In a proceeding to compel arbitration, a motion was made to disqualify the arbitrator who had been named in the underlying partnership agreement. By decision dated December 13, 2006, the court granted the motion (Matter of Kalikow, 14 Misc 3d 1203A [Sur Ct Nassau County 2006]). The unsuccessful parties on the motion now move the court for renewal and reargument and upon either or both renewal or reargument, for an order denying the motion to disqualify the arbitrator. The instant motion is granted to extent indicated below. The factual and procedural history of the case to this point was set forth in detail in the court's prior decision. For purposes of clarity, much of that history will now be repeated.

Decedent, Pearl B. Kalikow, died on January 4, 2006, survived by two children, Edward Kalikow and Laurie Platt (respondents). A purported will dated July 16, 2003 and codicils dated September 29, 2004 and April 5, 2005 have been offered for probate. By order dated April 5, 2006, preliminary letters testamentary issued to Eugene Shalik (petitioner) and James DeVita.

The instrument offered for probate bequeaths the residuary estate to the Sunshine Foundation. Article "NINTH" provides in part:

"If at the time of my death I own either a general partnership

interest in Hewlett Associates or stock of Kalikow Management Inc.,

I give said interest and/or stock to THE SUNSHINE FOUNDATION."

The value of decedent's 1% general partnership interest and 50% limited partnership interest in Hewlett Associates is estimated to exceed twenty million dollars ($20,000,000).

The Hewlett Associates Partnership Agreement ("Partnership Agreement"), dated January 3, 1980 provides in part:

"Except as otherwise expressly provided herein, each Partner covenants

and agrees that he will not, without the prior written consent of all

other Partners, pledge, encumber, sell, mortgage, hypothecate or assign

the whole or any part of his interest in the Partnership, including,

without limitation, his interest in any distributions to be made by

the Partnership."

The agreement further provides: [*2]

"Any controversy or claim arising out of or relating to this Agreement

or to the interpretation, breach or enforcement thereof shall be

submitted to Dennis A. Konner, Esq., or if he shall be

unwilling or unable to serve, then to three (3) arbitrators and settled

by arbitration in the City of New York in accordance with the rules,

then obtaining, of the American Arbitration Association provided,

however, and notwithstanding any other provision of such rules, if

the matter submitted to arbitration shall involve a dispute as to the

fair market value of the interest of any Partner herein and if

[the named arbitrator], shall be unwilling or unable to decide

such dispute, then such arbitration shall be held before three (3)

arbitrators, one of whom shall be a certified public accountant and

the other two (2) of whom shall be licensed real estate appraisers.

Any award made by a majority of such arbitrators shall be final,

binding and conclusive on all parties hereto for all purposes and

judgment may be entered thereon in any court having jurisdiction

thereof."

In June 2006, respondents served upon Eugene Shalik and James DeVita a demand for arbitration and notice of intention to arbitrate pursuant to the rules of the American Arbitration Association. The subject of the dispute is the bequest of decedent's interest in Hewlett Associates to the Sunshine Foundation.

Eugene Shalik then petitioned this court for an order determining that the dispute between the parties is not subject to arbitration as it involves the distribution of a decedent's estate. By decision dated October 13, 2006, the court determined that the parties were bound by the agreement to arbitrate. A decree dated November 22, 2006 directed the parties to proceed to arbitration.

In a letter dated November 2, 2006, Dennis Konner notified the parties of his intention to proceed with arbitration and conduct the arbitration under the Rules of the American Arbitration Association. An arbitration hearing was scheduled for November 30, 2006.

By letter dated November 14, 2006, counsel for Eugene Shalik requested that the American Arbitration Association disqualify Dennis Konner as the arbitrator for bias. The American Arbitration Association responded that it did not have authority to make an administrative decision in an independent arbitration, absent an order of the court or consent of the parties.

Mr. Konner, in a letter dated November 22, 2006 adjourned the hearing "without date pending further direction from an appropriate court." He thereafter rescinded the adjournment and rescheduled the hearing for December 8, 2006.

