On August 24, 2022, Justice Chan of the New York County Commercial Division issued a decision in Allyance Media Group, Inc. v. Acker Family 2016 Gift Trust, 2022 NY Slip Op. 32888(U), holding that correspondence with JAMS challenging its authority to arbitrate did not constitute a waiver of the right to stay the arbitration, explaining:
[R]espondents sought arbitration through JAMS to recover the $1,000,000 purchase price as well as statutory interest and attorneys’ fees. On May 16, 2022, respondent’s counsel emailed their JAMS Demand for Arbitration Form to Allyance’s counsel. . . . In email correspondence with JAMS and respondents, Allyance’s counsel, reiterating a reservation of rights, stated that JAMS has no authority to arbitrate this dispute or any alleged rights, claims, defenses etc arising under an agreement that was never signed and thus never in effect. . . . On June 3, 2022, Allyance’s counsel submitted a letter response to respondent’s position statement via email to JAMS and respondents. The email prefaced that the submission is without waiver of or prejudice to Allyance’s position that this arbitration may not properly proceed, and shall not be deemed to be participation in the arbitration. . . .
On June 16, 2022, the return date that JAMS had scheduled for responses to the strike and rank lists, Allyance filed the present petition seeking a stay of the arbitration and requested JAMS to suspend its proceedings until the court rules on the petition. . . .
Allyance argues that it neither waived nor forfeited its right to seek a stay of the Arbitration or that it participated in the arbitration within the meaning of CPLR 7503. . . .
CPLR 7503 provides:
(b) … a party who has not participated in the arbitration and who has not made or been served with an application to compel arbitration, may apply to stay arbitration on the ground that a valid agreement was not made . . .Allyance maintains that it did not participate in the arbitration under the meaning of CPLR 7503. Respondents disagree citing in support Infinity Ins. Co. v Daily Med. Equip. Distribution Ctr., Inc., which held that letter submissions opining as to the inapplicability of arbitration and also submitting a police report and explanation of benefits documents constituted participation in arbitration. However, Allyance’s situation is more akin to Matter of Blamowski in which the Court of Appeals found that the submission of six letters over the course of several months did not constitute participation where the initial letter stated that
there was no obligation to arbitrate and the subsequent letters reiterated this position. The Court considered the final letter which contained citations to case law and determined that the legal arguments in the last letter only maintained the party’s position not to participate in arbitration. Respondents’ reliance on JJF Assocs., LLC v Joyce and Flintlock Const. Servs., LLC. v Weiss is unavailing. In JJF Assocs., the party seeking a stay in that case had in fact originally compelled arbitration and its participation involved attending a prehearing conference and motion to dismiss, far beyond the involvement of Allyance here. Likewise in Flintlock, the party seeking the stay had participated for eight months and made a motion to dismiss before the arbitrator.