Williams v Roman Catholic Diocese of Brooklyn & Queens

[*1] Williams v Roman Catholic Diocese of Brooklyn & Queens 2021 NY Slip Op 21308 Decided on November 10, 2021 Supreme Court, Queens County Caloras, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and subject to revision before publication in the printed Official Reports.

Decided on November 10, 2021
Supreme Court, Queens County

Marcus Williams, Plaintiff,

against

Roman Catholic Diocese of Brooklyn & Queens, Angelo B. Pezzullo, David A.Pezzullo and Revel Transit Inc., Defendants.



Index No. 719352/20



Attorneys for Plaintiff

Sol Z. Sokel, Esq.

Gregory Spektor & Associates P.C.

1 Cross Island Plaza, Suite 203C

Rosedale, New York 11422

718-528-5272

Attorneys for Defendant Revel Transit, Inc.

Jennifer Bruder, Esq.

Haworth Barber & Gerstman, Esqs.

45 Broadway #2110

New York, New York 10006

212-952-1100

Attorneys for Defendants Roman Catholic Diocese of Brooklyn & Queens, Angelo B. Pezzullo and David A. Pezzullo

Ashley A. Hughes, Esq. and Albert J. Galatan, Esq.

Scahill Law Group P.C.

1065 Stewart Avenue, Suite 210

Bethpage, New York 11714

516-294-5200
Robert I. Caloras, J.

The following papers EF13-20, EF23-41, EF49-87 read on this motion by defendant Revel Transit Inc. (Revel) to change the venue of this action under CPLR 501, 510(1) and 511; a motion by plaintiff Marcus R. Williams to stay the arbitration demanded by Revel pursuant to CPLR 7503(b) and to dismiss Revel's 18th affirmative defense (demand for arbitration) pursuant to CPLR 3211(b); a cross motion by Revel to compel arbitration; and a cross motion by defendants Roman Catholic Diocese of Brooklyn & Queens, Angel B. Pezzulo and David A. [*2]Pezzulo (collectively, the RC Defendants) to dismiss Revel's demand for arbitration pursuant to CPLR 3211 and 7503(b).

Papers

Numbered

Notices of Motion - Affidavits - Exhibits EF 13-20; 23-34

Notices of Cross Motion - Affidavits - Exhibits... EF 35-41; 54-64, 67-71

Answering Affidavits - Exhibits EF 49-53, 65-66

Reply AffidavitsEF 72-74, 75-87

Upon the foregoing papers it is ordered that these motions and cross motions are consolidated for purposes of disposition and are determined as follows:

Plaintiff commenced this action to recover from personal injuries allegedly sustained as a result of motor vehicle accident on July 11, 2020. The motor vehicle operated by David Pezzullo and owned by Angelo Pezzullo was lawfully proceeding through a green light at or near the intersection of 31st Avenue and 47th Street in Queens, New York when plaintiff, who was operating an electric moped, proceeded through the same intersection and collided with David Pezzullo's vehicle. Plaintiff alleges that the accident occurred due to the mechanical failure of his moped, which he had leased under an agreement with Revel entered on or about June 17, 2020 (the Rental Agreement). Revel is a business that facilitates the reservation, support and invoicing of short-term electric moped rentals via a mobile web application (the Revel App).

Plaintiff commenced this action in Queens County based on his residence. In its answer, Revel included a demand to change venue to New York County based on the forum selection clause in Section 17 of the Rental Agreement, which designated New York County as the exclusive venue for litigation "except for small claims court actions which may be brought in New York, NY or in the county where [the user] resides." In moving for change of venue, Revel relies on Section 17 to argue that that New York County, rather than Queens County, is the proper venue in this matter.

