Court Opinion

ID: 5700472
Source: CourtListenerOpinion
Date Created: 2022-01-12 15:39:45.510706+00
Date Added: 2024-06-11T08:40:19.501202
License: Public Domain

Order, Supreme Court, New York County (Marylin G. Diamond, J.), entered October 18, 2004, which, insofar as appealed from, granted those aspects of defendants’ motion that sought to dismiss plaintiff’s first, third and fourth causes of action, granted that aspect of defendants’ motion that sought to compel arbitration of plaintiffs second cause of action and directed the parties to proceed to arbitration on that cause of action, and denied plaintiffs cross motion to stay arbitration, modified, on the law, the first, third and fourth causes of action reinstated, *482those aspects of defendants’ motion that sought to compel arbitration of plaintiffs claims denied, plaintiffs cross motion to stay arbitration granted, and otherwise affirmed, without costs.
Plaintiff is an attorney who was employed by defendant Molod Spitz DeSantis, EC. (the firm) from 1996 through April 2003. In December 2000 plaintiff and the firm entered into an “employment agreement” that “set[ ] forth the entire understanding of the parties relating to” plaintiffs employment as a “contract member” of the firm, including an agreement “that all controversies and claims which may arise out of the transaction contemplated by this Agreement or the construction, performance or breach of this Agreement shall be determined by binding arbitration.”
In June 2003 plaintiff commenced a special proceeding against the firm seeking to: (1) substitute plaintiff, in place of the firm, as the counsel of record for several clients in pending actions; (2) compel the firm to turn over all client files in matters in which substitution of counsel was sought; (3) require that the firm be reimbursed for disbursements, if any, upon the completion of each action in which plaintiff is substituted; (4) prohibit the firm from working on any file or billing any client where the subject client chose to be represented by plaintiff; (5) require the firm to forward to plaintiff all telephone calls, mail, facsimile transmissions and other communications addressed to her, and to safeguard plaintiffs possessions in the firm’s office until they were retrieved by her; (6) recover her salary through June 13, 2003; (7) recover damages for vacation time owed to her for 2002 and 2003; and (8) recover $1,850 in expenses incurred. On June 17, 2003 the parties entered into a “so-ordered” stipulation before Justice Diamond. The stipulation, among other things, resolved plaintiffs first, second, third and fifth claims. The stipulation stated, in pertinent part, that: “This stipulation should not otherwise be construed as a waiver of any rights or remedies that [plaintiff] or [defendants] may seek to obtain against one another.”
Plaintiff subsequently commenced the instant action against defendants. Plaintiff asserted claims for breach of contract (first cause of action), violations of the New York City Human Rights Law (second cause of action), failure to provide plaintiff with client files and executed consent-to-change-counsel forms, and failure to forward mail and telephone calls addressed to her (third cause of action), back pay, vacation pay and reimbursement of expenses (fourth cause of action), and defamation (fifth cause of action).
*483In lieu of answering, defendants moved to dismiss the complaint pursuant to CPLR 3211, or alternatively, to compel arbitration of plaintiffs claims. Defendants argued, among other things, that the stipulation resolved all 11 employment-related’ ’ issues, including plaintiffs first, second, third and fourth causes of action. Defendants also argued that any claims that survived the stipulation were subject to arbitration pursuant to the employment agreement.
Plaintiff cross-moved to stay arbitration, arguing that defendants waived the right to compel arbitration because they availed themselves of the courts in litigating matters related to the employment agreement. Additionally, plaintiff argued that her claims fell outside the scope of the arbitration clause and were preserved under the reservation-of-rights clause of the stipulation. Plaintiff also cross-moved to restrain defendants from separately litigating claims related to attorneys’ fees that were the subject of dispute between the parties.
Supreme Court, among other things, granted defendants’ motion to dismiss the complaint to the extent of dismissing the first, third and fourth causes of action.1 The court determined that these causes of action had been resolved by the parties’ stipulation in the special proceeding. The court also granted that aspect of defendants’ motion that sought to compel arbitration of plaintiffs second cause of action to recover damages for violations of the New York City Human Rights Law. Rejecting plaintiffs contention that defendants had waived the right to compel arbitration, the court denied plaintiffs cross motion to stay arbitration.
At the outset, Supreme Court erred in determining that the parties’ stipulation in the special proceeding barred plaintiffs first and fourth causes of action. The stipulation addressed neither the alleged breach of plaintiffs employment contract nor plaintiff’s claims for back pay, vacation pay and expense reimbursement. Furthermore, the stipulation contained a reservation-of-rights clause which stated that, by entering into the stipulation, the parties did not waive any rights or remedies they may have against one another.
