Empire Core Group, LLC v Perennial Painting & Cleaning LLC

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Empire Core Group, LLC v Perennial Painting & Cleaning LLC 2020 NY Slip Op 33310(U) October 6, 2020 Supreme Court, New York County Docket Number: 653643/2020 Judge: Debra A. James 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 10/07/2020 11:39 AM NYSCEF DOC. NO. 32 INDEX NO. 653643/2020 RECEIVED NYSCEF: 10/07/2020 SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY PRESENT: IAS MOTION 59EFM PART HON. DEBRA A. JAMES Justice --------------------------------------------X EMPIRE CORE GROUP, LLC INDEX NO. MOTION DATE Petitioner, 653643/202_0_ . 10/01/2020 001 MOTION SEQ. NO. -vPERENNIAL PAINTING AND CLEANING LLC d/b/a PERENNIAL CONSTRUCTION SOLUTIONS, DECISION + ORDER ON MOTION Respondent. -------------------------------------------------------------------X The following e-filed documents, listed by NYSCEF document number (Motion 001) 7, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19,20,21, 22,23,24,25,26,27,28,29,30, 31 were read on this motion to/for STAY ORDER Upon the foregoing documents, .it is ORDERED that the cross motion of respondent to compel arbitration pursuant to CP~R 7503 is denied; and it is further ADJUDGED that the petition to stay the subject arbitration is granted in all respects; and, it is further ADJUDGED and ORDERED that the parties need not and shall not proceed to arbitration, which is the subject for expedited Act dated July 24, respondent's demand ion pursuant to ;::he New Yo::-k Prompt Payment 2020 and petitioner's counsel shall serve a copy of this judgment upon the arbitral tribunal; and' it is further ADJUDGED that petitioner, having an address at 270 Broadway, Suite 1003, New York, New York 10001, do recover from respondent, 65364312020 EMPIRE CORE GROUP, LLC vs. PERENNIAL PAINTING ANO Motion No. 001 1 of 5 Page 1of5 ·······--· INDEX NO. 653643/2020 [*,------------"-;.;;.;.;...:..::===============.-----2] FILED: NEW YORK COUNTY CLERK 10/07/2020 11:39 AM NYSCEF DOC. NO. 32 RECEIVED NYSCEF: 10/07/2020 having an address at 315 East 86~ Street, Suite SKE, New York, New York 10028 , costs and disbursements in the amount of $ as taxed by the Clerk, and that petitioner have execution therefor. SION In Cusimano v Schnurr, 26 NY3d 391 (2015), the Cour: of. Appeals reversed the order of the Appella.te Division, First Department reversing the trial court's stay of arbitration, and reinstated the stay issued by the t 1 court. In Cusimano, plaintiff business owner and investor in commercial real entities brought a plenary action against its co-owners and the accountants alleging that the accountants acted in concert with the co-owners to misappropriate distributions from the entities. The Court observed "' [~ike contract rights generally, a right to arbitration may be modified, waived or abandoned'. Accordingly, a litigant may not compel arbitration when its use of the courts is "clearly inconsistent with [its] later claim that the parties were obligated to settle their differences by arbitration"' (citations omitted). While is true that '[n]ot every foray into the courthouse effects a waiver 0f the right to arbitrate,' we are s sfied that the totality of plaintiff's conduct here establishes waiver.u Finding the Federal Arbitration Act applicable to the dispute before it, the Court noted that "[t]he majority of 653643/2020 EMPIRE CORE GROUP, LLC vs. PERENNIAL PAINTING AND Motion No. 001 2 of 5 Page 2 of 5 [*FILED: 3] NEW YORK COUNTY CLERK 10/07/2020 11:39 AM NYSCEF DOC. NO. 32 INDEX NO. 653643/2020 RECEIVED NYSCEF: 10/07/2020 federal courts have taken the position that waiver cannot be established in the absence of prejudice.u The Court then analyzed and quoted from :Souisiana Sta di.um & Exposition Dist. V Merrill Lynch, Pierce & Smith, Inc, 626 F.3d 156 (2d Cir.), whose facts it found "strikingly similaru to those before it: "The court observed that there