Presidential Towers Residence, Inc. v. Praetorian Realty Corp., 46 N.Y.2d 446 (1978)
When parties have agreed to a broad arbitration clause, the arbitrator, not the court, determines whether specific claims are arbitrable, even if those claims arguably fall under clauses that did not survive the delivery of title in a real property transaction.
Summary
Presidential Towers sought to compel arbitration with Praetorian Realty over disputes arising from their agreement, despite Praetorian’s argument that the relevant clauses did not survive the delivery of title. The New York Court of Appeals affirmed the lower court’s order compelling arbitration. The Court held that because the arbitration clause was broad and explicitly survived the delivery of title, the arbitrator, not the court, should determine whether the specific claims were arbitrable. The court’s role is limited to an initial screening to determine if an agreement to arbitrate exists and if the subject matter is encompassed by the agreement.
Facts
Presidential Towers Residence, Inc. and Praetorian Realty Corp. entered into an agreement. A dispute arose between the parties. Praetorian Realty argued that certain clauses of the agreement did not survive the delivery of title. The agreement contained a broad arbitration clause encompassing “Any and all disputes of whatsoever kind and nature arising out of * * * this agreement.” The parties specifically agreed that the arbitration clause would survive the delivery of title.
Procedural History
Presidential Towers sought to compel arbitration. Praetorian Realty opposed, arguing that the claims asserted by Presidential Towers fell within clauses of the agreement that did not survive the delivery of title. The lower court ruled in favor of Presidential Towers, compelling arbitration. The Appellate Division affirmed. The New York Court of Appeals affirmed the Appellate Division’s order.
Issue(s)
Whether the court or the arbitrator should determine if specific claims are arbitrable when a broad arbitration clause exists, but one party argues that the claims fall under clauses that did not survive the delivery of title.
Holding
Yes, the arbitrator should determine if the specific claims are arbitrable because the arbitration clause was broad, explicitly survived the delivery of title, and the court’s role is limited to an initial screening.
Court’s Reasoning
The Court of Appeals reasoned that the arbitration clause was undeniably broad, covering all disputes arising from the agreement. More importantly, the parties explicitly agreed that the arbitration clause itself would survive the delivery of title. The court stated that once it performs the “initial screening process”, determining that the parties agreed to arbitrate the subject matter in dispute, its role ends. The court should not decide whether particular claims are tenable; that determination falls within the province of the arbitrator. The court cited Matter of Nationwide Gen. Ins. Co. v Investors Ins. Co. of Amer, 37 NY2d 91, 96. The Court stated that Praetorian’s contention that Presidential Towers’ claims are barred by the merger doctrine in real property law and by certain provisions of the agreement, is properly for the consideration of the arbitrator, not the courts. The Court emphasized the limited role of courts in reviewing arbitration agreements: to determine if a valid agreement exists and if the dispute falls within its scope. Arguments concerning the merits of the claims, such as the applicability of the merger doctrine or specific contract provisions, are for the arbitrator to decide.