Upon the foregoing papers it is ordered that the petitioner's application [motion sequence #1] pursuant to CPLR 7511(b)(1)(i)(ii) and (iii) for an order vacating and/or modifying an arbitration award dated February 10, 2005 as modified on March 10, 2005, and as re-issued with a determination as to counsel fees on June 30, 2005, and modified by the arbitrator on August 9, 2005, is denied. Petitioner's application [motion sequence #2] to stay further proceedings before the arbitrator is likewise denied. The portion of respondents' cross-petition [motion sequence #3] which seeks an order confirming the award is granted. That portion of respondents' cross-petition which seeks reasonable counsel fees together with costs and disbursements in connection with [*2]this proceeding shall be set down for a hearing. That portion of the cross-petition which seeks release of funds presently held in escrow is deferred to the hearing court.

This matter arises out of the termination by petitioner of a highly profitable medical practice belonging to Scott J. Ratner, M.D. and Edward T. Davison, M.D., which specialized in cardiology. Davison had been in practice since the 1960's when, in approximately 1989, at age 55, he hired Ratner, then 34 years of age. In 1992, Davison made Ratner a 50 percent partner. The relationship was apparently somewhat stormy and they entered into a formal written stockholder's agreement with accompanying employment agreements in 1996. Four important issues which have arisen were covered by these agreements. They are Ratner's obligation to fund Davison's retirement, the valuation and distribution of the P.C.'s assets in the event of a termination, the arbitration of disputes, and the award of counsel fees to the prevailing party.

The agreements obligated Ratner to fund Davison's retirement based upon a formula which utilized, in part, the dollar amount of the practice's revenue. They also provided, in the event of a termination of the practice, for a valuation of the practice's assets which were to be divided between the parties, with certain adjustments depending upon who sought the termination. Each party was to select an appraiser, and if the two appraisers did not agree the appraisers were to select a third appraiser whose conclusions were to be binding on the parties. Finally, the parties agreed that any disputes arising under the agreements were to be resolved through arbitration with the prevailing party entitled to recover counsel fees.

Unfortunately, as noted by the arbitrator, these agreements set the parties on a collision course with each other. Davison was provided with an incentive to increase revenue and further grow his practice by the addition of other physicians, while Ratner was provided with an incentive to keep the practice revenues down while increasing his income through outside employment. When Davison sought to bring additional physicians into the practice, with promises of a partnership within a certain period of time, Ratner, as a 50 percent owner, objected. Rather than seek to arbitrate this and other disputes which arose, on September 5, 1997 Davison wrote to Ratner terminating the practice as of December 8, 1997. A few days later Ratner commenced a dissolution action in this Court. In December 1997 Ratner commenced arbitration proceedings and on May 20, 1998 this court, Carter, J., issued an order in the dissolution proceeding, pursuant to the parties stipulation, referring all issues to arbitration.

The parties' arbitration proceeded for seven years with over fifty hearing dates. While Davison prevailed on some issues, the arbitrator's final decision awarded Ratner $983,979.84, representing his share of the practice, including good will, plus $250,000 in additional severance as a result of Davison's termination of the practice, and $1,024,452.18 in counsel fees. As just stated, this award was in part premised upon the arbitrator's finding that despite certain provocations by Ratner, it was Davison who sought to terminate the practice. Davison's motion to vacate these awards argues primarily that it was in reality Ratner who forced a termination of the practice, that the appraisal of the practice was flawed, both with respect to its valuation of good will and as to its methodology, that the arbitrator erred in making the final selection of the appraisers utilized to do the valuations, and that the arbitrator erred in refusing to permit a [*3]valuation of good will for Nassau Cardiac Imaging, a "department" of the practice. He argues that because the parties' agreements provided for both arbitration and a method for valuation, the arbitrator exceeded his powers in making certain rulings regarding these areas, citing Dimson v. Elghanayan, 19 NY2d 316.

The Court disagrees for several reasons. In the first place, the arbitrator did not contravene the parties' agreement regarding valuation procedures. Each party selected an appraiser whose appraisals differed widely. The appraisers were asked to select a third appraiser for a binding determination, but they could not agree on a third appraiser. Hence, in this Court's view, it was not improper for the arbitrator to make a selection of a third appraiser. When the appraisal was received, the arbitrator treated it as binding upon himself and the parties, as provided in the stockholders' agreement. Furthermore, if, as Davison now argues, the arbitrator was without authority to make this selection, or to rule regarding a lack of good will attaching to Nassau Cardiac imaging, he should have sought to stay the arbitration. (Rochester City School Dist. v. Rochester Teachers Ass'n, 41 NY2d 578) In failing to do so, an objection to the arbitrators authority may have been waived. (United Federation of Teachers, Local 2, AFT, AFL-CIO v. Board of Educ. of City School Dist. of City of NY, 1 NY3d 72; Board of Ed. of Norwood-Norfolk Cent. School Dist. v. Frank F. Hess, as President of the Norwood-Norfolk Central Teachers Association, et. al., 49 NY2d 145) It must also be noted that the parties stipulated before another Justice of this Court that all issues presented to that Court be referred to the arbitrator.

