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Current Developments in the Commercial Divisions of the
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Posted: August 3, 2014

Petition to Stay Mandatory Mediation Dismissed

On July 25, 2014, Justice Schmidt of the Kings County Commercial Division issued a decision in Matter of Albee Development LLC v. Casino Development Group, Inc., 2014 NY Slip Op. 31959(U), dismissing a petition to stay a mandatory mediation.

In Matter of Albee Development LLC, the respondent initiated an arbitration with the petitioner regarding a contract dispute. The petitioner petitioned to stay the arbitration because, among other grounds, the clause upon which the respondent relied in initiating the arbitration called for mandatory mediation, not arbitration. The court denied the petition, explaining:

[T]he court rejects as meritless petitioners’ assertion that [the petitioner] did not expressly agree to arbitration. Specifically, the contention that the subject agreements do not require [the petitioner] to submit to arbitration of disputes because the provisions specify “binding mediation” as the dispute resolution procedure instead of the word “arbitration” lacks merit. This distinction is not relevant for the purposes of CPLR Article 75; as respondent correctly observed, a trial court of this state has applied Article 75 to a “binding mediation” in confirming a mediation award. Moreover, given if this court were to find a meaningful distinction between the two expressions, in either situation, [the petitioner] has agreed to be bound by the decisions of a neutral third-party that, resolve disputed claims up to the applicable threshold-each contract provides that, unless a contrary agreement is made, “mediation shall be in accordance with Construction Industry Mediation Rules of the American Arbitration Association[.]” Given that the demands served by respondent appear to comply with the applicable rules of the subject organization, this court shall not interfere with the bargained-for alternative dispute resolution process based on the distinction between “binding mediation” and arbitration.

(Internal quotations and citations omitted).

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