MAYNARD v. SMITH (2022)

DECISION & ORDER

In an action to recover damages for personal injuries, the defendant appeals from an order of the Supreme Court, Nassau County (John M. Galasso, J.), entered February 6, 2020.  The order denied the defendant's motion pursuant to CPLR 7503(a) to compel arbitration.

ORDERED that the order is reversed, on the law, with costs, and the defendant's motion pursuant to CPLR 7503(a) to compel arbitration is granted.

On April 17, 2017, the plaintiff allegedly was injured in a motor vehicle accident in Nassau County.  In July and August 2017, the plaintiff's attorney was notified twice in writing by the defendant's insurance carrier that the bodily injury limits were “100,000/$300,000.”  In October 2018, the plaintiff commenced this action against the defendant to recover damages for personal injuries allegedly sustained in the accident.  In July 2019, the parties entered into an arbitration agreement which provided, inter alia, that any award would be restricted to “no less than $0.00 and no more than $50,000.”  The plaintiff's attorney thereafter refused to arbitrate, asserting that he had been mistaken as to the defendant's policy limits.  In an order entered February 6, 2020, the Supreme Court denied the defendant's motion pursuant to CPLR 7503(a) to compel arbitration.  The defendant appeals.

“In order to compel a party to arbitrate pursuant to a contractual agreement there must be ‘no substantial question [as to] whether a valid agreement was made or complied with’ ” (Manos v. Interbank of N.Y., 202 A.D.2d 403, 403, 608 N.Y.S.2d 691, quoting CPLR 7503[a]).  “In the event such question is raised, it is for the court to adjudicate” (Manos v. Interbank of N.Y., 202 A.D.2d at 403, 608 N.Y.S.2d 691).

“[T]he enforceability of arbitration agreements is governed by the rules applicable to contracts generally” (Sablosky v. Gordon Co., 73 N.Y.2d 133, 136, 538 N.Y.S.2d 513, 535 N.E.2d 643;  see Arboleda v. White Glove Enter. Corp., 179 A.D.3d 632, 116 N.Y.S.3d 339).

“Generally, a party's unilateral mistake is a ground for rescission of a contract only where it was induced by fraud or other wrongful conduct by the other party” (Perlbinder v. Vigilant Ins. Co., 190 A.D.3d 985, 988, 141 N.Y.S.3d 141).  Moreover, “the equitable remedy of rescission is not available to relieve an allegedly mistaken party of the consequences of their failure to exercise ordinary care” (id. at 988, 141 N.Y.S.3d 141;  see ATS–1 Corp. v. Rodriguez, 156 A.D.3d 674, 676, 67 N.Y.S.3d 60;  1810 E & J Rest. Corp. v. Red & Blue Parrot, Inc., 150 A.D.3d 648, 649, 54 N.Y.S.3d 38;  Rosin v. Weinberg, 107 A.D.3d 682, 966 N.Y.S.2d 209;  Yorker v. Daniel Yorker, Ltd., 12 A.D.3d 506, 783 N.Y.S.2d 857).

Contrary to the plaintiff's contention, he failed to establish that the arbitration agreement was subject to the equitable remedy of rescission on the ground of unilateral mistake by his attorney regarding the policy limits (see Perlbinder v. Vigilant Ins. Co., 190 A.D.3d at 988–989, 141 N.Y.S.3d 141).  The purported mistake in the high-low agreement at issue arose not from any fraudulent inducement by the defendant, but from the failure of the plaintiff's attorney to exercise ordinary care under the circumstances.  Accordingly, the Supreme Court should have granted the defendant's motion pursuant to CPLR 7503(a) to compel arbitration.

DILLON, J.P., IANNACCI, RIVERA and WOOTEN, JJ., concur.