Schiffer v. Slomin's

NASSAU COUNTY
Contracts

New York Law Journal

   |1 Comments

Judge Gary Knobel

Slomin's moved for dismissal of Raviv's action, and sought to compel arbitration between itself and Schiffer. In an apparent case of first impression, the court opined that a clause in Slomin's alarm and security agreement giving either party the right to have an action resolved by binding arbitration was unenforceable, and deemed null and void under General Business Law §399-c, which prohibited the use of mandatory arbitration clauses in contracts for the sale or purchase of consumer goods. Plaintiffs sought to recover $5,000 in damages for breach of contract in their small claims suit. They claimed they entered into three agreements with Slomin's. The court found the contracts at bar calling for the installation of an alarm and security system in plaintiffs' home was for the purchase of consumer goods as defined in §399-c. It found the arbitration clause in the contract fell within the protection of subsections 2(a) and 2(b) of the statute as it allowed the non-consumer party to mandate arbitration. Hence, the court ruled the "only reasonable conclusion" was that Slomin's clause ultimately circumvented the intended benefit of §399-c to consumers to have the right to seek judicial resolution of a dispute. Thus, Slomin's motion was denied.

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    I am surprised that the court did not consider that that section 2 of the FAA requires arbitration agreements to be enforced, subject only to defenses applicable generally to all contracts, notwithstanding a contrary state law, which the FAA pre-empts. Thus, Slomin should win on appeal, and if the NY courts uphold the lower court, the US Supreme Court would likely grant cert as per Wien & Malkin, 540 U.S. 801.

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