In re the Arbitration between International Fidelity Insurance & Saratoga Springs Public Library

Casey, J. Appeal from an order of the Supreme Court (Keniry, J.), entered December 21, 1995 in Saratoga County, which, inter alia, denied petitioner’s application pursuant to CPLR 7503 to stay arbitration between the parties. Petitioner was the surety for Peter Annis, Inc. (hereinafter Annis), the heating, ventilating and air conditioning contractor on a project to construct a new public library. When Annis defaulted during the performance of its prime contract with respondent, respondent demanded that petitioner perform under its surety bond. Ultimately the parties entered into a takeover agreement to complete the work of Annis, the principal on the prime contract. Pursuant to the takeover agreement, petitioner agreed "to procure the performance of all work remaining to be completed in accordance with all the terms and conditions of the original contract” (emphasis supplied). The original contract included a broad arbitration clause covering any controversy or claim arising out of or related to the original contract or the breach thereof. Petitioner commenced proceeding No. 1 to stay arbitration brought by respondent against petitioner and two contractors whereby respondent asserted a claim for damages caused by the delay in completing the project. Supreme Court, inter alia, denied petitioner’s application and petitioner now appeals. Despite the statement in the takeover agreement that petitioner was acting solely in its capacity as a performance bond surety, it is clear that at the very least petitioner agreed to accept and be bound by the resolution reached in the arbitration forum of any dispute concerning the adequacy of the performance of Annis’ original contract (see, Matter of Fidelity & Deposit Co. v Parsons & Whittemore Contrs. Corp., 48 NY2d 127, 131-132). It is also clear that respondent’s claim in the arbitration forum, which seeks damages caused by the delay in the completion of the project, is a dispute concerning the ade [720] quacy of the performance of the various prime contracts, including the original contract executed by Annis. Petitioner contends that any dispute concerning the adequacy of Annis’ performance of the original contract is subject to arbitration, but any dispute concerning the adequacy of the performance of the original contract after Annis defaulted and petitioner agreed to procure performance is not arbitrable. According to petitioner, the latter dispute is not arbitrable because it involves the adequacy of petitioner’s performance under its surety bond and/or the takeover agreement, neither of which includes an express agreement to arbitrate. This argument is meritless, for respondent’s arbitration claim does not involve a dispute about petitioner’s performance of an obligation under the surety bond or takeover agreement that is unrelated to the obligation of petitioner’s principal on the original contract (cf., id., at 131). Rather, respondent’s arbitration claim involves a dispute concerning the adequacy of the performance of the various prime contracts, including the original contract executed by Annis, petitioner’s principal, which petitioner agreed to take over. Adequacy of the performance of the original contract is clearly a matter subject to arbitration under the terms and conditions of that contract and petitioner agreed in the takeover agreement to be bound by those terms and conditions. Accordingly, Supreme Court correctly refused to stay the arbitration. Crew III, White and Peters, JJ., concur.