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Effort to vacate default judgment of an arbitration award rejected

Effort to vacate default judgment of an arbitration award rejected
Melnick v Khoroushi, 2008 NY Slip Op 10206, Appellate Division, First Department

Stuart L. Melnick attempted to vacate a default judgment that had affirmed an arbitration award directing Melnick to refund $12,000 in legal fees to Khoroushi.

The Appellate Division unanimously affirmed the default judgment and, in addition, issued a sanction ?for frivolous prosecution of this appeal? and awarded Khoroushi ?reasonable attorney fees incurred in responding to this appeal.?

The court said that a default is considered intentional when a party takes no steps to vacate it until after judgment has been entered against the party. Here, said the Appellate Division, Melnick had been given ?ample opportunity to avoid the entry of default judgment? but failed to demonstrate either a reasonable excuse for the default. Under the circumstances the court said Melnick?s appeal was frivolous.

Similarly, courts typically reject efforts to vacate an arbitration award resulting from a party?s default in the process such as not appearing at the arbitration. In such cases the arbitration is typically held ?in absentia.? For example, in Hall v Environmental Conservation, 235 AD2d 757, the Appellate Division ruled that an arbitrator may proceed with a contract disciplinary arbitration notwithstanding the fact that the appointing authority refused to participate in the proceeding. The court then ruled that the arbitration award was a final, binding determination, sustaining that part of the award that provided for ?back pay? to Hall.

The same result obtains when a party fails to participate in an administrative proceedings. The decision of the Appellate Division, Third Department in Aures v Buffalo Board of Education, 272 A.D.2d 664, demonstrates this. In Aures, the employer, the Buffalo City School District, failed to appear at an unem­ployment insurance hearing as scheduled. The hearing officer proceeded to hold the hearing "in absentia" and awarded unemployment insurance benefits to Aures. Rejecting Buffalo's appeal challenging the award of benefits, the Appellate Division ruled that the determination was binding on the parties.

Internet link to decision: http://www.courts.state.ny.us/reporter/3dseries/2008/2008_10206.htm

Full post as published by New York Public Personnel Law on January 09, 2009 (boomark / email).