FILED: NEW YORK COUNTY CLERK 10/10/2013 NYSCEF DOC. NO. 19 INDEX NO. 654319/2012 RECEIVED NYSCEF: 10/10/2013 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK: COMMERCIAL PART 48 MICHAEL COHEN, ET AL., Petitioners, Index No.: 654319/12 -against? Seq. No. 001 YELLOW CAB SLSJET MANAGEMENT CORP., DECISION AND JUDGMENT Respondent. JEFFREY K. OING, J.: Petitioners, Michael Cohen, Ania Shusterman (?Shusterman?), Laura Cohen, and petitioner medallion companies (the ?medallion companies"), move, pursuant to CPLR 7503, to stay permanently the underlying arbitration proceeding before the American Arbitration Association relating to claims brought by respondent Yellow Cab SLSJET Management Corp. (?Yellow Cab?) against petitioners for breach of contract. Michael Cohen and Laura Cohen own the medallion companies and each of the medallion companies, in turn, owns two taxi medallions. In June 2006, the fifteen medallion companies entered into fifteen management agreements with respondent Yellow Cab, one for each the medallion companies (the ?original contracts?). The fifteen original contracts are identical to one another, except for the name of the contracting medallion company and the identification of its medallion. The original contracts provided that respondent would take possession of the taxi Index No. 654319/12 Page 2 of 6 Seq. No.001 medallions, and manage them on behalf of the medallion companies. Respondent would retain the money earned from the management of the medallions, except for a flat fee which it would pay to each medallion company for each medallion every month. In November 2011, respondent and each of the fifteen medallion companies entered into another set of agreements (the ?November 2011 contracts"). The November 2011 contracts, like the original contracts, are each identical to one another, except for the name of the contracting medallion company and the identification of its medallions. The November 2011 contracts, however, have substantially different terms from those in the original contracts. For example, the November 2011 contracts provide that CONTRACT SUPERSEDES ANY OTHER CONTRACT THAT MAY BE IN FORCE OR EFFECT AT THE TIME OF THE SIGNING OF THIS (Petition, Ex. 18, 19). Each of the November 2011 contracts also contains the following arbitration clause: ?This Agreement contains the full intentions of the parties and shall be interpreted under the laws of the State of New York. Any action brought under this Agreement must be handled and resolved by the American Arbitration Association? (lg; at 15). Petitioner, Michael Cohen, signed each of the November 2011 contracts on behalf of each of the medallion companies. Index No. 654319/12 Page 3 of 6 Seq. No.001 In April 2012, the medallion companies terminated their contractual arrangements with respondent. In November 2012, respondent filed a statement of claim with the naming each of the petitioners as a respondent, and alleging that the contract terminations in April 2012 constituted a breach of the parties? arrangements. Petitioners point out that respondent contends in the SOC that ?[s]ubmission of this matter to arbitration is not a concession that the [November 2011] contracts are controlling, but is instead an attempt to expedite the resolution of this controversy? (Moving Papers, Ex. 1, SOC, i 25). Petitioners also point out that in the SOC respondent alleges: (1) that Michael Cohen ?unilaterally drafted the November 2011 contracts (SOC, 32); (2) that respondent?s principal ?had never seen [the November 2011 contracts]? and ?did not understand [the November 2011 contracts] to be in effect? until after Michael Cohen terminated them in April 2012 (SOC 11 37, 43); and (3) that Michael Cohen ?manipulated? the wife of respondent?s principal into signing the November 2011 contracts while her husband was traveling on business (SOC ll 35, 43). Further, in an April 19, 2012 letter to Michael Cohen?s counsel, respondent's counsel asserted that the November 2011 contracts were ?forgeries? and Index No. 654319/12 Page 4 of 6 Seq. No.001 part of a ?juvenile attempt" to supersede the original contracts (Moving Papers, Ex. 2). Petitioners argue that Michael Cohen, Laura Cohen, and Shusterman are not parties to any agreement to arbitrate any claims with respondent. As such, the arbitration proceedings related to respondent?s claims against these petitioners should be permanently stayed. In addition, because the original contracts do not include an agreement by the medallion companies to submit to arbitration, the arbitration proceedings must be stayed to the extent respondent?s breach of contract claims are based on the original contracts. Finally, although the November 2011 contracts contain an arbitration clause, respondent challenges the validity of the November 2011 contracts and claims that they are forgeries. Thus, respondent cannot rely upon the November 2011 contracts as a basis for arbitration. Respondent Yellow Cab filed an amended statement of claim (?amended with the on December 17, 2012 (Dwyer Affirm., Ex. B). The amended SOC withdrew the claims against the individual petitioners. In addition, the amended SOC acknowledged the November 2011 contracts between Yellow Cab and the medallion companies as valid and binding between the parties. Yellow Cab also claims that each of the SOC allegations with respect to the validity of the November 2011 contracts are not 9 Index No. 654319/12 Page 5 0f 6 Seq. No.001 asserted in the amended SOC. As such, respondent argues that the petition should be dismissed as moot with respect to the individual defendants, and should be denied as to the medallion companies. In reply, petitioners discuss a series of draft stipulations that went back and forth between the parties wherein petitioners proposed that respondent stipulate to abandoning all claims arising from the original contracts and all claims against the individual petitioners, and an acknowledgment that the November 2011 contracts had not been forged or improperly induced. Based on respondent's refusal to agree to stipulate that all arbitral claims against the individual petitioners and all claims arising from the original contracts have been irrevocably abandoned, petitioners argue that it appears that respondent may intend to pursue such claims, or to seek to revive them if the arbitration is permitted to proceed. The petition for a permanent stay of arbitration is denied. In the amended SOC filed with the respondents do not assert any claims against the individual petitioners. Furthermore, the amended SOC refers to the November 2011 contracts, which contain the arbitration clause, and not the original contracts. As such, petitioners' arguments for staying the arbitration based on the original SOC are no longer applicable herein. Index No. 654319/12 Page 6 of 6 Seq. No.001 Accordingly, it is ADJUDGED that the petition to stay the subject arbitration is denied in all respects, and the petition is dismissed; and it is further I ADJUDGED that the parties shall proceed to arbitration forthwith, and respondent's counsel shall serve a copy of this judgment upon the arbitral tribunal. This memorandum opinion constitutes the decision and judgment of the Court. 8 Dated: Index No. 654319/2012 SUPREME COURT OF THE STA TE OF NEW YORK COUNTY OF NEW YORK MICHAEL COHEN, ANIA SHUSTERMAN, LAURA COHEN, MARTHA CAB CORR, SIR MICHAEL HACKING CORR, LADY LAURA HACKING CORR, BARN TRANS CORR, SAMANTHA B. GOOD CAB CORR, LAF HACKING CORR, FLA. HACKING CORR, NY FUTON TAXI CORR, NY BADGE TAXI CORR, NY SHIELD TAXI CORR, MAD DOG CAB CORR, JAKE ROSS HACKING CORR, NY FUNKY TAXI CORR, MONICA TAXI CORR, and GOLDEN CHILD CAB CORR, Petitioners, FOR A JUDGMENT STAYING ARBITRATION PURSUANT TO ARTICLE 75 OF THE CPLR vs. YELLOW CAB SLSJ ET MANAGEMENT CORR, Respondent. JUDGMENT Herrick, Feinstein LLP 2 Park Avenue New York, NY 10016-9301 (212) 592-1400