Island Tennis, LP v Indoor Courts of Am., Inc.

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Island Tennis, LP v Indoor Courts of Am., Inc. 2013 NY Slip Op 32343(U) September 23, 2013 Supreme Court, Suffolk County Docket Number: 13-6142 Judge: Jerry Garguilo Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various state and local government websites. These include the New York State Unified Court System's E-Courts Service, and the Bronx County Clerk's office. This opinion is uncorrected and not selected for official publication. [* 1] COPY MEMORANDUM SUPREME COIJRT, SUFFOLK COUNTY ............................................................... I.A.S. PART 47 X LSLANI) TENNIS. LP,d/b/a SPORTIME, By: Jerry Garguilo, J.S.C. , 20 13 Dated: September Petitioner, - : Index No. 13-6 142 Mot. Seq. #001 - MotD; CDISPSUBJ Mot. Seq. #002 - XMD against - Return Date: 4/12/13 (#001) Return Date: 5/1/13 (#002) 6/12/13 Adjourned: INDOOR COURTS OF AMERICA, INC., d/b/a ICA. Respondent. I A Z E R , APTHEKER, ROSELLA & YEDID, P.C. Attormy for Petitioner 225 Old Country Road Melville, Nem York 1 1747 : McDERMOTT & McDERMOTT Attorney for Respondent 293 Route 100, Suite 2 10 Somers, New York 10589 In this article 75 proceeding, the petitioner, Island Tennis, LP, d/b/a Sportime ( Sportime ), seeks, inter. uliu, to confirm an arbitration award dated February 13, 2013, which was in its favor and against the respondent, Indoor Courts of America, Inc., d/b/a ICA ( ICA ), in the principal amount of $359,269.28, and ICA seeks to vacate the award. ICA separately moves to change the venue of this proceeding from Suffolk County to New York County and to consolidate this proceeding with a proceeding entitled Matter of ICA Sports & Bldg. Sys. v Island Tennis (Sup Ct, New York County, Index NO. 13-651445). The parties are signatories to a standard form contract dated November 20, 2006 pursuant to which ICA. as design-builder. agreed to perform design, construction. and other services on behalf of Sportin-(e,as owner, i n connection with the construction of an indoor tennis center on Randall s Island. The cor tract provides that all unresolved claims, disputes or controversies between the parties arising out of or relating to the contract shall be decided by arbitration, that the prevailing party in such arbitration shall be entitled to recover from the other party its reasonable attorney s fees and expenses, and that judgment may be entered on the arbitrator s award by any court having jurisdiction. When substantial disputes arose between the parties during the performance of the contract, the partics proceeded to arbitration before the American Arbitration Association ( AAA ). Both parties \\ere represented by counsel and participated in the arbitration. Following discovery and motion practice. the arbitrator conducted an eight-day hearing at which both parties presented witness testimony and documentary evidence. It appears that the parties respective claims were ultimately synthesized into five claims on behalf of Sportime and nine counterclaims on behalf of ICA. The parties [* 2] Islaid Tennis \ . I11dool-Cts. of Am. Index No. 13-6 142 Page 2 subsequentlj, submitted post-hearing briefs relative to those claims and counterclaims. On February 13, 2013, the arbitrator issued the following award in favor of Sportime, as claimant, and against ICA, as respondent. 1, THE UNDERSIGNED ARBITRATOR, having been designated in accordance with the arbitration agreement entered into between the above-named parties and dated November 20. 2006, and having been duly sworn, and having duly heard the proofs and allegations of the Parties, do hereby, FIND, as follows: Claimant s Claims A. In connection with Claimant s claim for recovery of the retainage due Arizon by Respondent, Claimant is Awarded Sixty One Thousand Four Hundred Sixty Eight Dollars and Sixty Cents ($61,468.60). B. In connection with Claimant s claim relating to Empire Zone rebates, Claimant is Awarded Sixty Four Thousand One Hundred Seventy One Dollars and Twenty Two Cents ($64,17 1.22). C. I n connection with Claimant s claim relating to deck leaks, Claimant is Awarded Forty Seven Thousand Eight Hundred Fifty Dollars ($47,850.00). No ruling is made in this arbitration, either granting or denying Respondent s right to deduct this $47,850.00 sum from the monies being withheld by Respondent under the WJL Remedial Agreement. D. I n connection with Claimant s claim relating to the sewer pipe, Claimant is Awarded Twenty One Thousand Three Hundred Eighty Four Dollars and Thirty Eight Cents ($21,384.38). No ruling is made in this arbitration, either granting or denying Respondent s right to deduct this $21,384.38 sum from the monies being withheld by Respondent under the WJL Remedial Agreement. E. I n connection with Claimant s claim relating to roof and skylight leaks, Claimant is 4\varded Ninety ( h e Thousand Five Hundred Fifty Five Dollars and Fifty Eight Cents ($91,555.58). Respondent s Counterclaims ,+I. Respondent s counterclaim relating to the Design Builder s fee for project costs is ct en i ed . 