Plateis v. Flax

• Decision Date: 28 October 1976
• Citation: 388 N.Y.S.2d 245,54 A.D.2d 813
• Parties: Marvin J. PLATEIS, Appellant, v. John J. FLAX et al., Respondents.
• Court: New York Supreme Court — Appellate Division

Page 245

388 N.Y.S.2d 245

54 A.D.2d 813

Marvin J. PLATEIS, Appellant, v. John J. FLAX et al., Respondents.

Supreme Court, Appellate Division, Third Department.

Oct. 28, 1976.

Jerome D. Brownstein, Albany, for appellant.

Pattison, Herzog, Sampson & Nichols, Albany (Grace S. Aboud, Albany, of counsel) for respondents.

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

MEMORANDUM DECISION.

Appeal from an order of the Supreme Court at Special Term, entered March 10, 1976 in Albany County, which denied plaintiff's motion for an order appointing a temporary receiver and, further, directed the parties to proceed to arbitration pursuant to their partnership agreement.

The plaintiff and defendants were practicing together as accountants under the terms of a partnership agreement which provided, Inter alia, that any dispute over its meaning or performance shall be arbitrated. On October 3, 1975 Marvin Plateis, plaintiff, commenced this action to dissolve the partnership. Before answering, the defendants made a stipulation with plaintiff on October 20 intended to permit an amicable settlement. On November 10 defendants served their answer, although at that time both they and plaintiff apparently still intended to settle the dispute without litigation. The answer, in addition to certain denials, asserted that defendants had 'not waived their right to arbitration.'

By the end of December plaintiff decided that defendants were misappropriating firm funds and thereby not honoring the stipulation. He sought, by order to show cause dated December 31, 1975, an order appointing him temporary receiver of the partnership assets. No formal notice of cross motion was made by defendants. However, the affidavit of defendants' counsel submitted in opposition at the oral argument requests that 'plaintiff be directed to proceed to arbitration pursuant to the partnership agreement.'

On appeal plaintiff argues that Special Term improperly ordered arbitration because: (1) defendants waived their right to arbitration by entering into the October 20 stipulation; (2) in any event, the failure to formally cross-move precluded the trial court from granting affirmative relief to defendants.

A defendant's unreasonable delay in asserting the right to arbitration may amount to his waiver of that right (8 Weinstein-Korn-Miller, N.Y.Civ.Prac., par. 7503.16). A waiver may also be found where

(T)he defendant's participation in the lawsuit manifests an affirmative acceptance of the judicial forum, with whatever advantages it may offer in the particular case * * *. Thus, entering a stipulation to extend the time to answer is a purely defensive action and is not inconsistent with a later attempt to force arbitration.

(Matter of Haupt v. Rose, 265 N.Y. 108, 191 N.E. 853.) In contrast, contesting the merits * * * is an affirmative acceptance of the judicial forum and waives any right to a later stay of the action. (Gold Plastering Co. v. 200 East End Ave. Corp., 282 App.Div. 1073, 126 N.Y.S.2d 838, affd. 307 N.Y. 668, 120 N.E.2d 846 * * *). (De Sapio v. Kohlmeyer, 35 N.Y.2d 402, 405, 362 N.Y.S.2d 843, 846, 321 N.E.2d 770, 772.)

The stipulation entered into by defendants in this case was designed to quickly resolve the dispute without resort to either trial or arbitration. It certainly was not the...