By commencing a CPLR Article 78 action involving arbitrable issues, the petitioner may be deemed to have waived his or her right to demand arbitration of those issues

The Village of Bronxville terminated the employment of one of its police officers [Employee] and notified him that his "health insurance coverage, as well as any other insurance coverage that had been provided by the Village, would terminate." Employee objected, contending that the collective bargaining agreement [CBA] between the Village and the Bronxville Police Taylor Act Committee [BPTC] provided that he was entitled to individual and family health insurance coverage as a disability retiree.

The CBA outlined a grievance procedure to resolve "[a]ny dispute arising concerning the interpretation, construction or application" of the terms of the CBA. Under the terms of the CBA, if the dispute was not resolved through the grievance procedure, the parties were to submit the matter to arbitration. Ultimately the Village Board of Trustees denied the grievance. When BPTC served a demand to arbitrate the matter, the Village commenced an CPLR Article 75 proceeding seeking a permanent stay of arbitration of Employee's claim for health insurance benefits pursuant to the terms set out in the relevant collective bargaining agreement.

The Village argued that the BPTC and Employee [1] had waived the right to arbitration the grievance, and [2] that arbitration should be permanently stayed for laches. Supreme Court granted the Village's petition holding that while the BPTC had not waived the right to arbitrate Employee's claim, arbitration should be permanently stayed pursuant to the doctrine of laches and BPTC appealed.  

The Appellate Division agreed with Supreme Court's determination granting a stay of arbitration, but for a different reason. Explaining that the doctrine of laches bars the enforcement of a right where there has been an unreasonable and inexcusable delay that results in prejudice to a party and prejudice may be demonstrated "by a showing of injury, change of position, loss of evidence, or some other disadvantage resulting from the delay," and although the BPTC unreasonably and inexcusably delayed filing a demand for arbitration, the Village failed to demonstrate that it suffered any prejudice as a result of that delay. Thus, concluded the Appellate Division, the doctrine of laches does not bar the arbitration in this instance.

Citing Sherrill v Grayco Bldrs., 64 NY2d 261, the Appellate Division opined that "[l]ike contract rights generally, a right to arbitration may be modified, waived or abandoned." The court then noted that Employee had previously commenced a proceeding pursuant to CPLR Article 78 against, among others, the Village, challenging the Village's determination to terminate his health insurance benefits. In that proceeding Employee had alleged that the Village had breached the collective bargaining agreement by failing to provide him with disability retiree health insurance coverage.*

"By commencing an action at law involving arbitrable issues" pursuant to Article 78 the Appellate Division opined that BPTC and Employee "had waived whatever right [they] had to arbitration," citing Hart v Tri-State Consumer, Inc., 18 AD3d 610.

The Appellate Division then ruled that Supreme Court should have permanently stayed the arbitration on the ground that BPTC and the Employee had waived any right to arbitrate the matter.

* The Appellate Division noted that "Where a party affirmatively seeks the benefits of litigation, in a manner 'clearly inconsistent with [its] later claim that the parties were obligated to settle their differences by arbitration,' the right to arbitrate has been waived."

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2019/2019_02710.htm