City of Elmira v. Larry Walter, Inc.

• Decision Date: 01 December 1977
• Citation: 400 N.Y.S.2d 204,60 A.D.2d 669
• Parties: In the Matter of the arbitration between CITY OF ELMIRA, Appellant-Respondent, and LARRY WALTER, INC., Respondent-Appellant.
• Court: New York Supreme Court — Appellate Division

Page 204

400 N.Y.S.2d 204

60 A.D.2d 669

In the Matter of the arbitration between CITY OF ELMIRA Appellant-Respondent and LARRY WALTER, INC., Respondent-Appellant.

Supreme Court, Appellate Division, Third Department.

Dec. 1, 1977.

Smith, Sovik, Kendrick, McAuliffe & Schwarzen, Syracuse (James A. O'Shea, Syracuse, of counsel), for appellant-respondent.

Michael J. Walter, Houston, Tex., for respondent-appellant.

Before GREENBLOTT, J. P., and SWEENEY, KANE, MAHONEY and LARKIN, JJ.

MEMORANDUM DECISION.

Appeals from an order of the Supreme Court at Special Term, entered April 22, 1977 in Chemung County, which denied petitioner's motion to stay arbitration as to the issue of nonpayment, but granted the motions as to the other issues contained in respondent's Demand for Arbitration.

On October 8, 1975 the parties entered into a contract for the construction of a parking garage. Interim payments were to be made to the contractor based on the percentage of work completed. The contractor was required to submit monthly applications for each partial payment to the engineering firm supervising construction. The first four applications were paid in full. Petitioner, City of Elmira, however, made only a partial payment on the fifth application and refused any payment on the remaining three applications, claiming that there had been an overpayment. Subsequent to the partial payment of the fifth application there followed various correspondence concerning nonpayment. Following several communications, a "Demand for Arbitration" was ultimately submitted on July 21, 1976 demanding the arbitration of six items including nonpayment to the general contractor. Petitioner sought an order staying arbitration. A hearing was held and the court at Special Term thereafter denied the motion for a stay of arbitration with respect to the item of nonpayment and granted the motion as to the remaining five items. Both parties have appealed.

Petitioner initially maintains that the arbitration clause is invalid in that it rests the option to arbitrate unilaterally in one party. Although section 134 of the contract provides that any controversy relating to the contract shall, at the option of the owner, be settled by arbitration, that section further provides that should the owner fail to render a final decision in the claim within the prescribed time or fail to exercise its option, the claim will be determined by arbitration. This provision mandating arbitration in the event that...