Hart v Downing

Annotate this Case

Download PDF

Hart v Downing 2018 NY Slip Op 32145(U) August 30, 2018 Supreme Court, New York County Docket Number: 657175/17 Judge: Paul A. Goetz Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. [*FILED: 1] NEW YORK COUNTY CLERK 08/31/2018 12:11 PM NYSCEF DOC. NO. 139 INDEX NO. 657175/2017 RECEIVED NYSCEF: 08/31/2018 SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY PRESENT: .Hon. PART 47 PaulA.Goe~ 1 JSC INDEX No. -v- Gst I ?S11+ MOTION DATE - - - - - - MOTION SEQ. No. The following papers, numbered 1 to c::o~ , were read on this motion t o / f o r - - - - - - - - - - - - - Notice of Motion/Order to Show Cause - Affidavits - E x h i b i t s - - - - - - - - - - - - - No(s). _ __ Answering Affidavits - Exhibits - - - - - - - - - - - - - - - - - - - - - - - - No(s). _ __ Replying Affidavits-------------~-------------- No(s). _ __ petitioners, who are fonner employees and investors of the corporate respondents, brought this petition pursuant to CPLR 7510 to continn an arbitration award issued by the American Arbitration Association ("AAA") on November 21, 2017, which awarded petitioners compensatory and punitive damages based bn respondents' violation of sfu.te wage statutes, breach of contract and fraud. By order dated February 23, 2018, this court granteo th~ petition and judgment was entered on March 20, 2018 against all respondents except David W. Wagner, who notified the court that he had filed for bankruptcy. Respondent Michael H. Shaut now moves pur~~ant to CP.LR 3211 to dismiss the petition (motion seq. #002) and pursuant to ~PLR SOI 5 to vacate the judgment entered against him (motion seq. #004). With respect to the motion to dismiss, petitioners argue as a threshold matter that the court should not even consider the mot!on because it wits serve~ after the return date of the petition and thus respondent Shaut waived the defc;mses raised in the motion. However, petitioners served the petition and notice of petition on respondent Sha.J.lt by "nail and mail" service on December 21, 2017, which was after the return qate of December 19~ 2017 stated in tl)e notice of petition. CPLR 403(b) (requiring that the petition be s'brved at least eigflt days·pefore the time at which the petition is noticed to be heard). Although petitioners entered intq a stipulation with some pf the other respondents extending the return date of the petition to January 12; 20 J.8, respondent Shaut was not a party to the stipulation and there is no indication that petitioners notified him of this extension by, for example, serving an amended notice of petition. Tflus, respondent Shaµt's late filing is excusiible and the court will consider the motion on the merits. ' . : .. : ;·'., . ' Dated: _ _ _ __ Hon. Paul A. Goetz, JSC CHECK ONE: ..............................................;;...................... 0 CHECK AS APPROPktATE: ........................ MOTIO.fl lS: .· D CHECK IF APPRO~RIATE: ......................... .'.................... 0 0 j;3 NON-FINAL DISPOSITION CASE DISPOSED D DENIED D SETTLE ORDER D GRANTED DO NOT POST 0 Page __._{_ of 1 of 4 4 GRANTED IN PART D OTHER SUBMIT ORDER FIDUCIARY APPOINTMENT 0REFERENCE [*FILED: 2] NEW YORK COUNTY CLERK 08/31/2018 12:11 PM NYSCEF DOC. NO. 139 INDEX NO. 657175/2017 RECEIVED NYSCEF: 08/31/2018 SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY PRESENT: PART47 Hon. Paul A. Goetz, JSC ' , INDEX No. -v- MOTION D A T E - - - - - . . - - MOTION SEQ. No. The following papers, numbered 1 to Ot>f't Ml , were read on this motion t o / f o r - - - - - - - - - - - - - Notice of Motion/Order to Show Cause - Affidavits - E x h i b i t s - - - - - - - - - - - - - No(s). _ __ Answering Affidavits - Exhibits No(s). _ __ Replying Affidavits No(s). _ __ Jn the motion to dfsmiss, respondent Sflaut first argues that the petition must be dismissed pursuant to CPLR 321 l(a)(8) l:>ec~µse the court lacf<s personaljurisdiction. Personal