Summary
concealing evidence constitutes corruption and fraud in procuring award sufficient to justify vacating award and remanding to a new panel of arbitrators
Summary of this case from Medina v. Foundation Reserve Ins. Co.Opinion
December 19, 1989
Appeal from the Supreme Court, New York County (David Saxe, J.).
After an initial confirmation by the IAS Part of the arbitration award granted to respondent-appellant, Milton Schonberger, it was learned by petitioners-respondents, Science Development Corp. and Farleigh S. Dickinson, Jr., that Schonberger and his then attorneys had failed to disclose critical evidence to the arbitrators. Specifically, it was revealed in the course of a dispute over legal fees which subsequently developed between Schonberger and his attorneys that counsel fees for prior services had been computed as a percentage of the royalties of certain patents owned by Schonberger.
In view of the fact that the value of Schonberger's assets was a central issue in the arbitration, petitioners-respondents moved to renew their previously denied application to vacate the arbitration award on the ground that Schonberger and his attorneys had concealed a transaction which provided strong evidence with respect to such value.
While we recognize that the discovery of new evidence is generally not a ground for vacatur of an arbitration award (Matter of Central Gen. Hosp. v Hanover Ins. Co., 49 N.Y.2d 950; Levine v Klein, 70 A.D.2d 532), it was proper, under the circumstances presented herein, for the IAS Part to grant renewal and vacate the award pursuant to CPLR 7511 (b) (1) (i), which cites the grounds of "corruption, fraud or misconduct in procuring the award". As was observed by this court in Matter of Kalgren (Central Mut. Ins. Co.) ( 68 A.D.2d 549, 553), "[w]hile their lack of candor may fall short of outright fraud, it does constitute the type of misconduct that warrants further proceedings before the arbitrator".
Concur — Murphy, P.J., Ross, Milonas, Kassal and Rubin, JJ.