11th Street LLC v. Certain Underwriters At Lloyd's London Subscribing to…

Background

This insurance action was removed from New York State Supreme Court to the Southern District of New York. Defendants moved to compel arbitration, and the parties agreed that the dispute should be arbitrated. Their disagreement concerned the selection of the arbitrators.

The policy provided that, after the claimant appointed an arbitrator and gave notice, the respondent had 30 days to appoint its arbitrator. If the respondent failed to do so, the claimant could nominate an arbitrator on the respondent’s behalf. The policy also included a New York choice-of-law provision.

On April 23, 2020, 11 Street LLC sent a demand for arbitration and notified defendants that Joe Zevuloni had been appointed as its arbitrator. Thirty days later was Saturday, May 23. Because May 24 was Sunday and May 25 was Memorial Day, defendants notified 11 Street LLC on Tuesday, May 26, that Charles Reilly Jr. would serve as their arbitrator. 11 Street LLC later argued that this designation was late and that it therefore could nominate defendants’ arbitrator.

Analysis

The court applied New York General Construction Law § 25, which supplies a default rule for contractual deadlines ending on a Saturday, Sunday, or public holiday. Under that rule, the required act may be performed on the next business day with the same effect as if it had been performed on time.

The court held that the policy was silent about how to calculate the 30-day period when its final day was not a business day. It also found no policy language showing that the parties intended to override § 25. The court rejected 11 Street LLC’s argument that appointing an arbitrator was not the kind of contractual “condition” covered by the statute, explaining that the statute had been applied broadly to authorized contractual acts. The court therefore concluded that defendants’ May 26 designation of Reilly was timely.

Ruling and effect

Judge Engelmayer granted defendants’ motion to compel arbitration at docket 9 as unopposed. The court also granted defendants’ letter motions at dockets 22 and 25 insofar as they argued that defendants’ nomination of Reilly was timely.

The case will proceed to arbitration. The Clerk of Court was directed to terminate all pending motions and stay the action in its entirety. The parties were directed to file a joint status update every 60 days concerning the arbitration proceeding.