jurisdiction is required in order to confirm an arbitral award jn a New York court. Hereford Ins. Co. v. American Independent Ins., 136 A.D.3d 551 (1st Dep't 2016)~ Although petitioners bear the burden of showing that the court has jurisdiction over the resp~qclept, on a motion to dismiss, petitioners need only demonstrate that facts "may exist" to exercis~ jurfsdiction over the respondent. American BankNote Corp. v. Daniele, 45 A.D.3d 338, 340 (1st Dep't 2007). J-Iere, petitioners have made such a showing by submitting evidence of pumerous representatfons by the corporate respondents that their principal place of business is in New York. Affirmation ofRossD. Carmel (undated), Exhs. M-S. Given the arbitrator's finding that the individual respondent~, incfuding Shaut, dominf!,ted and controlled the corporate respondents to such an extent that the indjvidilals are jointly and severally liable for the actions of the corporate entities, petitioners have suflici.ently demonstrated that ~lter ego liability may confer personal jurisdiction over tespondent Shaut. So. NewEng. Tel. Co. v. Global NAPs Inc., 624 F.3d 123, 138 (2d Cir. 2010). ~ . Jlespondent Shaut alsq argµes that the court lacks subject matter jurisdiction over this proceeding because pe never entered foto ~Tl arbitration agreement with petitioners. In support, respondent Shaut points out that the arbitration agreeme,nt's relied on by the petitioners were with the corporate respondents, and not with Shaut individually. Generally, questions regarding the arbitrability of claims are for courts to decide absent "clear and unmistakable evidence" that the parties intended to submit the question of arbitrability to the arbitrators. Smith Barney, Inc. v. Hause, 238 A.D.2d 104, 105 (1st Dep't 1997). Here, the ~rbitration clauses at i$su~ .provide th~t "[a]ny cpntroversy between the parities" shall be submitted to arbitration which shalf "be governed by the prpvisions of the Commercial Arbitration Rules of the American Arbitration Association." Carmel Aff., Exh. H, § I. . ,l . ~: • Dated: _ _ _ __ Hon. Paul A. CHECK ONE: ................................. :....... ;1•• , ....... :,: ............... 0 CHECK AS APPROPRIATE: .....................i.:MOTION IS:. CHECK IF A~PROPRIATE: ...............::: .................. ~ .... :... ·• D D D Page CASE DISPOSED ~oetz, JSC ~NON-FINAL DISPOSITION D DENIED D GRANTED IN PART D OTHER SETTLE ORDER D SUBMIT ORDER DO NOT POST D FIDUCIARY APPOINTMENT 0REFERENCE GRANTED 1- of 2 of 4 I:/ [*FILED: 3] NEW YORK COUNTY CLERK 08/31/2018 12:11 PM NYSCEF DOC. NO. 139 INDEX NO. 657175/2017 RECEIVED NYSCEF: 08/31/2018 SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY .. ~' PRESENT: 'H~n. 'fJ~ul ·:n..~Goetz; j5c PART 47 -v- .MOTION SEQ. No. The following papers, numbered 1 to 04/ 11/J!f MOTION DATE - - - - - - - , were read on this motion t o / f o r - - - - - - - - - - - - Notice of Motion/Order to Show Cause - Affidavits - E x h i b i t s - - - - - - - - - - - - - No(s). _ __ Answering Affidavits - Exhibits No(s). _ __ Replying Affidavits No(s). _ __ By specifically incorporatin~ the AAA rules into the arbitration clause, the parties expressly agreed to submit the issue of arbitrability to the arbitrators. Life Receivables Trust v. Goshawk Syndicate 102 at Lloyd's, 66 A.D.3d 495 (I st bep't 2009). Here, the arbitrator specifically addressed the argument that Shaut now raises and found that Shaut is bound by the arbitration agreements. Carmel i\.ff., Exh. H, § VII.c. The court must d,~fer iP' the arbitrator's finding on this issue. First Options of Chicago, Inc. v. f(aplan, 514 u.s. 938; 94~ (2d Cir. 1995).. Finally, the court <.fepJines t9 address respondent Shaut's argument regarding improper service given that it was improperly raised fot; rt,ie first tiwe in his reply brief. Erdy v. City of New York, 129 A.D.3d 546 (1st Dep't 2015). Accordingly, the motion to dismiss must be denied. ,.:'' With respect to