In re Pinkesz
| Decision Date | 19 August 2014 |
| Docket Number | No. 14531/13.,14531/13. |
| Citation | 997 N.Y.S.2d 669 (Table) |
| Parties | In the Matter of the Arbitration between Edward PINKESZ A/k/a Chaim Yosef Pinkesz, Petitioner and Joel WERTZBERGER, Respondent. |
| Court | New York Supreme Court |
Victor Worms, Attorney for Petitioner.
Herrick, Feinstein, Attorney for Respondent.
Edward Pinkesz a/k/a Chaim Yosef Pinkesz (petitioner) seeks to confirm a Beth Din1 decision dated July 22, 2013. Joel Wertzberger (respondent) cross-moves to vacate that decision.
(1)
The parties herein were engaged in business surrounding life settlement transactions, in which a person or entity purchases and maintains an existing life insurance policy as an investment, paying the original holder a lump sum. In early 2011, Wertzberger and Anthony Pinkesz, petitioner's brother, jointly purchased life insurance policies, each with a face value of $5 million, covering Jacob Pinkesz (the Jacob Policy) and Julius Pinkesz (the Julius Policy) from a Philadelphia synagogue. Non-parties Chaim Hager (Hager) and Hershey Deutch also apparently acted as investors in purchasing at least the Jacob Policy.
Pinkesz organized the joint purchase of the policies by Anthony Pinkesz and Wertzberger, who had initially been bidding against each other. In return for this organization, Wertzberger agreed to pay Pinkesz a brokerage fee, the amount of which partially underlies the instant dispute, but which generally took the form of a $750,000 loan and a payment of $325,000 upon the Jacob Policy's maturation, to be reduced by $100,000 per year if maturation did not occur within three years. A loan agreement provided that, if Wertzberger failed to timely deliver the loan money, the payment at maturation would be $750,000, reduced by $100,000 yearly after three years.
A dispute developed between Pinkesz and Wertzberger, which they agreed to resolve before the Rabbinical Court Orech Mishor of Boro Park (the Beth Din). An arbitration agreement, dated April 12, 2011, (the Arbitration Agreement) named Rabbi Israel M. Kenig (Rabbi Kenig) as the sole arbitrator and stated that it applied to It stated that the presiding rabbis could “issue interim rulings” and provided that proceedings could occur before only one party if the other party evaded appearing.
The Beth Din issued a ruling, dated May 5, 2011, (the 2011 Decision) which stated, “With regards to the matter of controversies between Mr. Chaim Joseph Pinkes (the plaintiff), and between Mr. Joel Wertzberger (the defendant); the parties accepted our opinion through an Agav Suder binding procedure by signing an Arbitration Agreement; we hereby issue the following. Rabbi Kenig signed the 2011 Ruling as the Beth Din's chief.
In June 2011, Anthony Pinkesz sold his interest in the Jacob Policy to Wertzberger for $1.5 million. Wertzberger then transferred the policy to an entity called Pinkesz Mutual Holdings LLC, the members of which were Shirley Elfie Life Trust, with a 50% share, Hager, with a 25% share, and Better Bottles, LLC, with a 25% share2 . Wertzberger notes that he is a member of Better Bottles, LLC. Jacob Pinkesz died during the summer of 2012.
Rabbi Kenig called Wertzberger back to the Beth Din in July 2013. The parties met before Rabbi Kenig on July 10, 2013, but both the circumstances and substance of this meeting are disputed as discussed in detail below. Rabbi Kenig issued another ruling, dated July 22, 2013, (the 2013 Decision) which stated, “Subsequent to a second rabbinical court hearing on July 10, 2013 and we received new information in the matter, it came to us that Mr. Joel Wertzberger (the respondent) must pay Mr. Chaim Yosef Pinkesz (the plaintiff) the amount of three million seven hundred and fifty thousand dollars $3,750,000.00 immediately and without delay.”
(2)
Pinkesz commenced the instant proceeding by filing a petition to confirm the 2013 Decision on August 20, 2013. Pinkesz notes that, after “new evidence became available” following the 2011 Decision, he requested a second hearing, which resulted in the 2013 Decision. He recounts that the Beth Din served a copy of the 2013 Decision on Wertzberger by certified mail. Pinkesz also included copies of the Arbitration Agreement, the 2011 Decision, the 2013 Decision and certified translations of each.
