SUPREME COURT OF NEW YORK, NASSAU COUNTY
2009 N.Y. Misc. LEXIS  2639; 241 N.Y.L.J. 70
April 6, 2009,  Decided
NOTICE:
THE LEXIS PAGINATION OF THIS  DOCUMENT IS SUBJECT TO CHANGE PENDING RELEASE 
OF
THE FINAL PUBLISHED VERSION.  THIS OPINION IS UNCORRECTED AND SUBJECT TO
REVISION BEFORE  PUBLICATION IN THE PRINTED OFFICIAL REPORTS.
COUNSEL: For Plaintiff:  Blodnick & Baum, PC.
For Defendant: Kirschenbaum & Kirschenbaum,  PC.
JUDGES: Justice William R. LaMarca.
OPINION BY: William R.  LaMarca
OPINION
Defendant, NEW YORK MERCHANTS  PROTECTIVE CO. INC., (hereinafter referred to
as "NYMP"), moves for an order,  pursuant to CPLR § 7503(a), compelling
arbitration of the disputes between  NYMP and plaintiff, CUSTOM METAL INC.
(hereinafter referred to as "CUSTOM  METAL") and STEVE PRATT. Counsel for
plaintiff opposes the motion, which is  determined as follows:
The complaint alleges that NYMP  is licensed to install and/or maintain 
alarm
systems and that CUSTOM METAL is  a customer of NYMP since 1990 when it 
leased
and installed an alarm/security  system at its principal place of business.
Plaintiff alleges that, over the  years, in 1998, 2002 and again in 2008, 
when
CUSTOM METAL moved to a new  location, NYMP would remove the security 
system and
reinstall it at the new  location. At the time of its last move, in 2008, a
contract for the leased  equipment was in place, signed by CUSTOM METAL's
President, STEVE PRATT, on  January 19, 2003, with an initial term of ten 
(10)
years, automatically  renewable for five (5) years and then for successive
periods of one (1) year,  subject to cancellation by written notice of 
either
party thirty (30) days  prior to the expiration of any term. The complaint
alleges that CUSTOM METAL  houses government equipment and costly metal 
products
and requires a high  level of security to conduct business with the 
government
and private  entities.
In essence, CUSTOM METAL asserts that, in  2008, it experienced numerous and
recurring problems with the security system  which NYMP attempted to 
remedy. It
is alleged that, when a repairmen was sent  to repair and update the 
equipment,
the workman required that PRATT sign what  was purported to be an 
authorization
for the installation and repairs, and  that he was not advised that the 
document
was actually a new contract, with  an increased monthly cost and which bound
CUSTOM METAL for a period of ten  (10) years. CUSTOM METAL claims that said
contract, dated August 27, 2008, is  the contract in dispute herein, that it
contains unconscionable language,  that it was executed under fraudulent
pretenses and that it should be  declared null and void. The complaint also
contends that NYMP fraudulently  represented that certain features, such as 
a
back up system, were in place,  and that CUSTOM METAL later learned that 
was not
the case when the security  of their property was breached and their 
property was
stolen. No dates are  provided as to the alleged theft of property or 
breach of
security. CUSTOM  METAL claims damages for the the complaint falls within 
the
broad arbitration  agreement and that an order compelling arbitration 
should  be
granted.
In opposition to the motion, counsel for  CUSTOM METAL argues that it is
seeking to vitiate the entire contents of the  Agreement and the Court 
should not
enforce the arbitration provision of said  Agreement which is the product of
fraud in the inducement and  misrepresentations. In reply, counsel for NYMP
points out that, even if the  2008 contract is deemed to be invalid, the 
2003
contract is enforceable,  which includes an agreement to arbitrate.
The Court of  Appeals in Weinrott v. Carp, 32 NY2d 190, 344 NYS2d 848, 298
NE2d 42 (C.A  1973), instructs:
...CPLR 7503  (subd.(a)) (sic) states: "A party aggrieved by failure
of  another to arbitrate may apply for an order compelling arbitration.
When there is no substantial question whether a Valid Agreement  was
made or complied with--the court shall direct the  parties to
arbitrate...
The "valid agreement" referred to concerns a valid agreement  to
arbitrate
...Since we now hold that an arbitration provision of a  contract is
separable, the agreement to arbitrate would  be "valid" even if the
substantive portions of the  contract were induced by fraud (citations
omitted).
In Weinrott, the Court of Appeals  held that a broad arbitration clause 
should
be given full effect of its  wording in order to implement the intention of 
the
parties and, unless the  alleged fraud permeated the entire agreement, the
arbitration provision  should be upheld. Indeed, all of the cases cited by
plaintiff for the  proposition that the Court must separately examine the
substantive agreement  and the agreement to arbitrate, upheld the 
arbitration
clause of the  agreement and, despite the claims of fraud, sent the matter 
to
arbitration.  (See, O'Neil v. Krebs 16 AD3d 144 [2nd Dept. 2005]; Riverside
Capital  Advisors, Inc. v. Winchester Global Trust Co., 21 AD3d 887 (2nd 
Dept.
2005);  Stellamack Air Conditioning & Refrigeration Corp. v.  Contractors
Management Systems of NH, Inc., 293 AD2d 956 (3rd Dept.  2002).
After a careful reading of the submissions  herein, it is the judgment of 
the
Court that NYMP is entitled loss of its  property, for the costs of a new
security system and for the "negligent"  installation of the alarm system by
NYMP.
On the  instant motion, counsel for NYMP, points out that both the January 
19,
2003  and the August 27, 2008 Agreements, contain broad arbitration clauses 
at
P18,  as follows:
18. LEGAL  ACTION...Any action or dispute between the parties,
including issues of arbitrability, shall, at the option of either
party, be determined by arbitration administered by the  National
Arbitration Association under its Commercial  Arbitration Rules...
Counsel for NYMP states that the National  Arbitration Association (NAA) no
longer exists and has been succeeded, by  merger, by Arbitration Services, 
Inc.,
which has jurisdiction over all  matters previously referred to the NAA. 
NYMP has
demanded arbitration and  moving counsel claims that every allegation in to 
the
requested relief  enforcing the arbitration provision of the parties 
contract. In
the case at  bar, the contracts contained a Severability Clause ( § 26) and 
the
Court  finds that fraud does not permeate the whole agreement so as to make 
 the
arbitration clause unenforceable. The parties' disputes arose under the  
subject
contracts and should be determined by the Arbitrator. It is  therefore
ORDERED, that NYMP's motion to compel  arbitration is granted and the 
parties
are directed to proceed to arbitration  at Arbitration Services, Inc.; and 
it  is
further
ORDERED, that the instant action is  stayed pending the conclusion of
arbitration on those disputes deemed by the  Arbitrator to be referable to
arbitration (CPLR § 7503[a]). All further  requested relief not specifically
granted is  denied.
This constitutes the decision and order of the  Court.
SUPREME COURT OF NEW YORK, NASSAU COUNTY
2009 N.Y. Misc. LEXIS  2639; 241 N.Y.L.J. 70

