Learn About the Law
Get help with your legal needs
Marcus WILLIAMS, Plaintiff, v. ROMAN CATHOLIC DIOCESE OF BROOKLYN & QUEENS, Angelo B. Pezzullo, David A. Pezzullo and Revel Transit Inc., Defendants.
Motion by defendant Revel Transit Inc. (Revel) to change the venue of this action under CPLR 501, 510(1) and 511; a motion by plaintiff Marcus R. Williams to stay the arbitration demanded by Revel pursuant to CPLR 7503(b) and to dismiss Revel's 18th affirmative defense (demand for arbitration) pursuant to CPLR 3211(b); a cross motion by Revel to compel arbitration; and a cross motion by defendants Roman Catholic Diocese of Brooklyn & Queens, Angel B. Pezzullo and David A. Pezzullo (collectively, the RC Defendants) to dismiss Revel's demand for arbitration pursuant to CPLR 3211 and 7503(b).
It is ordered that these motions and cross motions are consolidated for purposes of disposition and are determined as follows:
Plaintiff commenced this action to recover from personal injuries allegedly sustained as a result of motor vehicle accident on July 11, 2020. The motor vehicle operated by David Pezzullo and owned by Angelo Pezzullo was lawfully proceeding through a green light at or near the intersection of 31st Avenue and 47th Street in Queens, New York when plaintiff, who was operating an electric moped, proceeded through the same intersection and collided with David Pezzullo's vehicle. Plaintiff alleges that the accident occurred due to the mechanical failure of his moped, which he had leased under an agreement with Revel entered on or about June 17, 2020 (the Rental Agreement). Revel is a business that facilitates the reservation, support and invoicing of short-term electric moped rentals via a mobile web application (the Revel App).
Plaintiff commenced this action in Queens County based on his residence. In its answer, Revel included a demand to change venue to New York County based on the forum selection clause in Section 17 of the Rental Agreement, which designated New York County as the exclusive venue for litigation “except for small claims court actions which may be brought in New York, NY or in the county where [the user] resides.” In moving for change of venue, Revel relies on Section 17 to argue that that New York County, rather than Queens County, is the proper venue in this matter.
Under CPLR 510(1), grounds for changing the place of trial include improper venue. On an application to change venue, a defendant must show that the county originally chosen is improper and that the defendant's choice of venue is proper (id.; see Joseph v. Kaufman, 188 A.D.3d 847, 135 N.Y.S.3d 428 ). Once the defendant meets this burden, then a plaintiff must establish, in opposition, that the venue selected was proper (see Harvey v. Ogunfowora, 179 A.D.3d 775, 776, 113 N.Y.S.3d 901 ). CPLR 501, which governs contractual provisions fixing venue, allows written agreements designating the place of trial to be enforced upon motion. “A contractual forum selection clause is prima facie valid and enforceable unless it is shown by the challenging party to be unreasonable, unjust, in contravention of public policy, invalid due to fraud or overreaching, or it is shown that a trial in the selected forum would be so gravely difficult that the challenging party would, for all practical purposes, be deprived of its day in court” (Casale v. Sheepshead Nursing & Rehabilitation Ctr., 131 A.D.3d 436, 436-437, 13 N.Y.S.3d 904 [internal citations and quotation marks omitted]; see also Stravalle v. Land Cargo, Inc., 39 A.D.3d 735, 736, 835 N.Y.S.2d 606 ).
Here, the forum selection clause in Section 17 is prima facie valid and enforceable. In opposition, plaintiff argues that the language therein allows the action to be brought in the county of plaintiff's residence, and that such a reading is consistent with other terms of the Rental Agreement (e.g. Section 1.14) prohibiting operation of the rented moped across major bridges and tunnels or outside the designated “Home Zone.” Plaintiff further argues that such venue clause is unreasonable and unjust, in contravention of public policy, and invalid due to fraud or overreaching because he never signed nor had an opportunity to review such Rental Agreement purporting to waive his right to trial in the county where he resides. He avers that he was unreasonably and unfairly deprived of a meaningful opportunity to review and assent to the Rental Agreement, including the forum selection clause.
In determining whether a party to an online contract has agreed to accept its terms, courts will look to the particular circumstances of the website or mobile application usage for evidence that the user had actual or constructive notice of the terms of agreement and consider whether a reasonably prudent person would be put on notice of the provision in the contract, and whether the terms thereof were reasonably communicated to the user (see Schnabel v. Trilegiant Corp., 697 F.3d 110, 120 [2d Cir. 2012]; Fteja v. Facebook, Inc., 841 F. Supp. 2d 829, 833 [S.D.N.Y. 2012]; Stonehill Capital Mgt. LLC v. Bank of the W., 28 N.Y.3d 439, 448, 45 N.Y.S.3d 864, 68 N.E.3d 683 ). A person is on inquiry notice if a “reasonably prudent offeree would be on notice of the terms at issue” (Schnabel, 697 F.3d at 120). Such agreement need not be signed as long as there is other proof that the parties intended to be bound by documents containing arbitration obligations (see Highland HC v. Scott, 113 A.D.3d 590, 594, 978 N.Y.S.2d 302 ).
