NACHMAN v. JENELO CORP (2006)

In an action to recover damages for breach of contract and breach of fiduciary duty, the plaintiff appeals, as limited by her brief, from so much of an order of the Supreme Court, Westchester County (Nastasi, J.), dated January 5, 2005, as granted that branch of the defendants' cross motion which was to dismiss the complaint.

ORDERED that the order is reversed insofar as appealed from, on the law, with costs, that branch of the cross motion which was to dismiss the complaint is denied, and the complaint is reinstated.

 The Supreme Court had no authority to dismiss the complaint merely because the subject shareholders' agreement contained a mandatory arbitration clause (see Allied Bldg. Inspectors Int. Union of Operating Engrs., Local Union No. 211, AFL-CIO v. Office of Labor Relations of the City of N.Y., 45 N.Y.2d 735, 738, 408 N.Y.S.2d 476, 380 N.E.2d 303).   Rather, upon a proper and timely motion by the defendants pursuant to CPLR 7503(a), the court could have stayed the action and directed the parties to arbitrate.   In the six years this action has been pending, however, the defendants never moved for relief under CPLR 7503(a).   Instead, they answered the complaint, asserted a counterclaim, and even moved, inter alia, for summary judgment dismissing the complaint.   Under the circumstances, the defendants waived their right to arbitration (see Grenadeir Parking Corp. v. Landmark Assoc., 294 A.D.2d 313, 743 N.Y.S.2d 95;  see also Sherrill v. Grayco Bldrs., Inc., 64 N.Y.2d 261, 272, 486 N.Y.S.2d 159, 475 N.E.2d 772).   Accordingly, the order must be reversed insofar as appealed from and the complaint reinstated.