SCHATZ v. III (1997)

Order and judgment (one paper), Supreme Court, New York County (Helen Freedman, J.), entered April 1, 1997, which denied petitioners' application pursuant to CPLR 7504 seeking court appointment of three neutral arbitrators, dismissed the petition, and granted respondents' cross motion to stay the arbitration claim of the corporate petitioner, unanimously modified, on the law, to deny respondents' cross motion and to reinstate the arbitration claim of the corporate petitioner, and to direct the IAS court to appoint an arbitrator for the minority stockholders should they be unable to agree thereon within 60 days of the date of this order, and otherwise affirmed, without costs.

 The application seeking court selection of three neutral arbitrators was properly denied on the ground that the changed alignment of the parties, in which the individual petitioner, a minority shareholder, now finds himself aligned against both the majority and minority factions, does not, by itself, affect petitioners' right to participate in the selection of one of the three arbitrators, or otherwise present a “real probability that injustice will result” (Matter of Lipschutz v. Gutwirth, 304 N.Y. 58, 64, 106 N.E.2d 8).   If petitioner and his fellow minority shareholders are unable to agree on an arbitrator within 60 days of the date of this order, then the IAS court shall select one for them (id., at 63, 106 N.E.2d 8).

 Respondents concede that their cross motion to stay arbitration by the corporate petitioner should have been denied as untimely because made more than 20 days after service of the demand to arbitrate (CPLR 7503[c] ).  In addition, it appears that the corporate petitioner can enforce the arbitration provision even though it did not sign the stockholders agreement because, under section 3.3 thereof, on which the dispute centers, it appears to be the third-party intended beneficiary of referrals of brokerage business (see, Matter of Crawford v. Feldman, 199 A.D.2d 265, 604 N.Y.S.2d 585;  Edward S. Gordon Co. v. Blodnick, Schultz & Abramowitz, 150 A.D.2d 212, 540 N.Y.S.2d 816, lv. denied 74 N.Y.2d 613, 547 N.Y.S.2d 847, 547 N.E.2d 102).

MEMORANDUM DECISION.