59 Misc. 2d 498 | N.Y. Sup. Ct. | 1969
Petitioner Met Food Corp. (“Met”), as owner, engaged the Heyward-Bobinson Company, Inc. (“ Heyward ”) as general contractor and respondent M. Bisen
With respect to the owner’s right to indemnification for any claims asserted against it by a contractor, the agreements provide : “ If such separate contractor sues the Owner on account of any damage alleged to have been so sustained [i.e. damage caused by one contractor to another contractor], the Owner shall notify the Contractor, who shall defend such proceedings at the Contractor’s expense and, if any judgment against the Owner arises therefrom, the Contractor shall pay or satisfy it and pay all costs.”
For reasons not relevant to this application, petitioner terminated its engagement of Heyward as general contractor during the early stages of construction and about a month later, Heyward commenced an action against Met, grounded in breach of contract. The answer interposed by Met in that action contains affirmative defenses and counterclaims, including Met’s right to reimbursement and indemnification by Hey-ward of sums paid by Met to others, for claims resulting from Heyward’s violation and breaches of its contract with Met. That action is presently pending in the Supreme Court, Nassau County.
Eisenberg, apparently, continued its work as electrical contractor. But in May of 1968 (about a year after the commencement of Heyward’s Supreme Court action) Met was served with a notice of arbitration by Eisenberg for “ additional expenses incurred and loss of profit for work performed under [their] contract.” That notice was later withdrawn, but a subsequent notice to arbitrate was served by Eisenberg on Met in June of 1968. The parties have since appointed their respective arbitrators and a third was selected pursuant to the arbitration agreement. A date for the arbitration hearing had already been set when the instant application, brought on by order to show cause, was commenced.
Met now seeks an order enjoining both the arbitration and the action at law, pending the joinder of Heyward as a party to, as well as the determination of, the arbitration commenced
Although vigorously opposed by Eisenberg and Heyward, there is some justifiable basis for the relief requested. It would afford petitioner the opportunity to settle its differences with both Eisenberg and Heyward on the very same issues, at the same time. The question, however, is whether the court has jurisdiction to authorize such relief.
Under section 96 of the former Civil Practice Act (predecessor of the CPLR), the arbitration of a controversy was classified as a special proceeding and, as such, was subject to joinder and consolidation. For example, the Appellate Division, First Department, in Matter of Symphony Fabrics Corp. (Benson Silk Mills) (16 A D 2d 473, affd. 12 N Y 2d 409) authorized the consolidation of two arbitration proceedings, involving three different parties, but only upon the condition that the two parties, who consented to the consolidation, stipulate to join with each other in the designation of arbitrators. That condition was imposed by the court in order to relieve the third party, who opposed the consolidation, of any possible prejudice. Thus, even under the former act (and assuming this court were to regard the proposed third-party claim by Met against Hey-ward as a separate proceeding, subject, at the discretion of the court, to joinder or consolidation) the instant application would have to be denied. Unless Heyward would be permitted the right to participate equally in the selection of arbitrators, the consolidation would be prejudicial. Neither Eisenberg nor Heyward may be precluded from exercising the full rights afforded them under the arbitration clause with respect to such selection; and since both oppose this application, it is apparent that neither is willing to waive such right.
Accordingly, and without reaching the question of whether petitioner has waived its rights to arbitration with Heyward, by reason of its voluntary participation in the action at law now pending in Nassau County (Matter of Zimmerman v. Cohen, 236 N. Y. 15), the court is constrained to deny the petition in all respects.