Likewise, the RC Defendants, who argue that they could not be bound to the Rental Agreement as non-parties thereto, fail to set forth any reasons that enforcement of the forum selection clause would be unreasonable, unjust, in contravention of public policy, or invalid due to fraud or overreaching. Moreover, the parties fail to demonstrate that a trial in New York County could be so gravely difficult that they would be deprived of their day in court (see Couvertier v. Concourse Rehabilitation & Nursing, Inc., 117 A.D.3d 772, 773, 985 N.Y.S.2d 683 ). Thus, contrary to plaintiff and the RC Defendants’ arguments, the forum selection clause in the Rental Agreement is binding on the parties to this litigation (see Casale, 131 A.D.3d at 437, 13 N.Y.S.3d 904; Pratik Apparels, Ltd. v. Shintex Apparel Group, Inc., 96 A.D.3d 922, 923, 946 N.Y.S.2d 507 ).
Turning to the arbitration clause in Section 17 of the Revel Agreement, Revel included in its answer to the complaint a demand for arbitration (18th affirmative defense). CPLR 7503(a) permits a “party aggrieved by the failure of another to arbitrate [to] apply for an order compelling arbitration. Where there is no substantial question whether a valid agreement was made or complied with, and the claim sought to be arbitrated is not barred by limitation under (CPLR 7503[b]), the court shall direct the parties to arbitrate.” Likewise, CPLR 7503(b) allows “a party who has not participated in the arbitration and who has not made or been served with an application to compel arbitration [to] apply to stay arbitration on the ground that a valid agreement was not made or has not been complied with․”
Plaintiff argues that the arbitration clause cannot be enforced because it is prohibited under General Business Law (GBL) § 399-c, which provides that an arbitration clause shall be null and void in a contract of sale for customer goods, defined therein to include services. Revel, however, contends that the contract at issue involves interstate commerce and therefore triggers the Federal Arbitration Act (FAA) under 9 United States Code (USC) § 2 to preempt GBL § 399-c.
Section 2 of the FAA “embodies national policy favoring arbitration and plac[ing] arbitration agreements on equal footing with all other contracts” (Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 443, 126 S.Ct. 1204, 163 L.Ed.2d 1038 ). This statute overrides inconsistent provisions of arbitration acts with respect to an arbitration agreement's enforceability, preempting state law in order to accomplish the full purposes and objectives of Congress (see generally Smith Barney, Harris Upham & Co. v. Luckie, 85 N.Y.2d 193, 204, 623 N.Y.S.2d 800, 647 N.E.2d 1308 ; J.J.’s Mae, Inc. v Wrshow & Sons, Inc., 277 A.D.2d 128, 128, 717 N.Y.S.2d 37 ). The FAA thus preempts state law on the subject of enforceability of arbitration clauses covered thereby, even though the dispute itself may arise under New York law (Fletcher v. Kidder, Peabody & Co, Inc., 81 N.Y.2d 623, 630, 601 N.Y.S.2d 686, 619 N.E.2d 998 ; Hayes v. County Bank, 26 A.D.3d 465, 466, 811 N.Y.S.2d 741 ). When parties agree to arbitrate all questions arising under a contract, the FAA supersedes state laws lodging primary jurisdiction in another forum, whether judicial or administrative (see Preston v. Ferrer, 552 U.S. 346, 359, 128 S.Ct. 978, 169 L.Ed.2d 917 ).
The FAA provides, in pertinent part, “A written provision in any contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction ․ shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” To determine whether the FAA applies, the contract must first be found to involve or “affect” interstate commerce (see Matter of Diamond Waterproofing Sys., Inc. v. 55 Liberty Owners Corp., 4 N.Y.3d 247, 252, 793 N.Y.S.2d 831, 826 N.E.2d 802  [FAA applies where contract containing arbitration provision “affects” interstate commerce, rather than using “substantial nexus” test]). Historically, a low threshold must be met to trigger application of the FAA and invoke Congress’ interstate commerce power (see Wickard v. Filburn, 317 U.S. 111, 125, 63 S.Ct. 82, 87 L.Ed. 122  [“even if [the activity at issue is] local ․ it may still, whatever its nature, be reached by Congress if it exerts a substantial economic effect on interstate commerce”]). Additionally, arbitration agreements may be declared unenforceable for defenses such as duress, fraud, or incapacity (see AT & T Mobility LLC, 563 U.S. at 339, 131 S.Ct. 1740).
