Upon the following papers read on this petition for a stay of arbitration; Notice of Motion and supporting papers1-8; Notice of Cross Motion and supporting papers; Answering Affidavits and supporting papers 13-16; Replying Affidavits and supporting papers18-23; it is, ORDERED that the petition to stay arbitration of the respondents’ claims is granted as to the claim to enforce the sale, cancellation, and reissuance of the petitioner Harvey Markowitz’s shares of Chain Sales Marketing, Inc.; and it is further ORDERED that the motion is otherwise denied. The respondent, Timothy Roach, is the executor of the estate of Donald Roach. Donald Roach was the 100 percent shareholder of Chain Sales Marketing, Inc. (“Chain Sales”). He sold 49 percent of the stock of Chain Sales to the petitioner Harvey Markowitz pursuant to a stock-purchase-and-general-business agreement dated January 29, 1998 (the “Agreement”). Article VIII of the Agreement provided that, upon the death of Donald Roach, his executor shall sell and Harvey Markowitz shall buy his shares of Chain Sales at the price and upon the terms and conditions set forth therein. The Agreement also contained the following broad arbitration clause: “In the event of any disagreement between the parties that cannot be resolved, the shareholders agree to submit their disagreement to the American Arbitration Association whose decision shall be binding upon the parties, and the resolution of the disagreement.” Donald Roach died on March 19, 2018, and his son, Timothy Roach, was appointed the executor of his estate. Timothy Roach seeks arbitration (1) to compel access to relevant information and records germane to Chain Sales’ financial status and the nature and extent of any and all monies that may be owed to his father’s estate (2) to compel an accounting of Chain Sales’ business and financial affairs since his father’s death, and (3) to enforce his father’s rights to be fully paid for his shares and/or to enforce the sale, cancellation, and reissuance of Harvey Markowitz’s shares per the Agreement. The petitioners seek to stay the arbitration on the ground that the only issue to be determined is the value of Donald Roach’s shares. The petitioners contend that, upon the death of Donald Roach, Timothy Roach did not become an officer, director, or shareholder of Chain Sales. The petitioners contend that his only right under the Agreement, as the executor of his father’s estate, is to be paid for Donald Roach’s shares. The petitioners contend that, since the Agreement provides for the shares to be conclusively valued by Chain Sales’ independent accountants, the valuation issue is not subject to arbitration. Contrary to the petitioners’ contentions, upon the death of Donald Roach, title to his stock was transferred by operation of law to his personal representative. At the time of his appointment as the executor of Donald Roach’s estate, Timothy Roach became the owner of the stock and was vested with all rights flowing from such ownership as was formerly enjoyed by Donald Roach (see, EPTL 13-1.1; Matter of Starbuck, 251 NY 439, 443; Matter of Brown, 295 AD2d 127; Matter of Bloch v. Gerhsman, 272 App Div 218, 221). Moreover, CPLR 7512 provides that, when a party dies after making a written agreement to submit a controversy to arbitration, the proceedings may be begun or continued upon the application of, or upon notice to, his executor or administrator. Arbitration is strongly favored under New York law (State of New York v. Philip Morris Inc., 30 AD3d 26, 31, affd 8 NY3d 574). Any doubts about whether an issue is arbitrable will be resolved in favor of arbitration (Id.). It is, of course, for the court in the first instance to determine whether the parties have agreed to submit their disputes to arbitration and, if so, whether the disputes generally come within the scope of their arbitration agreement (Id.). When, as here, there is a broad arbitration clause, it creates a presumption of arbitrability (Matter of Domansky v. Little, 2 AD3d 132, 133), and the court merely determines whether there is a reasonable relationship between the subject matter of the dispute and the subject matter of the underlying contract (Id.). The court’s inquiry ends when the requisite relationship is established (State of New York v. Philip Morris Inc., supra). Any analysis of the scope of the substantive provisions of the parties’ agreement is left to the arbitrator (Nationwide General Ins. Co. v. Investors Ins. Co. of America, 37 NY2d 91, 96), see also, Board of Educ. [Watertown Educ. Assn.], 93 NY2d 132, 143). As previously noted, Timothy Roach is now the owner of Donald Roach’s shares and, as such, is vested with all rights flowing from such ownership as was formerly enjoyed by Donald Roach.1 Timothy Roach seeks access to Chain Sales’ books and records, an accounting, and to enforce his right to sell Donald Roach’s shares to the petitioner Harvey Markowitz pursuant to Article VIII of the Agreement. Article v. of the stock-purchase agreement gives the parties “free access” to inspect Chain Sales’ books and records, and Article XIII gives a seller of shares, or his legal representatives, the right to examine Chain Sales’ books and records and receive all accounting reports as long as any part of the purchase price remains unpaid. The court finds that, under these circumstances, there is a reasonable relationship between the subject matter of the parties’ dispute and the underlying Agreement. Whether Timothy Roach can prevail and how to value his shares is left to the arbitrator. Matters of contract interpretation are for the arbitrator to resolve (Pearl Street Dev. Corp. v. Conduit & Foundation Corp., 41 NY2d 167, 171; Matter of Barbalious v. Exterior Wall Systems, 14 AD3d 508). Timothy Roach does not dispute the petitioners’ contention that his claim to enforce the sale, cancellation, and reissuance of Harvey Markowitz’s shares per the Agreement is barred by the six-year statute of limitations applicable to breach-of-contract claims. Whether a claim sought to be arbitrated is barred by the statute of limitations is a threshold issue that must be decided by the court (Cooper v. Bruckner, 21 AD3d 758, 759). In the absence of any opposition, the court finds that the claim to enforce the sale, cancellation, and reissuance of Harvey Markowitz’s shares is time-barred, and any arbitration thereof is stayed. Finally, whether the demand for arbitration was properly served is for the arbitrator to determine (Id.). Moreover, the petitioners applied for a stay of arbitration within 20 days after service of the demand. Thus, any failure to comply with CPLR 7503 (c) is academic and did not result in any prejudice to the petitioners. Accordingly, the motion is granted only to the extent indicated. Dated: December 10, 2019
