Summary
The Appellate Division, First Department affirmed a trial court order granting summary judgment that dismissed cross-claims and directed the distribution of escrowed funds. The court determined that the cross-claims were subject to a broad arbitration clause in the parties' LLC operating agreement and found no waiver of arbitration rights despite discontinued proceedings and parallel litigation. Accordingly, the lower court's decision was upheld.
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Practice areas
Questions Presented
- Whether Ray Enterprises, LLC waived the arbitration clause by ceasing to pay arbitration fees and by pursuing summary‑judgment and enforcement actions.
- Whether the summary‑judgment motion to dismiss the cross‑claims should be granted.
Holdings
- Ray did not waive arbitration; the failure to pay arbitration fees and the pursuit of legal claims do not constitute a waiver of the parties’ agreement to arbitrate.
- The summary‑judgment motion is granted, dismissing the first‑through‑sixth cross‑claims against Ray Enterprises, LLC.
Factual background
Plaintiff Saul Feiger and others sued Ray Enterprises, LLC and related defendants. The dispute centered on escrowed funds from the sale of real property and alleged misconduct concerning the operating agreement of a jointly owned, now‑defunct LLC, Maximus Hill, LLC. The operating agreement contained a broad arbitration clause, and the parties had previously engaged in arbitration proceedings that were discontinued when Ray ceased payment.
Procedural history
The Supreme Court, New York County entered an order granting Ray Enterprises, LLC summary judgment dismissing the first‑through‑sixth cross‑claims and directing distribution of escrowed funds. Ray appealed the denial of an earlier summary‑judgment motion and the court remanded for additional discovery.
Remand instructions
The matter is remanded for further discovery because discovery was incomplete.