Court Opinion

ID: 6011185
Source: CourtListenerOpinion
Date Created: 2022-01-13 10:49:41.826802+00
Date Added: 2024-06-11T08:50:21.492162
License: Public Domain

Mikoll, J. P.
(dissenting). I agree with petitioner’s contention that Supreme Court erred in requiring it to arbitrate any issues concerning its performance as a performance bond surety. Petitioner’s contractual obligations stem from its bond and takeover agreement. While respondent seeks damages from petitioner under the surety bond, it is the bond that determines the relief between the parties. While petitioner is bound by factual findings of arbitration concerning its principal’s default, respondent is attempting to litigate issues flowing from petitioner’s performance of its bond obligation. The bond and takeover agreement define the parties’ rights. Since these provide for resolution in a court of law, arbitration cannot be forced on petitioner.
Supreme Court’s reliance on Matter of Fidelity & Deposit Co. v Parsons & Whittemore Contrs. Corp. (48 NY2d 127) is at odds with the logic of the case. The Court of Appeals there found that the surety’s incorporation by reference of its principal’s contract, which contained a broad arbitration clause, bound the surety to the findings of arbitration between the principal *721and obligee. However, the court went on to say that a distinction must be drawn between disputes arising under the subcontract and differences which may arise between the surety and the obligee under the performance bond (see, id., at 131). This reasoning was reiterated and reaffirmed by the. Court of Appeals in Matter of Cowper Co. v Hires-Turner Glass Co. (51 NY2d 937). In Cowper, the subcontract incorporated by reference a prime contract which included an arbitration clause. The court held that the incorporation by reference clause did not bind the subcontractor to arbitrate under the prime contract’s arbitration provision.
I disagree with Supreme Court’s conclusion that arbitration is indicated because petitioner stands in the place of Peter Annis, Inc. The record, to the contrary, discloses that respondent’s claims against petitioner relate to petitioner’s performance of its obligations as a performance bond surety. This is clearly stated in the affidavit of respondent’s architect. There is no legal basis for submitting this dispute to arbitration. Without petitioner’s express consent to arbitrate, it cannot be compelled to do so (see, Matter of Marlene Indus. Corp. [Carnac Textiles], 45 NY2d 327).
I conclude that petitioner has preserved its right by seeking a stay of arbitration and reserving its right to contest the denial thereof by this appeal. Petitioner has taken all steps required of it to preserve that position.
I would modify Supreme Court’s order by reversing the order of the court which denied the stay of arbitration proceedings between petitioner and respondent and joined petitioner in arbitration proceedings, and, as so modified, affirm.
Ordered that the order is affirmed, with costs.