Aegis Capital Corp., Petitioner, v. JOSEPH RALLO BORAL CAPITAL LLC BENCHMARK INVESTMENTS INC (2026)

This proceeding arises from an arbitration conducted by the Financial Industry Regulatory Authority (FINRA). In June 2020, respondents David W. Boral and Joseph Rallo commenced the underlying FINRA arbitration against petitioner, Aegis Capital Corp. In July 2020, Aegis counterclaimed in the arbitration against Boral and Rallo, and also brought a third-party arbitral claim against respondent D. Boral Capital LLC (then known as Benchmark Investments, Inc.). The resulting arbitral proceeding lasted five years, including extensive motion practice and 34 hearing sessions before a three-person arbitration panel.

The panel ultimately denied in their entirety Boral/Rallo's claims against Aegis, Aegis's counterclaims against Boral/Rallo, and Aegis's third-party claims against Benchmark. (NYSCEF No. 21 at 4.) The panel held that claimants were each separately liable to Benchmark for $75,000 in legal fees "because of the egregious nature of [claimants'] wrongs" and the "disproportionate impact" on Benchmark's legal fees. (Id.) And the panel held that Aegis was liable to Benchmark for $100,000 in legal fees "because of the dilatory progress of this arbitration, nearly five years until completion." (Id.)

On motion sequence 001, Aegis has moved under CPLR 7511 (b) to vacate the arbitral award; and Boral/Rallo and D. Boral Capital have filed separate cross-motions to confirm. On motion sequence 002, Aegis moves to seal several exhibits to its reply papers in support of motion sequence 001.¹ Aegis's motion to vacate is denied; Boral/Rallo and D. Boral Capital/Benchmark's cross-motions to confirm are granted. Aegis's motion to seal is granted without opposition.

As Aegis forthrightly concedes, the threshold for vacating an arbitral award under CPLR 7511 (b) is extremely high. When an unbiased arbitral panel is acting within the scope of its authority, "a court may vacate an arbitration award only if it violates a strong public policy" or "is irrational." (Matter of Falzone [New York Cent. Mut. Fire Ins. Co.], 15 NY3d 530, 534 [2010].) The award must be confirmed "if any plausible basis exists for the award," even if the court hearing the petition to confirm believes that the arbitral panel committed errors of law or fact. (Matter of Rose Castle Redevelopment II, LLC v Franklin Realty Corp., 184 AD3d 230, 234 [1st Dept 2020].) Aegis has not cleared the high bar to establishing a basis to vacate.

Aegis argues that the arbitral award must be vacated because the panel disregarded Aegis's showing that Boral/Rallo breached contractual non-solicitation obligations. (See NYSCEF No. 14 at 7-9.) This argument is, in essence, a claim that the arbitral award should be vacated because it is legally and factually erroneous. That claim is without merit under the standards governing CPLR 7511 (b) motions to vacate. (See Matter of Rose Castle, 184 AD3d at 234.) For the same reason, there is no merit to Aegis's argument that the award of legal fees to D. Boral Capital from Aegis must be vacated because it lacked a sufficient basis in the pleadings and the proof.

Aegis also contends that it was irrational for the panel to have found that Boral/Rallo committed wrongdoing yet still deny Aegis's counterclaims against them. But whether Boral/Rallo acted wrongly and whether Aegis has a basis to recover from them are two different questions—particularly given Boral/Rallo's arguments that Aegis wronged them. Aegis has not shown that it would be irrational for the panel to have concluded that, notwithstanding any wrongdoing by Boral/Rallo, Aegis did not prove its own (counter)claims against them.

For these reasons, Aegis's motion to vacate the arbitral award is denied. Respondents' cross-motions to confirm are granted.

With respect to Aegis's request to seal, the court agrees that sealing is warranted under Rule 216.1 of the Uniform Rules for the New York State Trial Courts. The documents at issue contain confidential business and proprietary information. The details of that information are not relevant to Aegis's arguments in support of vacatur (or respondents' arguments in support of confirmation)—as witness the fact that the parties' publicly filed memorandums of law do not cite or rely on those details.

Accordingly, it is

ORDERED that Aegis's motion to vacate the underlying arbitration award (mot seq 001) is denied; and it is further

ORDERED that Boral/Rallo and D. Boral Capital's cross-motions to confirm the underlying arbitration award (mot seq 001) are granted; and it is further

ORDERED that Aegis's motion to seal (mot seq 002) is granted without opposition; and it is further

ORDERED that upon service of a copy of this order with notice of its entry, the County Clerk shall seal the documents appearing at NYSCEF Nos. 50-54, 56-57, 60, 61, and 66, and, until further order of this court, shall deny access to the said sealed documents to anyone (other than the staff of the Clerk or the court) except for counsel of record for any party to this case and any party; and it is further

ORDERED that the parties shall each, within 30 days of entry of this order, pay their respective shares of the arbitral fees assessed by the panel (as set out at pages 4-7 of the modified arbitral award, NYSCEF No. 21) to FINRA Dispute Resolution Services, in the manner provided for by FINRA's arbitration rules, to the extent not already paid; and it is further

ORDERED that respondent D. Boral Capital LLC is awarded a judgment against respondent David W. Boral for $75,000, with interest on that sum running at the statutory rate from September 24, 2025; is awarded a judgment against respondent Joseph Rallo for $75,000, with interest on that sum running at the statutory rate from September 24, 2025; and is awarded a judgment against petitioner Aegis Capital Corp. for $100,000, running at the statutory rate from September 24, 2025; and it is further

ORDERED that D. Boral Capital LLC shall serve a copy of this order with notice of its entry on all parties; and on the County Clerk (using the NYSCEF document type "Notice to the County Clerk - CPLR § 8019 (c)"); who shall seal the documents identified above and enter judgment accordingly.

DATE 3/31/2026

FOOTNOTES

1.   Aegis previously obtained interim relief from this court, sealing those exhibits pending the determination of the current motion. (See NYSCEF No. 71 at 2.)

Gerald Lebovits, J.