On July 15, 2024, Justice Patel of the New York County Commercial Division issued a decision in Country-Wide Ins. Co. v. Quick Docs Med. PLLC, 2024 NY Slip Op. 32499(U), vacating an arbitral award for prior court decision resolving the same dispute, explaining:
Where the amount in contention does not exceed $5,000.00, courts grant deference to the findings of the arbitrators. . . . Thus, if the amount petitioner is seeking is less than the statutory amount, the judiciary is restricted by the findings of the arbitrators. Only when review has basis in an enumerated ground in CPLR § 7511 or the court finds that the arbitration award is a result of arbitrary or capricious determinations by the arbitrators may the court interject. . . . .
In the present matter, Respondent’s award does not exceed the $5,000.00 limit. As such, the Court is bound by the factual determinations of the arbitrators and review of the motion to vacate the award is limited to the bases enumerated in CPLR § 7511. Here, Petitioner contends that the arbitrators’ awards are incorrect as a matter of law, relying on CPLR § 7511(b)(1)(i), (iii) and (iv).
Petitioner argues that the arbitrators lacked subject matter jurisdiction to determine the present issue as Petitioner had previously been granted default judgment in the underlying matter. An arbitration award may be vacated as barred by the preclusive effect of a judgment or settlement entered in prior litigation. Ordinarily a default judgment in a declaratory judgment action will have res judicata effect barring any action [or arbitration] to recover no-fault benefits. In the present matter, Petitioner commenced legal proceedings and sought default judgment prior to arbitration. Petitioner’s motion to enter default judgment was granted on January 17, 2018. To date, Respondent has not sought to vacate said decision. Nonetheless, Respondent demanded arbitration approximately two months after the decision.
Respondent now argues that vacatur of a master arbitrator’s award requires a lofty standard that has not been met by Petitioner. More specifically, Respondent identifies that vacatur of a master arbitrator’s award for an error of law requires an egregious misinterpretation and/or misapplication of the law. However, to refuse vacatur in the present matter would be to render an order of the court meaningless. The decision granting default judgement states, in relevant part, “[Petitioner] owes no duty to Defendants Jean Bastien . . . and Quick Docs Medical, PLLC, to pay No Fault claims submitted in relation to the June 6, 2016 loss . . . .” In other words, the court there had already determined, legally, that Respondent’s failure to appear precluded Respondent’s recovery. Respondent failed to vacate the decision at any time prior to or during the arbitration at issue. To allow Respondent to now recover would be to grant Respondent immunity from the law and the courts. Court orders would be relegated to a suggestion prone to circumvention. Therefore, Respondent’s argument is unconvincing. Accordingly, the arbitrators’ determination is inapposite to the final determination of the court and incorrect as a matter of law. Thus, vacatur of the arbitration award is warranted.
(Internal quotations and citations omitted).