The parties dispute whether the transaction herein involves interstate commerce. Plaintiff contends that the Rental Agreement does not affect interstate commerce because the leased mopeds are restricted from traveling to “prohibited areas,” including bridges and tunnels connecting Queens/Brooklyn to Manhattan, in order to travel outside the state. On the other hand, Revel argues that plaintiff's moped transaction affects interstate commerce because Revel App users can access mopeds in multiple cities, and Revel provides cellular, GPS maps and tracking across the country through the Revel App to facilitate navigation, provide customer support, and track its mopeds. Moreover, as stated in the Block affidavit, the mopeds are manufactured in China, then distributed in the U.S. by an Illinois company and leased to Revel from two Minnesota companies.
The court finds that Revel's reliance on partners and suppliers outside the state is sufficient to demonstrate the interstate commerce involved when a customer rents a moped through the Revel App (see Matter of Diamond Waterproofing Sys., Inc. v. 55 Liberty Owners Corp., 4 N.Y.3d 247, 252, 793 N.Y.S.2d 831, 826 N.E.2d 802  [interstate commerce found where numerous out-of-state entities involved in transaction for construction project]; Highland, 113 A.D.3d at 593, 978 N.Y.S.2d 302 [interstate commerce found where property location, architectural and engineering plans, developers, services and materials for renovation project were from different states]; cf. Smith v. Nobiletti Bldrs., Inc., 177 A.D.3d 807, 110 N.Y.S.3d 747  [not interstate commerce where all named defendants were local commercial entities who lacked multi-state or national presence and scale and scope of work performed was not of such magnitude as would affect interstate commerce]). Moreover, plaintiff's contention that the Rental Agreement prohibits interstate commerce by restricting moped travel to within the “Home Zone” does not remove this case from the ambit of interstate commerce, as the Rental Agreement does not physically restrict movement of its rented mopeds, although transgressors may be assessed fees for crossing through or into prohibited areas.
This matter involving interstate commerce thus triggers application of the FAA. Moreover, as discussed above, nothing in the record renders the arbitration clause unenforceable by suggesting that plaintiff was compelled to enter the Rental Agreement through duress, fraud, incapacity, or anything other than his own volition (see AT & T Mobility LLC, 563 U.S. at 339, 131 S.Ct. 1740). Likewise, insofar as plaintiff argues that he did not agree to arbitration when he leased a moped, as discussed above defendants have established that the Revel App's Sign-Up Flow necessitated affirmatively toggling buttons to indicate assent and that plaintiff proceeded through to completion and acceptance of the contract (see Meyer, 868 F.3d at 75). As the caselaw is clear that conflicting state legislation attempting to carve out exceptions to arbitration has been unsuccessful (see Caponera v. Atlantic Bldg. Inspection Serv., 66 Misc. 3d 748, 752-753, 117 N.Y.S.3d 822 [Cohoes City Court 2020] [citing various Supreme Court cases, FAA requiring enforcement of arbitration provisions in contracts preempts GBL § 399-c prohibiting arbitration clauses in contracts for sale of consumer goods]), the FAA preempts GBL § 399-c with respect to the subject Rental Agreement.
Finally, with respect to the RC Defendants’ cross motion, they fail to demonstrate that there was not a valid argument to arbitrate or that the claim sought to be arbitrated is time barred under CPLR 7503(b). Although the RC Defendants urge the court to stay the arbitration for considerations of judicial economy and consistent adjudication, such result may be achieved by staying the instant action as against the RC Defendants pending the arbitration of plaintiff's claims against Revel (see generally Weiss v. Nath, 97 A.D.3d 661, 949 N.Y.S.2d 81 ; Anderson St. Realty Corp. v. New Rochelle Revitalization, LLC, 78 A.D.3d 972, 913 N.Y.S.2d 114 ).
Thus, plaintiff's action with respect to Revel shall proceed to arbitration. The action as against the RC Defendants shall be stayed pending the arbitration of the claims between plaintiff and Revel, until further order of this court.
The court has considered the parties’ remaining contentions and finds them unavailing.
Insofar as the motion for change of venue from Queens County to New York County is granted, the Clerk of Queens County shall deliver forthwith to the Clerk of New York County all papers filed in this action and certified copies of all minutes and entries, which shall be filed, entered or recorded in the office of the Clerk of New York County. Revel is directed to serve a copy of this order with notice of entry on the Clerks of both Queens and New York Counties.
Accordingly, Revel's motion to change venue and its cross motion to compel arbitration are granted. The respective motion and cross motion by plaintiff and the RC Defendants motion to stay the arbitration and dismiss Revel's 18th affirmative defense (the demand for arbitration) are both denied.
Robert I. Caloras, J.
Response sent, thank you
Docket No: Index No. 719352/20
Decided: November 10, 2021
Court: Supreme Court, Queens County, New York.
Search our directory by legal issue
Enter information in one or both fields (Required)
FindLaw for Legal Professionals
Search our directory by legal issue
Enter information in one or both fields (Required)