Petitioner brought on this motion returnable December 7, 2006 for an order seeking to disqualify Konner on the grounds that he is aligned with the respondents. The court issued a temporary restraining order staying the arbitration and a hearing was held on the issue of disqualification. James DeVita joined in the application. [*3]

Mr. Konner did not attend the hearing. The arbitrator made no submissions until after the motion was submitted, at which time he submitted an affidavit to the court. At the hearing, respondents objected to any testimony by Eugene Shalik concerning the business and personal relationship between Konner and Edward Kalikow, on the grounds of hearsay and surprise. Based on these objections, no testimony was taken from Eugene Shalik regarding those issues. Respondents did not call any witnesses.

Mr. Konner, an attorney, drafted the Partnership Agreement. His affidavit reveals that since 1996 he has represented Eugene Shalik and Edward Kalikow, partners in "K & S," in connection with real estate development transactions valued at approximately nine hundred million dollars ($900,000,000). Mr. Konner and his wife have invested in approximately sixteen of the K & S ventures. In addition, they are personal friends of Edward Kalikow.

Respondents argue that Shalik was aware of the business and personal relationship between Konner and Edward Kalikow and Konner therefore had no obligation to furnish a statement concerning these relationships. Counsel for James DeVita, also a preliminary executor represented that DeVita, had no independent knowledge of these connections. On November 28, 2006, counsel for DeVita requested Konner to make full disclosure of his associations with respondents which were subsequent to the Partnership Agreement. Mr. Konner does not dispute that he failed to respond to the letter and states in his affidavit that he "planned on disclosing [his] relationship with the Kalikow family at commencement of the arbitration."

Kalikow and Platt now move first for renewal of the prior motion. The affirmation in support by their attorney is, unfortunately, almost hysterical in tenor, replete with personal accusations against opposing counsel and the opposing party James DeVita. It also misses the central basis upon which the motion to disqualify Konner was based. Counsel's affirmation repeatedly asserts that DeVita's attorney lied to the court at the hearing about the relationship between DeVita and Konner. He asserts that that purported lie, i.e., that there was little or no relationship between them, was the basis upon which the court granted the motion to disqualify. While the court's prior decision did indicate that DeVita had "no independent knowledge" of Konner's business connections with both Kalikow and Shalik, the court's decision did not rest on that assertion. Rather, the court found that the standard to disqualify an arbitrator was an appearance of bias and that disqualification was warranted because "the conduct of the arbitrator in failing to disclose to the preliminary executors in advance his business and personal relationships with respondents creates an appearance of bias in favor of the respondents."

A motion to renew must be based on facts not offered on the prior motion that would change the prior determination (CPLR 2221[e][2]). Here, the proffered new facts are allegations that DeVita knew of Konner's relationship with Edward Kalikow. However, even if DeVita had some knowledge of Konner's business relationship with Kalikow, the court finds no precedent for a determination that that fact exonerates Konner from his duty of disclosure, and movants do not cite to any. Therefore, the motion for leave to renew is denied.

A motion to reargue is not based on any new facts, but seeks to convince the court that it overlooked or misapprehended the facts or the law on the prior motion (CPLR 2221[d]). Movants' counsel contends that this court overlooked the Court of Appeals decision in Siegel v [*4]Lewis (40 NY2d 687 [1976]), which counsel contends is "irrefutably dispositive" of the instant case. Siegel, like the case at bar, concerned a private arbitration, as opposed to one conducted under the aegis of the American Arbitration Association. Two individuals were named in the parties' stock-purchase agreement as arbitrators in the event of a dispute. The parties were the attorney and accountant for one of the parties, a fact which was known to the other signatory to the stock purchase agreement. After a falling out between the parties, the Court refused to disqualify the arbitrators in advance of the arbitration. Here, however, the allegation is that there was a falling out not only between the decedent Pearl Kalikow and her children Edward Kalikow and Laurie Platt, but also between decedent and Dennis Konner, to such an extent that her will expressly provides that Konner is prohibited from serving as executor or trustee.

