Court Opinion

ID: 5691676
Source: CourtListenerOpinion
Date Created: 2022-01-12 15:28:03.985022+00
Date Added: 2024-06-11T08:40:09.456689
License: Public Domain

Botein, J. (dissenting).
The contract between the parties contains the following relevant arbitration provisions: “ c. If any question arises as to the validity, interpretation or performance of this agreement * * * such question shall be settled by arbitration ”.
Respondent has filed a demand for arbitration of the following three items or claims:
“ 1. Damages for breach of contract arising from fraud and misrepresentation inducing claimant to enter into contract.
“ 2. Damages for breach of contract resulting from failure to supply efficient and properly operating equipment.
“ 3. Return of moneys prepaid by the claimant.”
Petitioners moved to stay any arbitration proceeding until Item 1 had been eliminated from the demand, and they appeal from the order denying their motion. I believe the disputed item should not survive the motion, as it does not come within the scope of the arbitration clause, limited as it is to only three aspects of the contract. It certainly raises no question as to the interpretation of the agreement. It cannot relate to performance of the contract, for although gilded with the phrase ‘ ‘ damages for breach of contract ”, the claim is clearly for prior deceit inducing the making of the contract. It is contended in the majority opinion that Item 1 embraces issues relating to breach of contract arising subsequent to the making of the contract. If so, it will overlap Item 2, since respondent asserts in his opposing affidavits that he seeks damages on the ground that the product proved ‘ ‘ highly inefficient ’ ’.
Nor does Item 1 challenge the validity of the agreement — which is the third and remaining ground for arbitration. Respondent does not seek to rescind or destroy the contract. On the contrary, by asserting this claim in tort for fraudulent inducement of the contract, he affirms its validity (Fitzgerald v. Title Guar. & Trust Co., 290 N. Y. 376). Under section 112-e of the Civil Practice Act, a claim for damages resulting from prior deceit inducing a contract is not inconsistent with a claim based upon rescission of the contract. Respondent could have, in the same demand, attempted to have his contract and also destroy it. He has elected to stand upon the contract. A court of law may accord to arbitration only such disputes as the parties themselves have agreed should be submitted. Item 1 does not spell out such a dispute. The order should be reversed, the *351motion granted and the arbitration stayed until Item 1 has been eliminated from the demand.
Breitel and Rabin, JJ., concur with Cox, J.; Botein, J., dissents in opinion, in which Peck, P. J., concurs.
Order affirmed, with $20 costs and disbursements to the respondent.