Schenkers Intern. Forwarders, Inc. v. Meyer

• Decision Date: 08 January 1991
• Citation: 164 A.D.2d 541,564 N.Y.S.2d 323
• Parties: SCHENKERS INTERNATIONAL FORWARDERS, INC., Petitioner-Respondent, v. Gerhard MEYER, Respondent-Appellant.
• Court: New York Supreme Court — Appellate Division

Page 323

564 N.Y.S.2d 323

164 A.D.2d 541

SCHENKERS INTERNATIONAL FORWARDERS, INC., Petitioner-Respondent, v. Gerhard MEYER, Respondent-Appellant.

Supreme Court, Appellate Division First Department.

Jan. 8, 1991.

Victoria A. Cundiff, of counsel (Meredith H. Savitt with her on the brief; Milgrim Thomajan & Lee, P.C., attorneys), New York City, for petitioner-respondent.

David J. Rowland, of counsel (Rowland & Associates, attorneys), New York City, for respondent-appellant.

Before MURPHY, P.J., and ROSS, ELLERIN and RUBIN, JJ.

RUBIN, Justice.

Respondent sought to compel arbitration (CPLR 7503[a] with respect to the propriety of petitioner's termination of his employment pursuant to a contract containing a broad arbitration provision. Petitioner sought to stay arbitration (CPLR 7503[b], contending that the contract had expired according to its terms. The contract, which specifies an initial five-year period of employment terminating December 31, 1984, provides: "this Agreement shall automatically be renewed for an additional three (3) years unless terminated * * * upon written notice * * * which must be delivered six months prior to the respective date of renewal." It is uncontroverted that no notice of termination was given and that the agreement was automatically extended until December 31, 1987. Respondent takes the position that the employment contract was automatically renewed for yet another three-year period based upon petitioner's failure to give timely notice of termination prior to the December 31, 1987 expiration date. Petitioner, however, contends that the contract provides only for a single automatic renewal and expired according to its terms on that date. Therefore, no notice was required to be given to effect the termination of the employment contract.

Upon this appeal, the parties raise the issue of whether the question of termination is to be decided by the court or by the arbitrator. Petitioner contends that it may not be compelled to proceed to arbitration because the contract containing the arbitration provision has expired. The general rule is that a party may not be "forced into arbitration and, thus, denied the procedural and substantive rights otherwise available in a judicial forum, absent evidence of an express intention to be so bound" (Schubtex, Inc. v. Allen Snyder, Inc., 49 N.Y.2d 1, 6, 424 N.Y.S.2d 133, 399 N.E.2d 1154; Matter of Marlene Inds. Corp. [Carnac Textiles], 45 N.Y.2d 327, 333-334, 408 N.Y.S.2d 410, 380 N.E.2d 239). Respondent, on the other hand, maintains that expiration of the contract is precisely the question at issue and that it must be submitted to arbitration. As this court stated the rule, "whether the contract containing the arbitration clause had been terminated, is an issue to be determined in arbitration" (Matter of Popular Publ. [McCall Corp.], 36 A.D.2d 927, 928, 321 N.Y.S.2d 308, lv. den., 29 N.Y.2d 483, 324 N.Y.S.2d 1028, 273 N.E.2d 576). In deciding the applications before it in favor of petitioner, Supreme Court relied on Matter of Waldron (Goddess), 61 N.Y.2d 181, 185, 473 N.Y.S.2d 136, 461 N.E.2d 273, in which the Court of Appeals held that an arbitration provision in an expired employment contract was ineffectual even though the employee seeking to compel arbitration continued to work for the employer.

The various propositions which have been advanced in this case are all quite valid, and resolution of this appeal turns upon which proposition is applicable to the circumstances reflected in the record. Upon a motion pursuant to CPLR 7503, the court must first make a determination whether the parties have entered into a valid arbitration agreement (O'Brien v. Bache Halsey Stuart Shields, 80 A.D.2d 846, 444 N.Y.S.2d 469) and, if so, whether the issue sought to be submitted to arbitration falls within the scope of that agreement (Matter of County of Rockland [Primiano Constr. Co.], 51 N.Y.2d 1, 7, 431 N.Y.S.2d 478, 409 N.E.2d 951). Where the intention to arbitrate a particular matter is equivocal, a party may not be compelled to proceed to arbitration (Thomas Crimmins Contr. Co. v. City of New York, 74 N.Y.2d 166, 171, 544 N.Y.S.2d 580, 542 N.E.2d 1097; Matter of Robert Stigwood Org. [Atlantic Rec. Corp.], 83 A.D.2d 123, 126-127, 443 N.Y.S.2d 726).

In the matter under review, it is clear that the parties entered into a valid arbitration agreement. It is equally clear that, if the employment agreement remains in effect, the dispute between the parties is encompassed within the contract's broad arbitration clause which extends to "[a]ny controversy or claim arising out of or relating to this Agreement" (Matter of Nationwide Gen. Ins. Co. v. Investors Ins. Co. of Am., 37 N.Y.2d 91, 95-96, 371 N.Y.S.2d 463, 332 N.E.2d 333). Supreme Court determined, however, that the contract does not remain in effect and, pursuant to Matter of Waldron (Goddess) (supra), that the expired employment agreement imposes no obligation upon petitioner to arbitrate the dispute.

The operative criterion in deciding a case of this type is the existence of a valid issue with respect to termination of the underlying agreement. In Waldron (supra), termination of the employment agreement was not at issue. In a case which stands in stark contrast to Waldron, however, the Court of Appeals held that, even where an agreement containing an arbitration provision had terminated by operation of law, arbitration was nevertheless to be compelled because the parties treated the agreement as though it were still in effect (Matter of...