13. Respondent s counterclaim relating to the Design Builder s fee for project costs paid [* 3] Island Tennis v , Indoor Cis. of Am. Inde.\ No.13-6 142 Page 3 directly by Claimant is denied. C. Respondent s counterclaim relating to the Design Builder s fee for temporary power is denied . I). I n connection with Respondent s counterclaim relating to Payment Application 29, Iiespondent is Awarded Fifty Three Thousand Two Hundred Forty Eight Dollars ($53.248.00). E. Respondent s counterclaim relating to Payment Application 30 is denied. F. Respondent s counterclaim relating to Payment Application 3 1 is denied. (3. Respondent s counterclaim relating to Payment Application 32 is denied. H. Respondent s counterclaim relating to Work Product is denied I . Respondent s counterclaim relating to the change order for the Sewage Pipe Ejector Pit is denied. Recapitulation of amount Awarded to Claimant (exclusive of Interest and Attorneys Fees): To Claimant: I o Respondent: Net Awarded to Claimant: ~~ $ 286,429.78 $ 53,248.00 $ 233,181.78 fn addition to the above. Claimant is Awarded attorneys fees and pre-award interest in the amount $ 1 12,875.00, representing a total amount due Claimant of Three Hundred Forty Six Thousand Fifty Six Dollars and Seventy Eight Cents ($346,056.78). Accordingly. 1 AWARD, as follows: Respondent shall pay to Claimant the net sum ofThree Hundred Forty Six Thousand Fifty Six Dollars and Seventy Eight Cents ($346,056.78). I hc adininistratikre fees of the American Arbitration Association totaling $14,800.00 and the compensatjon of the arbitrator totaling $33,575.00, shall be borne as follows: Eighty Percent (80%) by Respondent and Twenty Percent (20%) by Claimant. Therefore Rcspondent shall reimbiirse Claimant the sun? of $13,212.50 representing that portion of said k e s in excess of the apportioned costs previously incurred by Claimant. [* 4] Island l ennis 1 . Indoor Cts. of Am. Index No.13-61.12 Page I I f the amounts due are not paid within 30 days from the date ofthis Award, then interest shall accrue at the statutory rate of 9% per annum commencing on the 3 1 st day from the date of this Award until paid. This .4ward is in full settlement of all claims submitted to this Arbitration. All claims not espressly granted herein are hereby denied. rhis proceeding followed. Addressing first ICA s request for a change of venue, which it contends is warranted as a matter of right based on Sportime s choice of an improper county (see CPLR 5 10 [ 1I), the court notes that venue generally shall be in a county in which any one of the parties resided at the time the action was conimenced (CPLR 503 [a]) and that a partnership is deemed a resident of any county in which it has its principal of5ce (CPLR 503 [d]). Here, it appears from the petition, and ICA does not dispute, that Sportiine was a limited partnership having its principal office in Suffolk County at the time this proceeding was commenced. Where, as here, the parties agreement does not specify the county in which a proceeding arising out of an arbitrable controversy shall be brought, the proceeding may be brought in any county where at least one of the parties resides (see CPLR 7502 [a] [i]). Consequently, ICA cannot be found to have satisfied its burden of establishing that the venue chosen by Sportime was improper (see Furth v ELRAC, Inc., 1 1 AD3d 509, 784 NYS2d 112 [2004]). ICA s further request for an order of consolidation is academic, the parties having discontinued the New York County proceeding by the filing of a stipulation dated June 12, 2013. ICA s motion is, therefore, denied. Pursuant to CPLR 75 10, a court shall confirm an award upon application of a party made within one year after its delivery to him, unless the award is vacated or modified upon a ground specified in section 75 I I Once a party has participated in the arbitration, as here, its