In thе Matter of LEVIN & GLASSER, P.C., Respondent, v KENMORE PROPERTY, LLC, Appellant.
Appellate Division of the Supreme Court of New York, First Department
October 15, 2009
66 AD3d 443 | 896 NYS2d 311
The petitioner law firm was the claimant in an arbitration proceеding against respondent, its former client, under the Fee Dispute Resolution Program (
Petitioner commenced the instant proceeding to confirm the award and requested thаt the judgment confirming the award include interest at the statutory rate of 9% from the date it claimed the fees and disbursements were due, December 23, 2005 (the date of its final bill). By a judgment entered November 19, 2007, Supreme Court cоnfirmed the award and directed that interest be paid from December 23, 2005, which it calculated to be $48,052.60. Because the amount awarded with interest was greater than the amount held in escrow, respondent was required to pay an additional sum to petitioner to satisfy the judgment. Respondent contends, and we agree, that the court erred in awarding interest prior to the date of the award.
We have previously held thаt “[i]n a contract dispute brought before an arbitrator the question of whether interest from the date of the breach of the contract should be allowed in an arbitration award is a mixed question of law and fаct for the arbitrator to determine” (Matter of Gruberg [Cortell Group], 143 AD2d 39, 39 [1988], citing Matter of Penco Fabrics [Louis Bogopulsky, Inc.], 1 AD2d 659 [1955] [“The question whether interest was to be allowed on the award from the date when payment of the invoices was found to be due was for the arbitra
We perceive nо basis for coming to a different conclusion with respect to arbitrations under the Fee Dispute Resolution Program. To be sure, the Rules of the Chief Administrator of the Courts do not authorize an award of preaward interest. But neither do they forbid it and, for several reasons, we think the silence of the rules on this subject is an insufficient basis for concluding that the arbitrators have no authority to award preaward interest. First, “the cases grant arbitrators broad authority to resolve disputes” (Matter of 166 Mamaroneck Ave. Corp. v 151 E. Post Rd. Corp., 78 NY2d 88, 93 [1991]; see also Matter of Board of Educ. of Norwood-Norfolk Cent. School Dist. [Hess], 49 NY2d 145, 152 [1979] [“to achieve what the arbitration tribunal believes to be a just result, it may shape its remediеs with a flexibility at least as unrestrained as that employed by a chancellor in equity“]). Accordingly, the legally significant fact is the absence of a provision in the rules prohibiting, rather than the absence of one authorizing, the award of preaward interest (see Hunter v Glenwood Mgt., 156 AD2d 310, 311 [1989] [“an arbitrator‘s power to resolve a dispute properly before him is ordinarily plenary unless expressly limited by the terms of the agreement to arbitrate“]).
In addition, to conclude that arbitrators under the Fee Dispute Resolution Program lack that authority would make little sense, as it would invite, as it did here, subsequent judicial proceedings whenever attorneys prevаil in an arbitration. Judicial proceedings would be necessary for attorneys to vindicate their right under
Further, petitioner is not entitled to postaward, prejudgment interest since it was holding the $310,000 at issue in escrow and chose not to avail itself of the funds when the arbitrators’ award of $280,000 became final. Although petitioner asserts that it could not pay itself from the escrowed funds without respondent‘s consent and also asserts that appellant never gave its consent, the rеlevant rule, former
In short, petitioner both deprived itself of the use of the funds awarded to it and deprived respondent of the use of the balance of the funds being held in escrоw. Under settled law, petitioner‘s statutory right to interest is far from absolute. To the contrary, as then Justice Bergan stated for a panel of this Court, “The holder of the judgment may be estopped by equitable considerations, or by his own acts, from enforcing the interest which the statute gives him” (Feldman v Brodsky, 12 AD2d 347, 350, 351 [1961] [“Interest may be cut off because of some action by the judgment creditor which would make it inequitable or oppressive that he get interеst on his judgment, e.g., his refusal to accept a tender“], affd 11 NY2d 692 [1962]; see also Matter of Venables v Painewebber, Inc., 205 AD2d 788, 789 [1994]). Given the “special and unique duties” petitioner owed to respondent, including “safeguarding client property and honoring the client[‘s] interests over [its own]” (Matter of Cooperman, 83 NY2d 465, 472 [1994]), we think it would be particularly inequitable to require respondent to pay statutory interest to petitioner and thus recompense petitioner for its own failure to pay itself.
Because petitioner was holding more than the $280,000 it was awarded by the arbitrators on the date the award became payable, March 13, 2007, respondent is entitled to the balance that would have remained in the escrow account аfter payment of the award on that date, with interest on such balance from that date. In addition, because Supreme Court erred in awarding interest to petitioner and respondent was thereby required to рay an additional sum to petitioner to satisfy the judgment, respondent is entitled to the amount it paid over $280,000 to satisfy the judgment, with interest from the date the sum was paid. Concur—Saxe, J.P., Buckley, McGuire, DeGrasse and Freedman, JJ.
Saxe, J.P., Buckley, McGuire, DeGrasse and Freedman, JJ.