Waiver of right to arbitrate

Willer v Kleinman, 2014 NY Slip Op 01164 (2d Dept. 2014)

You agree to arbitrate or are a forced participant in an arbitration.  Assuming there is no other way to wiggle out of being subjected to AAA jurisdiction, you proceed to file a complaint.  Your adversary answers your complaint and pleads counterclaims that bear on the merits of the arbitration.  Are you out of the woods?  Precedent suggests that you are.

“However, the defendants, by their conduct in this lawsuit, waived arbitration. As this Court explained in Reynolds & Reynolds Co., Automotive Sys. Div. v Goldsmith Motor Corp. (251 AD2d 312, 313),”[t]here is no inflexible or mechanical rule as to what constitutes a waiver of the right to arbitrate. Rather, determination of the issue depends on the facts and circumstances of each particular case . . . Among the factors to be considered are the extent of the party’s participation in litigation and conduct inconsistent with the assertion of a right to arbitrate, the delay in seeking arbitration, and whether the other party has been prejudiced” (citations omitted).

While a party who commences an action waives arbitration, the same cannot be said for a defendant (see De Sapio v Kohlmeyer, 35 NY2d 402, 405). A defendant who submits an answer, or submits a pre-answer motion to dismiss the action, does not waive arbitration, especially if the arbitrability of the controversy is asserted as a ground to dismiss the action (see Flynn v Labor Ready, 6 AD3d 492; Spatz v Ridge Lea Assoc., 309 AD2d 1248; Ruttura & Sons Constr. Co. v Petrocelli Constr., 257 AD2d 614). However, in the instant case, the defendants asserted counterclaims related to issues in the main action, against both plaintiffs, including Nadia Willer, who is united in interest with Justin Willer, but is not a party to any arbitration agreement (see Dembitzer v Chera, 305 AD2d 531, 532). Further, the defendants sought and obtained discovery (see De Sapio v Kohlmeyer, 35 NY2d 402, 405).

Trial De Novo granted and declaration of non-coverage granted

Allstate Ins. Co. v. Phelps Memorial Hospital, 2013 NY Slip Op 33590(U)(Sup. Ct. Nassau Co. 2013)

“This Court conducted a non-jury trial on matter on November 7, 2013, and
reserved decision. The plaintiffs expert credibly testified the treatment rendered to Jorge  Caniero was neither caused by the November 18, 2010 motor vehicle accident nor was  there any exacerbation of a pre-existing condition caused by that same accident. The  Court finds Jorge Caniero was admitted to Phelps Memorial Hospital on suspicion he  experienced a stroke which was not related to the November 18, 20 I 0 motor vehicle  accident. The Court also finds the treatment rendered by the defendant was related to the  diagnosis of acute CVA hypertension, diabetes, mellitus, coronary artery disease and  hyperlipidemia. These conditions were not causally related to the November 18, 2010  motor vehicle accident.

“The plaintiff proffered medical facts by its expert which were sufficient to show the medical condition  for which Jorge Caniero was treated was not related to the November 18, 2010 motor vehicle accident nor was there any exacerbation of a pre-existing condition caused by that same accident”

This is an interesting order as it is one of the few times a lack of causation defense has actually been successful.  It seems to help that Defendant did not put on a case?  If you look at the history of this matter, Defendant made a motion to dismiss the action as time barred, presumably because the Trial de-novo/declaratory judgment action was not commenced within the 90-day period set forth in Article 75 of the CPLR.  This motion was denied.

I suspect Defendant’s motion should have probably been granted.  The simple reason is that assuming the demand for trial de-novo occurs more than 6-years after the claim became overdue, while the original arbitration was commenced timely, then the trial de novo would be time barred.  I am not sure that makes sense and is in accord with the meaning of Ins. Law 5106(c).

How come there have been no new master arbitration decisions posted on AAA’s website since October 15, 2013?

Dear AAA,

Insofar as 60-70 percent of most defense firms’ inventories involve AAA arbitration matters, it is important for us (well me at least) to follow master decisions and keep a log of interesting ones.  I started logging decisions of interest (I rarely share those on here) in late 2012.  However, for some reason, AAA stopped posting these decisions as of October 14, 2013.  I sent an email to AAA on their customer feedback form late last week, but have not gotten a response.  I checked today and again there have not been any new decisions.

Could someone at AAA who reads this please look into this issue.  For me, these decisions are invaluable in preparing proper master briefs, arguing certain threshold matters before AAA and deciding potential Article 75 candidates.



An arbitrator’s order is not binding where the provider was not named in the underlying arbitration

Queens Arthroscopy & Sports Medicine v Unitrin Direct Ins. Co, 2013 NY Slip Op 52021(U)(App. Term 2d Dept. 2013)

“On March 23, 2011, plaintiff moved in this action for summary judgment, and the following day, the arbitrator issued a decision, which stated that, based upon the credible evidence before him, either defendant or Arch Insurance Company [*2]would be the source of first-party no-fault benefits. The arbitrator directed Arch Insurance Company to commence processing plaintiff’s claims, because that insurer had received notice of the claims first.”

