Opinion
13569 Index No. 655704/19 Case No. 2020-01264
04-13-2021
In the Matter of BERGASSI GROUP LLC, Petitioner-Respondent, v. ALLIED WORLD INSURANCE COMPANY, Respondent-Appellant.
Kennedys CMK LLP, New York (Michael J. Tricarico of counsel), for appellant. Gallo, Vitucci & Klar LLP, New York (Taranae J. Hashemi of counsel), for respondent.
Kennedys CMK LLP, New York (Michael J. Tricarico of counsel), for appellant.
Gallo, Vitucci & Klar LLP, New York (Taranae J. Hashemi of counsel), for respondent.
Kapnick, J.P., Kern, Singh, Scarpulla, JJ.
Order, Supreme Court, New York County (Tanya R. Kennedy, J.), entered January 15, 2020, which granted petitioner Bergassi Group LLC's (Bergassi) petition to permanently stay arbitration, unanimously reversed, on the law, without costs, the petition denied and the proceeding dismissed.
Where "a contract containing an arbitration provision ‘affects’ interstate commerce, disputes arising thereunder are subject to the FAA" ( Matter of Diamond Waterproofing Sys., Inc. v. 55 Liberty Owners Corp., 4 N.Y.3d 247, 252, 793 N.Y.S.2d 831, 826 N.E.2d 802 [2005] ). The surety agency agreement here between corporations from different states gave rise to a finding of interstate commerce and was subject to the FAA ( Chartis Seguros Mexico, S.A. de C.V. v. HLI Rail & Rigging, LLC, 967 F. Supp. 2d 756, 762 [S.D. N.Y.2013] ). Although "a New York court, applying the Federal Arbitration Act, limits its inquiry to whether there is a valid agreement to arbitrate the particular dispute" and all other questions are for the arbitrator ( Matter of Cone Mills Corp. [Nielsen Co.], 90 A.D.2d 31, 33, 455 N.Y.S.2d 625 [1st Dept. 1982] ), the parties can agree to arbitrate gateway issues of arbitrability ( Matter of Monarch Consulting, Inc. v. National Union Fire Ins. Co. of Pittsburgh, PA, 26 N.Y.3d 659, 676, 27 N.Y.S.3d 97, 47 N.E.3d 463 [2016] ).
Applying principles of New York state contract law, based on the choice of law provision governing the surety agency agreement ( First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944, 115 S.Ct. 1920, 131 L.Ed.2d 985 [1995] ), and reading the contractual clauses together in context ( Nova Cas. v. Harleysville Worchester Ins. Co., 146 A.D.3d 428, 428, 50 N.Y.S.3d 1 [1st Dept. 2017] ), the provision that "[i]f a dispute or disagreement arises in connection with this Agreement, including a dispute or disagreement as to its formation or validity, such dispute or disagreement shall be submitted to arbitration," refers any disputes over the validity or formation of the arbitration provision in question to arbitration. Accordingly, the matter here should proceed to arbitration.