the motion tp vacate, respondent Shaut argues that the judgment should be vacated pursuant to CPLR SOIS(a)(4) based on lack of jurisdiction. However, the more appropriate provision to ~pply under these circums.iimces is CPLR 5015(a)(l), excusable default. As discussed above, respondent ~haut has providep a reasonable excuse, for his default because the petition and notice of petition was ~rved on him aft~~ tit~· retUrn date stated on the notice of petition. Respondent Shaut also has a meritorious defense to the ~tition to epnfirm, namely lack of personal jurisdiction. Accordingly, the judgment spoulq be vacated on this basis. ' ·'i. Dated: _ _ _ __ Hon. Paul A. Goetz, JSC CHECK ONE: ...................................................................... CHECK AS APPROPRIATE: ........................ MOTIOr)I IS: CHECK.IF APPROPRIATE: .......................................,...... ' , .: ' ' ~ '1 0 D 0 D Page CASE DISPOSED ~NON-FINAL DISPOSITION D DENIED D GRANTED IN PART D OTHER SETTLE ORDER D SUBMIT ORDER DO NOT POST D FIDUCIARY APPOINTMENT 0REFERENCE GRANTED 3 of 3 of 4 1/ [*FILED: 4] NEW YORK COUNTY CLERK 08/31/2018 12:11 PM NYSCEF DOC. NO. 139 INDEX NO. 657175/2017 RECEIVED NYSCEF: 08/31/2018 SUPREME COURT OF TH.E STATE OF NEW YORK NEW YORK COUNTY PRESENT: Hon. Paul A. PART 47 ~oetz, JSC INDEX No. b.£1 lrS/ft -v- The following papers, numbered 1 to , were read on this motion t o / f o r - - - - - - - - - - - - - Notice of Motion/Order to Show Cause - Affidavits - E x h i b i t s - - - - - - - - - - - - - No(s). _ __ Answering Affidavits - Exhibits - - - - - - - - - - - - - - - - - - - - - - - - No(s). _ __ Replying Affidavits No(s). _ __ petitioners contenci th~t respondent Shaut's motion is precluded by an order entered in the Northern Shauf v; Andrew Hatch, et al., Case No. 1: 18-cv-420. That order granted the motion by the award creditors, the petitioners herein,: to dismis~ Shaut' s motion based on improper service, timeliness and res judicata due to t~e judgment entered against Shaut in this matter. However, respondent Shaut does not seek to vacate the Fbitr~l award, bu• rather the judgmeqt entered thereon. Moreover, the dismissal of Shaut' s motion was pot on the merits and ~oe~, not preclude Shaut from opposing the motion to confirm on the narrow grounds listed in <;PL~ 7Sl has well as based on lack of personal jurisdiction. Pine Street Associates, L.f. v. Southridge 'far(ners, f,..P., 107 A.D.3d 95, 100 (1st Dep't 2013); NYCTL 1999-1 Trust v. 573 Jackso,ri Ave. R°,ff!.ty Cqrp., 39 A.D.3d 267 (1st Dep't 2007). Likewise, petitioners' argument that the award,fPust be coritlrmed tjnder CPLR 751 l(e) in light of the Ohio court's order dismissing Shaut's mption to vacate is unpersuasive as the Ohio co~rt did not deny Shaut's motion to vacate but rather dismissed the motion pn procedural grounds. lq any event, petitioners' argument in this regard is more appropriately dire~tedto the, Ohio court which rendered the decision. Accordingly, it is pi strict of Ohio in a c~se CC)mmenced by Shaut to vacate the arbitral award, captioned Michael H . ,•' OJll)EiiED that tqe motion to vacate the judgment is granted and the court's judgment filed on April 12, . ~Q18is vacated s'olel{with' respect to respondent Michael H. Shaut; and it is further oR\:>ERED that the JQ~tion to dismiss is denieq and pursuant to CPLR 404(a), respondent Shaut may 'JDS~er the petition within five days after service of this order with notice of entry. Dated: Hon. Paul A. Goetz, c~ ~NON-FINAL DISPOSITION CHECK ONE: ...................................................................... 0 CASE DISPOSED D CHEC~lfAPP,ROPRIAT~:i?""""""": ..........'.·........'.. :~.:..... D D DENIED D GRANTED IN PART D OTHER SETTLE ORDER D SUBMIT ORDER CHECK AS APPROPRIATE: .....................,.. MOTION IS: '.,, 0 Page GRANTED DO NOT POST 0 ':/ of 4 of 4 FIDUCIARY APPOINTMENT 0REFERENCE

Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.