(3)
Wertzberger now cross-moves for an order, pursuant to CPLR 7511, vacating the 2013 Decision. He first argues that Rabbi Kenig exceeded the scope of his arbitral powers in issuing the 2013 Decision, as his authority as an arbitrator concluded with the issuance of 2011 Decision. The doctrine of functus officio, respondent contends, bars reopening a concluded dispute or modifying a final arbitration decision except in specific circumstances where CPLR 7509 permits modification. Wertzberger asserts that a decision may be considered final despite terms of an arbitration agreement that permit subsequent amendment or addition. Rabbi Kenig further exceeded the Arbitration Agreement's scope, Wertzberger argues, as the 2013 Decision purports to award Pinkesz monies that belong to Pinkesz Mutual Holdings LLC3 , which was not party to the arbitration.
Wertzberger argues that he suffered prejudice from various violations of arbitral procedure required by CPLR article 75. He alleges that Rabbi Kenig had represented that the July 2013 hearing would concern Wertzberger's purported failure to comply with the 2011 Decision, but then addressed, instead, questions as to whether Pinkesz was, in fact, a partner in interest in the Jacob Policy. Rabbi Kenig, Wertzberger claims, then refused to grant an adjournment to allow Wertzberger to produce evidence or witnesses pertinent to this issue, of which Wertzberger asserts he had no prior notification, whereas Anthony Pinkesz was present to testify on Pinkesz's behalf. Wertzberger alleges that Rabbi Kenig refused to permit Wertzberger to submit evidence concerning the partnership issue until Wertzberger had placed $425,000 in escrow to potentially satisfy the 2011 Decision. Rabbi Kenig, Wertzberger contends, also refused his request to be represented at the hearing by a to‘an, or religious representative, who was also a licensed attorney.
Wertzberger also contends that he did not receive proper notice of the 2013 hearing, getting only a letter, by regular mail, four days before the hearing date. Neither that letter, nor text messages Wertzberger exchanged with Rabbi Kenig, Wertzberger claims, explained the reason for this second hearing and represented only that it concerned compliance with the 2011 Decision. He also argues that resolution by a Beth Din requires the decision of three rabbis, whereas both hearings were before only Rabbi Kenig and he alone issued the 2013 Decision.
Wertzberger characterizes the 2013 Decision as irrational, as the profit realized from the Jacob Policy totaled only $2.2 million, and, thus, even were Pinkesz a partner in that policy (which Wertzberger adamantly denies), he could never be entitled to $3.75 million. Finally, Wertzberger argues that the 2013 Decision requires vacatur because Rabbi Kenig demonstrated bias against Wertzberger and engaged in ex parte communications with Pinkesz. Wertzberger contends that he did not know, until after the 2013 Decision's issuance, that Pinkesz's father is president of the synagogue where Rabbi Kenig officiates and that Rabbi Kenig and Pinkesz had a prior relationship. Wertzberger further claims that Rabbi Kenig told other community members that Wertzberger is a thief and an atheist, who deserves to fail.
Wertzberger supports his cross motion and opposition to the petition with the affidavit of Abraham Leifer (Leifer). Leifer states that, during the summer of 2013, he had a conversation with Rabbi Kenig in which the rabbi said “(a) Joel [respondent] steals money from people;' and (b) You know that Joel is an atheist who doesn't believe in G-d and it would be a mitzvah (a word meaning something similar to “good deed”) to bury him.' “ Leifer recounts that he had another interaction with Rabbi Kenig, around Labor Day 2013, during which he said, “(a) Joel Wertzberger is an atheist and we have to show him and show the world that he should get what is coming to him;' and (b) It's a mitzvah (a word meaning a word meaning [sic] something similar to “good deed”) to not let him [Joel Wertzberger] succeed' “ (second alteration in original; second opening internal quotation mark omitted in original). Leifer states that he had other conversations with Rabbi Kenig in which the rabbi made similar statements.
Wertzberger also supports his cross motion and opposition with the affidavit of Moshe Follman (Follman), who states that he was walking down the street in May 2013 and overheard a discussion in which a man said “Joel Wertzberger is doing evil things to the people in the community by buying the mortgages' and it would be a mitzva...
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