Petitioner, The LCF Group, Inc., (LCF), petitions this court to confirm an arbitrator's award. There is no opposition.

On or about July 30, 2021, LCF and respondents Wesley Fields d/b/a Fields Construction [*2]["merchant respondent"] and Wesley Fields ["guarantor respondent" or "respondent Fields"] [collectively, "respondents"] entered into an agreement whereby LCF agreed to purchase $14,900.00 of the merchant respondent's future receivables in return for an up-front payment of $10,000.00 ["Agreement 1"]. On or about September 24, 2021, the merchant respondent and LCF entered into a second Agreement ["Agreement 2"], pursuant to which LCF agreed to purchase $22,350.00 of the merchant respondent's future receivables in return for an up-front payment of $15,000.00.

Pursuant to Agreement 1 and Agreement 2 [hereinafter, collectively referred to as the "Agreements"], the respondents agreed to allow LCF access to their online banking accounts and repayment was to be accomplished through ACH debits until satisfaction of the Agreements was made in full.

The guarantor respondent Fields executed a personal guaranty of performance, guarantying that the merchant respondent would not breach its performance obligations under the Agreements. He also signed the Agreements as an authorized representative of the merchant respondent. LCF tendered its payment of $10,000.00 to the respondents pursuant to Agreement 1 on or about August 4, 2021, and payment of $15,000.00 pursuant to Agreement 2, on or about September 27, 2021.

The parties' Agreements each contained an arbitration clause, which provided, in pertinent part, that any dispute between the parties relating to their contract would be settled by arbitration administered by Mediation and Civil Arbitration, Inc. ("MCA"). LCF claims that the respondents stopped meeting their contractual obligation by blocking LCF's access to respondents' receivables and that such constituted a default of the parties' agreement. The arbitration award that LCF seeks to have confirmed found that the respondents were in default under the parties' Agreements and further found that LCF is entitled to the entry of award in the amount of one hundred six thousand six hundred twenty-four 35/100 USD ($106,624.35).

"[J]udicial review of arbitration awards is extremely limited". (Sheriff Officers Ass'n, Inc., ex rel. Ranieri v. Nassau County, 113 AD3d 620, 621 [2d Dept 2014] [quotations omitted]). In determining any matter arising under CPLR article 75, "the court shall not consider whether the claim with respect to which arbitration is sought is tenable, or otherwise pass upon the merits of the dispute." (CPLR 7501).

The Court of Appeals has recognized "three narrow grounds that may form the basis for vacating an arbitrator's award—that it violates public policy, is irrational, or clearly exceeds a specifically enumerated limitation on the arbitrator's power". (Matter of Shenendehowa Cent. Sch. Dist. Bd. of Educ. (Civil Serv. Empls. Assn., Inc., Local 1000, AFSCME, AFL—CIO, Local 864), 20 NY3d 1026, 1027 [2013]).

In this case, the Court has examined the Arbitration Award dated February 9, 2022, and finds that it is irrational and lacks "even a barely colorable justification for the outcome reached". (Wien & Malkin LLP v. Helmsley—Spear, Inc., 6 NY3d 471, 479 [2006] [quotations omitted]). Accordingly, LCF's motion to confirm same is DENIED. The arbitrator's award that LCF seeks to confirm provides that, under Agreement 1, the respondents' total balance, consisting of default fees, attorneys' fees and the remaining balance due and owing to LCF totaled $63,899.28, a completely irrational and illogical figure considering that the agreement was for LCF to be reimbursed for $14,900.00. Even accepting the arbitrator's determination that the respondents' default under Agreement 1 resulted in the imposition of a liquidated default fee of five thousand three hundred fifteen USD ($5,315.00), plus imposition of liquidated counsel [*3]fees in the amount of one-third of the Total Balance in the amount of fourteen thousand seven hundred twenty-eight 73/100 USD ($14,728.73), the arbitrator fails to explain how the respondent's default in reimbursing their $14,900.00 contractual obligation resulted in a total sum of $74,996.79. That, when added to the $31,627.56 that the arbitrator determined was owed to LCF under Agreement 2, resulted in the exorbitant total of $106,624.35 total owed to LCF. It is illogical to find that LCF would be entitled to such an exorbitantly high sum, when the arbitrator failed to specify how he reached that figure.

While the Court recognizes the "extremely limited" scope of its review, the vast disparity between the payment received by the respondents and the amount the respondents are required to pay pursuant to the arbitration award, and the arbitrator's failure to specify how he calculated such an exorbitantly high total figure, have caused this Court concern and this Court finds that such an award is violative of public policy.

While, in general, the court is not opposed to the various fees, including the one-third counsel fee provision, that are typically charged by receivable purchase companies such as LCF, in this matter the arbitrator issued an award that was more than four times the amount that LCF remitted to the respondents (prior to deducting agreed upon fees), and the arbitrator failed to offer even a colorable explanation for how he reached that total.

The court finds, under these circumstances, that the award was irrational.

Accordingly, it is hereby

ORDERED, that the petition is DENIED in its entirety.