United Nations Development Corp. v. Norkin Plumbing Co.

380 N.E.2d 253, 45 N.Y.2d 358, 408 N.Y.S.2d 424, 1978 N.Y. LEXIS 2149
CourtNew York Court of Appeals
DecidedJuly 13, 1978
StatusPublished
Cited by71 cases

This text of 380 N.E.2d 253 (United Nations Development Corp. v. Norkin Plumbing Co.) is published on Counsel Stack Legal Research, covering New York Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United Nations Development Corp. v. Norkin Plumbing Co., 380 N.E.2d 253, 45 N.Y.2d 358, 408 N.Y.S.2d 424, 1978 N.Y. LEXIS 2149 (N.Y. 1978).

Opinion

OPINION OF THE COURT

Jasen, J.

Upon this appeal, the issue posed for our consideration is whether the commercial arbitration agreement to which the parties have subscribed contains an express condition precedent to the submission of a dispute to arbitration, such that the question of compliance with that condition constitutes a threshold inquiry for judicial resolution, rather than a matter of procedural arbitrability falling within the prerogative of the arbitrator.

Appellant United Nations Development Corp., a nonprofit public benefit corporation, undertook the construction of office space, hotel accommodations and other facilities for the United Nations Community, including a 39-story combination hotel and office building. Respondent Norkin Plumbing Co. successfully bid on the subcontract to perform the plumbing work on the proposed building. The resulting contract provided for the completion by respondent of all the necessary plumbing work for the building in accordance with a construction schedule designed to ensure occupancy in August of 1975. As is often the case, however, delays occurred impeding respondent’s performance to the point where the necessary plumbing installations were not completed until June of 1976.

As a consequence of these delays — delays which it attributed to appellant — respondent served a demand for arbitration before the American Arbitration Association on August 24, 1976. Appellant commenced this proceedng to stay arbitration on the ground that the demand was not made within 60 days after the claim arose, as provided by the contract. Thereafter, respondent served a cross motion to compel arbitration.

Supreme Court, New York County, dismissed appellant’s petition to stay arbitration and granted respondent’s cross motion to compel arbitration holding that the timeliness of the demand for arbitration presented a question to be deter[362]*362mined by the arbitrator. The Appellate Division, First Department, unanimously affirmed, without opinion.

We hold that the contractual limitation upon the time within which a demand for arbitration was required to be filed does not constitute an express condition precedent permitting threshold judicial resolution of the question of compliance, but, rather, constitutes a matter of procedural arbitrability to be determined by the arbitrator.

At the center of this dispute lies paragraph 7.10.2 of article 7 of the parties’ agreement, which provides, inter alia, that a "demand for arbitration shall be made within 60 days after the claim, dispute or other matter in question has arisen, and in no event shall it be made after the date when institution of legal or equitable proceedings based on such claim, dispute or other matter in question would be barred by the applicable statute of limitations.” The 60-day demand requirement was included in the construction contract by way of modification of the standard form contract used by the parties: namely, the "General Conditions of the Contract for Construction” formulated by the American Institute of Architects. Prior to the parties’ inclusion of a 60-day demand requirement, the standard form contract provided for the filing of a notice of demand to arbitrate within a "reasonable time” after the claim arose, as limited peripherally by the applicable Statute of Limitations.

In the courts below, appellant has maintained that paragraph 7.10.2 of the parties’ agreement constitutes a condition precedent, clear and unambiguous in its meaning, permitting judicial resolution of the timeliness of respondent’s filing of a notice of demand to submit their dispute to arbitration. In rebuttal, respondent has argued that this contractual limitation upon the time within which to demand arbitration is ambiguous, and, therefore, its meaning and respondent’s compliance with its mandate should be left to the arbitrator. In our view, the parties have misperceived the issue by focusing their attention entirely upon the clarity or ambiguity of the condition precedent to arbitration contained in their agreement. In so doing, they have overlooked a far more primary question: that is, whether the condition imposed by their agreement is an express or implied condition precedent. In our opinion, this distinction is crucial to an appropriate analysis of the instant case.

Our analysis begins, as it must, with CPLR 7503 (subd [363]*363[b]), which delineates the narrow scope of threshold judicial inquiry permissible upon an application to stay arbitration. In addition to determining whether there exists a valid agreement between the parties, the court may also determine whether the agreement has been complied with and whether the claim raised is barred by the applicable Statute of Limitations. (See CPLR 7502, subd [b]; see, generally, Siegel, New York Practice, § 590.) Of simplest resolution is the case in which the parties to an arbitration agreement are bound not by a contractual limitation to the submission of a claim to arbitration, but by the applicable Statute of Limitations. In such a case the timeliness of a demand for arbitration presents a question for judicial determination. (See, e.g., Matter of Paver & Wildfoerster [Catholic High School Assn.], 38 NY2d 669, 673-674.)

Similarly, where there exists a statutory condition precedent, as distinguished from a Statute of Limitation, compliance with that condition also falls within the threshold jurisdiction of the court. Typical of this case is Matter of Board of Educ. (Wager Constr. Corp.) (37 NY2d 283), in which we held that section 3813 of the Education Law, requiring timely service of a notice of claim upon boards of education against which a party alleges the existence of a claim, constitutes a condition precedent to arbitration, the fulfillment of which is a question for the court. (Id., at p 289; see Matter of Board of Educ. [Heckler Elec. Co.], 7 NY2d 476; Matter of Guilderland Cent. School Dist. [Guilderland Cent. Teachers Assn.], 45 AD2d 85.)

Unlike statutory conditions precedent, however, contractual conditions precedent are not governed by a rule given to so facile an application. Of critical importance in this area is the nature of the arbitration agreement: that is, whether it contains a broad or narrow arbitration clause. Where the agreement contains a broad clause, compliance with contractual notice provisions as well as time requirements in the grievance procedure are issues to be determined by the arbitrator. (Matter of Board of Educ. [Wager Constr. Corp.], 37 NY2d, at pp 288-289, supra.) This is so whether the arbitration involves a commercial transaction or a collective bargaining agreement. (See id., at p 289, citing Matter of Novelty Fabrics Corp. [Lawrence J. Fink, Inc.], 1 AD2d 949, affd 2 NY2d 894 [commercial transaction]; Matter of City School Dist. of City of Poughkeepsie [Poughkeepsie Public School [364]*364Teachers Assn.], 35 NY2d 599; Matter of Long Is. Lbr. Co. [Martin], 15 NY2d 380 [collective bargaining agreements].) To be distinguished, however, is the narrow arbitration clause in which the parties have indicated their desire to withhold from the arbitrator full power to resolve all aspects of their disputes. When faced with a clause of this nature on an application to stay arbitration, courts have on occasion retained jurisdiction to determine whether there has been compliance with a condition precedent to submission of a claim to arbitration. (See, e.g., Matter of Blends, Inc. [Schottland Mills],

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Bluebook (online)
380 N.E.2d 253, 45 N.Y.2d 358, 408 N.Y.S.2d 424, 1978 N.Y. LEXIS 2149, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-nations-development-corp-v-norkin-plumbing-co-ny-1978.