State of New York

Supreme Court, Appellate Division

Third Judicial Department

Decided and Entered: March 19, 2015 519354 

________________________________

In the Matter of the Arbitration 

between DELANEY GROUP, INC.,

RespondentAppellant,

and

MEMORANDUM AND ORDER

HOLMGREN ENTERPRISES, INC.,

Doing Business as VIKING 

LAND CLEARING,

AppellantRespondent.

________________________________

Calendar Date: January 5, 2015

Before: McCarthy, J.P., Egan Jr., Lynch and Clark, JJ.

__________

Fox & Kowalewski, LLP, Clifton Park (Laurence I. Fox of

counsel), for respondent-appellant.

Jacobowitz & Gubits, LLP, Walden (Kara J. Cavallo of

counsel), for appellant-respondent.

__________

Egan Jr., J.

Cross appeals from an order of the Supreme Court (Aulisi,

J.), entered March 6, 2014 in Fulton County, which, among other

things, denied respondent's cross application pursuant to CPLR

7511 to confirm a modified arbitration award.

At all times relevant, petitioner was the prime contractor

on a public work project awarded by the Department of

Transportation for construction work on a portion of State Route

17 in Sullivan County. In conjunction therewith, petitioner
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entered into a subcontract with respondent to clear and grub

approximately 75 acres of land in exchange for $406,250. The

parties' subcontract provided that "[a]ny controversy of [sic]

claim" arising out of or related to the subcontract would be

settled by arbitration.

In October 2010, respondent filed a demand for arbitration

contending, among other things, that it was entitled to extra

payment for clearing and grubbing additional acreage over and

above that required by the underlying subcontract, in response to

which petitioner apparently interposed a counterclaim. At the

conclusion of the hearing that followed, the arbitrator found

that respondent was entitled to $150,250 for the additional trees

removed and the additional acreage cleared and grubbed. The

arbitrator also concluded, however, that petitioner was entitled

to what amounted to a credit totaling $96,318.35 – representing

$13,806 in "stipulated backcharges" and $82,512.35 that

petitioner, pursuant to a stipulation of the parties, was

permitted to withhold pending resolution of certain issues that

were not part of the arbitration proceeding. Accordingly,

petitioner was directed to pay respondent $53,931.65 "at [that]

time."1

Following receipt of the arbitrator's original award,

respondent sought "clarification" thereof – contending that the

arbitrator "misunderstood the parties['] stipulation." 

Specifically, respondent asserted that petitioner had withheld

the $82,512.35 referenced in the award prior to the actual

arbitration and, further, that the parties had stipulated that

such sum "could continue to be withheld pending the passage of

time or other resolution between the parties." According to

respondent, the $82,512.35 at issue was not intended to be

applied against any award made in its favor and, therefore, the

arbitrator should not have deducted that amount from the total

1 The parties' stipulation was not reduced to writing, the

hearing minutes were not transcribed and the parties' posthearing submissions do not appear in the record.
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sum due and payable to respondent.2 Petitioner opposed the

relief sought, arguing that the requested clarification would

amount to a redetermination of the merits and, further, that the

adjustment sought by respondent did not qualify as the

"correction of a clerical, typographical, technical or

computational error" in the original award within the meaning of

CPLR 7509 and 7511 (c) (1). In so doing, petitioner did not

address the substance of respondent's claim – namely, that

petitioner was, in effect, receiving a double credit as to (at

least) the $82,512.35 at issue.

The arbitrator thereafter issued a modified award, which 

granted the full $150,250 to respondent and deleted any reference

to the previous "credits," thereby making no award of damages

with respect to petitioner's counterclaim. As to the basis for

such modification, the arbitrator noted, "It now appears that the

amounts in question were withheld from [respondent's] final

payment, and therefore should not, of course, have been withheld

again in the [original arbitration] [a]ward." Petitioner then

commenced the instant proceeding seeking to vacate both the

original and the modified award contending, among other things,

that respondent's request for modification was untimely, that the

arbitrator exceeded her authority with respect to the modified

award as such modification did not fall within any of the grounds

set forth in CPLR 7511 (c) and that the original award should be

vacated in its entirety due to respondent's failure to comply

with what petitioner deemed to be a condition precedent to

arbitration. Respondent answered and requested that Supreme

Court dismiss the petition in its entirety and confirm the

modified arbitration award.

Supreme Court declined to vacate the original award based

upon respondent's failure to comply with the notice of claims

provision set forth in the parties' arbitration agreement,

finding that the arbitrator's decision not to enforce this clause

was both rational and based upon consideration of the underlying

equities. Similarly, Supreme Court denied petitioner's request

2 The request for clarification made no mention of the

$13,806 in "stipulated backcharges." 
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to vacate the modified award based upon respondent's untimely

modification request, finding – in essence – that the arbitrator

acted within her authority in entertaining a request that, due to

law office failure, was filed one day beyond the 20-day period

set forth in CPLR 7509. As to the merits, Supreme Court agreed

that the arbitrator exceeded her authority in issuing the

modified award, as such modification went beyond the mere

correction of a computational error within the meaning of CPLR

7511 (c) (1), and granted petitioner's request to vacate this

award. As to the original award, Supreme Court found that the

arbitrator – by neglecting to delineate and address the effect of

the parties' purported stipulation – failed to make "a final and

definite award [upon] the subject matter submitted" (CPLR 7511

[b] [1] [iii]). Accordingly, Supreme Court vacated the original

award as well and remanded the matter to the arbitrator for a

rehearing and redetermination of the issues – including the

existence and/or content of the parties' alleged stipulation and

the corresponding effect, if any, upon petitioner's counterclaim. 

