BRESLIN BROOKHAVEN LLC v. ROSE (2026)

DECISION & ORDER

In an action, inter alia, to recover damages for breach of contract, the defendants appeal from an order of the Supreme Court, Nassau County (Sharon M.J. Gianelli, J.), dated June 3, 2025.  The order denied the defendants' motion pursuant to CPLR 7503(a) to compel arbitration and stay all proceedings in the action pending completion of the arbitration or, in the alternative, pursuant to CPLR 3211(a) to dismiss the complaint.

ORDERED that the order is modified, on the law, by deleting the provision thereof denying that branch of the defendants' motion which was pursuant to CPLR 7503(a) to compel arbitration and stay all proceedings in the action pending completion of the arbitration, and substituting therefor a provision granting that branch of the motion;  as so modified, the order is affirmed, with costs to the defendants.

On August 17, 1999, the defendant Allan V. Rose and the plaintiff entered into an operating agreement (hereinafter the agreement) for Rose–Breslin Associates, LLC (hereinafter the LLC).  The purpose of the LLC was acquiring several parcels of unimproved land in Suffolk County from various entities owned by the members of the plaintiff and developing those parcels.  The agreement provided that “[i]f there is a dispute between the parties arising out of or relating to matters set forth in this [a]greement, ․ either party may submit the dispute to binding arbitration before the American Arbitration Association.”

In May 2024, the plaintiff, individually and derivatively on behalf of the LLC, commenced this action against Rose and the defendant AVR Enterprises, LLC (hereinafter AVR), inter alia, to recover damages for breach of contract.  The plaintiff alleged that shortly after the agreement was executed, Rose bypassed third-party funding requirements by making loans to the LLC, with loan payments prioritizing repayment of principal over interest.  The plaintiff further alleged that, based on this principal-first arrangement, the plaintiff agreed to forego third-party funding for loans provided by Rose.

The defendants moved pursuant to CPLR 7503(a) to compel arbitration and stay all proceedings in this action pending completion of the arbitration, invoking the agreement's arbitration provision, or, in the alternative, pursuant to CPLR 3211(a) to dismiss the complaint.  The plaintiff opposed the motion, arguing, among other things, that AVR was not a party to the arbitration agreement and that the defendants waived the right to compel arbitration by appearing in a 2022 action between the parties concerning Rose's assignment of his interest in the LLC to AVR. In an order dated June 3, 2025, the Supreme Court denied the defendants' motion.  The defendants appeal.

“On a motion to compel or stay arbitration, a court must first determine whether the parties agreed to arbitration and, if so, whether the dispute generally falls within the scope of their arbitration agreement” (Yeled V'Yalda Early Childhood Ctr., Inc. v. Attentive Behavior Mental Health Counseling, P.C., 208 A.D.3d 1209, 1210, 175 N.Y.S.3d 250;  see Mozzachio v. Schanzer, 188 A.D.3d 873, 874, 136 N.Y.S.3d 59).  “ ‘Arbitration is a matter of contract, grounded in agreement of the parties’ ” (Yeled V'Yalda Early Childhood Ctr., Inc. v. Attentive Behavior Mental Health Counseling, P.C., 208 A.D.3d at 1210, 175 N.Y.S.3d 250 [internal quotation marks omitted], quoting Matter of Belzberg v. Verus Invs. Holdings Inc., 21 N.Y.3d 626, 630, 977 N.Y.S.2d 685, 999 N.E.2d 1130).  “Thus, when deciding whether the parties agreed to arbitrate a certain matter, ordinary state law principles that govern the formation of contracts apply” (id.;  see Mozzachio v. Schanzer, 188 A.D.3d at 874, 136 N.Y.S.3d 59).  “If the parties have broadly agreed to settle any dispute arising out of a contract between them by arbitration, once it appears that there is, or is not a reasonable relationship between the subject matter of the dispute and the general subject matter of the underlying contract, the court's inquiry with respect to the arbitrability of the dispute is ended” (Russo v. Time Moving & Stor., Inc., 194 A.D.3d 976, 977, 149 N.Y.S.3d 169 [internal quotation marks omitted];  see Matter of Levy, 79 A.D.2d 684, 434 N.Y.S.2d 39).

“ ‘Inasmuch as an arbitration clause is a contractual right, the general rule is that only a party to an arbitration agreement is bound by or may enforce the agreement’ ” (Yeled V'Yalda Early Childhood Ctr., Inc. v. Attentive Behavior Mental Health Counseling, P.C., 208 A.D.3d at 1210, 175 N.Y.S.3d 250, quoting Mozzachio v. Schanzer, 188 A.D.3d at 874–875, 136 N.Y.S.3d 59).  However, “[a] nonsignatory to an arbitration clause may, in certain situations, compel a signatory to the clause to arbitrate the signatory's claims against the nonsignatory despite the fact that the signatory and the nonsignatory lack an agreement to arbitrate” (Mozzachio v. Schanzer, 188 A.D.3d at 875, 136 N.Y.S.3d 59 [internal quotation marks omitted] ).  This Court has held that “[a]n assignee of a contract may avail itself of an arbitration clause contained therein” (Matter of S & L Vending Corp. v. 52 Thompkins Ave. Rest., 26 A.D.2d 935, 935, 274 N.Y.S.2d 697;  see Icdas Celik Enerji Tersane Ve Ulasim Sanayi A.S. v. Travelers Ins. Co., 81 A.D.3d 481, 483, 916 N.Y.S.2d 88).

Here, the operating agreement's arbitration provision, which requires the parties to submit all disputes “arising out of or relating to matters set forth in this Agreement” to arbitration, is sufficiently broad to encompass the instant dispute (see Sutphin Retail One, LLC v. Sutphin Airtrain Realty, LLC, 143 A.D.3d 972, 974, 40 N.Y.S.3d 457;  Giahn v. Giahn, 290 A.D.2d 483, 484, 736 N.Y.S.2d 394).  Further, as the agreement permitted Rose to assign his interest in the LLC to a third party and did not preclude an assignee from enforcing the arbitration provision, AVR was entitled to enforce the agreement's arbitration provision (see Icdas Celik Enerji Tersane Ve Ulasim Sanayi A.S. v. Travelers Inc. Co., 81 A.D.3d at 483, 916 N.Y.S.2d 88;  Matter of S & L Vending Corp. v. 52 Thompkins Ave. Rest., 26 A.D.2d at 935, 274 N.Y.S.2d 697).  Finally, the defendants have not waived their right to arbitrate the instant dispute by appearing in a separate action and litigating it on the merits (see Denihan v. Denihan, 34 N.Y.2d 307, 309, 357 N.Y.S.2d 454, 313 N.E.2d 759;  Matter of Monroe County [Monroe County Law Enforcement Assn.], 132 A.D.3d 1373, 1373–1374, 18 N.Y.S.3d 245;  Radzievsky v. Macmillan, Inc., 170 A.D.2d 400, 400, 566 N.Y.S.2d 285).  Accordingly, that branch of the defendants' motion which was pursuant to CPLR 7503(a) to compel arbitration and stay all proceedings in this action pending completion of the arbitration should have been granted.

In light of the foregoing, we need not reach the defendants' remaining contentions.

IANNACCI, J.P., DOWLING, VENTURA and GOLIA, JJ., concur.