“”However, plaintiff was not named in the arbitration and was not in privity with its assignor, who was a named party in that proceeding, as the assignment of benefits had been executed before the arbitration proceeding had been commenced, and plaintiff otherwise had no full and fair opportunity to appear and defend its interests in that proceeding. Consequently, the instant action is not subject to dismissal by virtue of the decision in the arbitration hearing”

There is no way to compel a medical provider to participate in an arbitration that it does not file.  Perhaps, Defendant should have filed a declaratory judgment and named everybody in it?

Motion to compel arbitration denied

Interboro v. Boris Kleyman, Index #: 152395/10 (Supreme Ct. NY Co. 2013)


In this particular matter, Plaintiff moved to reargue the prior order of Supreme Court, dismissing the matters against certain Defendants on the basis the a provider has the unilateral choice to chose to arbitrate its bills.

As can be seen, the Court realized that the weight of judicial authority holds that an insurance carrier has the right, in the first instance, to litigate coverage issues in a Supreme Court action.  Thus, leave to reargue was granted and, upon reargument, the motion to dismiss was denied en toto.

It should be noted that the initial opinion was published.  Hopefully, this opinion will in turn be published.

**CORRECTION** Opinion was published today, 11/7/13

I will say that Justice Kern, to her credit, will reverse herself on reargument when presented with persuasive authority to do same.

A trial de novo is but a declaratory judgment action – District Court lacks jurisdiction

Liberty Mut. Ins. Co. v Bayside Pain & Rehabilitation Medicine, P.C., 2013 NY Slip Op 50906(U)(App. Term 2d Dept. 2013)

“Defendant moved to dismiss the complaint for, among other things, failure to state a cause of action, and plaintiff opposed the motion. While the motion was pending, the Supreme Court transferred the action to the District Court of Nassau County pursuant to CPLR 325 (d). By order dated July 12, 2011, the District Court granted defendant’s motion and dismissed the complaint.”

“This action seeks, in essence, a declaratory judgment and not monetary damages. While we cannot review the propriety of the order of the Supreme Court transferring this declaratory judgment action to the District Court pursuant to CPLR 325 (d) (see e.g. Priel v Linarello, 7 Misc 3d 64 [App Term, 2d & 11th Jud Dists 2005], affd 44 AD3d 835 [2007]; Green v Lakeside Manor Home for Adults, Inc., 30 Misc 3d 16 [App Term, 2d, 11th & 13th Jud Dists 2010]), it is, nevertheless, not within the subject matter jurisdiction of the District Court to adjudicate this particular type of declaratory judgment action.”

Great Wall is binding precedent on American Arbitration Association

Allstate Ins. Co. v Natural Healing Acupuncture, P.C., 2013 NY Slip Op 50645(U)(Civ. Ct. Kings Co. 2013)

“The arbitrator failed to mention, much less follow the Appellate Term’s decision in Great Wall Acupuncture v. GEICO Gen. Ins. Co., 16 Misc 3d 23 (App. Term, 2nd Dept. 2007), which addressed the issue and applied the fee schedule for licensed chiropractors to acupuncture services provided by licensed acupuncturists.  In Great Wall, the Appellate Term analogized licensed chiropractors to licensed acupuncturists based on the similar training they underwent for licensure in order to perform acupuncture services, while contrasting them to physicians, who only had to obtain certification in order to perform acupuncture. The Appellate Term further noted the Department of Insurance’s lack of “specific guidance as to which particular fee schedule should be applied to a licensed acupuncturist performing acupuncture,” and urged it to do so. Great Wall, supra at 24.

“Although acknowledging Great Wall, supra, and the fact that the proposed legislation to increase the reimbursement rates for both chiropractors and acupuncturists was still pending, the master arbitrator confirmed the award. The master arbitrator found that Allstate impermissible sought to have him conduct a de novo review, and that the lower arbitrator’s award had “a plausible basis in the evidence presented” and thus conformed to applicable law.”

“This Court does not understand the reasoning behind the master arbitrator’s award. Allstate did not seek a de novo or a factual review, as prohibited by Petrofsky, supra. Rather, petitioner argued that the decision was arbitrary and capricious and contrary to well settled law. This Court cannot countenance an award which finds that proposed or pending legislation trumps well established precedent, i.e. Great Wall, supra. Therefore, the award is vacated and the Court directs that the arbitrator calculate the fees owed to respondent in accordance with the fee schedule for licensed chiropractors who perform acupuncture.”

Rules on Trial De-Novo

Dutchess Med., P.C. v Allstate Ins. Co., 2013 NY Slip Op 23139 (City Ct. Poughkeepsie 2013)

“In a de novo hearing’, the judgment of the [trial] court is suspended and the reviewing court determines the case as though it originated in the reviewing court and gives no attention to the findings and judgment of the lower court except as they may be helpful to us in the reasoning.” Reck v. Reck, application for rehearing, 46 N.E. 2d 429, 430 (1942). A demand for trial de novo must be made “within 30 days after service upon such party of the notice of filing of the award with the appropriate court clerk, or if service is by mail, within 35 days of such service . . . ” [22 N.Y.C.R.R. §28.12], or the finding becomes final and binding.

