In an October 27, 2010 decision by Justice Driscoll, petitioners moved for an Order, pursuant to CPLR Art. 75, to dismiss or, in the alternative, to stay, the underlying arbitration brought by respondent before AAA. Respondent was employed by one of the petitioners, pursuant to which the parties entered into a Deferred Compensation Plan. The Plan contained various restrictive covenants, as well as a dispute resolution clause mandating arbitration. Petitioner was later reorganized, and respondent was then employed by one of the other related organizations. Petitioner was ultimately terminated from his employment, after which he commenced arbitration with AAA. His petition sought the following relief:
“Claimant seeks a declaration that he is not bound by restrictive covenants in a Deferred Compensation Plan and may compete against Respondents and solicit Respondents’ clients. Claimant also seeks an amount to be determined, but believed to be between $500,000- 1,000,000 for Respondents’ breach of contract and all expenses in connection with this arbitration, including attorneys‘ fees.”
Petitioners sought dismissal or a stay of the arbitration on the grounds that the petition in arbitration was procedurally defective, and that not all petitioners were parties to the Deferred Compensation Plan and therefore did not agree to arbitrate. The Court denied Petitioners’ application, concluding that the doctrine of estoppel precluded the nonsignatories to the arbitration agreement from disavowing arbitration. The Court reasoned that under the estoppel theory, a company knowingly exploiting an agreement containing an arbitration clause can be estopped from avoiding arbitration, despite not having signed the agreement.
BP Air Conditioning Corp. v. Lasorsa, Sup Ct, Nassau County, Oct. 27, 2010, Driscoll, J, Index No. 016032-10