The court does agree, however, that it misapprehended the proper standard to be applied in determining whether Mr. Konner should be disqualified from serving as arbitrator in advance of the arbitration proceeding. The court indicated that the proper standard for review is whether the arbitration process is free from the appearance of bias, and cited authority for that proposition. It appears that the cases holding that an arbitrator must be free of even the appearance of bias cite to the United States Supreme Court decision in Commonwealth Corp. v Casualty Co. (393 US 145) for that proposition. In that case, Justice Black was writing for a plurality of four justices. The plurality opinion vacating an arbitration award was not based on the fact that there was a mere appearance of bias, but rather that the arbitrator had failed to disclose a substantial financial relationship with one of the parties. Justice White, in a concurring opinion, stressed that with Justice Black's plurality opinion, the Court had not decided that arbitrators were to be held to the same standards as judges. Subsequent cases decided under the Federal Arbitration Act have pointed out that 9 USCS 10(a)(2) requires a showing of "evident partiality" to disqualify an arbitrator, which is not made out by showing a mere appearance of bias (International Produce v A/S Rosshavet (638 F2d 548 [2d Cir 1981]), cert den 451 US 1017 [1981]). What is required is a showing that "a reasonable person would have to conclude that an arbitrator was partial to one party to the arbitration" (Lucent Technologies, Inc. v Tatung Co., 379 F3d 24 [2d Cir 2004] citing Morelite Constr. Corp. v. N.Y.C. Dist. Council of Carpenters, 748 F.2d 79 [2d Cir 1984]).

Because there has been no showing that the business of Hewlett Associates in any way effects interstate commerce, the dispute is not governed by the FAA but by state law (cf. Citizens Bank v Alafabco, Inc., 539 US 52 [2003]; Wien & Malkin LLP v Helmsley-Spear Inc., 6 NY3d 471 [2006]). Most of the cases decided under CPLR Article 75 require a showing not merely of an appearance of bias, but that unless the arbitrator is disqualified in advance of the arbitration hearing, there is a "real possibility" or "probability" that injustice will result (Lipschutz v Gutwirth, 304 NY 58 [1952]; Siegel v Lewis, 40 NY2d 687, 691 [1976]; Bronx Lebanon Hospital Center v Signature Medical Mgmt Group LLC, 6 AD3d 261 [1st Dept 2004]; Schatz v Blanchard, 244 AD2d 223 [1st Dept 1997]; Belanger v State Farm 74 AD2d 938 [3d Dept 1980]). That should be especially true where, as here, the parties in their original agreement named a particular individual to arbitrate any future dispute between them (Siegel v Lewis, 40 NY2d 687 [1976]; Amtorg Trading Corp. v Camden Fibre Mills, Inc., 277 AD 531 [1st Dept 1950], affd 304 NY 519 [1952]).The Court of Appeals has held, with regard to the predecessor statute to CPLR Article 75, "the purpose of that article is to give effect to contracts [*5]providing for the settlement of disputes before tribunals of the parties' own choosing by rendering such agreements irrevocable and, in effect, subject to specific enforcement" (Lipschutz v Gutwirth, 304 NY 58, 61 [1952]). Clearly, if the designation of a particular arbitrator is subject to specific enforcement, more must be shown to disqualify that individual than a mere appearance of bias in favor of one side to the dispute (see, e.g., NY Jur2d Arbitration § 126 [court may exercise its equitable jurisdiction to remove an arbitrator only where partiality is probable]). However, the preliminary executors have not been given a full opportunity to detail any such disqualifying bias on Konner's part as he has not, as yet, provided the necessary disclosure which he promised to provide. His contention that he can provide the disclosure on the day of the arbitration hearing is somewhat disingenuous as it gives the parties to the hearing no opportunity to establish probable partiality on his part and a party who is aware of facts which would disqualify an arbitrator but fails to object until after the arbitration is concluded has waived the right to object (J.P. Stevens & Co. v Rytex Corp., 34 NY2d 123 [1974]).

Accordingly, the court grants leave to reargue and upon such reargument grants the motion to vacate the court's prior decision herein which disqualified Dennis Konner as the arbitrator. Since it appears on the record as it now stands that Konner has not made the requisite disclosures to the preliminary executors, he is directed to do so within 21 days of entry of the order to follow. The arbitration hearing shall be conducted no fewer than 14 days following delivery of those disclosures.

Settle order on five days notice with five additional days if service is by mail.

Dated: March 20, 2007

John B. Riordan

Judge of the

Surrogate's Court

The appearance of counsel is as follows: