Arbitrators’ Refusal to Grant An Adjournment Insufficient Grounds to Vacate Final Award

On June 23, 2023, Justice Joel M. Cohen of the New York County Commercial Division issued a decision and order on motion in Panzer v. Epstein, 2023 NY Slip Op 32099(U), granting respondent’s motion to confirm and denying petitioner’s cross-motion to vacate the Final Award. The Court also denied respondent’s motion to compel petitioner to accept the money amount specified in the Final Award as premature. Regarding its decision to confirm the Final Award, the Court explained:

Panzer alleges that Epstein did not provide certain financial information to Panzer's expert until eighteen (18) days before expert reports were due and twenty-two (22) days before the Final Arbitration Hearing commenced. Panzer argues that that Panel's refusal to adjourn the deadline for expert reports and the hearing date constitutes misconduct warranting vacatur and a new arbitration pursuant to CPLR 7511(d). Epstein argues that the Panel's Final Award was properly issued after the parties were afforded an opportunity to make all arguments and present all evidence at the evidentiary hearing.

CPLR 7510 provides that "[t]he court shall confirm an award upon application of a party made within one year after its delivery to him, unless the award is vacated or modified upon a ground specified in section 7511." CPLR 7511(b)(1)(i) provides, in relevant part, that "[t]he award shall be vacated. . .if the court finds that the rights of [the moving] party were prejudiced by. . .corruption, fraud or misconduct in procuring the award. . ." Petitioner Panzer bears the burden of establishing a basis to vacate the Final Award (Channel Textile Co., Inc. v Adams, 161 AD2d 409, 555 N.Y.S.2d 338 [1^st Dept 1990]). Absent a basis to vacate, the Court is "statutorily mandated to confirm the award" (Id.).

The Court's role in reviewing an arbitration award is tightly constrained. As the Court of Appeals stated in a seminal decision in this area: "It is well settled that judicial review of arbitration awards is extremely limited. An arbitration award must be upheld when the arbitrator offer[s] even a barely colorable justification for the outcome reached.' Indeed, we have stated time and again that an arbitrator's award should not be vacated for errors of law and fact committed by the arbitrator and the courts should not assume the role of overseers to mold the award to conform to their sense of justice" (Wien & Malkin LLP, v. Helmsley-Spear, Inc., 6 NY3d 471, 479-80, 846 N.E.2d 1201, 813 N.Y.S.2d 691 [2006]). "[A]n arbitrator's rulings, unlike a trial court's, are largely unreviewable" (In re Falzone (New York Cent. Mut. Fire Ins. Co.), 15 NY3d 530, 534, 939 N.E.2d 1197, 914 N.Y.S.2d 67 [2010]).

Arbitrators are properly given broad discretion with respect to procedural matters such as the scope of discovery (Matter of Merrill Lynch, Pierce, Fenner & Smith, 198 AD2d 181, 181, 604 N.Y.S.2d 78 [1st Dept 1993]). Similarly, "[a]djournments generally fall within the sound exercise of an arbitrator's discretion pursuant to CPLR 7506(b), the exercise of which will only be disturbed when abused. A refusal to grant an adjournment constitutes 'misconduct' within the meaning of CPLR 7511[b][1][i] only when it results in the failure to hear pertinent and material evidence and in the effective exclusion of an entire issue" (Campbell v New York City Tr. Auth., 32 AD3d 350, 352, 821 N.Y.S.2d 27 [1st Dept 2006] [collecting cases]). Petitioner has not established that the Panel foreclosed "the presentation of pertinent and material evidence" (HSBC Bank USA, Nat. Ass'n v Natl. Equity Corp., 23 AD3d 305, 305, 804 N.Y.S.2d 311 [1st Dept 2005]).

Contrary to Petitioner's contentions, the Panel authorized briefing and considered Petitioner's adjournment requests prior to the evidentiary hearing. The Panel properly determined that either party could seek an adverse inference at the hearing. Further, Petitioner's expert testified that his firm was able to complete its appraisal report in advance of the evidentiary hearing. Lastly, the Final Award was issued after post-hearing briefing and makes clear that the Panel considered the parties' expert testimony and reports. Petitioner's disagreement with the result is not a sufficient basis to find "misconduct" under CPLR 7511 (Channel and Wien, supra).

This decision is a reminder that arbitration is binding on the parties expect for limited circumstances. Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning whether to include and the scope of arbitration provisions in contracts.