Sullivan v. Kisly

— Order of the Supreme Court, New York County (Tompkins, J.), entered on December 23, 1982, which granted defendants’ motion to stay the action and compel arbitration, is reversed, on the law and the facts, with costs and disbursements, and motion to stay the action and compel arbitration denied. The instant action arises out of the purported breach of a written agreement entered into between the parties in March of 1981 and calling for the renovation of plaintiffs’ residence at 138 East 37th Street in Manhattan. The summons and complaint were served in March of 1982, and the defendants answered on April 19,1982, generally denying the allegations contained in the complaint. They also interposed an affirmative defense claiming that the contract had been executed by the corporate rather than the individual defendants. By notice of motion dated May 4,1982, plaintiffs moved to dismiss the affirmative defense and included as an exhibit the first page of the agreement indicating the names of the respective parties, the date of the contract and the fact that the contract was the standard form agreement between owner and contractor issued by the American Institute of Architects. The motion, which was opposed pursuant to an affidavit dated May 12, 1982, was granted by an order dated June 4, 1982. Plaintiffs served a notice of deposition, dated May 24,1982, with the deposition scheduled for June 8,1982. „On June 21, 1982, defendants demanded a bill of particulars, and on July 7, 1982, the examination before trial was conducted. The plaintiffs furnished defendants with the bill of particulars on or about July 21, 1982. Then, by motion dated August 23, 1982, defendants for the first time requested that, based upon the arbitration clause in the contract, the action be stayed and arbitration compelled. In granting the motion, Special Term concluded that: “Defendants answered and participated in discovery because, they contend, they did not have a copy of the contract and were not aware of the arbitration clause. Plaintiffs argue that defending this action constitutes a waiver of the arbitration clause. There is no doubt that affirmative use of the judicial process constitutes a waiver of the right to go to arbitration (DeSapio v Kohlmeyer, 35 NY2d 402). However, defense of litigation brought by other parties is not a waiver.” In De Sapio v Kohlmeyer (35 NY2d 402), the Court of Appeals held that while the party who commences a lawsuit may generally be deemed to have waived its right to arbitration, this rule does not apply to a defendant. Nevertheless, a defendant’s right to compel arbitration is not unlimited. According to the court (p 405): “The crucial question, of course, is what degree of participation by the defendant in the action will create a waiver of a right to stay the action. In the absence of unreasonable delay, so long as the defendant’s actions are consistent with an assertion of the right to arbitrate, there is no waiver. However, where the defendant’s participation in the lawsuit manifests an affirmative acceptance of the judicial forum, with whatever advantages it may offer in the particular case, his actions are then inconsistent with a later claim that only the arbitral forum is satisfactory.” At the outset, it should be noted that we are unimpressed with defendant Walter J. Kisly’s 784 assertion that at the time of service of the complaint, neither he nor his counsel possessed a copy of the agreement since marital difficulties precluded his being able to return home and retrieve his papers. The fact is that the contract was in the standard form prepared by the American Institute of Architects and was completed by defendant and presented to plaintiffs for their signature. An arbitration clause routinely appears in this type of agreement', which is no doubt the same contract regularly utilized by defendants in connection with all of their undertakings to perform work. Thus, it strains credulity to accept the claim that defendants lacked knowledge of the provisions of the contract. Significantly, defendants did not, in their answer, deny that they had information regarding the terms and conditions of the contract. They also failed to proceed expeditiously to ask that plaintiffs produce the entire contract. Instead, they continued to participate in the litigation to the extent of demanding an examination before trial and submitting Mr. Kisly for an examination. Under the circumstances, what occurred here amounted to a greater involvement in the litigation than simply taking steps of a defensive nature, and Special Term improperly granted defendants’ motion to stay the action and compel arbitration. Concur — Ross, J. P., Asch and Milonas, JJ.