Here, the Arbitrator’s decision was rendered on January 2, 2013. The decision was filed with this Court on February 20, 2013.  The plaintiff has provided no evidence it served upon the defendant a notice of filing of the award with the Court Clerk. Therefore, defendant’s demand for trial de novo (filed on February 6, 2013) was in fact timely – as defendant’s time had not even begun to run. See, 22 N.Y.C.R.R. §28.12.”

“Accompanied by its demand for a trial de novo, defendant filed a jury trial demand. The law provides that for the arbitration of certain claims, the rules must permit a jury trial de novo upon demand by any party following the determination of the arbitrators.C.P.L.R. §3405.  Indeed, the rules, as promulgated, specifically provide both parties that the trial de novo be accompanied by a demand for a trial with or without a juryN.Y.C.R..R. §28.12.

These particular statutes are noteworthy here because on August 14, 2012, plaintiff filed a notice of trial without a jury. And while this defendant had ten (10) days after service of plaintiff’s notice of trial to demand a jury trial [U.C.C.A. §1303(a)], defendant never made such a demand thereby waiving its right to a jury trial under U.C.C.A. §1303(b) – or seemingly waived it – as explained more fully below. Also see C.P.L.R. §4102.

However, while defendant may have waived his right to a jury trial under U.C.C.A. § 1303(b), both parties are awarded an encore with respect to their right to demand a jury trial when the matter is subject to mandatory arbitration. In particular, C.P.L.R. §3405 together with N.Y.C.R.R. §28.12 specifically address the right to demand a jury trial in arbitration cases, whereas U.C.C.A. §1303 has more of a general applicability for all actions in City Court. As such, the strict timing requirements to request a jury trial [pursuant toU.C.C.A. §1303] are rendered virtually obsolete when the matter is subject to mandatory arbitration. U.C.C.A. §1303.  In short, while the time to demand a jury trial expired under U.C.C.A. §1303 ten (10) days after this plaintiff served its notice of trial, both parties’ right to demand a jury trial was revived when the arbitrator issued its final determination. C.P.L.R. §3405; N.Y.C.R.R. §28.12.”


Arbitration and personal jurisdiction

American Ind. Ins. Co. v Art of Healing Medicine, P.C., 2013 NY Slip Op 01546 (1st Dept. 2013)

“At this pre-arbitration stage, the issue is not whether New York courts have jurisdiction over AIIC, but whether the arbitrator has authority under the terms of the insurance contract to award no-fault benefits to the appellants (see American Ind. Ins. v Gerard Ave. Med. P.C., 12 Misc 3d 1176[A], 2005 NY Slip Op 52302[U] [Sup Ct, Bronx County]). Without providing a copy of the policy of insurance, AIIC could not establish that a valid arbitration agreement is not controlling. Our recognition in other cases that New York State courts do not have personal jurisdiction over AIIC does not entitle AIIC to, in effect, a declaration that the arbitrator does not have authority and jurisdiction over AIIC. While personal jurisdiction is required for the exercise of the state’s judicial power over a party, arbitration is a form of dispute resolution almost wholly independent of the court system (see Siegel, NY Prac § 586 at 1050 [5th ed 2011]). “Except for a few basic guarantees, such as the right to be heard and to be represented by counsel at the arbitration, the procedural law of the state is also inapplicable to arbitration, including the rules of evidence” (id. at 1052). In short, personal jurisdiction is not required for arbitration that is controlled by the parties’ agreement. Therefore, the Supreme Court erred in granting the petition to permanently stay arbitration on the ground that there was no personal jurisdiction over AIIC.”

So personal jurisdiction is not a pre-requisite to filing an arbitration against somebody in the State of New York?  I suppose the execution of an arbitration agreement, whether voluntarily or through operation of law, will waive jurisdictional defenses, similar to a forum selection clause in a contract – hence all cruise ship cases must be heard in Miami-Dade Circuit Court in the Sunshine State.  I am taking it that if the policy did not contain an arbitration clause and there were no other links to New York, then a successful personal jurisdictional defense could have been forwarded?


Alev Med. Supply, Inc. v Allstate Prop. & Cas. Ins. Co., 2012 NY Slip Op 51294(U)(App. Term 2d Dept. 2012)

Since each medical provider as assignee of a purportedly injured party has its own right to chose litigation or arbitration, the decision of one medical provider cannot prejudice another medical provider or assignor.


“A prior arbitration proceeding involving one claimant provider seeking reimbursement of assigned first-party no-fault benefits does not preclude another provider from commencing its own action seeking reimbursement of assigned no-fault benefits, even where the claims have been assigned by the same individual and have arisen from the same accident”

Westchester Lincoln

“Defendant failed to demonstrate that it had timely denied the claims at issue based upon plaintiff’s assignor’s failure to appear for an EUO, and therefore that it is not precluded from asserting its proffered defense that plaintiff failed to comply with a condition precedent to coverage”