Gwathmey Siegel Kaufman & Associates Architects, LLC v. Rales
898 F. Supp. 2d 610
S.D.N.Y.2012Background
- Gwathmey and Rales entered an architectural services contract on Sept. 19, 2002 for the Glenstone project including residence, studio, and museum; final punch lists were issued in 2006; Gwathmey invoiced substantial fees in 2006; project opening gala occurred circa Sept. 2006.
- The Agreement contains an arbitration clause under AAA Construction Industry Rules; timeliness and scope of arbitration are governed by Article 7.1 and 7.2, with New York law governing substantive issues and a 3-year NY CPLR statute of limitations.
- Rales notified Gwathmey of defects on May 28, 2010; tolling agreement entered but did not revive pre-existing defenses; Rales filed a Demand for Arbitration with AAA on Sept. 19, 2011; Gwathmey answered and withdrew a counterclaim; Gwathmey later contested arbitration until a court ruled on arbitrability.
- The court-bench decision frames issues regarding arbitrability, timeliness, and whether the case should be stayed or compelled to arbitration; the court ultimately denies the motion for injunctive relief and summary judgment while granting a stay to arbitrate.
- The parties dispute whether the claims are time-barred and whether timeliness is arbitrable; the court concludes that timeliness is arbitrable and within the scope of the arbitration agreement, and grants the stay pending arbitration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Arbitrability of the timeliness question under FAA | Gwathmey argues the Court should decide timeliness | Rales/defendant argues arbitrator decides arbitrability under AAA rules | Timeliness arbitrable; arbitrator to decide scope and timeliness under AAA rules. |
| Whether summary judgment on timeliness is warranted | Gwathmey seeks judgment that timeliness is non-arbitrable | Rales contends timeliness is within arbitrator’s remit | Summary judgment denied; arbitrability governs outcome. |
| Whether a preliminary injunction is warranted | Gwathmey seeks injunctive relief to prevent arbitration | Arbitration is contractual, no irreparable harm from arbitration | No preliminary injunction warranted; stay granted pending arbitration. |
Key Cases Cited
- Contec Corp. v. Remote Solution Co., 398 F.3d 205 (2d Cir. 2005) (incorporation of AAA rules governs arbitrability decision)
- Shaw Grp. Inc. v. Triplefine Int'l Corp., 322 F.3d 115 (2d Cir. 2003) (arbitration clauses construed broadly; issues of arbitrability contemplated)
- First Options of Chi., Inc. v. Kaplan, 514 U.S. 938 (Supreme Court 1995) (presumptions in arbitral vs judicial determination of arbitrability; contractual consent)