B. Vacating Or Modifying Award By the Court

• Jurisdiction: New York

B. Vacating or Modifying Award by the Court

The party wishing to vacate an award may make an application to the court within 90 days after receipt of the award.¹²³ In the alternative, the party may omit the motion and raise the objection when the prevailing party moves to confirm the award.¹²⁴

Whichever approach is selected, the arbitrator's award will be vacated only on the grounds set forth in CPLR 7511(b)(1).¹²⁵ A party who participated in the arbitration or was served with notice of intent to arbitrate may have an award vacated if (1) the rights of that party were prejudiced by corruption, fraud¹²⁶ or misconduct¹²⁷ in procuring the award; (2) the arbitrator was partial; ¹²⁸ (3) the arbitrator exceeded his or her power¹²⁹ or failed to make a final and definitive award;¹³⁰ or (4) a procedural failure occurred and was not waived.¹³¹ Participation in an arbitration proceeding normally serves as a waiver of the claim that no arbitration agreement exists as a ground for vacating an award.¹³²

An award will also be vacated if it is "totally irrational."¹³³ While a court may vacate an award because it is excessive,¹³⁴ neither the FAA nor the CPLR give it the power to modify an excessive award.¹³⁵ Further, courts may vacate or modify an award that violates public policy.¹³⁶ Finally, a court has the power to vacate or modify an award when, acting in its capacity as parens patriae, it finds the award in conflict with the best interests of children.¹³⁷

In addition to the foregoing grounds, a party who neither participated in the arbitration nor was served with notice may move to vacate on any of the following grounds: (1) the rights of that party were prejudiced; (2) a valid arbitration agreement was never made; (3) the arbitration agreement has not been complied with; or (4) the arbitration claim was barred by the statute of limitations.¹³⁸

The court, upon vacating the award, may order a rehearing and determination, by the original or a newly appointed arbitrator, of all or any of the issues.¹³⁹ Following denial of a motion to vacate or modify the award or a modification of the award, the court will confirm the award.¹⁴⁰

PRACTICE GUIDE

The 90-day statute of limitations in which to make an application to modify or vacate an award under CPLR 7511 cannot be extended by lack of knowledge of grounds for vacatur or modification. The grounds set forth in CPLR 7511 are exclusive.

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Notes:

^[123] CPLR 7511(a). The 90-day period begins to run when the award is delivered to the aggrieved party's union representative (which was the aggrieved's agent for purposes of the arbitration) for the same reason that receipt of an award by a party's counsel is deemed receipt by the party. See Case v. Monroe Cmty. Coll., 89 N.Y.2d 438, 654 N.Y.S.2d 708, reh'g denied, 89 N.Y.2d 1087, 659 N.Y.S.2d 861, modification denied, 89 N.Y.2d 1081, 659 N.Y.S.2d 852 (1997); see also Lowe v. Erie Ins. Co., 56 A.D.3d 130, 865 N.Y.S.2d 465 (4th Dep't 2008) ("delivery" must be construed as the date on which the award was received). On June 18, 2001, the New York Assembly passed an amendment to CPLR 7502(a) by adding subsection (iv), which revives the time for applying to confirm or contest an arbitration award, where the application was denied solely on the basis that the relief was sought in the wrong forum.

^[124] Alexander, McKinney's Practice Commentary, CPLR 7511 (1998); see Neuhaus v. Staten Island Bd. of Realtors, Inc., 44 A.D.3d 1054, 845 N.Y.S.2d 792 (2d Dep't 2007) (holding that those who were not parties to the arbitration proceeding had no standing to move to confirm the award or oppose a petition to vacate it).

