KNOBEL v. DEMBA WEI LLP (2020)

Order and judgment (one paper), Supreme Court, New York County (W. Franc Perry, J.), entered on or about April 2, 2019, upon petitioner's motion to confirm an arbitration award in its favor, confirming the award and directing the Clerk to enter judgment accordingly, unanimously reversed, on the law, the order and judgment vacated and the matter remanded to Supreme Court. Appeal from order, Supreme Court, New York County (Arthur F. Engoron, J.), entered on or about September 14, 2018, which denied plaintiff's motion for a trial de novo to challenge the arbitration award and granted defendants' motion to dismiss the complaint, unanimously reversed, on the law, without costs, the complaint is reinstated and the matter remanded to the Supreme Court.

As the dismissal of a prior action commenced by Dembra Wei, LLP for failure to attend a calendar call (22 NYCRR 202.27[b]) was not on the merits, it does not have res judicata effect (Hernandez v. St. Barnabas Hosp., 89 A.D.3d 457, 931 N.Y.S.2d 875 [1st Dept. 2011]; Espinoza v. Concordia, 32 A.D.3d 326, 820 N.Y.S.2d 259 (1st Dept. 2006]).Therefore, the parties were not precluded from commencing subsequent independent actions. Knobel subsequently timely commenced his action seeking a trial de novo of the arbitration award rendered in the prior fee dispute (see CPLR 304[a]; Lomtevas v. Pradhan, 65 Misc.3d 1215[A], 2019 N.Y. Slip Op. 51658[U], *2, 2019 WL 5382261 [Sup. Ct., Kings County 2019]). He did not otherwise waive that. The parties so-ordered stipulation, in which they consented to binding arbitration pursuant to Section 137 of the New York County Fee Dispute Program, does not constitute a waiver of Knobel's right to seek de novo review. Subdivisions (B)(1) and (2) of section 6 of the Standards and Guidelines of the Board of Governors (Unified Court System, Attorney–Client Fee Dispute Resolution Program) provide any purported waiver is not valid on the part of a client unless it is “knowing and informed” and that a retainer agreement (or other writing) must contain express waiver language specifying that “the client understands that he or she is waiving the right to reject an arbitration award and to commence a trial de novo in court” (http://www.courts.state.ny.us/admin/feedispute/pdfs/Standards.pdf; see also Maddox v. Stein, 42 Misc.3d 134[A], 2014 N.Y. Slip Op. 50057[U], 2014 WL 274540 [App. Term 2d Dept., 2014]). In light of the fact that the so-ordered stipulation did not contain such language, or even a close approximation of such language, Knobel's consent to a binding arbitration pursuant to Section 137 of the New York County Fee Dispute Program cannot be considered to have been “knowing and informed.” Consequently, Knobel's retained his right to commence an action to obtain judicial review of this fee dispute.

In view of our reinstatement of Knobel's dismissed proceeding, the motion court's entry of a judgment confirming the arbitration award must be vacated and the matter remanded to the Supreme Court, where Knobel shall have the right to interpose an answer.