ability to have a court vacate the award is limited by CPLR 75 1 1 (b) ( I ), which provides that an award may be vacated only if the rights of that party were prejudiced by (i) corruption, fraud, or misconduct in procuring the award, (ii) partiality of a supposedly neutral arbitrator, (iii) the arbitrator exceeding his power or so imperfectly esecuting it so that no final and definite award was made, or (iv) failure to follow procedures provided l C P1,R article 75. Even ifthe arbitrator misconstrues or disregards the relevant facts or law, the award y \vi11 not be vacated unless it is violative o f a strong public policy, is totally irrational or clearly exceeds a specifically enumerated limitation on the arbitrator s power (Matter o Town o Callicoon /Civil f f Serv. Empls. .4.s.sn., Town o Ccillicoon Unit/, 70 NY2d 907, 909. 524 NYS2d 389 [ 19871). As such, f judicial review of arbitration awards is extremely limited. and courts are obligated to give deference to :in arbitrator s decision. An arbitrator s award should not be vacated for errors of law and fact committed by the arbitrator and the courts should not assume the role of overseers to mold the award to f conform to their sense ofjustice (Matter o MBNA Am. Bank v Kuratlianos, 65 AD3d 688, 883 NYS2d 9 I 7. 9 18 (20091). By the same reasoning, a party seeking to vacate an award carries a heavy burden (c.g,Scollar v Cece, 28 AD3d 3 17, 812 NYS2d 521 [2006]), for once the issue is properly before the arbitrator, questions of law and fact are merged in the award and are not within the power of f thejudiciary to resolve (Binglzamtorz Civ. Seuv. Forum v City o Binghamton, 44 NY2d 23, 28, 403 .* [* 5] Island l ennis Y . Indoor Cts. of Ani. Inde.\ N o . 13-6 142 Page 5 N Y S 2 d 482, 484 [ 19781). As set forth in ICA s petition to vacate the award (in the since-discontinued New York County proceeding), IC A objects to the award on the following grounds: ( i ) misconduct in procuring the award in that the Arbitrator failed to rule on the ICA motion t o dismiss Sportime s claims based on the defense of release by Sportime of ICA which would have been dispositive of the Sportime claims against ICA thereby violating a strong New York State public policy, demonstrating a manifest disregard of the law, and gave the release agreement provisions a totally irrational construction, (ii) the Arbitrator conducted inconsistent and disparate treatment between Sportime and ICA, (iii) the Arbitrator exceeded his power and so imperfectly executed the Arbitration Award in that the Arbitrator disregarded the operative agreements between ICA and Sportime, the attendant and governing AAA rules on the form of the award as well as the parties proposed awards such that the Arbitration Award was irrational as well as not a final and definite award upon the subject matter submitted. [and] (iv) the arbitrator failed to provide all process due to ICA and failed to conduct a fair hearing * * *. Now, upon review of the papers submitted, the court finds no basis for disturbing the award. ICA s objections are addressed below seriatim. Initially, the court rejects ICA s claim that the arbitrator committed misconduct by failing to rule on its motion to dismiss. Even assuming that such failure may be found to constitute misconduct within the meaning of CPLR 75 1 1 (b), it is evident that ICA did not suffer any resulting prejudice. Rather, whatever prejudice ICA may have suffered was a result of the arbitrator s express findings in favor of Sportime on its claims relating to the deck leaks and the sewer pipe, and its implicit finding that ICA s defense of release was either inapplicable to those claims or lacked merit. As to those findings, the court notes that any error on the part of the arbitrator is, under the circumstances, beyond the reach of judicial review (.see Mntter o Sprinzen [NombergJ, 46 NY2d 623, 415 NYS2d 974 [1979]). While an f arbitration award may be vacated as illegal if, as ICA claims, it is violative of a strong public policy embodicd in constitutional. statutory. or common law. a court must be able to examine [the] award on its f ace. without engaging in extended factfinding or legal analysis, and conclude that public policy When the parties stipulated to discontinue the New York County proceeding, they also stipulated in this proceeding t h a t the petit ion and memorandiim of law filed by ICA i n the New York County proceeding, which \\ere attached to its Verified Answer in this special