Under CPLR 510(1), grounds for changing the place of trial include improper venue. On an application to change venue, a defendant must show that the county originally chosen is improper and that the defendant's choice of venue is proper (id.; see Joseph v Kaufman, 188 AD3d 847 [2020]). Once the defendant meets this burden, then a plaintiff must establish, in opposition, that the venue selected was proper (see Harvey v Ogunfowora, 179 AD3d 775, 776 [2020]). CPLR 501, which governs contractual provisions fixing venue, allows written agreements designating the place of trial to be enforced upon motion. "A contractual forum selection clause is prima facie valid and enforceable unless it is shown by the challenging party to be unreasonable, unjust, in contravention of public policy, invalid due to fraud or overreaching, or it is shown that a trial in the selected forum would be so gravely difficult that the challenging party would, for all practical purposes, be deprived of its day in court" (Casale v Sheepshead Nursing & Rehabilitation Ctr., 131 AD3d 436, 436-437 [2015][internal citations and quotation marks omitted]; see also Stravalle v Land Cargo, Inc., 39 AD3d 735, 736 [2007]).

Here, the forum selection clause in Section 17 is prima facie valid and enforceable. In opposition, plaintiff argues that the language therein allows the action to be brought in the county of plaintiff's residence, and that such a reading is consistent with other terms of the Rental Agreement (e.g. Section 1.14) prohibiting operation of the rented moped across major bridges and tunnels or outside the designated "Home Zone." Plaintiff further argues that such [*3]venue clause is unreasonable and unjust, in contravention of public policy, and invalid due to fraud or overreaching because he never signed nor had an opportunity to review such Rental Agreement purporting to waive his right to trial in the county where he resides. He avers that he was unreasonably and unfairly deprived of a meaningful opportunity to review and assent to the Rental Agreement, including the forum selection clause.

In determining whether a party to an online contract has agreed to accept its terms, courts will look to the particular circumstances of the website or mobile application usage for evidence that the user had actual or constructive notice of the terms of agreement and consider whether a reasonably prudent person would be put on notice of the provision in the contract, and whether the terms thereof were reasonably communicated to the user (see Schnabel v Trilegiant Corp., 697 F3d 110, 120 [2d Cir 2012]; Fteja v Facebook, Inc., 841 F Supp 2d 829, 833 [SDNY 2012]; Stonehill Capital Mgt. LLC v Bank of the W., 28 NY3d 439, 448 [2016]). A person is on inquiry notice if a "reasonably prudent offeree would be on notice of the terms at issue" (Schnabel, 697 F3d at 120). Such agreement need not be signed as long as there is other proof that the parties intended to be bound by documents containing arbitration obligations (see Highland HC v Scott, 113 AD3d 590, 594 [2014]).

The court finds that plaintiff affirmatively activated toggle buttons adjacent to clear and conspicuous blue hyperlinks in the Revel App's Sign-Up Flow, indicating assent therein and allowing him to proceed to the next screen and through the series of screens to completion. The affidavit of Asa Block (Block), Revel's Director of Product, states that it would have been impossible for plaintiff to complete the Sign-Up Flow and agree to Revel's contractual terms in order to gain access to mopeds through Revel without confirming his agreement to the Rental Agreement (cf. Applebaum v Lyft, Inc., 263 F Supp 3d 454, 466 [2017] [court found that a reasonably prudent consumer would not have been on inquiry notice of defendant's terms of service where the user could proceed without clicking on the hyperlink containing such terms]). There is also no evidence that plaintiff was acting under duress or otherwise fraudulently induced to enter the contract by downloading the Revel App and proceeding through the Sign-Up Flow (see AT & T Mobility LLC v Concepcion, 563 US 333, 339 [2011]). Despite plaintiff's contentions that the forum selection clause was difficult to read due to the small print and was not clearly and conspicuously identified, such print is small but legible, and the forum selection clause at issue is printed in the same size as the rest of the contract. Thus, as plaintiff was on inquiry notice of Revel's terms of use in the Rental Agreement, plaintiff was bound thereto by virtue of electronically clicking to accept the contract (see Meyer v Uber Techs., Inc., 868 F3d 66, 75 [2d Cir 2017]).

