Court Opinion

ID: 5844574
Source: CourtListenerOpinion
Date Created: 2022-01-12 23:41:45.223616+00
Date Added: 2024-06-11T08:43:53.272467
License: Public Domain

Bloom, J. (dissenting).
Defendant appeals from so much of an order as denied his application to stay this action pending arbitration. Defendant is the owner of. the 50-story building located at 9 West 57th Street. By lease dated November 25, 1969, defendant let 21 floors in the building to plaintiff. That lease was subsequently amended on July 17, 1970 to include four additional floors so that plaintiff is now the lessee of 25 floors occupying 678,990 square feet representing approximately 45% of the building’s rentable space.
Defendant is a member of the Realty Advisory Board on Labor Relations, Inc. By consequence, it is bound by the collective agreement entered into between the Realty Advisory Board and Local 32B, Building Services Employees International Union, AFL-CIO. Pertinent to the action before us is article 7 of the lease which provides for the escalation of rents in the event of an increase in the wage rates of certain employees covered by the collective agreement. Section 7.01 defines wage rates of porters and *59cleaning women to include, in addition to hourly wage rates, sums paid for pensions, welfare funds, vacations, bonuses, Social Security, unemployment, disability benefits, health, life, accident or other types of insurance. It also provides that the “Basic Wage Rate shall mean the Wage Rate in effect on December 31, 1969”. Section 7.02 specifies, in part that “[i]f the Wage Rate shall be changed at any time after December 31, 1969, and shall be greater than the Basic Wage Rate at any time(s) during the term of this lease, Tenant shall pay to Landlord as additional rent” a sum computed in accordance with the provisions of the article. The landlord is required to give the tenant written notice of any increase in the basic wage and to set forth its calculation of the additonal rent payable. Under section 7.03 such notice is binding and conclusive upon the tenant unless, within 45 days after receipt thereof, the tenant shall notify the landlord that it disputes the correctness of the notice. In such event, the parties shall, by agreement, endeavor to compose their differences. Failing such agreement, the matter is to be submitted to “informal” arbitration.
The wages of porters and cleaning women are fixed by the collective agreement on an hourly basis. The peripheral benefits provided by the collective agreement are fixed on a weekly basis “for ever regular employee”. Thus, in order to compute the hourly base wage it became necessary to reduce the weekly sums paid to the various funds to an hourly rate. Up to and including the 1979 wage escalations, the hourly wage rate was obtained by dividing the total annual wage payable to porters and the total annual peripheral benefits paid on their behalf by 1,680 (40 hours per week times 52 weeks) and cleaning women by 1,560 (30 hours per week times 52 weeks).1 Many of the notices served by defendant were disputed by plaintiff and, in some instances, arbitration was demanded. None of these disputes has, in fact, proceeded to arbitration.
*60In February, 1980 defendant served upon plaintiff a wage escalation notice. This notice, for the first time, computed . the hourly wage for porters on the basis of annual work time of 1,657 hours and for cleaning women on the basis of annual work time of 1,221 hours. So that comparison with the basic wage rate would be fair, the base year, 1969, was recomputed on the same basis. The effect on plaintiff was startling. The recomputation alone affected an annual increase of $780,000 in its rent. Since the lease does not expire until July 31, 1997, this revision of the formula for computing the base wage would entail payment of some $13,500,000 in additional rent over the life of the lease.
The reason for the new denominator utilized by the defendant is indicated at the bottom of the 1980 escalation notice sent by defendant to plaintiff. A note provides that “[a] 11 items, other than the minimum hourly rate, are calculated by dividing the total annual cost by the number of hours actually worked per year for both the base year and the current year”.
Subsequent to the service of the 1980 wage escalation plaintiff brought this action. The complaint contains five causes of action. The first cause seeks a declaration that defendant is without power unilaterally to effect a change in the method of computing the annual number of hours worked by porters and cleaning women for the purpose of determining the amount of the wage escalation under article 7 of the lease. The second cause alleges a violation of the General Business Law while the third cause alleges a conversion of Avon’s funds. Both seek compensatory and exemplary damages. The fourth cause seeks recoupment of the alleged excess rent paid by reason of the adoption by defendant of the new formula. The fifth and final cause seeks reformation of the lease. At or about the same time as the commencement of this action, plaintiff served upon defendant a demand for arbitration. In large part the demand tracks the complaint.2 However, it contains additional claims which it concedes are within the ambit of the arbitration provision of article 7.
