Redmond v. Redmond

39 A.D.2d 527, 330 N.Y.S.2d 684, 1972 N.Y. App. Div. LEXIS 4947

• Court: Appellate Division of the Supreme Court of the State of New York
• Decided: April 13, 1972
• Status: Published

Opinion

Judgment, Supreme Court, Bronx County entered on June 11, 1971, insofar as appealed from, unanimously reversed, on the law, and petitioners’ application for a permanent stay of arbitration granted. Respondent is granted leave to serve a supplemental complaint in each of the pending derivative actions within 20 days after service upon him by appellants of a copy of the order entered herein, with notice of entry. Appellants shall recover of respondent $30 costs and disbursements of this appeal. While we agree with respondent that the charges of waste and mismanagement in the operations of the two close corporations involved herein are arbitrable under the arbitration clause contained in the February 24, 1964 agreement, these essentially same issues are encompassed in his previously commenced, and still pending, derivative actions. Having elected to vindicate his, and thé corporations’, rights in a judicial proceeding, respondent has waived his right to arbitration. (Matter of Zimmerman v. Cohen, 236 N. Y. 15.) Although east in the form of derivative suits, under the circumstances here disclosed respondent will be the eventual beneficiary of any recovery obtained if he ultimately prevails. (Cf. Geltman v. Levy, 11 A D 2d 411; Perlman v. Feldmann, 219 F. 2d 173.) Nevertheless, respondent should have the opportunity to assert, directly, any individual cause of action he may have. Accordingly, respondent is hereby granted leave to serve a supplemental complaint in each of the pending derivative actions within 20 days after service upon him by appellants of a copy of the order to be entered hereon, with notice of entry. Concur—Stevens, P. J., Kupferman, Murphy, Steuer and Capozzoli, JJ.