168 A.D.2d 224 | N.Y. App. Div. | 1990
Judgment, Supreme Court, New York County (Michael J. Dontzin, J.), entered May 22, 1990, which, inter alia, denied petitioner’s motion, pursuant to CPLR 7503 to stay arbitration, dismissed the petition, and directed the parties to proceed with arbitration, unanimously affirmed, with costs.
Petitioner is the sole general partner of The Palace Com
On February 7, 1990, respondents served a demand for arbitration on petitioner stating that petitioner had breached its fiduciary duties in the management and operation of the partnership affairs, causing substantial damage to the partnership and the claimants’ interests therein. Respondents’ allegations are based, in part, on the criminal indictments against Harry and Leona Helmsley and other senior executives in the Helmsley organization. One of the allegations is that petitioner conducted the affairs of the partnership and the Palace Hotel in violation of 18 USC § 1962 (c) (the Federal RICO statute). In addition, respondents’ demand alleges that petitioner engaged in self-dealing, that it mismanaged the financial affairs of the partnership, and that it refused to provide financial information. For petitioner’s ongoing breaches, respondents seek the removal of petitioner as general partner and the appointment of an interim receiver pending the reconstitution of the partnership, or, in the alternative, dissolution of the partnership, as well as an accounting and treble damages.
The reasons advanced by petitioner for permanently staying arbitration were properly rejected by the IAS court. First, petitioner’s argument that the arbitration clause does not provide for arbitration of claims relating to the management of the partnership business is unavailing. Respondents do not merely disagree with petitioner’s management decisions, but are claiming that petitioner has breached its fiduciary duty to the partnership, causing substantial damages to respondents’ interests in the partnership, and requiring the removal of petitioner as general partner. We agree with the IAS court that there was a reasonable relationship between the subject
Furthermore, under applicable Federal law, respondent’s RICO claims are arbitrable (Shearson/American Express v McMahon, 482 US 220, reh denied 483 US 1056). Contrary to petitioner’s argument, Volt Information Sciences v Board of Trustees (489 US 468) does not compel the conclusion that New York’s public policy prohibiting an arbitrator from awarding punitive damages preempts the Federal rule that RICO treble damage claims are arbitrable. Furthermore, in Volt, the State law fostered arbitration, rather than requiring a judicial forum for resolution of the parties’ disputes. (Supra.)
Lastly, since there is no provision in the partnership agreement that the consent of all limited partners is necessary to submit a dispute to arbitration, and since the agreement provides that "any dispute or controversy among the Partners” should be submitted to arbitration, arbitration should not be stayed merely because all the limited partners have not provided written consents to arbitration. The rights of the parties absent consent by certain limited partners should be addressed by the arbitrator (see, Matter of Rabinor [Pashman], 23 AD2d 741, 742). Concur — Ellerin, J. P., Wallach, Smith and Rubin, JJ.