were 'two types of prejudice: substantive prejudice and prejudice due to excessive cost and time delay,' and determined that both types had been established. "As to substantive prejudice, the court pointed out that granting the motion to arbitrate would allow plaintiff to avoid the motion to dismiss . . . As to the second type of prejudice, the court noted that it could consider 'other surrounding circumstances' beyond the burdens and expenses that would result from a grant of arbitration, 'including judicial economy'" "'Although we recognized that a plaintiff's initiation of a lawsuit does not, by itself, result in a waiver of arbitration, we also note that by filing its lawsuit and litigating at length, [the plaintiff] "acted inconsistently with its contractual right to arbitration"'". (26 NY3d at 400-401 [citation omitted]). Finding the facts of the case practically on all fours with those of Louisiana Stadium, the therein had likewise waived Cusimano Court arbitrat~on held that plaintiff and that the defendants were prejudiced by plaintiff's initial corrunencement of a plenary action and pursuit of the litigation strategy for a year before moving to compel arbitration. The Court found even more "telling", plaintiff's making such motion to compel only after the trial judge questioned the viability of its plenary action claims. 65364312020 EMPIRE CORE GROUP, LLC vs. PERENNIAL PAINTING ANO , Motion No. 001 3 of 5 Page 3 of 5 [*FILED: 4] NEW YORK COUNTY CLERK 10/07/2020 11:39 AM NYSCEF DOC. NO. 32 INDEX NO. 653643/2020 RECEIVED NYSCEF: 10/07/2020 In the case at bar, the question is whether the petitioner, the plaintiff in the plenary action, who moves to stay arbitration, is prejudiced by the assertion of prompt payment counterclaim by respondent, defendant in such action, which interposition occurred before respondent moved to compel arbitration. that, This court finds in demanding arbitration of, its prompt payment c'laim only after it interposed a counterclaim for such relief, and in moving to compel only after petitioner herein moved to stay arbitration, respondent prejudiced petitioner herein. service of the counterclaim, and serve a reply. petitioner was required to prepare The court finds that the fact that petitioner, unlike the defendant in Cusimano, served a Substantively, with the responsive did not move t:o dismiss, is pleading, a distinction without but a difference. This court finds that petitioner herein also suffered what the Second Circuit in Louisiana Stadium characterized as the second type of prejudice. Respondent did not move to compel arbitration until after petitioner, based in part on the fact: that its claim for breach of subcontract was not subject to arbitration, applied for a stay of arbitration. subcontract agreement. the burdens claims Thus, and are Both parties agree that such breach of not the subject of any arbitration the prejudice to petitioner herein is •beyond expenses that would result from a grant of arbitration" (26 NY3d at 401), as it. implicates "judicial economy" 65364312020 EMPIRE CORE GROUP, LI.C vs. PERENNIAL PAINTING AND Motion No. 001 4 of 5 Page4of5 [*FILED: 5] NEW YORK COUNTY CLERK 10/07/2020 11:39 AM INDEX NO. 653643/2020 NYSCEF DOC. NO. 32 RECEIVED NYSCEF: 10/07/2020 in that arbitration would require the parties to litigate their disputes in two the As forums. actions of the actions respondent of the herein plaintiff indicate in forum shopping, and as such prejudice has been established and respondent 26 NY3d at 401). has waived its right to arbitrate 10/6/2020 DATE CHECK ONE: v DEB A?JAIfs, J:S.c~ CASE DISPOSEO GRANTED D DENIED APPLICATION: SETTLE ORDER CHECK IF APPROPRIATE: INCLUDES TRANSFER/REASSIGN ~ NON·FINAL DISPOSITION GRANTED IN PART - SUBMIT ORDER FIDUCIARY APPOINTMENT 65364312020 EMPIRE CORE GROUP, Ll.C vs. PERENNIAL PAINTING ANO Motion No. 001 5 of 5 D D OTHER REFERENCE Page 5 of 5

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