95 N.Y.2d 61 (2000)
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CPLR 204(b) tolls the statute of limitations when a party erroneously seeks arbitration, and the ‘final determination’ of nonarbitrability is the order of the last appellate court to which an appeal was taken.
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Summary
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Joseph Francese, Inc. sued the Enlarged City School District of Troy for breach of contract after a construction project dispute. Francese initially sought arbitration, which the District successfully stayed. Francese then filed a lawsuit, which the District argued was time-barred. The New York Court of Appeals held that CPLR 204(b) tolled the statute of limitations during the arbitration proceedings. The Court rejected the requirement of demonstrating a “color of right” to arbitration and defined the “final determination” of nonarbitrability as the appellate court’s order.
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Facts
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Joseph Francese, Inc. contracted with the Enlarged City School District of Troy in 1991 for a construction project. The contract incorporated an American Institute of Architects form but deleted the general arbitration clause, while leaving other references to arbitration intact. A dispute arose in 1993, leading Francese to file a notice of claim and the District to terminate the contract. Francese then demanded arbitration on September 15, 1993.
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Procedural History
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The District moved to stay arbitration; Francese cross-moved to compel it. Supreme Court granted the stay on May 9, 1994. The Appellate Division affirmed on November 10, 1994. Francese commenced a breach of contract action on April 20, 1995. Supreme Court dismissed the action as untimely. The Appellate Division affirmed. The New York Court of Appeals granted leave to appeal.
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Issue(s)
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1. Whether CPLR 204(b) requires a plaintiff invoking its benefit to demonstrate that the demand for arbitration was made under a color of right.r
2. Whether the “final determination” of nonarbitrability under CPLR 204(b) is the initial trial court order or the final order of the appellate court.
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Holding
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1. No, because adding a “color of right” requirement is inconsistent with the broad and liberal purpose of tolling statutes as interpreted in Gaines v. City of New York, designed to ensure a diligent suitor a hearing on the merits.r
2. The final determination is the order of the Appellate Division, because practical considerations dictate that the finality rule should apply equally in the context of the section 204(b) tolling provision.
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Court’s Reasoning
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The Court of Appeals rejected the Appellate Division’s requirement of demonstrating a “color of right” to arbitration. Referencing Gaines v. City of New York, the Court emphasized a broad interpretation of tolling statutes to ensure diligent litigants have a hearing on the merits. The Court stated, “[t]he statute is designed to insure to the diligent suitor the right to a hearing in court till he reaches a judgment on the merits. Its broad and liberal purpose is not to be frittered away by any narrow construction.”r
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The Court also highlighted that the District was on timely notice of the plaintiff’s claims due to the arbitration demand, negating the underlying purpose of the limitations period. The Court also acknowledged criticisms of the “color of right” requirement from legal commentators.r
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The Court then addressed what constitutes a