Court Grants Petition Staying Arbitration Because Claimant Failed to Use Pre-Arbitration Dispute Resolution Process

On July 8, 2020, Justice Borrok of the New York County Commercial Division issued a decision in Locascio v. Hobbs, Inc., 2020 NY Slip Op. 32226(U), granting a petition to stay an arbitration because of the claimant's failure to use a mandatory pre-arbitration dispute resolution process, explaining:

[Petitioner} correctly points out that a condition precedent to arbitration has not been met. Section 15.2.1 of the GCC states:

Claims, excluding those arising under Sections 10.3, 10.4, 11.3.9 and 11.3.10 [which are not applicable here], shall be referred to the Initial Decision Maker for initial interpretation. The Architect will serve as the Initial Decision Maker, unless otherwise indicated in the Agreement. Except those claims excluded by Section 15.2.1, an initial interpretation shall be required as a condition precedent to arbitration of any Claim brought by the Contractor against the Owner, arising prior to the date final payment is due, unless 30 days have passed after the Claim has been referred to the Initial Decision Maker with no interpretation having been rendered.

It is undisputed that the claims Hobbs seeks to arbitrate were not first referred to the Initial Decision Maker for initial interpretation. Thus, under the plain terms of Section 15.2.1 a condition precedent to arbitration has not been met and Hobbs is therefore not entitled to proceed with the Arbitration against Mr. Locascio.

(Internal citations omitted).

Commercial litigation involves more than courts. Disputes often are--by agreement--decided by private arbitrators. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client have a question regarding a dispute that is subject to an arbitration agreement.