Medrite Care, LLC v. Medrite 243 LLC

Background

Medrite Care, LLC; Medrite 22nd LLC; Medrite 72 LLC; Medrite BH LLC; Medrite Midtown West LLC; and Henry Weiss, individually and derivatively on behalf of the listed entities, were the plaintiffs. The defendants included Medrite 243 LLC and other Medrite entities, Supreme Medical Management LLC, and Samuel Fishman a/k/a Samuel Fisch. The listed entities also appeared as nominal defendants.

Plaintiffs’ complaint stated that they were religiously bound to bring their dispute first to a Beis Din, described as a Jewish court of law. Plaintiffs said they would serve defendants with a hazmanah, described as the Beis Din equivalent of a summons, and intended to continue pursuing their claims in federal court until defendants complied with the hazmanah and submitted to the jurisdiction of the Beth Din.

Defendant Samuel Fisch stated that he was willing to bring the dispute to a Beis Din and said that he had already issued a rabbinical court summons seeking to call Henry Weiss to a Beis Din. At a hearing, plaintiffs’ counsel said that participation required consent not only to a rabbinical court generally but also to a particular court and panel of judges. Defense counsel said Fisch was willing to proceed before semikhah, which counsel described as an established beth din.

Defendants moved to compel arbitration and dismiss the complaint, arguing that the complaint and Fisch’s declaration together formed an arbitration agreement. In the alternative, defendants sought a stay of the federal proceedings while the dispute was resolved in a rabbinical court.

Legal Standard

The Federal Arbitration Act requires courts to enforce valid agreements to arbitrate, but parties cannot be required to arbitrate unless they agreed to do so. The court therefore first had to determine whether the parties formed an arbitration agreement. It applied ordinary New York contract-formation principles, including the requirement that the parties show sufficiently definite and mutual assent to all material terms.

Under New York law, an acceptance must clearly and unambiguously follow the offer’s terms. A response that changes or qualifies those terms is a rejection and counteroffer. A mere agreement to agree, leaving a material term for future negotiations, is not enforceable.

The court reviewed the motion under a standard similar to summary judgment, considering the relevant admissible evidence and drawing reasonable inferences in favor of the nonmoving party.

Analysis

The court was not persuaded that the complaint and Fisch’s declaration created an arbitration agreement. Even assuming that the complaint made a definite offer to arbitrate, the court found that defendants did not unequivocally accept it. The complaint stated that plaintiffs would serve defendants with a hazmanah. Defendants instead served their own hazmanah from their preferred beth din.

The court also relied on the parties’ statements at the hearing. Fisch’s counsel represented that Fisch was willing to proceed before a particular beth din, rather than agreeing to arbitrate on whatever terms plaintiffs had offered. Because that response changed or qualified the alleged offer, the court treated it as a rejection and counteroffer.

Defendants argued that, under Jewish law, it did not matter who served the hazmanah or which beth din issued it. The court declined to resolve the parties’ competing claims about Jewish law because New York law governed contract formation. The court concluded that defendants had not clearly and unequivocally accepted plaintiffs’ alleged offer.

The court further concluded that the parties’ statements were best understood as competing offers or a nonbinding agreement to negotiate later about the forum. Because the parties had not shown definite mutual assent to all material terms, no enforceable arbitration agreement existed.

Disposition

Judge Mary Kay Vyskocil denied defendants’ motion to compel arbitration and dismiss the case. Defendants were ordered to file an answer to the complaint by July 27, 2020.