Upon the foregoing papers in this special proceeding, petitioner Chatsworth Securities, LLC (Chatsworth) moves, by order to show cause, for a judgment, pursuant to CPLR 7510, confirming the May 11, 2013 arbitration award (Arbitration Award) against respondents Veritas Ship Agency, Inc. (Veritas) and Nicholas T.K. Skarvelis (Skarvelis), [*2]Veritas' executive director, and directing that money judgments be entered against Veritas and Skarvelis, jointly and severally, in accordance with the Arbitration Award, in addition to $6,000 in attorney's fees and costs that Chatsworth incurred in prosecuting this judicial proceeding.

Skarvelis, as "Executive Director" of Veritas, entered into a February 7, 2012 written letter agreement with Chatsworth, pursuant to which Chatsworth was engaged as Veritas' exclusive investment banker and placement agent for the purpose of funding Veritas through private placement transactions with certain institutional investors (Financing Agreement). The Financing Agreement provides that "Chatsworth will arrange, negotiate and place on a best efforts basis up to $600 million in debt or equity financing or other securities as Chatsworth and the [Veritas] Company may mutually agree . . ." in exchange for fees.

Under the Financing Agreement, the parties agreed that Veritas shall pay Chatsworth: (1) a "Placement Fee" upon the closing of any financing or placement of securities, and (2) a "Monthly Fee" of $25,000, with a three-month minimum,"payable to Chatsworth within forty five days of the signing of this [Financing] Agreement." In addition to these fees, Veritas agreed in the Financing Agreement "to reimburse Chatsworth for all pre-approved reasonable and documented out-of pocket marketing and traveling expenses . . . arising out of Chatsworth's engagement hereunder."

The Financing Agreement provides that the parties will proceed with arbitration of "[a]ny controversy or claim arising out of or relating to this [Financing Agreement]" and that Veritas "will pay for the cost of collection including reasonable attorney's fees" if Veritas fails to pay Chatsworth's fees and/or expenses under the Financing Agreement:

"Any controversy or claim arising out of or relating to this contract or the breach thereof shall be settled by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association [AAA] at a hearing to be held at New York, NY and judgment upon an award rendered by the Arbitrator(s) may be entered in any court having jurisdiction thereof. The commencement of arbitration proceedings by an aggrieved party to settle disputes arising out of or relating to this contract is a condition precedent to the commencement of legal action by either party . . . . Each party will be responsible for their own costs in conjunction with the arbitration proceeding . . . . The [Veritas] Company agrees that in the event of non-payment of fees and expenses due to Chatsworth under this agreement that the [Veritas] Company will pay for the cost of collection including reasonable attorney's fees" (emphasis added).

According to Chatsworth's verified petition, "[i]n or about the Spring of 2012, [Chatsworth] successfully completed said business activities on behalf of Respondents and [*3]requested payment from Respondents" who allegedly "failed to pay . . ." Chatsworth's fees and expenses (Petition ¶¶ 6-7).

Arbitration of the Payment Dispute

Chatsworth demanded to arbitrate the dispute in an April 24, 2012 letter from its counsel to Skarvelis (Arbitration Demand), advising that "you have defaulted on paying[,]" "you will not be able to hide behind any corporate veil and you will be personally liable for all damages . . ." and that "[f]ailure to make payment by May 3, 2012 will result in the filing of an arbitration claim pursuant to the terms of the [Financing Agreement]":

"My firm has been retained to seek recovery from you and Veritas . . . for the failure to pay Chatsworth . . . in connection with the February 7, 2012 [Financing Agreement].

"It appears that when you executed the [Financing] [A]greement, you failed to make several important disclosures to Chatsworth. First, you represented that Veritas . . . was in good standing and was a viable company. Since you have defaulted on paying the minimum retainer amounts due and the outstanding expenses, my clients have learned that your representations were false. Thus, you will not be able to hide behind any corporate veil and you will be personally liable for all damages sustained by Chatsworth to date . . . .