Likewise, the RC Defendants, who argue that they could not be bound to the Rental Agreement as non-parties thereto, fail to set forth any reasons that enforcement of the forum selection clause would be unreasonable, unjust, in contravention of public policy, or invalid due to fraud or overreaching. Moreover, the parties fail to demonstrate that a trial in New York County could be so gravely difficult that they would be deprived of their day in court (see Couvertier v Concourse Rehabilitation & Nursing, Inc., 117 AD3d 772, 773 [2014]). Thus, contrary to plaintiff and the RC Defendants' arguments, the forum selection clause in the Rental Agreement is binding on the parties to this litigation (see Casale, 131 AD3d at 437; Pratik Apparels, Ltd. v Shintex Apparel Group, Inc., 96 AD3d 922, 923 [2012]).

Turning to the arbitration clause in Section 17 of the Revel Agreement, Revel included in its answer to the complaint a demand for arbitration (18th affirmative defense). CPLR 7503(a) [*4]permits a "party aggrieved by the failure of another to arbitrate [to] apply for an order compelling arbitration. Where there is no substantial question whether a valid agreement was made or complied with, and the claim sought to be arbitrated is not barred by limitation under (CPLR 7503[b]), the court shall direct the parties to arbitrate." Likewise, CPLR 7503(b) allows "a party who has not participated in the arbitration and who has not made or been served with an application to compel arbitration [to] apply to stay arbitration on the ground that a valid agreement was not made or has not been complied with...."

Plaintiff argues that the arbitration clause cannot be enforced because it is prohibited under General Business Law (GBL) § 399-c, which provides that an arbitration clause shall be null and void in a contract of sale for customer goods, defined therein to include services. Revel, however, contends that the contract at issue involves interstate commerce and therefore triggers the Federal Arbitration Act (FAA) under 9 United States Code (USC) § 2 to preempt GBL § 399-c.

Section 2 of the FAA "embodies national policy favoring arbitration and plac[ing] arbitration agreements on equal footing with all other contracts" (Buckeye Check Cashing, Inc. v Cardegna, 546 US 440, 443 [2006]). This statute overrides inconsistent provisions of arbitration acts with respect to an arbitration agreement's enforceability, preempting state law in order to accomplish the full purposes and objectives of Congress (see generally Smith Barney, Harris Upham & Co. v Luckie, 85 NY2d 193, 204 [1995]; J.J.'s Mae, Inc. v Wrshow & Sons, Inc., 27 AD2d 128, 128 [2000]). The FAA thus preempts state law on the subject of enforceability of arbitration clauses covered thereby, even though the dispute itself may arise under New York law (Fletcher v Kidder, Peabody & Co, Inc., 81 NY2d 623, 630 [1993]; Hayes v County Bank, 26 AD3d 465, 466 [2006]). When parties agree to arbitrate all questions arising under a contract, the FAA supersedes state laws lodging primary jurisdiction in another forum, whether judicial or administrative (see Preston v Ferrer, 552 US 346, 359 [2008]).

The FAA provides, in pertinent part, "A written provision in any contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction ... shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." To determine whether the FAA applies, the contract must first be found to involve or "affect" interstate commerce (see Matter of Diamond Waterproofing Sys., Inc. v 55 Liberty Owners Corp., 4 NY3d 247, 252 [2005] [FAA applies where contract containing arbitration provision "affects" interstate commerce, rather than using "substantial nexus" test]). Historically, a low threshold must be met to trigger application of the FAA and invoke Congress' interstate commerce power (see Wickard v Filburn, 317 US 111, 125 [1942] ["even if [the activity at issue is] local ... it may still, whatever its nature, be reached by Congress if it exerts a substantial economic effect on interstate commerce"]). Additionally, arbitration agreements may be declared unenforceable for defenses such as duress, fraud, or incapacity (see AT & T Mobility LLC, 563 US at 339).

The parties dispute whether the transaction herein involves interstate commerce. Plaintiff contends that the Rental Agreement does not affect interstate commerce because the leased mopeds are restricted from traveling to "prohibited areas," including bridges and tunnels connecting Queens/Brooklyn to Manhattan, in order to travel outside the state. On the other hand, Revel argues that plaintiff's moped transaction affects interstate commerce because Revel App users can access mopeds in multiple cities, and Revel provides cellular, GPS maps and tracking across the country through the Revel App to facilitate navigation, provide customer [*5]support, and track its mopeds. Moreover, as stated in the Block affidavit, the mopeds are manufactured in China, then distributed in the U.S. by an Illinois company and leased to Revel from two Minnesota companies.

