Case Name: Marthan Equities, Inc., et al., Appellants, v. P. M. Realty Management Corporation et al., Respondents
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1995-06-27
Citations: 216 A.D.2d 180
Docket Number: 
Parties: Marthan Equities, Inc., et al., Appellants, v P. M. Realty Management Corporation et al., Respondents.
Judges: 
Reporter: Appellate Division Reports
Volume: 216
Pages: 180–182

Head Matter:
Marthan Equities, Inc., et al., Appellants, v P. M. Realty Management Corporation et al., Respondents.
[628 NYS2d 678]

Opinion:
Order, Supreme Court, New York County (Phyllis Gangel-Jacob, J.), entered August 30, 1993, which denied petitioners' motion to confirm an arbitration award and granted respondents' cross motion to vacate the award, affirmed, with costs.
The IAS Court correctly held that it was misconduct within the meaning of CPLR 7511 (b) (1) (i), requiring vacatur of the award, for the two remaining arbitrators to continue receiving proof, over respondents' objection, after the third had with drawn (Matter of New York Tel. Co. [Pennsylvania Gen. Ins. Co.], 87 AD2d 956). CPLR 7506 (e) provides that even though a majority is sufficient to determine a question or render an award, the hearing itself "shall be conducted by all the arbitrators" (emphasis added). This requirement may be waived only by consent of the parties (CPLR 7506 [f]), and it is undisputed that respondents vigorously objected to any continuation of the hearing without substitution of a third arbitrator. This is a time-honored rule (Matter of Bullard [Grace Co.], 240 NY 388) to which we have indicated, in unambiguous dicta, our firm adherence (Artie Shaw Presents v Snyder, 46 AD2d 867, 868), the rationale being that the parties are entitled to a full discussion of the issues in order that each arbitrator have the benefit of hearing the views and opinions of his fellow arbitrators. Only where the matter has already been "heard, considered and practically decided" is the necessity for filling the vacancy obviated (Matter of American Eagle Fire Ins. Co. [New Jersey Ins. Co.], 240 NY 398, 409), and the record reveals that this arbitration had clearly not yet reached that stage when the third arbitrator withdrew.
There are several reasons why the dissent's reliance upon the Rules of the American Arbitration Association is misplaced. As a threshold matter, petitioners did not raise this argument before the motion court; since the point has not been preserved, we must decline to consider it (First Intl. Bank v Blankstein & Son, 59 NY2d 436, 447; Peddle v Turner Constr. Co., 92 AD2d 530). It was improper for petitioners to include a copy of the Rules as part of the record on appeal, since it was never presented to the IAS Court (Norgauer v Norgauer, 126 AD2d 957, 958).
Even were we to ignore this basic rule of appellate practice, the argument must fail on the merits. The dissent has quoted the relevant arbitration clause contained in paragraph 12 of the parties' contract. Significantly, these parties did not bind themselves to the Rules, a reference commonly found in arbitration clauses which is wholly missing here. In the absence of contractual adherence to these Rules, we may confidently conclude that these parties contracted with reference to the otherwise prevailing law of this State. Assuming any conflict between these authorities, it is the law which must prevail. Concur—Rosenberger, J. P., Wallach, Ross and Williams, JJ.