Under that view, adding “enforced” or “enforcement” invoked New York law explicitly and therefore excluded any award of punitive damages because such an award was prohibited by New York law. Other parties invoked the New York rule against punitive damages with the explicit inclusion of the Garrity case by name: “enforced in accordance with the law of the State of New York, including Garrity v. Lyle Stuart, Inc., 40 N.Y.2d 354 (1976).” Others limited the power of the arbitrator(s) to exclude an award of punitive damages.
The Supreme Court of New York confirmed the arbitration award.The Appellate Division first held that the award of punitive damages was improper under the rule in Garrity v. Lyle Stuart, 40 N.Y.2d 354 (1976), which prohibited arbitrators from awarding punitive damages unless preempted. In addition, the court opined that the arbitrator exceeded her powers and gave an irrational construction to the provisions of the partnership agreement when she awarded Kudler the assignment of the policies taken out on his life by the partnership.