*61Defendant moved to stay the action pending arbitration. Plaintiff moved to stay arbitration pending disposition of the action brought by it. Special Term denied defendant’s motion to stay the action. It denied plaintiff’s motion as academic. Only defendant has appealed from that determination. Hence, there is no need here to treat with the somewhat awkward situation posed by plaintiff’s motion to stay an arbitration which it had inaugurated.3
Our law has long recognized the validity of an agreement to arbitrate (Matter of Berkovitz v Arbib & Houlberg, 230 NY 261; Matter of Marchant v Mead-Morrison Mfg. Co., 252 NY 284). Prior to the enactment of the arbitration statute the remedy for breach of an agreement to arbitrate gave rise only to an action for damages (Haggart v Morgan, 5 NY 422). Indeed, a submission to arbitration could be revoked at any time prior to the final submission to the arbitrators for their decision even though a valuable consideration had been paid for waiver of the right to revoke. All that remained was the right of the aggrieved party to seek redress by way of damages (Finucane Co. v Board of Educ., 190 NY 76).
The change came with the adoption of the Arbitration Law (L 1920, ch 275), now CPLR article 75. The covenant to arbitrate was made “valid, enforcible and irrevocable, save upon such grounds as exist at law or in equity for the revocation of any contract”. Thus, while an agreement to arbitrate is now specifically enforceable, it “is clear that unless the agreement to arbitrate expressly and unequivocally encompasses the subject matter of the particular dispute, a party cannot be compelled to forego the right to seek judicial relief and instead submit to arbitration” (Bowmer v Bowmer, 50 NY2d 288, 293-294; see, also, Matter of Marlene Inds. Corp. [Carnac Textiles], 45 NY2d 327). “The agreement to arbitrate must be express, direct, and unequivocal as to the issues or disputes to be submitted to arbitration” (Gangel v DeGroot, 41 NY2d *62840, 841). Of necessity, therefore, we are required to turn to the lease to determine whether the parties by their treaty agreed to submit to arbitration the issue of a new formula for the determination of the basic wage rate. Section 7.02 of the lease provides for additional rent “[i]f the Wage Rate shall be changed at any time after December 31, 1969, and shall be greater than the Basic Wage Rate at any time(s) during the term of this lease”. Here, the escalated rent is not bottomed upon any purported change in the wage rate. Indeed, no claim to that effect is before us. The change is claimed to rest solely and exclusively upon the adoption by the defendant of a new formula for the computation of the wage rate. Plaintiff never agreed to arbitrate that issue.4 In the absence of such an agreement, it may not be compelled to forego its right to litigate the question in the judicial forum.
Accordingly, and to the extent appealed from, I would affirm the order of Special Term.
Kupferman, J. P., and Sullivan, J., concur with Ross, J.; Bloom, J., dissents in a separate opinion.
Order, Supreme Court, New York County, entered on August 28, 1980, reversed, on the law to the extent appealed from, and the motion for a stay pending arbitration, granted. Appellant shall recover of respondent $50 costs and disbursements of this appeal.

. Commencing in or about 1972 this was amended to 2,000 hours per year for porters and 1,500 hours per year for cleaning women. This change was precipitated by defendant’s recognition that although the lease provision (§ 7.01) permitted exclusion of vacation time in the computation of base wage, he had failed to exclude it.

. Plaintiff’s asserted reason for seeking the same relief both in the courts and in arbitration is to protect itself against any eventuality.

. Plaintiff concedes that despite the denial of its motion to stay the arbitration instituted by it, if defendant’s motion to stay this action is denied, it is precluded from arbitrating any of the claims encompassed by the instant complaint.

. The original formula for computation of the increased rent was, apparently, the product of an agreement by acquiescence. We are not told whether plaintiff acquiesced in the formula adopted by defendant in or about 1972. In ■any event, we need not concern ourselves with the method whereby the formula for increased rent was to he adopted or whether it is subject to change, other than to note that the parties have not by the lease agreed to arbitrate that issue.