ITT Avis, Inc. v. Tuttle

• Decision Date: 28 May 1970
• Citation: 261 N.E.2d 395,27 N.Y.2d 571,313 N.Y.S.2d 394
• Parties: , 261 N.E.2d 395 In the Matter of ITT AVIS, INC., Respondent, v. Robert N. TUTTLE, Appellant.
• Court: New York Court of Appeals Court of Appeals

Page 394

313 N.Y.S.2d 394

27 N.Y.2d 571, 261 N.E.2d 395

In the Matter of ITT AVIS, INC., Respondent, v. Robert N. TUTTLE, Appellant.

Court of Appeals of New York.

May 28, 1970.

Andrew M. Calamari and Richard deY. Manning, New York City, for appellant.

John M. Armentano, Mineola, for respondent.

MEMORANDUM.

The arbitration clause contained in the employment contract provided: 'Any controversy concerning A question of fact arising under this agreement shall be determined by arbitration in accordance with the rules then in effect of the AMERICAN ARBITRATION ASSOCIATION.' (Emphasis added.)

While it is true that the employment contract makes mention of the stock option plan, there is absolutely no indication in the employment agreement that the parties ever contemplated arbitrating the disputes which might arise under the separate stock option agreement. Accordingly, in the absence of an arbitration clause in the option agreement itself, or some clear statement incorporating the arbitration clause contained in the employment contract, it is simply impossible to read these separate agreements as one to find the requisite intention to arbitrate the dispute which has arisen under the option agreement (Matter of Lehman v. Ostrovsky, 264 N.Y. 130, 190 N.E. 208). To hold otherwise, would, in our opinion, lead the parties into arbitration 'unwittingly through subtlety' (Matter of Riverdale Fabrics Corp. (Tillinghast-Stiles Co.), 306 N.Y. 288, 291, 118 N.E.2d 104, 106).

Accordingly, the order appealed from should be affirmed.

BREITEL and JASEN, Judges (concurring).

We concur on the sole ground that the issues tendered by the demand for arbitration do not involve questions of fact, the only matters made subject to arbitration by the agreement. Instead, they involve only the obligations or rights of the parties under conceded or undisputed facts. In short, the resolution of the issues depends on the interpretation of the agreement, and thus are issues not covered by the unusual and severely limited arbitration clause. Consequently, appellant should be remitted to his remedies at law which are plenary.

BURKE, Judge (dissenting).

The appellant entered into a contract with the petitioner under which he was to be employed for a term of two years, unless the contract were terminated sooner according to its terms. The employment contract was executed by the parties on June 3, 1965 and, under the heading 'COMPENSATION,' provided as follows:

'(a) Salary at the rate of Twenty Five Thousand Dollars ($25,000) per year, payable monthly, for the period, subject to such increases as may from time to time be mutually agreed upon.

'(b) Such awards, if any, under the Bonus Plan or Plans of ITT as may from time to time be determined by the Bonus and Stock Option Committee of ITT.

'(c) Such awards, if any, under the ITT-Avis Stock Purchase Plan as may from time to time be determined by the committee of the Board of Directors of SUBSIDIARY administering such Plan of Subsidiary.'

The contract further provided that it was to terminate at the end of the period set forth in it but that, if the employment of the appellant were continued after the end of such period without further written agreement, the services were not be be for any fixed period; such services would continue on a month-to-month basis at the rate of compensation then in effect until terminated by either party on one month's notice to the other party. The contract contained the following provision relating to disputes: '7. ARBITRATION--Any controversy concerning a question of fact arising under this agreement shall be determined by arbitration in accordance with the rules then in effect of the AMERICAN ARBITRATION ASSOCIATION.' On the same day, appellant and ITT, the parent of petitioner ITT-Avis, executed a form 'OPTION AGREEMENT' under which the appellant became entitled 'as a matter of separate inducement and agreement in connection with his employment and not in lieu of salary or other compensation for his services', to purchase at a specified price 1,500 units of ITT stock. The agreement set forth a schedule for the exercise of the option: 600 units at any time; 300 units at any time on or after October 4, 1965; 300 units at any time on or after October 4, 1966; and 300 units at any time on or after October 4, 1967 (in each case not later than the expiration date of the option, October 3, 1972). In addition, this option agreement provided that '(e)xcept as provided in paragraph 4 hereof, this option may not be exercised at any time unless Employee is then a regular employee of ITT or a subsidiary of ITT.' Paragraph 4, in turn, provided that '(i)f Employee's employment with ITT or a subsidiary of ITT is terminated by ITT or such subsidiary, or is terminated by Employee with the written approval of ITT or such subsidiary, this option may be exercised within three months after such termination of employment, but in no event later than the expiration date provided in Section 2 hereof.' On June 23, 1967, petitioner's president sent a written notice to the appellant that his employment was being terminated as of September 30, 1967.

After the termination of his employment with the petitioner, appellant served a demand for arbitration of his claims for the moving expenses allegedly due him, for specific performance of the last 300 units of ITT stock remaining under the terms of the option agreement and for the bonus he asserted was due him for the last year of his employment by petitioner. Petitioner moved at Special Term to stay the arbitration upon the ground that none of the items sought to be arbitrated constituted 'questions of fact arising under the (employment) agreement'. Petition...