On October 7, 2024, Justice Bannon of the New York County Commercial Division issued a decision in Ironmen Holdings, LLC v. Nieporte, 2024 NY Slip Op. 33743(U), holding that a dispute over compliance with an agreement to arbitrate must be brought as an Article 75 proceeding, explaining:
Initially, the plaintiffs’ claims are subject to dismissal because they are improperly brought via a plenary action rather than a special proceeding pursuant to CPLR Article 75. CPLR 7502(a) mandates that a special proceeding shall be used to bring before a court the first application arising out of an arbitrable controversy. Further, CPLR 7503(b) provides that a party may apply to stay arbitration on the ground that a valid agreement was not made or has not been complied with. Thus, issues as to whether the parties made a valid agreement to arbitrate and whether, if such an agreement was made, it has been complied with, must be raised as threshold questions under CPLR 7503. Aside from such threshold questions concerning procedural requirements or conditions precedent to arbitration, which are reserved for the court to determine upon a motion pursuant CPLR 7503, all other questions regarding a party’s contract performance are for the arbitrators.
Here, the plaintiffs’ complaint is the first application arising out of an arbitrable controversy, and it seeks to challenge the defendant’s compliance with the parties’ arbitration agreement. Specifically, it alleges the defendant has breached the arbitration agreement by seeking an arbitrator other than Segall, the parties’ mutually selected mediator. A contractual provision, such as the one allegedly breached by the defendant, specifically providing the procedure for selecting an arbitrator is a condition precedent to arbitration. Objections to proceeding with an arbitration based on noncompliance with a provision providing for such condition precedent must be brought via a motion to stay arbitration under CPLR 7503(b). Thus, the plaintiffs’ claims concerning the defendant’s noncompliance with the arbitration agreement, and their challenge to proceeding with the Arbitration before any arbitrator other than Segall, should have been brought as an Article 75 special proceeding to stay the Arbitration, and, having failed to follow the proper procedure, plaintiffs cannot now be heard by bringing these claims in a plenary action.
The plaintiffs contend that CPLR 7503 is inapplicable because they are not seeking to stay or avoid arbitration, but rather are asking the court to find that Defendant breached the Arbitration Agreement and to enjoin him, and the underlying arbitration, from proceeding in a manner inconsistent with the Arbitration Agreement. This argument is specious. An application to enjoin the Arbitration from further proceeding is effectively a procedurally improper request to stay the Arbitration. And the assertion that the defendant will otherwise proceed with the Arbitration in a manner inconsistent with the arbitration agreement’s procedure for arbitrator selection is simply another way of saying that the defendant is not complying with the procedure, which is a condition precedent to arbitration—i.e., one of the express statutory bases for a stay motion under CPLR 7503(b). If anything, given the plaintiffs’ evident awareness that the arbitration was not proceeding in accordance with the arbitration agreement’s arbitrator selection clause their failure to seek a stay on this basis pursuant to CPLR 7503 constitutes a binding waiver of its contractual right to have Segall serve as the arbitrator.
(Internal quotations and citations omitted).