IN RE: Application of J.J.'s MAE (2000)

Order and judgment (one paper), Supreme Court, New York County (Louis York, J.), entered February 24, 2000, which granted petitioner's CPLR article 75 application to stay arbitration and denied respondent's cross motion to compel arbitration, unanimously affirmed, with costs.

 Under Matter of Marlene Indus. Corp. v. Carnac Textiles, 45 N.Y.2d 327, 408 N.Y.S.2d 410, 380 N.E.2d 239, inclusion of an arbitration clause in a confirmation invoice constitutes a material alteration of an existing contract between merchants within the meaning of UCC 2-207, absent explicit agreement by the recipient of the invoice.   Although the Federal Arbitration Act preempts inconsistent State law as to an arbitration agreement's enforceability (see, Matter of Smith Barney Shearson Inc. v. Sacharow, 91 N.Y.2d 39, 48, 666 N.Y.S.2d 990, 689 N.E.2d 884), it preempts only those provisions of State law that actually conflict with provisions of the Federal statute (see, Matter of Propulsora Ixtapa Sur. [Omni Hotels Franchising Corp.], 211 A.D.2d 546, 548, 621 N.Y.S.2d 569, lv. denied 85 N.Y.2d 805, 626 N.Y.S.2d 756, 650 N.E.2d 415), and does not preempt such “general principles of state contract law as rules of decision on whether the parties have entered into an agreement to arbitrate” (Chelsea Sq. Textiles, Inc. v. Bombay Dyeing & Mfg. Co., 189 F.3d 289, 296).   Even if we were to agree, however, that Progressive Cas. Ins. Co. v. C.A. Reaseguradora Nacional De Venezuela, 991 F.2d 42 bars application of the Marlene Industries rule per se in matters of interstate commerce (see, e.g., I.K. Bery, Inc. v. Irving R. Boody & Co., 2000 U.S. Dist LEXIS 1872, at *17-18, 2000 WL 218398, at *5), we would nonetheless find that the arbitration clause in the seller's invoice herein to constitute a material alteration of the parties' agreement that would result in surprise or hardship if incorporated without the express awareness of the buyer (see, UCC 2-207[2][b];  Bayway Ref. Co. v. Oxygenated Mktg. & Trading A.G., 215 F.3d 219, 224) and, accordingly, the application to stay arbitration was properly granted (compare, Bayway Ref. Co., supra).

MEMORANDUM DECISION.