^[125] Alexander, McKinney's Practice Commentary, CPLR 7511 (1998); see, e.g., Civil Service Emp. Ass'n, Local 1000 AFSCME, AFL-CIO, Mount Vernon Library Unit 9166-01 v. Bd. of Trustees of Mount Vernon Pub. Library, No. 50849/2018, 2018 N.Y. Slip Op. 28121, 2018 WL 1902987 at *4 (Sup. Ct., Westchester Co. April 19, 2018) (vacating arbitration award because the arbitrator "'exceeded his power'" by conditioning the award on removing a pay parity clause from the parties' collective bargaining agreement) (internal citations omitted); Matter of Geo-Group Comms., Inc. v. Jaina Sys. Network, Inc., 144 A.D.3d 598, 598, 42 N.Y.S.3d 118 (1st Dep't 2016) (upholding arbitrator's award because a party "failed to demonstrate any of the grounds for vacating the award set forth in CPLR 7511(b)."); State Ins. Fund v. Aetna Cas. & Sur. Co., 89 N.Y.2d 1053, 1054, 659 N.Y.S.2d 846 (1997) ("[An] arbitration award may be vacated upon the application of a party who participated in the arbitration only on the basis 'that the rights of that party were prejudiced by corruption, fraud or misconduct in procuring the award, partiality of an arbitrator, . . . the arbitrator['s having] exceeded his power or [having] failed to make a final and definite award, or a procedural failure that was not waived' " (citing CPLR 7511(b)(1)); Silverman v. Benmor Coats, Inc., 61 N.Y.2d 299, 308, 473 N.Y.S.2d 774 (1984) (an arbitrator's award "will not be vacated even though the court concludes that his interpretation of the agreement misconstrues or disregards its plain meaning or misapplies substantive rules of law, unless it is violative of a strong public policy, or is totally irrational or exceeds a specifically enumerated limitation on his power"); In re Falzone, 15 N.Y.3d 530, 533–34, 914 N.Y.S.2d 67 (2010) ("The fact that a prior arbitration award is inconsistent with a subsequent award is not a ground, pursuant to CPLR 7511, for vacating an arbitration award. . . . It is well settled that a court may vacate an arbitration award only if it violates a strong public policy, is irrational, or clearly exceeds a specifically enumerated limitation on the arbitrator's power." (internal citations omitted)); New Century Acupuncture, P.C. v. Country Wide Ins. Co., 48 Misc. 2d 1201(A), 18 N.Y.S.3d 580, *1 (N.Y. Dist. Ct. 2015) ("Outside of the narrowly circumscribed exceptions . . . the Court lacks authority to review arbitration decisions . . ."); Zakarian Mgmt. Grp., Inc. v. Lax , 40 Misc. 3d 1206(A), 975 N.Y.S.2d 713 (Sup. Ct., N.Y. Co. 2013) (declining to vacate an arbitration award that allegedly reflected a "manifest disregard of the law" because "it is well settled that mistake of law is not grounds to vacate an arbitration award"); Adolphe v. N.Y.C. Bd. of Educ., 89 A.D.3d 532, 533, 932 N.Y.S.2d 482 (1st Dep't 2011) (the "contention that the hearing officer's decision was based on mistakes of law and a disregard of the evidence" was not grounds for vacating an arbitration award); Benedict P. Morelli & Assocs., P.C. v. Shainwald, 49 A.D.3d 476, 854 N.Y.S.2d 133 (1st Dep't 2008) (the mere possibility that arbitration award was punitive was an insufficient reason to vacate it); DiNapoli v. Peak Auto., Inc., 34 A.D.3d 674, 675, 824 N.Y.S.2d 424 (2d Dep't 2006) ("'Vacatur of an arbitration award is strictly limited to the reasons stated in CPLR 7511(b), but where the parties have submitted to compulsory arbitration, the award must have evidentiary support and cannot be arbitrary or capricious if it is to be upheld.'") (internal citation omitted); City of Middletown v. City of Middletown Police Benevolent Ass'n, 30 A.D.3d 597, 598, 818 N.Y.S.2d 232 (2d Dep't 2006) (holding that vacatur of award was not warranted because "award did not violate strong public policy, was not irrational, and did not clearly exceed a specifically enumerated limitation of the arbitrator's power"; nor did it violate the New York Constitution); City Sch. Dist. of the City of N.Y. v. McGraham, 75 A.D.3d 445, 450, 905 N.Y.S.2d 86 (1st Dep't 2010), aff'd , 17 N.Y.3d 917 (2011) (when arbitration is compulsory, the arbitrator's decision "must be in accord with due process and supported by adequate evidence, and must also be rational and satisfy the arbitrary and capricious standard of CPLR article 78" (quoting Lackow v. Dep't of Educ. of City of N.Y., 51 A.D.3d 563, 859 N.Y.S.2d 52 (2008)); Mazzella v. Bedford Cent. Sch. Dist., 154 A.D.3d 761, 762, 62 N.Y.S.3d 449 (holding that, in compulsory arbitration, a decision "'must have evidentiary support and cannot be arbitrary and capricious'" and the decision also "'must be in accord with due process.'") (internal citations omitted). But see Travelers Ins. Co. v. Job, 239 A.D.2d 289, 658 N.Y.S.2d 585 (1st Dep't 1997) (standard of review in compulsory arbitration is the arbitrary and capricious standard of CPLR art. 78 review). The FAA provides that an award may be vacated or modified where (1) the award was procured by corruption, fraud or undue means; (2) there was evident partiality or corruption in the arbitrators, or either of them; (3) the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced; (4) where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final and definite award upon the subject matter submitted was not made. 9 U.S.C. § 10(a).

^[126] See, e.g., Sorrentino v. Weinman, 50 A.D.3d 305, 854 N.Y.S.2d 711 (1st Dep't 2008) (holding that there were no grounds to vacate award where petitioner had not demonstrated fraud on respondents' part, much less any that was not discoverable through due diligence prior to or during the hearing, that was material to his case); Imgest Fin. Establishment v. Shearson Lehman Hutton, Inc., 172 A.D.2d 291, 291, 568 N.Y.S.2d 104 (1st Dep't 1991) ("To vacate an arbitration award on the ground of fraud, a party must establish by clear and convincing evidence the existence of fraud, that the fraud would not have been discovered upon exercise of due diligence prior to or during the arbitration, and that the fraud materially related to an issue in arbitration."); Field v. BDO USA, LLP, 129...