Defendants Turner Environlogic, Inc. and Westchester Fire

Insurance Company as Surety move for an order pursuant to CPLR 2201 enjoining Plaintiff from proceeding with this civil action and for an order pursuant to CPLR 7503(a) compelling Plaintiff to arbitrate the dispute between the parties on the grounds that the [*2]claims alleged in the complaint are subject to arbitration pursuant to a written procurement contract.

BACKGROUND

In 2002 Plaintiff, Village of Freeport ("Village") awarded a procurement contract to Defendant Turner Environlogic, Inc. ("Turner"). The contract, No. 8188-P1, provided for the construction of an emission control system for the Village's Electric Power Plant 2 Expansion at 289 Buffalo Avenue in Freeport, New York. In this action, the Village asserts causes of action sounding in breach of contract, breach of warranty, breach of a performance bond and specific performance. In response, Defendants moved to stay this action and compel the Village to proceed to arbitration in compliance with the procurement contract's arbitration clause.

Procurement Contract No. 8188-P1 for an emissions control system, in relevant part, addresses "Procurement General Conditions" (Section 00700), "Procurement Supplementary Conditions" (Section 00800) and "Modifications to Procurement General Conditions" (Section 00810).

Section 00700 consists of 17 pages setting forth the Procurement General Conditions. The General Conditions include Article 15 which provides for arbitration in the event of a dispute arising out of the "Procurement Documents".

Regarding the specifics of Article 15, which is entitled "Arbitration", Section 15.1 states, in relevant part:

All claims, disputes and other matters in question between OWNER and CONTRACTOR arising out of or relating to the Procurement Documents or the breach thereof . . . shall be decided by arbitration in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association then obtaining subject to the limitations of this Article 15. (emphasis supplied)

Section 00800 addresses the Procurement Supplementary Conditions. It appears to be a transition vehicle which merely provides the following:

These Supplementary Conditions amend or supplement the Procurement General Conditions, No. 1910-26-B (1981 edition), and other provisions of the Procurement Documents as indicated below. All provisions which are not so amended or supplemented remain in full force and effect. (emphasis supplied).

Article 16 of the General Conditions is entitled "Miscellaneous". Supplementary Condition 16 adds three new paragraphs to the end of article 16. All three paragraphs speak to the General Municipal Law of the State of New York. The first, Section 16.4 notes that the Village is governed by the General Municipal Law. The second, addresses the fact that Section 16.5 provides, in any conflicts between the General Municipal Law and the Procurement Documents, the General Municipal Law governs. The third, Section 16.6 states that "all applicable laws, rules, ordinances and regulations of the State of New York, the Village of Freeport and any other authority, are . . . incorporated by reference." It goes on to state that "should disputes arise, OWNER and SUPPLIER hereby submit to the jurisdiction of courts located in, and venue is hereby stipulated to be in, Nassau County, New York" (emphasis supplied).

DISCUSSION [*3]

Submission to the jurisdiction of the courts in Nassau County "should disputes arise" is part of a supplement to the miscellany of Article 16, which emphasizes that municipal and state law govern the relation of the parties and supercede the Procurement Documents should there be a conflict. The submission to jurisdiction is specifically part of section 16.6 which incorporates such state and municipal law by reference and addresses disputes which may arise.

In contrast, Article 15 governs disputes concerning the Procurement Documents and their breach. It unequivocally provides for arbitration arising therefrom. There are no supplementary conditions to Article 15. Section 00800, explaining the supplementary conditions, states that any provision which is not amended remains in full force and effect.

Employing ordinary contract construction principles to the Procurement Agreement relating to the arbitration clauses (see, Primavera Laboratories, Inc. v. Avon Products, Inc., 297 AD2d 505 [1st Dept. 2002]), the Court finds that the submission to jurisdiction of the courts with venue in Nassau County refers only to the subject matter of the supplement, and provides jurisdiction in the courts of New York should disputes arise regarding the laws of New York creating a conflict with the Procurement Contract.

Disputes arising out of an alleged breach of the Procurement Contract remain subject to arbitration. The clear intention of the parties was to submit breach of contract issues to arbitration. See, Evans v. Famous Music Corp., 1 NY3d 452, 458 (2004). See also, Greenfield v. Philles Records, Inc., 98 NY2d 562 (2002).