Respondent now appeals, seeking reinstatement of the modified

award, and petitioner cross appeals, contending that there is no

basis upon which to remand this matter to the arbitrator for

further proceedings.

We affirm. Initially, we reject petitioner's assertion

that respondent failed to comply with what it characterizes as a

condition precedent to arbitration. The parties' dispute in this

regard centers around a notice of claim clause contained within

the arbitration agreement, which required that any claim for an

adjustment in the subcontract price be made within 15 days of the

occurrence giving rise to the claim. Although the arbitrator

recognized that respondent failed to comply with this provision,

she determined that such noncompliance was not a bar to

arbitration given, among other things, that the parties

anticipated that respondent might be called upon to perform

additional work – as evidenced by the fact that petitioner's

contract with the Department of Transportation assigned a value

to respondent's work that far exceeded the amount of respondent's

subcontract – as well as uncontroverted testimony that the exact

acreage to be cleared and grubbed could not be ascertained until

the work was completed. "An arbitrator is charged with the

interpretation and application of the [parties'] agreement . . .
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[and] courts are obligated to give deference to the decision of

the arbitrator" (Matter of New York City Tr. Auth. v Transport

Workers' Union of Am., Local 100, AFL-CIO, 6 NY3d 332, 336 [2005]

[citations omitted]). Inasmuch as the arbitrator's decision in

this regard was rational and, further, was based upon a

consideration of the underlying equities, Supreme Court properly

declined to vacate the original award upon this ground. We reach

a similar decision with respect to Supreme Court's finding that

the arbitrator did not exceed her authority in excusing

respondent's one-day delay in submitting its modification request

(cf. Spector v Torenburg, 852 F Supp 201, 207-208 [1994]; but see

Matter of Bianchi [Katz], 111 AD3d 1012, 1013 [2013]). 

Accordingly, neither the original award nor the modified award is

subject to vacatur based upon these procedural grounds.

As to the merits, we agree with petitioner that the

arbitrator's modification of the original award exceeded the

narrow grounds set forth in CPLR 7511 (c). A review of the

modified award reveals that the arbitrator did not simply correct

a "miscalculation of figures . . . in the [original] award" (CPLR

7511 [c] [1]) but, rather, made new factual findings as to the

applicability of the parties' apparent stipulation relative to

petitioner's counterclaim and its corresponding impact upon the

moneys awarded, i.e., the arbitrator impermissibly revisited the

merits of the parties' dispute. Under these circumstances, the

modified award was properly vacated (see CPLR 7509, 7511 [c];

Avamer Assoc., L.P. v 57 St. Assoc., L.P., 67 AD3d 483, 484

[2009]; cf. Matter of Outback Steakhouse, Inc. v Contracting

Mgt., Inc., 58 AD3d 855, 855 [2009]).

We also are persuaded that Supreme Court properly vacated

the original arbitration award and remanded the matter to the

arbitrator for a rehearing (see CPLR 7511 [d]). CPLR 7511 (b)

(1) (iii) permits a court to vacate an arbitration award if the

court finds that a party's rights were prejudiced because the

arbitrator, in making such an award, either "exceeded his [or

her] power or so imperfectly executed it that a final and

definite award upon the subject matter submitted was not made." 

Although we find no basis upon which to conclude that the

arbitrator exceeded her authority in rendering the initial award,

we agree with Supreme Court that, by failing to address the
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existence and/or content of the parties' purported stipulation,

ascertain whether the contested funds were in fact withheld by

petitioner prior to the start of the arbitration and assess the

corresponding impact, if any, upon petitioner's counterclaim, the

arbitrator "so imperfectly executed" her powers that "a final and

definite award" was not in fact made (CPLR 7511 [b] [1] [iii]). 

In reaching this result, we are not suggesting that the

arbitrator made a factual or legal error as to the import and/or

effect of the parties' apparent stipulation, as we acknowledge

that such matters are largely beyond our review (see Matter of

Falzone [New York Cent. Mut. Fire Ins. Co.], 15 NY3d 530, 534

[2010]; Matter of Aftor v Geico Ins. Co., 110 AD3d 1062, 1064

[2013]). Rather, it is the arbitrator's failure to ascertain the

existence of the stipulation, articulate its parameters and

assess its impact upon both respondent's claim for additional

compensation and petitioner's corresponding counterclaim that

warrants vacatur of the original award. The parties' remaining

contentions, to the extent not specifically addressed, have been

examined and found to be lacking in merit.

McCarthy, J.P., Lynch and Clark, JJ., concur.

ORDERED that the order is affirmed, without costs.

ENTER:

Robert D. Mayberger

Clerk of the Court