Failure to Keep Track of Time Limitations For Confirmation Has Dire Consequences
By Gerald M. Levine
A recent decision from the Third Department, Bianchi v. Katz, 111 A.D.3d 1012 (2013) is a warning against untimeliness in taking steps to confirm an award. Every procedure has its time limitations. A party seeking to stay an arbitration must make its application within 20 days of service of the demand (CPLR 7503), failing which it "shall thereafter be precluded from objecting that a valid agreement was not made." An application of a party "to vacate or modify an award may be made by a party within ninety days after its delivery to him" (CPLR 7511). If an award is to be confirmed, the application has to be made within a one-year period running from the date the award is delivered to the party (CPLR 7510). Between the bookends there are still other times that have to be obeyed for modifying an award. At the front end all that is lost is that the moving party will have to submit to arbitration, but at the back end all is literally lost: untimeliness renders the award unenforceable.
In Bianchi, the arbitrator issued an award of damages to petitioners, but petitioners' counsel informed the arbitrator of an alleged error in the computation. Respondent's counsel "vehemently" object to any modification. Petitioners' counsel failed to follow up; the arbitrator was not put in a position that it had to act, and did not do so. More than a year later, petitioners applied to the Supreme Court for an order of confirmation of the original arbitration award. Supreme Court denied the petition as untimely, as did the Appellate Division whose reasoning is straight forward. This is not an issue of first impression. An arbitrator's power to modify an award is extremely limited. The procedure is governed by CPLR 7509 and 7511. The Court explained that there are two different limitation periods:
In particular [CPLR 7509] ... provides that a written request for modification must be made within 20 days of the delivery of the original award with written notice to the other parties, that written objections must be served upon the arbitrator and other parties within 10 days of receipt of such notice and that the arbitrator must issue a decision within 30 days of the date of the filing of the objections or the expiration of the time within which to do so.
Absent compliance with the statutory requirements, an arbitrator is without authority to modify an award, although application can still be made to the court (CPLR 7511, the ninety day rule). Petitioners' counsel (whether the original or his successor) struck out on all the time periods. His letter to the arbitrator informing him of an alleged error was sent 34 days after delivery of the original award so there was understandable cause for respondent's "vehemen[ce] objecting to any modification [of it.]" He made no application to the Court. Then, he failed to confirm the award within the one-year statutory period.
Object lessons are hard against counsel who provide the warnings that others learn from. The Appellate Division cites seven cases that in one way or another are concerned with (un)timeliness with one or more of the statutory dates. Bianchi is simply added to the list. The result of missing the first date meant that even if the arbitrator had acted on the request for modification it would have been deemed a nullity, which is probably the reason he took no action after the respondent rebuffed claimant's request for a modification. "Given the noncompliance with CPLR 7509, there is no impact on the statute of limitations set forth in CPLR 7510." The hard lesson is that missing a statutory date that is one of several that has to be obeyed for counsel and the awardee to avoid the ultimate loss of having an unenforceable award.
Gerald M. Levine is a member of Levine Samuel, LLP. He practices in New York City and is on the list of neutrals of the American Arbitration Association. Mr. Levine runs an ADR blog on domain names and cybersquatting at http:www.iplegalcorner.com. He is the author of a forthcoming book in Spring 2014 on domain name arbitration under the Uniform Domain Name Dispute Resolution Policy.