Supreme Court of the State of New York, Appellate Division, Second Judicial Department

Decided on August 19, 2026

2024-03321, (Index No. 151/23)

Hector D. Lasalle, P.J.

Cheryl E. Chambers

Paul Wooten

Helen Voutsinas, JJ.

[*1]

DECISION & ORDER

In an action, inter alia, to recover damages for breach of contract and to recover in quantum meruit, the plaintiffs appeal from an order of the Supreme Court, Nassau County (Eileen C. Daly-Sapraicone, J.), dated December 29, 2023. The order granted the defendants' motion pursuant to CPLR 3211(a) to dismiss the complaint and to compel arbitration.

ORDERED that the order is modified, on the law, by deleting the provisions thereof granting those branches of the defendants' motion which were pursuant to CPLR 3211(a) to dismiss the causes of action alleging quantum meruit and constructive fraud and to compel arbitration of those causes of action, and substituting therefor a provision denying those branches of the motion; as so modified, the order is affirmed, without costs or disbursements.

In 2008, the plaintiffs entered into an agreement with the defendant Ascend Learning, Inc. (hereinafter Ascend), for the plaintiffs to provide consulting and real estate services (hereinafter the agreement). The agreement contained an arbitration provision stating that "[a]ny legal claims arising out of this agreement shall be subject to arbitration and to mandatory mediation as a condition precedent to arbitration, and must be commenced within 60 days of the date of the occurrence of the claim" (hereinafter the arbitration provision).

In May 2023, the plaintiffs commenced this action against Ascend and certain affiliated individuals, namely, the defendants Steven F. Wilson, Susan Pollack, and Andrew Epstein, alleging, inter alia, breach of contract, quantum meruit, and constructive fraud. Thereafter, the defendants moved pursuant to CPLR 3211(a) to dismiss the complaint and to compel arbitration based on the arbitration provision. The plaintiffs opposed the motion. In an order dated December 29, 2023, the Supreme Court granted the defendants' motion. The plaintiffs appeal.

"Arbitration is a matter of contract, 'grounded in agreement of the parties'" (Matter of Belzberg v Verus Invs. Holdings Inc., 21 NY3d 626, 630 [citation omitted], quoting County of Sullivan v Edward L. Nezelek, Inc., 42 NY2d 123, 128). "Thus, when deciding whether the parties agreed to arbitrate a certain matter, ordinary state law principles that govern the formation of contracts apply" (Yeled V'Yalda Early Childhood Ctr., Inc. v Attentive Behavior Mental Health Counseling, P.C., 208 AD3d 1209, 1210). "'When the terms of a written contract are clear and [*2]unambiguous, the intent of the parties must be found within the four corners of the contract, giving practical interpretation to the language employed and the parties' reasonable expectations'" (Federico v Dolitsky, 176 AD3d 916, 918, quoting Patsis v Nicolia, 120 AD3d 1326, 1327).

Contrary to the plaintiffs' contention, the arbitration provision clearly and unambiguously provided for binding arbitration of all "legal claims" (see Rothberg v Kaufman, 106 AD3d 975, 975-976).

Also contrary to the plaintiffs' contention, the defendants did not waive their right to compel arbitration by participating in the action. "[W]here the defendant's participation in the lawsuit manifests an affirmative acceptance of the judicial forum, with whatever advantages it may offer in the particular case, [their] actions are then inconsistent with a later claim that only the arbitral forum is satisfactory" (De Sapio v Kohlmeyer, 35 NY2d 402, 405; see Stark v Molod Spitz DeSantis & Stark, P.C., 9 NY3d 59, 66-67). However, "entering a stipulation to extend the time to answer is a purely defensive action and is not inconsistent with a later attempt to force arbitration" (De Sapio v Kohlmeyer, 35 NY2d at 405). Similarly, a defendant does not "waive its right to compel arbitration by serving a motion to dismiss prior to its answer, as a defendant is entitled to have the sufficiency of a complaint tested before a duty to seek arbitration arises" (Flynn v Labor Ready, 6 AD3d 492, 493; see Matter of Long Is. Power Auth. Hurricane Sandy Litig., 165 AD3d 1138, 1143). Here, the defendants did not waive their right to compel arbitration by entering into stipulations to extend the time to answer or by moving to dismiss the complaint and to compel arbitration based on the arbitration provision.

Although the defendants' contention that compliance with the condition precedent in the arbitration provision is to be determined in arbitration is raised for the first time on appeal, this Court may review that contention because it presents a pure question of law appearing on the face of the record that could not have been avoided had it been raised at the proper juncture (see Yeled V'Yalda Early Childhood Ctr., Inc. v Attentive Behavior Mental Health Counseling, P.C., 208 AD3d at 1210). "Unless otherwise provided for in the agreement to arbitrate, where the parties to an arbitration agreement consent to a particular arbitration procedure, the resolution of procedural questions, including whether the invocation of arbitration was proper or timely, commonly referred to as procedural arbitrability, is generally left to the arbitrator" (Matter of New Brunswick Theol. Seminary v Van Dyke, 184 AD3d 176, 180-181 [alteration and internal quotation marks omitted]). Here, since satisfaction of the condition precedent in the arbitration provision and the consequences of any failure to comply therewith constitutes a matter of procedural arbitrability to be determined by the arbitrator, the plaintiffs' contention that noncompliance with the condition precedent warrants denial of the defendants' motion is without merit.

Furthermore, although the plaintiffs' contention that the arbitration provision was not applicable to the equitable causes of action alleging constructive fraud and quantum meruit is raised for the first time on appeal, this Court may review that contention because it presents a pure question of law appearing on the face of the record that could not have been avoided had it been raised at the proper juncture (see Yeled V'Yalda Early Childhood Ctr., Inc. v Attentive Behavior Mental Health Counseling, P.C., 208 AD3d at 1210). Since the plain language of the arbitration provision required arbitration of "legal claims" (emphasis added), rather than "all claims," the Supreme Court should have denied those branches of the defendants' motion which were pursuant to CPLR 3211(a) to dismiss the causes of action alleging quantum meruit and constructive fraud and to compel arbitration of those causes of action.

The plaintiffs' remaining contentions are either not properly before this Court or without merit.

LASALLE, P.J., CHAMBERS, WOOTEN and VOUTSINAS, JJ., concur.

ENTER:

Darrell M. Joseph

Clerk of the Court