proceeding, shall be deemed an objection to the Arbitration A\varcl in opposition to Sportime s Verified Petition to confirm the Arbitration Award in this proceeding * * *. A part! may oppose an arbitration award either by motion pursuant to CPLR 75 1 1 (a) to vacate or modif> the a~zarclwithin 90 days after delivery of the award, or by objecting to the award on the grounds set forth i n C P L R 7 5 I I ( b ) upon an application to confirm the award notwithstanding the expiration ofthe 90-day period (Mutter ofBrentrzrill 11 N(itionwideMut. Ins. eo.,194 AD2d 537, 598 NYS2d 3 15 [1993]). [* 6] prccludes Its enforcement (id. 63 1, 415 NYS2d at 978). Stated another way, the award itself must at f directly conflict with a strong public policy tantamount to illegality (we Matter o Troy Police Benevolent & Protective Assn. /City o Troy/, 271 AD2d 926, 707 NYS2d 265 [2000]). Indirect or f attenuated consequences of an award, which does not on its face violate a law, do not suffice (see Matter of New York State Correctioncil Officers & Police Benevolent Assn. v State of New York, 94 NY2d 32 1. 704 NYS2d 9 10 [ 19991). Here, there is no illegality in the award itself. To the extent ICA contends that the arbitrator demonstrated a manifest disregard of the law in failing to enforce the release. the court notes that this standard applies only to contracts governed by the Federal Arbitration Act ( 9 IJSC $ 1, e/ xeq ) and that ICA has not established that the parties contract affects interstate commerce (see Wien & Mulkin v Helmsley-Spear, Inc., 6 NY3d 471, 813 NYS2d 691, cert dismissed 548 US 940, 127 S Ct 34 [2006]; Matter o Diamond Waterproofing Sys. v 55 Liberw Owners Coup., 4 f NY3d 247, 793 NYS2d 83 1 [ZOOS]); nor, in any event, does it appear that this case presents one of the rare occurrences of egregious impropriety to which the doctrine might otherwise attach (Wien & Malkin v Helmsley-Spear, Inc., supra at 480, 813 NYS2d at 696). Insofar as ICA argues that the arbitrator s failure to enforce the release was irrational and gave the provisions in the parties other f f agreements an irrational construction (see generully Matter o Rockland County Bd. o Coop. Educ. Servy. v BOCES StaflAssn., 308 AD2d 452, 764 NYS2d 1 18 [2003]), it is evident that the arbitrator could rationally have concluded, based on the testimony and documentary evidence referenced in Sportime s post-hearing brief, that the deck leaks and sewer pipe problems were not attributable to the subcontractor whose work was the subject of the release and that Sportime s claims relating to those problems did not fall within the scope of the release. ICA s claim that the arbitrator conducted inconsistent and disparate treatment between the parties-which, like the claim of misconduct, is premised on the arbitrator s failure to rule on its motion to dismiss-is similarly rejected for want of a showing of prejudice. Nor is there a basis for vacating the award on the ground that it was not final and definite. An award is deficient in this regard only if it leaves the parties unable to determine their rights and obligations, if it does not resolve the controversy submitted or if it creates a new controversy (Matter of Meisek v Uhr. 79 NY2d 526. 536, 583 NYS2d 951, 955 119921). Here, the controversy between the parties was expressly defined by their respective claims and counterclaims. The award, which provides fbr ii fixed sum t o be paid in resolution of those claims and counterclaims, resolved the controversy. Even il: as IC1\ contends, the award did not employ the form or detail requested by the parties, this does not constitute a basis to vacate it (.see Matter o RRNAssoc. (DAKElec. Contr. Cory.], 224 AD2d 250, f 637 NYS2d 409 [ 19961; Mutter o Centrrrl Queens Young Mensfloung Womens Hebrew Assn. f [Jolrtrtisen & Blrrivnnrii, Arclritects-RubstinZen Co.], 16 1 AD2d 337, 555 NYS2d 96 [ 19901). Likewise. even if the arbitrator failed to consider or appreciate certain evidence-as here, the canceled f checks re1atiL.e to the leak claims-vacatur would not be warranted (see Matter o Solow Bldg. Co. v Morgtin Giiur. Trust Co. of N. Y . , 6 AD3d 356, 776 NYS2d 547, Iv denied 3 NY3d 605, 785 NYS2d 22 [2004J. c c rf dt Mii- d543 US 1 148, 125 S Ct I3 10 [2005]).As to ICA s clainis regarding the alleged irrationalitj o f the award, the court notes, relative to payment application 29, that an arbitrator need not f specify the formula used in calculating an award (see Matter o Sulco Constr. Co. v Lasberg Constr. [* 7] Island Tennis Y. Indoor Cts. of Am. Index No.13-6 142 Page 7 A ~ s o c .349 AD2d 309. 