Supreme Court also erred in dismissing plaintiffs third cause of action. Under this cause of action, plaintiff seeks to recover damages based on defendants’ alleged failure to: (1) forward to plaintiff mail and telephone calls addressed to her; (2) provide *484plaintiff with executed consent forms to effect substitution of counsel; and (3) provide plaintiff with certain client files. Supreme Court dismissed this cause of action on the ground that the claims thereunder were resolved by the stipulation. However, by asserting this cause of action plaintiff essentially alleges that the terms of the settlement have been breached by defendants. Therefore, plaintiffs third cause of action is in essence one to enforce the stipulation (see generally Drew v Prudential Ins. Co. of Am., 224 AD2d 1036 [1996]).
Turning to the issue of the appropriate forum for plaintiffs claims, plaintiff asserts that defendants waived the right to compel arbitration pursuant to the employment agreement. In support of her waiver argument, plaintiff points out that defendants failed to move to compel arbitration in the special proceeding and participated in litigation regarding several matters that were subject to the arbitration clause.
A party will be deemed to have waived a contractual right to arbitrate when the party’s “litigation activity manifested a preference ‘clearly inconsistent with [its] later claim that the parties were obligated to settle their differences by arbitration’ ” (Sherrill v Grayco Bldrs., 64 NY2d 261, 272 [1985], quoting Matter of Zimmerman [Cohen], 236 NY 15, 19 [1923]). The Court of Appeals has provided the following guidance to courts evaluating a waiver-of-the-right-to-arbitrate claim: “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” (De Sapio v Kohlmeyer, 35 NY2d 402, 405 [1974]; see Allied Bldg. Inspectors Intl. Union of Operating Engrs., Local Union No. 211, AFL-CIO v Office of Labor Relations of City of N.Y., 45 NY2d 735, 737 [1978]).
To be sure, “[n]ot every foray into the courthouse effects a waiver of the right to arbitrate” (Sherrill, 64 NY2d at 273), and actions undertaken by the party against whom the waiver would operate that are merely defensive will be considered consistent with an assertion of the right to arbitrate (see e.g. Matter of Haupt v Rose, 265 NY 108, 110-111 [1934] [entering into stipulation to extend time to answer coupled with moving to dismiss the complaint or, alternatively, to compel plaintiff to separately state and number causes of action insufficient to constitute waiver]; Flynn v Labor Ready, 6 AD3d 492 [2004] [making mo*485tions to dismiss complaint pursuant to CPLR 3211 (a) (7) and to deny class action certification insufficient to constitute waiver]; Two Cent. Tower Food v Pelligrino, 212 AD2d 441 [1995] [interposing answer that contains no affirmative defenses or counterclaims insufficient to constitute waiver]). However, where the party against whom the waiver would operate contests the merits of the dispute or seeks affirmative relief through the judicial process, that party waives the right to compel arbitration (see e.g. De Sapio, 35 NY2d at 405-406 [defendant’s acts of interposing cross claim and taking deposition of plaintiff each sufficient to waive right to compel arbitration] ; Great N. Assoc. v Continental Cas. Co., 192 AD2d 976 [1993] [commencement of judicial action or proceeding embracing same issues as those contained in arbitration claim sufficient to waive right to compel arbitration]).
In the case at bar, plaintiff initiated both the special proceeding and the instant plenary action. In response to the special proceeding defendants did not move to compel arbitration. Rather, they elected to enter into the stipulation, which was “so-ordered” by the justice assigned to the then-pending judicial proceeding, redressing issues between the parties that were embraced by the arbitration clause in the employment agreement (cf. Siegel, NY Prac § 595, at 1049 [4th ed] [to avoid waiver, motion to compel arbitration should be defendant’s sole step when sued on a claim that she believes is arbitrable]). Additionally, defendants litigated the issue of the division of attorneys’ fees between the firm and plaintiff in two other actions—Cooney v The Second Toro Family, Ltd. Partnership (Sup Ct, NY County, Index No. 105706/01) and Pringle v Chelsea Piers Mgt., Inc. (Sup Ct, Bronx County, Index No. 25359/00)—despite the fact that the issue of the division of attorneys’ fees between the parties was addressed in sections 3.2 and 3.3 of the employment agreement, and concomitantly subject to the arbitration clause.2
Through their actions defendants manifested a preference clearly inconsistent with their claim that the parties were obligated to settle their differences by arbitration (see Sherrill, 64 NY2d at 272). Far from employing a defensive posture, defendants actively participated in a special proceeding and two plenary actions that involved matters falling within the ambit of the arbitration clause, thereby manifesting an affirmative acceptance of the judicial forum (see De Sapio, 35 NY2d at 405-406). By seeking and accepting the benefits of litigation, *486defendants have waived their contractual right to compel arbitration, and plaintiffs first, second, third and fourth causes of action should be litigated in the plenary action.
In light of the foregoing, we need not address plaintiffs argument that her cause of action to recover damages for gender discrimination in contravention of the New York City Human Rights Law is not subject to arbitration. Concur—Williams, Gonzalez and McGuire, JJ.

. The court also dismissed plaintiffs fifth cause of action to recover damages for defamation. Plaintiff has not challenged that aspect of the order on appeal, and therefore abandoned that claim (see Doe v Westfall Health Care Ctr., 303 AD2d 102, 105 [2002]).

. Nor did defendants act only defensively in Cooney and Pringle, where, in fact, defendants initiated the litigation with plaintiff herein by bringing motions for the apportionment of attorneys’ fees.