IN RE: 215-219 WEST 28TH STREET MAZAL OWNER LLC (2019)

Order, Supreme Court, New York County (Andrea Masley, J.), entered May 21, 2019, which, insofar as appealed, denied the petition of 215–219 West 28th Street Mazal Owner LLC (Mazal Owner), 215 West 28th Street Property Owner LLC (215 Property Owner), 225 West 28th Street Property Owner LLC (225 Property Owner) and 213–227 West 28th Street LLC (213–227 West) (together, the non-signatory petitioners) for a permanent stay of arbitration, without prejudice, so that the issue could be decided by the arbitrator in arbitration, unanimously reversed, on the law, without costs, and the matter remanded to the IAS court for a hearing to determine the threshold issue of whether the non-signatory petitioners are bound by the arbitration agreement.  Appeal from the so-ordered transcript granting the same relief as the order, unanimously dismissed, without costs, as subsumed in the appeal from the order.

The issue of whether a party is bound by an arbitration provision in an agreement it did not execute is a threshold issue for the court, not the arbitrator, to decide (see Matter of County of Rockland [Primiano Constr. Co.], 51 N.Y.2d 1, 7, 431 N.Y.S.2d 478, 409 N.E.2d 951 [1980] ).  The case is remanded to the IAS court for an evidentiary hearing and further factual development on whether the non-signatory petitioners were bound to the arbitration clause (see Rosplock v. Upstate Mgt. Assoc., Inc., 108 A.D.3d 825, 827, 968 N.Y.S.2d 706 [3d Dept. 2013] );  see also Matter of Rural Media Group, Inc. v. Yraola, 137 A.D.3d 489, 490, 26 N.Y.S.3d 531 [1st Dept. 2016] ).

The cases respondent relies upon in opposition do not change the result.  Respondent's cases do not involve situations where there was a dispute as to whether the party sought to be bound to arbitrate had signed the agreement containing the arbitration clause (see e.g. Matter of Monarch Consulting, Inc. v. National Union Fire Ins. Co. of Pittsburgh, PA, 26 N.Y.3d 659, 675–676, 27 N.Y.S.3d 97, 47 N.E.3d 463 [2016];  Garthon Bus. Inc. v. Stein, 30 N.Y.3d 943, 944, 64 N.Y.S.3d 622, 86 N.E.3d 514 [2017] ).

While respondent makes extensive arguments as to why the non-signatory petitioners were effectively parties to the agreement and thus bound by the arbitration clause, these arguments are not relevant.  The IAS court did not come to a definitive ruling as to whether the non-signatory petitioners were bound by the arbitration agreement, and instead denied the petition without prejudice so that it could be decided by the arbitrator.  Absent a ruling on the issue, the only question to be addressed by this Court is whether the IAS court properly declined to do so.