671 NYS2d 289 [1998]); as to those portions ofthe award denying its . counterclaims for additional design builder s fees, the court finds ample support-again, in the testimony and documentary evidence referenced in Sportime s post-hearing brief-for the finding that ICA was not entitled to any such fees. Notably, an arbitrator will not be deemed to have acted irrationally unless there is H O proof ivhutever to justify the award (Matter o Peckerman v D & D Assoc., 165 AD2d 289, f 296. 567 NYS2d 4 16,420 [ 199 1 ] [emphasis added]). The court further rejects ICA s claim that it was denied due process and deprived of a fair hearing. ICA s claim is based, in part, on an alleged statement made by the arbitrator during the hearing that he would limit himself to 15 hours to review the testimony and exhibits and that, as a result, he would not review certain exhibits. Even assuming that such a statement necessarily implicates due process or the right to a fair hearing, ICA failed to demonstrate that the arbitrator did, in fact, limit his review or refuse to consider exhibits. ICA also contends that it was placed at a severe tactical and strategical disadvantage following a last-minute change of protocol initiated by the arbitrator requiring ICA to create, jointly with Sportime, a series of bucket tables organizing ICA s claims for certain design builder s fees by invoice and category of work, as a result of which ICA was required to restructure its exhibits and change the order of its testimony. However, apart from the additional work this entailed. ICA has failed to demonstrate either how it was prejudiced by the procedure, or that whatever disadvantage may have inured to it by its adherence to the procedure did not also inure to Sportime. The court notes, moreover, that where, as here, parties voluntarily participate in an arbitration. only certain minimums of procedural due process pertaining to the presentation of evidence arc guaranteed, namely, the right to be heard, to present evidence, and to cross-examine witnesses (see CPLR 7506 [c]; see ulso Sawtelle v Waddell & Reed, 304 AD2d 103, 754 NYS2d 264 [2003]); ICA aclmowledges that, on the last day of the hearing, it cross-examined the Sportime witnesses and presented its own witness to testify about the bucket tables. .4s to any and all remaining objections by ICA relative to the award not previously addressed in this decision, the court has considered those objections and finds them without merit. Since the court is mandated to confirm an award upon application of a party made within one year after its delivery to him. unless the award is vacated or modified upon a ground specified in section 75 1 I .. (CPLK 75 10; accord CPLR 75 1 1 [e]). the petition is granted to the extent of confirming the a u arc1 and directing the entry of judgment thereon. Howei.er. as to Sportime s request for an award of the additional attorney s fees which it incurred i n connection with this special proceeding to confirm the arbitration award, the petition is denied. ,4bsent an agreement between the parties, statute or court rule, a civil litigant cannot recover its attorncF s fees (.wc Hooper Assoc. v AGS Conzputevs, 74 NY2d 487. 549 NYS2d 365 [ 19891). While the parties agreement does provide that the prevailing party in any arbitration, or any other final, binding dispute proceeding upon which the parties may agree, shall be entitled to recover from the other party reasonable attorneys fees (.we u1.w CPLR 75 13), it does not provide for attorney s fees incurred in the conduct ofjudicial proceedings (qf Mntter o New Fork Merckants Protective Co. v RWAdccrt f [* 8] Island rennis \ Indoor Cts. of Am. Inclex No. 13-6 142 Pagc 8 PO/J*> AD3d 554. 968 NYS2d 552 [2013]: cf also General Business Law 9 198-a [I]). 108 Consec~iiently.Sportiiiie is not entitled to the requested award, notwithstanding that this proceeding arises froni the arbitration. And insofar as a portion of the fees which Sportime now seeks to recover were incurred in drafting its attorney s affirmation in support of its request-i. e., fees on fees -the court would be ~vithout authority to grant recovery in any event (,see Sage Realty Corp. v Proskacier Rose, 288 AD2d 14, 737 NYS2d 162 [2001], lv denied 97 NY2d 608, 739 NYS2d 98 [2002]). Submit order and judgment (one paper).

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