"A party to an agreement may not be compelled to arbitrate its dispute with another unless the evidence establishes the parties' clear, explicit and unequivocal' agreement to arbitrate." God's Battalion of Prayer Pentecostal Church, Inc. v. Miele Assoc., LLP, 6 NY3d 371, 374 (2006). Article 15 provides such a "clear, explicit and unequivocal" agreement, inasmuch as it provides that all "claims, disputes and other matters in question arising out of or relating to" the Procurement Documents or the breach thereof are subject to arbitration. The arbitration clause "unequivocally encompasses the subject matter of th[is] particular dispute" and, thus, arbitration may be compelled. See, Matter of Baime [Martin's], 88 AD2d 595, 596 (2nd Dept. 1982), quoting Bowmer v. Bowmer, 50 NY2d 288 (1980).

The Village's contention that the Supplementary Conditions to Article 16 negate the arbitration clause must be rejected. A sound principle of contract interpretation requires that the court "give effect to the intent of the parties as revealed by the language and structure of the contract." (Emphasis supplied.) Reda v. Eastman Kodak Co., 233 AD2d 914 (4th Dept. 1996). To do so, the court must examine the document "as a whole", give effect and meaning to "every term", and make a reasonable effort to "harmonize all of its terms" Id. at 914-915. Moreover, any "ambiguity in the wording" of an agreement "must be construed against the drafter." Quality King Distributors, Inc. v. E & M ESR, 36 AD3d 780, 783 (2nd Dept 2007). Indeed, any ambiguity must be construed against the Village which drafted the entire contract.

The interpretation proffered by the Village violates all of the above rules of contract interpretation. The Village reads the Supplementary Condition too broadly and "in isolation from the remainder of the agreement." Reda v. Eastman Kodak Co., supra. The result is that the Village's interpretation does not give effect to the arbitration [*4]provisions, and renders them meaningless. Nor does the Village make any effort to harmonize the provisions for arbitration of Procurement disputes with the provisions for litigation of disputes concerning the statutes and ordinances of New York and its subdivisions. Nor does the Village consider the structure of the Procurement Documents and the manner in which specific sections are modified or supplemented. It also ignores the specific declaration that those provisions, which are not modified, remain in full force and effect.

The Village's reliance on authority which holds that the added provisions supercede other provisions is misplaced. Section 203 (d) of the Restatement 2d of Contracts, relied upon by the Village, states that in contract interpretation "separately

negotiated or added terms are given greater weight than standardized terms or other terms not separately negotiated".

Here, the added terms were not separately negotiated. The General and Supplementary Conditions were presented to Defendant at the same time. There was no negotiation with regard to such terms. Moreover, the comments to Section 203 (d) indicate that a "printed provision that is clearly part of an integrated contract is normally to be interpreted as consistent with other terms" and it is only in cases of inconsistency that a handwritten or typewritten term inserted in connection with the particular transaction will prevail. The supplemental term providing for litigation concerning controlling statutes is not inconsistent with the provision mandating arbitration in the case of breach of the procurement terms.

Reserving resolution of statutory interpretation to the courts makes eminent sense, for arbitrators decisions may not be appealed merely for errors in application or interpretation of the law, while judges may. See, Cifuentes v. Rose and Thistle, Ltd., 32 AD3d 816 (2nd Dept. 2006).

Moreover, the very structure utilized by the Village to supplement the General Conditions, i.e., by tying the supplement to a specific article or section, indicates that the jurisdictional supplement expressly was intended not to affect the arbitration provisions of Article 15. To do so, it would have specifically stated that ir was intended to supplement Article 15, rather than Article 16. Certainly, when it was the intent of the Village to delete a provision, it knew how to do so. For example, Supplementary Condition 6.2, regarding progress payments, expressly provides for deletion of "paragraph 6.2.1 of the Procurement General Conditions in its entirety." Such language could have been employed to delete Article 15 in whole or part, if that was the Village's intent.

Nor does the Court accept the Village's contention that Defendants are merely seeking delay by moving for arbitration. Arbitration is a favored remedy in the State of New York for its speed as well as "economy, informality, privacy, and expertise in the specialized area of the decision-maker", with these factors representing "potential advantages over litigation". Sablosky v. S. Gordon Co., 73 NY2d 133, 138 (1989). The benefits of speed and expertise are well served in this case where scientific and technical principles will govern.

Accordingly, it is

ORDERED, that Defendants' motion is granted. This action is hereby stayed. The Plaintiff is directed forthwith to proceed to arbitration in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association.

This constitutes the decision and Order of the Court. [*5]

Dated: Mineola, NY_____________________________

December 12, 2007Hon. Leonard B. Austin, J.S.C.