April 6, 2009,  Decided
NOTICE:
THE LEXIS PAGINATION OF THIS  DOCUMENT IS SUBJECT TO CHANGE PENDING RELEASE OFTHE FINAL PUBLISHED VERSION.  THIS OPINION IS UNCORRECTED AND SUBJECT TOREVISION BEFORE  PUBLICATION IN THE PRINTED OFFICIAL REPORTS.
COUNSEL: For Plaintiff:  Blodnick & Baum, PC.
For Defendant: Kirschenbaum & Kirschenbaum,  PC.
JUDGES: Justice William R. LaMarca.
OPINION BY: William R.  LaMarca
OPINION
Defendant, NEW YORK MERCHANTS  PROTECTIVE CO. INC., (hereinafter referred toas "NYMP"), moves for an order,  pursuant to CPLR § 7503(a), compellingarbitration of the disputes between  NYMP and plaintiff, CUSTOM METAL INC.(hereinafter referred to as "CUSTOM  METAL") and STEVE PRATT. Counsel forplaintiff opposes the motion, which is  determined as follows:
The complaint alleges that NYMP  is licensed to install and/or maintain alarmsystems and that CUSTOM METAL is  a customer of NYMP since 1990 when it leasedand installed an alarm/security  system at its principal place of business.Plaintiff alleges that, over the  years, in 1998, 2002 and again in 2008, whenCUSTOM METAL moved to a new  location, NYMP would remove the security system andreinstall it at the new  location. At the time of its last move, in 2008, acontract for the leased  equipment was in place, signed by CUSTOM METAL'sPresident, STEVE PRATT, on  January 19, 2003, with an initial term of ten (10)years, automatically  renewable for five (5) years and then for successiveperiods of one (1) year,  subject to cancellation by written notice of eitherparty thirty (30) days  prior to the expiration of any term. The complaintalleges that CUSTOM METAL  houses government equipment and costly metal productsand requires a high  level of security to conduct business with the governmentand private  entities.
In essence, CUSTOM METAL asserts that, in  2008, it experienced numerous andrecurring problems with the security system  which NYMP attempted to remedy. Itis alleged that, when a repairmen was sent  to repair and update the equipment,the workman required that PRATT sign what  was purported to be an authorizationfor the installation and repairs, and  that he was not advised that the documentwas actually a new contract, with  an increased monthly cost and which boundCUSTOM METAL for a period of ten  (10) years. CUSTOM METAL claims that saidcontract, dated August 27, 2008, is  the contract in dispute herein, that itcontains unconscionable language,  that it was executed under fraudulentpretenses and that it should be  declared null and void. The complaint alsocontends that NYMP fraudulently  represented that certain features, such as aback up system, were in place,  and that CUSTOM METAL later learned that was notthe case when the security  of their property was breached and their property wasstolen. No dates are  provided as to the alleged theft of property or breach ofsecurity. CUSTOM  METAL claims damages for the the complaint falls within thebroad arbitration  agreement and that an order compelling arbitration should  begranted.
In opposition to the motion, counsel for  CUSTOM METAL argues that it isseeking to vitiate the entire contents of the  Agreement and the Court should notenforce the arbitration provision of said  Agreement which is the product offraud in the inducement and  misrepresentations. In reply, counsel for NYMPpoints out that, even if the  2008 contract is deemed to be invalid, the 2003contract is enforceable,  which includes an agreement to arbitrate.
The Court of  Appeals in Weinrott v. Carp, 32 NY2d 190, 344 NYS2d 848, 298NE2d 42 (C.A  1973), instructs:

