Summary
holding appellant was compelled to arbitrate with a nonsignatory when issues in overall dispute were inextricably interwoven with claims against nonsignatory, and nonsignatory was closely related to signatories and was alleged to have engaged in the same improper conduct
Summary of this case from Zabinski v. Bright Acres AssociatesOpinion
February 8, 1996
Appeal from the Supreme Court, New York County (Robert Lippmann, J.).
The IAS Court, in compelling arbitration and staying the California action, properly determined that petitioners PromoFone, Inc., MovieFone, Inc. and Teleticketing Co., L.P. had neither abandoned nor intentionally waived their right to proceed to arbitration in New York by their commencement of a plenary Federal action against Ticketmaster. Although arbitration is a contractual right which can be waived by the commencement of a plenary action ( Matter of United Paper Mach. Corp. [Di Carlo], 19 A.D.2d 143, affd 14 N.Y.2d 814), nevertheless, litigation of separate and distinct claims, even if involving overlapping factual issues arising from a common agreement, as here, does not constitute waiver of these petitioners' right to arbitrate ( Denihan v. Denihan, 34 N.Y.2d 307, 310; Sprout-Bauer, Inc. v. Koppers Co., 159 A.D.2d 299, lv dismissed 76 N.Y.2d 772).
We agree with the IAS Court that the motion to compel arbitration was brought in the proper forum and that CPLR 7503 (a) did not require dismissal of the New York special proceeding seeking to stay the California action and to compel arbitration in this State. The New York court had jurisdiction to enjoin appellant PCC from pursuing the out-of-State litigation in contravention of the agreement to arbitrate all disputes in New York and the strong public policy of this State favoring arbitration ( Hamilton Co. v. American Home Assur. Co., 21 A.D.2d 500, 502, affd 15 N.Y.2d 595).
The IAS Court also properly enjoined the California litigation pending outcome of the New York arbitration and compelled appellant PCC to arbitrate in New York with petitioner Falconwood, a non-signatory to the arbitration agreement, since the record reveals that the issues in the overall dispute between the other petitioners and appellant PCC are "inextricably interwoven" with the claims against non-signatory Falconwood ( Berg v. Dimson, 151 A.D.2d 362, 363, lv denied 75 N.Y.2d 703). New York courts have stayed litigation proceedings that included parties who were not signatories to the arbitration agreement, where the nonsigning party, such as Falconwood herein, is closely related to the signatories and is alleged to have engaged in substantially the same improper conduct ( Lawson Fabrics v Akzona, Inc., 355 F. Supp. 1146, 1151, affd 486 F.2d 1394; Edwards v. Bergner, 22 A.D.2d 808).
We have considered appellant's remaining arguments and find them to be without merit.
Concur — Milonas, J.P., Ellerin, Wallach, Kupferman and Williams, JJ.