"Failure to make payment by May 3, 2012 will result in the filing of an arbitration claim pursuant to the terms of the [Financing] [A]greement. As you know, under the terms of the [Financing] [A]greement, you will also be liable for the reasonable collection costs that we incur" (emphasis added).

Skarvelis did not respond or object to the Arbitration Demand and failed to make a motion to stay arbitration pursuant to CPLR 7503. Instead, Chatsworth and Skarvelis proceeded with arbitration before Gerald Harris of the AAA and a full evidentiary hearing was conducted on March 27, 2013 during which Chatsworth and Skarvelis had an opportunity to present testimony and evidence.

The Arbitration Award

Arbitrator Harris issued the May 11, 2013 Arbitration Award in favor of Chatsworth, finding that Veritas and Skarvelis are "jointly and severally" liable for breaching the [*4]Financing Agreement. The Arbitration Award determined that Veritas and Skarvelis shall pay Chatsworth money damages, plus statutory interest at the rate of 9%, consisting of: (1) $75,000 for the minimum "Monthly Fee" under the Financing Agreement; (2) $7,658.88 as reimbursement for expenses incurred under the Financing Agreement; (3) $4,175 in AAA administrative fees previously advanced by Chatsworth to the AAA; and (4) $25,000 in reasonable attorney's fees incurred by Chatsworth as of the date of the Arbitration Award.

Importantly, Arbitrator Harris also determined that Skarvelis "is bound by" the terms of the Financing Agreement as the "legal alter ego" of Veritas based on the evidence adduced at the arbitration hearing. The Arbitration Award thus provides:

"1.The evidence established that respondent Nicholas T.K. Skarvelis ( Skarvelis') is the legal alter ego of his dissolved corporation, respondent Veritas Ship Agency, Inc ( Veritas'), of which he was the sole shareholder, officer and director. Accordingly, Skarvelis is bound by the Arbitration Agreement which he signed on its behalf."

Chatsworth commenced this special proceeding on July 9, 2013 by filing its verified petition against Veritas and Skarvelis. It has contemporaneously moved, by order to show cause, for an order: (1) confirming the Arbitration Award, pursuant to CPLR 7510, and (2) directing money judgments in favor of Chatsworth against both Veritas and Skarvelis in accordance with the Arbitration Award.

Skarvelis, in opposition to Chatsworth's verified petition and order to show cause, served a January 6, 2014 pro se opposition/answer on behalf of himself and Veritas, denying the material allegations and alleging, in relevant part, that: (1) the Financing Agreement was "for services to be fully provided by CHATSWORTH to Veritas . . ."; (2) "CHATSWORTH failed on all counts to provide any evidence that it performed the duties prescribed in Section 3 of the [Financing Agreement] . . ."; (3) "CHATSWORTH wrongfully commenced an arbitration sighting fees for which [it] had not earned"; (4) "the arbitrator arrived [at] a decision based on false information provided by CHATSWORTH and a failure of CHATSWORTH to provide evidence . . ."; and (5) the Arbitration Award is defective.

Skarvelis' opposition/answer specifically alleges that the Arbitration Award is defective "on four counts":

"a)VERITAS was denied a choice from a list of arbitrators of non attorney commercial arbitrators . . . .

"b)CHATSWORTH failed to provide any evidence that it [*5]performed the duties prescribed in Section 3 of the [Financing Agreement] as demanded by Veritas and the Arbitrator . . . .

"c)The Arbitrator coerced Captain Nicholas T.K. Skarvelis to appear as a respondent in spite of the fact that [he] is not named as a participant in the [Financing Agreement] under threat of being unilaterally and heavy handily named as a respondent by the Arbitrator and the threat of a default arbitration award . . . .

"d)Respondents were denied discovery documents from the claimant . . . ."

