Court Opinion

ID: 5792983
Source: CourtListenerOpinion
Date Created: 2022-01-12 18:13:01.509394+00
Date Added: 2024-06-11T08:42:20.069263
License: Public Domain

Sweeney, J. (dissenting).
The pivotal issue on this appeal is whether the so-called “ liquidated damage ” provision of the designation of bargaining agent agreement calls for a penalty. We agree with the majority’s reasoning and its conclusion on this issue. The damage clause imposes a penalty. We do not *146agree, however, with the result reached by the majority and, therefore, dissent and vote to reverse.
It is well settled that our review is a limited one, and a mistake of law or fact by an arbitrator will not justify vacatur of an award. (Matter of Burt Bldg. Materials Corp. [Local 1205, Int. Brotherhood of Teamsters], 18 N Y 2d 556.) It is equally well established that where the arbitrator’s award contravenes public policy the court has the authority to vacate it. (Matter of Western Union Tel. Co. [ACA], 299 N. Y. 177.) Our courts have held that the imposition of a penalty for a breach of contract is against public policy and have vacated an arbitration award which imposes a penalty as opposed to granting liquidated damages. (See Matter of Publishers’ Assn. of New York City [Newspaper & Mail Deliverers’ Union of N. Y.], 280 App. Div. 500, and cases cited therein.) Both ¡Special Term and the arbitrators agree with these general principles, but concluded that the damage clause in question provided for liquidated damages and not a penalty. This conclusion was properly rejected by the majority. They would, nevertheless, affirm on the theory that the “public policy” against enforcement of penalty “provisions ” should not apply in the instant case. With this conclusion we are unable to agree. It is unsupported by citation or authority, and contrary to existing precedent. 3h this arbitration award case where there is no correlation between the award and the actual damages sustained, we find no compelling reason for making an exception and not applying the established law. The cases cited in the concurring opinion are distinguishable. In our view, the penalty imposed herein calls for damages beyond actual loss caused by a breach which do not result from a formula hut, on the contrary, are directed solely toward punishment, with discretion in the arbitrators to add more. To enforce this clause is against public policy, one which should not be treated lightly and taken away. The award, therefore, should be vacated and, since the respondent is limited to its actual damages, the matter remitted to the same arbitrators for a rehearing on the issue of damages. (CPLR 7511, subd. [c], par. [3]); see Matter of Heymanson [Morgan & Bro.1, 276 App. Div. 837.)
Staley, Jr., J., concurs with Greenblott, J.; Herlihy, P. J., concurs in a separate opinion in which Staley, Jr., J., concurs; Sweeney and Reynolds, JJ., dissent in an opinion by Sweeney, J.
Judgment affirmed, without costs.