Finally, and most importantly, the Court finds that Davison is judicially estopped from raising any issue regarding the arbitrators power to make rulings regarding the appraisal process. On June 14, 2002, Davison's then counsel, Steven L. Levitt, Esq., submitted to the arbitrator his "FURTHER SUBMITTAL ON THE ISSUE OF GOOD WILL PURSUANT TO THE ORDER OF THE ARBITRATOR OF JUNE 4, 2002." In that memorandum of law, at Point II, Davison's counsel argued to the arbitrator that the parties' arbitration clause gave the arbitrator the authority to determine what the assets were which were to be valued, and that the dispute as to whether good will was to be treated as an asset subject to distribution could and should be resolved by the arbitrator. Now that Davison has won the day on that issue, and then received a ruling from the arbitrator with which he does not agree, he is judicially estopped and can not be heard to complain that the arbitrator was without authority to make the ruling which counsel for Davison sought to have the arbitrator make in the first place. (Maas v. Cornell University, 94 NY2d 87; Ford Motor Credit Co. v. Colonial Funding Corp., 215 AD2d 435; Prudential Home Mortg. Co., Inc. v. Neildan Const. Corp., 209 AD2d 394)

Arbitration is a much favored method of dispute resolution. (Matter of Smith Barney Shearson v Sacharow, 91 NY2d 39; Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Benjamin, 1 AD3d 39) An arbitrator is not required to explain or justify an award. (Ross v. Riviera Trading Corp., 204 AD2d 120) Neither is he bound by substantive law or traditional court rules regarding evidence. (Silverman v. Benmor Coats, Inc., 61 NY2d 299; Dahan v. Luchs, 92 AD2d 537) So strong is the State's interest in arbitration as a means of resolving disputes, that errors of law or [*4]fact are insufficient to warrant vacating an award. (Matter of Sprinzen, 46 NY2d 623; Motor Vehicle Acc. Indemnification Corp. v. Aetna Cas. & Sur. Co., 89 NY2d 214) Even where an arbitrator has misapplied the law, the award may not be vacated. (Schine Enterprises, Inc. v. Real Estate Portfolio of New York, Inc., 26 NY2d 799) Absent language to the contrary in an arbitration agreement, the arbitrator "may do justice as he sees it, applying his own sense of law and equity to the facts as he finds them to be." (Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Benjamin, supra.) Nevertheless, in the instant matter the arbitrator issued a decision in excess of 100 pages in length in which he carefully reviewed the evidence before him and fully explained his conclusions. That the Court may or may not agree with his conclusions is beside the point and the Court may not vacate an award on that basis. (United Federation of Teachers, Local 2, AFT, AFL-CIO v. Board of Education of the City School District of the City of New York, 1 NY3d 72)

It is well settled that CPLR 7511(b) sets forth the exclusive bases for vacating an arbitration award. (Boggin v. Wilson, 14 AD3d 523) Petitioner now moves pursuant to CPLR 7511 §(b)(1)(i)(ii) and (iii)to vacate the award and stay its enforcement. CPLR 7511 §(b)(1) provides:

The award shall be vacated on the application of a party who either participated in the arbitration or was served with a notice of intention to arbitrate if the court finds that the rights of that party were prejudiced by:

i) corruption, fraud or misconduct in procuring the award; or

(ii) partiality of an arbitrator appointed as a neutral, except where the award was by confession; or

(iii) an arbitrator, or agency or person making the award exceeded his power or so imperfectly executed it that a final and definite award upon the subject matter submitted was not made.

These illustrations of instances where courts will intervene in the arbitration process are, without apparent exception, cases in which public policy considerations, embodied in statute or decisional law, prohibit, in an absolute sense, particular matters being decided or certain relief being granted by an arbitrator. Stated another way, the courts must be able to examine an arbitration agreement or an award

on its face, without engaging in extended factfinding or legal analysis, and conclude that public policy precludes its enforcement. This is so because, as has been previously noted, an arbitrator is free to apply his own sense of law and equity to the facts as he has found them to be in resolving a controversy.