It is well settled that "this State favors and encourages arbitration as a means of conserving the time and resources of the courts and the contracting parties" (Matter of Nationwide Gen. Ins. Co. v Investors Ins. Co., 37 NY2d 91, 95 [1975] accord 166 Mamaroneck Ave. v 151 East Post Rd., 78 NY2d 88, 93 [1991] [arbitration is a favored method of dispute resolution]). Hence, " [j]udicial review of an arbitrator's award is extremely limited' (Pearlman v Pearlman, 169 AD2d 825, 826 [1991]), and a reviewing court may not second-guess the fact-findings of the arbitrator" (Matter of Liberty Mut. Ins. Co. v Sedgewick, 43 AD3d 1062, 1063 [2007]).

Importantly, under CPLR 7510, "[t]he court shall confirm an award upon application of a party made within one year after its delivery to him, unless the award is vacated or modified upon a ground specified in section 7511"^[FN1] (Bernstein Family Ltd. Partnership v Sovereign Partners L.P., 66 AD3d 1, 3 [2009] [noting that CPLR 7510 mandates that the court "shall confirm the award"]). Further, according to the commentaries to CPLR 7510, "[u]nless a party seeks to vacate or modify the award, or the application to confirm is untimely, confirmation should be summarily granted." In addition, the court may entertain claims for costs that the moving party incurred in an Article 75 special proceeding to confirm [*6](Matter of Meehan v Nassau Community Coll., 242 AD2d 155, 158 [1998] [holding that "the costs incurred in the court proceedings relating to the awards, as distinguished from those incurred in the course of the arbitrations themselves [are] available" in a special proceeding]).

Here, Chatsworth timely moved to confirm the Arbitration Award within one year, as required under CPLR 7510, and seeks money judgments in accordance with the Arbitration Award and an additional judgment of at least $6,000 "for the prosecution of this proceeding."Skarvelis failed to cross-move to vacate or modify the Arbitration Award under CPLR 7511 or to raise any grounds for such relief in his opposition/answer to the verified petition. Instead, Skarvelis denies the allegations in the verified petition and makes the conclusory assertion that the Arbitration Award is "defective" because he was allegedly "coerced" by Arbitrator Harris to appear as a respondent in the arbitration proceeding "despite . . . the fact that [Skarvelis] is not named as a participant in the [Financing Agreement] . . . ." Skarvelis, however, does not submit any testimonial or documentary evidence in this special proceeding proving that his participation in the arbitration on behalf of Veritas and himself was the product of coercion, or that he was otherwise prejudiced by corruption, fraud or misconduct. Inasmuch as the court finds no basis to vacate or modify the Arbitration Award, Chatsworth's motion to confirm must be granted.

Contrary to Skarvelis' opposition, the Appellate Division, Second Department has held that "[w]here one . . . merely acts as the alter ego of a second corporation, the second corporation can be compelled to participate in an arbitration proceeding although it is not a signatory of the contract containing the arbitration clause which was, however, signed by the alter ego" (Matter of Sbarro Holding, Inc. v Shiaw Tien Yuan, 91 AD2d 613, 614 [1982]). Applying the corollary to this principle, Skarvelis, a signatory to the Financing Agreement and the alter ego of Veritas, was legally compelled to participate in the arbitration. Furthermore, Skarvelis has waived his right to challenge the arbitrability of the dispute, including the alter ego issue that was raised, litigated and adjudicated in the arbitration, by actively participating in the arbitration proceedings without seeking a stay under CPLR 7503 (see Smullyan v Sibjet, 201 AD2d 335, 336 [1994]).

Accordingly, Chatsworth's motion for a judgment confirming the Arbitration Award and awarding Chatsworth $6,000 in attorneys' fees and expenses incurred on the instant motion is granted.

Settle judgment incorporating the provisions of the Arbitration Award and this decision, on notice, together with findings of fact and conclusion of law within 60 days.

The foregoing constitutes the decision and order of the court.

E N T E R,

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J. S. C.