The court finds that Revel's reliance on partners and suppliers outside the state is sufficient to demonstrate the interstate commerce involved when a customer rents a moped through the Revel App (see Matter of Diamond Waterproofing Sys., Inc. v 55 Liberty Owners Corp., 4 NY3d 247, 252 [2005] [interstate commerce found where numerous out-of-state entities involved in transaction for construction project]; Highland, 113 AD3d at 593 [interstate commerce found where property location, architectural and engineering plans, developers, services and materials for renovation project were from different states]; cf. Smith v Nobiletti Bldrs., Inc., 177 AD3d 807 [2019] [not interstate commerce where all named defendants were local commercial entities who lacked multi-state or national presence and scale and scope of work performed was not of such magnitude as would affect interstate commerce]). Moreover, plaintiff's contention that the Rental Agreement prohibits interstate commerce by restricting moped travel to within the "Home Zone" does not remove this case from the ambit of interstate commerce, as the Rental Agreement does not physically restrict movement of its rented mopeds, although transgressors may be assessed fees for crossing through or into prohibited areas.

This matter involving interstate commerce thus triggers application of the FAA. Moreover, as discussed above, nothing in the record renders the arbitration clause unenforceable by suggesting that plaintiff was compelled to enter the Rental Agreement through duress, fraud, incapacity, or anything other than his own volition (see AT & T Mobility LLC, 563 US at 339). Likewise, insofar as plaintiff argues that he did not agree to arbitration when he leased a moped, as discussed above defendants have established that the Revel App's Sign-Up Flow necessitated affirmatively toggling buttons to indicate assent and that plaintiff proceeded through to completion and acceptance of the contract (see Meyer, 868 F3d at 75). As the caselaw is clear that conflicting state legislation attempting to carve out exceptions to arbitration has been unsuccessful (see Caponera v Atlantic Bldg. Inspection Serv., 66 Misc 3d 748, 752-753 [Cohoes City Court 2020] [citing various Supreme Court cases, FAA requiring enforcement of arbitration provisions in contracts preempts GBL § 399-c prohibiting arbitration clauses in contracts for sale of consumer goods]), the FAA preempts GBL § 399-c with respect to the subject Rental Agreement.

Finally, with respect to the RC Defendants' cross motion, they fail to demonstrate that there was not a valid argument to arbitrate or that the claim sought to be arbitrated is time barred under CPLR 7503(b). Although the RC Defendants urge the court to stay the arbitration for considerations of judicial economy and consistent adjudication, such result may be achieved by staying the instant action as against the RC Defendants pending the arbitration of plaintiff's claims against Revel (see generally Weiss v Nath, 97 AD3d 661 [2012]; Anderson St. Realty Corp. v New Rochelle Revitalization, LLC, 78 AD3d 972 [2010]).

Thus, plaintiff's action with respect to Revel shall proceed to arbitration. The action as against the RC Defendants shall be stayed pending the arbitration of the claims between plaintiff and Revel, until further order of this court.

The court has considered the parties' remaining contentions and finds them unavailing.

Insofar as the motion for change of venue from Queens County to New York County is granted, the Clerk of Queens County shall deliver forthwith to the Clerk of New York County all papers filed in this action and certified copies of all minutes and entries, which shall be filed, entered or [*6]recorded in the office of the Clerk of New York County. Revel is directed to serve a copy of this order with notice of entry on the Clerks of both Queens and New York Counties.

Accordingly, Revel's motion to change venue and its cross motion to compel arbitration are granted. The respective motion and cross motion by plaintiff and the RC Defendants motion to stay the arbitration and dismiss Revel's 18th affirmative defense (the demand for arbitration) are both denied.

DATED: November 10, 2021

ROBERT I. CALORAS, J.S.C.