...CPLR 7503  (subd.(a)) (sic) states: "A party aggrieved by failureof  another to arbitrate may apply for an order compelling arbitration.When there is no substantial question whether a Valid Agreement  wasmade or complied with--the court shall direct the  parties toarbitrate...
The "valid agreement" referred to concerns a valid agreement  toarbitrate
...Since we now hold that an arbitration provision of a  contract isseparable, the agreement to arbitrate would  be "valid" even if thesubstantive portions of the  contract were induced by fraud (citationsomitted).


In Weinrott, the Court of Appeals  held that a broad arbitration clause shouldbe given full effect of its  wording in order to implement the intention of theparties and, unless the  alleged fraud permeated the entire agreement, thearbitration provision  should be upheld. Indeed, all of the cases cited byplaintiff for the  proposition that the Court must separately examine thesubstantive agreement  and the agreement to arbitrate, upheld the arbitrationclause of the  agreement and, despite the claims of fraud, sent the matter toarbitration.  (See, O'Neil v. Krebs 16 AD3d 144 [2nd Dept. 2005]; RiversideCapital  Advisors, Inc. v. Winchester Global Trust Co., 21 AD3d 887 (2nd Dept.2005);  Stellamack Air Conditioning & Refrigeration Corp. v.  ContractorsManagement Systems of NH, Inc., 293 AD2d 956 (3rd Dept.  2002).
After a careful reading of the submissions  herein, it is the judgment of theCourt that NYMP is entitled loss of its  property, for the costs of a newsecurity system and for the "negligent"  installation of the alarm system byNYMP.
On the  instant motion, counsel for NYMP, points out that both the January 19,2003  and the August 27, 2008 Agreements, contain broad arbitration clauses atP18,  as follows:

18. LEGAL  ACTION...Any action or dispute between the parties,including issues of arbitrability, shall, at the option of eitherparty, be determined by arbitration administered by the  NationalArbitration Association under its Commercial  Arbitration Rules...

Counsel for NYMP states that the National  Arbitration Association (NAA) nolonger exists and has been succeeded, by  merger, by Arbitration Services, Inc.,which has jurisdiction over all  matters previously referred to the NAA. NYMP hasdemanded arbitration and  moving counsel claims that every allegation in to therequested relief  enforcing the arbitration provision of the parties contract. Inthe case at  bar, the contracts contained a Severability Clause ( § 26) and theCourt  finds that fraud does not permeate the whole agreement so as to make  thearbitration clause unenforceable. The parties' disputes arose under the  subjectcontracts and should be determined by the Arbitrator. It is  therefore
ORDERED, that NYMP's motion to compel  arbitration is granted and the partiesare directed to proceed to arbitration  at Arbitration Services, Inc.; and it  isfurther
ORDERED, that the instant action is  stayed pending the conclusion ofarbitration on those disputes deemed by the  Arbitrator to be referable toarbitration (CPLR § 7503[a]). All further  requested relief not specificallygranted is  denied.
This constitutes the decision and order of the  Court.