Avon Products, Inc. v. Solow

• Decision Date: 18 May 1989
• Citation: 541 N.Y.S.2d 406,150 A.D.2d 236
• Parties: AVON PRODUCTS, INC., Plaintiff-Appellant, v. Sheldon H. SOLOW, Defendant-Respondent.
• Court: New York Supreme Court — Appellate Division

Page 406

541 N.Y.S.2d 406

150 A.D.2d 236

AVON PRODUCTS, INC., Plaintiff-Appellant, v. Sheldon H. SOLOW, Defendant-Respondent.

Supreme Court, Appellate Division,

First Department.

May 18, 1989.

P.C. Hein, New York City, for plaintiff-appellant.

J.L. Warden, New York City, for defendant-respondent.

Before KUPFERMAN, J.P., and CARRO, ASCH, SMITH and RUBIN, JJ.

MEMORANDUM DECISION.

Order of the Supreme Court, New York County (Edward Greenfield, J.), entered on or about December 14, 1988, which granted defendant's motion to stay arbitration and permanently stayed arbitration of a dispute concerning a lease escalation clause as applied to the year 1980 in an arbitration hearing concerning application of the lease clause as it applies to the year 1981, unanimously reversed, with costs, on the law, and the motion denied.

The parties are embroiled in a longstanding dispute regarding the amount of the annual increase in rent to be paid by plaintiff Avon Products, Inc. to defendant Sheldon H. Solow pursuant to an escalation clause of the lease between the parties. The amount payable is tied to the wage rates of certain custodial personnel employed by defendant at the subject premises. The lease contains a wage rate arbitration clause which this court has held to require arbitration of any dispute under the escalation provision (Avon Products v. Solow, 79 A.D.2d 53, 435 N.Y.S.2d 728, affd. 54 N.Y.2d 637, 442 N.Y.S.2d 506, 425 N.E.2d 894 [1981]. In that opinion, which concerned the dispute over the 1981 rent increase, we stated that "... there was no question that arbitration was the sole forum in which to seek redress"(79 A.D.2d 53, 57, 435 N.Y.S.2d 728). The Court of Appeals agreed stating, "The arbitration clause at issue is broad enough to embrace all disputes concerning the correctness of the rental increase notice given by defendant to plaintiff" (54 N.Y.2d 637, 639, 442 N.Y.S.2d 506, 425 N.E.2d 894).

In the intervening years, the parties have disputed each and every rent increase sought by defendant, and the record reflects that arbitration proceedings with respect to all years from 1980 through and including 1988 are now pending. Avon previously moved for consolidation of those proceedings which the IAS court denied in the exercise of its discretion (order dated July 10, 1987). Avon applied for leave to renew its motion. Upon renewal, while adhering to its original decision, the IAS court noted that two different impartial arbitrators had been appointed to hear the various disputes and stated, "In denying consolidation, the court expected that the arbitrations would be held sequentially; it did not contemplate the possibility that different arbitrators would be appointed causing unnecessary duplication of evidence as to some issues" (order dated January 12, 1988). The IAS court nevertheless concluded, albeit reluctantly, that its power to intervene in arbitration proceedings was limited (citing Board of Educ. v. Auburn Teachers Assn., 115 A.D.2d 296, 496 N.Y.S.2d 132) and did not include the authority to interfere with an appointment of arbitrators made by the American Arbitration Association. This court affirmed, without opinion (Avon Prods. v. Solow, 143 A.D.2d 1073, 533 N.Y.S.2d 167).

Subsequent to the IAS court's decision, however, the parties, in an agreement dated February 5, 1988, stipulated that arbitration of the disputes would not proceed in sequence, but rather that the 1981 dispute would be heard first. The demand for arbitration of this dispute seeks a declaration to the effect that "Solow shall not for 1981 or any future period use any method different from that used in making calculations under the Escalation Formula in the notice first submitted to Avon for the year 1972" (the initial year of the lease term). In March, 1988, Avon applied to the arbitrators for permission to amend its demand for arbitration, pursuant to Rule 8 of the Rules of the American Arbitration Association, to subject the 1980 wage escalation calculation to any declaration the arbitrators might make with respect to the method of calculation to be applied to the 1981 dispute. The arbitrators granted the requested relief, whereupon Solow moved before the IAS court to stay the arbitration as to any aspect of the 1980 rent increase under the wage escalation provision. The court granted the motion and the instant appeal ensued.

As the Court of Appeals observed,

It is always useful to bear in mind that the announced policy of this State favors and encourages arbitration as a means of conserving the time and resources of the courts and the contracting parties. "One way to encourage the use of the arbitration forum" we recently noted "would be to prevent parties to such agreements from using the courts as a vehicle to protract litigation. This conduct has the effect of frustrating both the initial intent of the parties as well as legislative policy" (Matter of Weinrott [Carp], 32 N.Y.2d 190, 199, 344 N.Y.S.2d 848, 298 N.E.2d 42). To this end the Legislature has assigned the courts a minimal role in supervising arbitration practice and procedures (Matter of Nationwide Gen. Ins. Co. v. Investors Ins. Co. of Am., 37 N.Y.2d 91, 95, 371 N.Y.S.2d 463, 332 N.E.2d 333).

This policy, as reflected in CPLR Article 75, is designed to prevent the kind of abuse of the arbitral process so amply demonstrated by the case before us. It precludes the parties to an arbitration agreement from simultaneously pursuing their claims before the courts and thus playing one forum off against the other.

This lawsuit has been ongoing since at least 1980. The matter has been before this court on two prior occasions (Avon Prods. v. Solow, 79 A.D.2d 53, 435 N.Y.S.2d 728 and Avon Prods. v. Solow, 143 A.D.2d 1073, 533 N.Y.S.2d 167). Upon the latter appeal, the record totalled 3,344 pages, comprising seven volumes. On the present appeal, the record is a mere 1,715 pages, comprising only three volumes. At this time, a second appeal is pending before this court involving the 1986 and 1987 rent increases under the lease escalation clause (number 1418N on the calendar of April 12, 1989). It can hardly be said that arbitration of this dispute has had the effect of "conserving the time and resources of the courts" (Matter of Nationwide Gen. Ins. Co. v. Investors Ins. Co. of Am., supra, 37 N.Y.2d 91, 95, 371 N.Y.S.2d 463, 332 N.E.2d 333).

Upon an application to stay arbitration, the court may concern itself with only three threshold issues: whether a valid arbitration agreement has been made by the parties, whether the agreement has been complied with and, if so, whether the claim sought to be arbitrated is time-barred (CPLR 7503(b); Matter of County of Rockland v. Primiano Constr. Co., 51 N.Y.2d 1, 431...