In a September 15, 2011 decision by Justice Demarest, the court granted the defendant’s motion to stay the action pending arbitration upon finding that the plaintiff’s claims for breach of fiduciary duty, conversion, unjust enrichment, violations of the BCL, and claims concerning stock ownership were arbitrable under the broad arbitration clause set forth in the parties’ shareholders agreement which provided that “any controversy relating to the Shareholders Agreement shall be resolved exclusively by arbitration.” The court rejected the plaintiff’s opposing argument that the arbitration clause conflicted with another provision in the shareholders agreement which permitted the parties to seek a declaratory judgment in a suit at law. Despite testimony from the drafter of the shareholders agreement that the declaratory judgment provision was included to resolve disputes outside the scope of the arbitration, including the issue of stock ownership, the court held that the issue of stock ownership was covered by the agreement and resolvable by arbitration. The court also rejected the plaintiff’s argument that the action should proceed in the court because the relief requested was equitable in nature, finding that the arbitrators have broad authority and the plaintiff failed to present any reason why an arbitrator would lack the authority to resolve the claims asserted in the complaint. The court denied the motion to dismiss the complaint pursuant to CPLR § 3211(a)(5), on the grounds that dismissal under that provision is available only after arbitration is concluded and an award is issued.

Box Export & Import, Inc. v Karakus, Sup Ct Kings County, September 15, 2011, Demarest, J, Index No. 8738/11