Frydman v. Diamond et al

Filing 24

MEMORANDUM OPINION AND ORDER re: 16 MOTION to Compel Arbitration and for Sanctions, filed by Scott Diamond, Warren Diamond. For the foregoing reasons, Defendants' motion to compel arbitration and to dismiss the complaint is de nied. In light of the Court's ruling on the motion, the defendants' request that the Court impose sanctions is also denied. The Clerk of Court is instructed to terminate the motion pending at docket number 16. (As further set forth in this Order.) (Signed by Judge Gregory H. Woods on 9/10/2015) (kko)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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JACOB FRYDMAN,
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Plaintiff,
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-v :
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WARREN DIAMOND and SCOTT DIAMOND, :
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Defendants. :
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USDC SDNY
DOCUMENT
ELECTRONICALLY FILED
DOC #:
DATE FILED: 09/10/2015

1:14-cv-8741-GHW
MEMORANDUM OPINION
AND ORDER

GREGORY H. WOODS, United States District Judge:
The parties in this case have jointly managed a real estate holding company for over a
decade. The relationship has been rocky, as documented by a series of settlement agreements that
govern the parties’ relationship. In this most recent of several lawsuits, the plaintiff, Mr. Jacob
Frydman, alleges that the defendants, Mr. Warren Diamond and Mr. Scott Diamond, have violated
the Racketeer Influenced and Corrupt Organizations Act, and breached a series of contractual and
other legal duties. Arguing that the dispute resolution provision of a 2005 settlement agreement
requires that this action be arbitrated, the defendants have moved to compel arbitration and dismiss
the complaint. Because the 2005 arbitration agreement was subsequently amended expressly to
permit any party to initiate any “action seeking injunctive or equitable relief . . . in a court of
competent jurisdiction,” notwithstanding the provisions of the 2005 settlement agreement, the
Court holds that this action is not subject to arbitration. Accordingly, the defendants’ motion to
compel arbitration and dismiss the complaint is denied.

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I.

Background
A. Factual Background
Mr. Frydman, a real estate investor and developer, Mr. Warren Diamond, and his son, Mr.

Scott Diamond, together with others—all acting through a web of corporate entities—jointly own
500 Lincoln LLC (“500 Lincoln”), a real estate investment company. See Complaint, Dkt. No. 1, ¶¶
8-19. 1 The principal asset of 500 Lincoln is a large building located diagonally across from the
entrance to the Lincoln Tunnel, at 500 Tenth Avenue. Id. at ¶ 10. The management of 500 Lincoln
is governed by an Amended and Restated Operating Agreement, dated as of October 31, 2002. Id.
at ¶ 15; Declaration of Steven Cooper (“Cooper Decl.”), Dkt. No. 17, Ex. C. (the “Operating
Agreement”).
In 2005, in response to a series of disputes between Mr. Frydman and Mr. Warren Diamond
regarding the management of the property, a number of individuals and entities involved in the
ownership or operation of 500 Lincoln entered into a settlement agreement. Cooper Decl., Ex. G
(the “2005 Settlement Agreement”). The signatories to the 2005 Settlement Agreement included
both the plaintiff and Mr. Warren Diamond, but Mr. Scott Diamond, did not execute that agreement
in his individual capacity. Id. Mr. Scott Diamond is not alleged to have been actively involved in the
management of the business at that time. The 2005 Settlement Agreement limited Mr. Warren
Diamond’s involvement in the operation of the business, and provided that Mr. John Del Monaco
would represent Mr. Warren Diamond’s economic interests in the business. Compl. at ¶¶ 83-85.
Significantly for purposes of this motion, the 2005 Settlement Agreement contained a
comprehensive dispute resolution provision. Section 12 of the 2005 Settlement Agreement requires

The allegations in the plaintiff’s complaint are undisputed by the defendants for purposes of this motion. See
Defendants’ Brief (“Defs. Br.”), Dkt. No. 18 at 3 n.2.
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the contracting parties to settle their disputes using arbitration. The scope of that provision is
broad. In particular, Section 12 provides that:
All disputes between the parties hereto and/or under the Operating Agreement
arising out of relating in any way to this Agreement or the business of 500 Lincoln . .
. “Disputes” . . . shall be resolved exclusively pursuant to this Section 12. The parties
hereto expressly waive their rights to seek resolution of the Disputes in any other
judicial or non-judicial forum.
2005 Settlement Agreement § 12 (emphasis in original). The 2005 Settlement Agreement goes on to
detail in four single-spaced pages the rules governing any potential arbitration proceedings between
the parties. Id.
Following the 2005 Settlement Agreement, the business operated smoothly for six years
under the joint management of Mr. Frydman, his business partner, Mr. Rutter, and Mr. Del Monaco.
Compl. at ¶¶ 90-92. According to the complaint, the wheels fell off again when Mr. Del Monaco
resigned as co-manager of the business, and Mr. Warren Diamond’s son, Mr. Scott Diamond,
asserted managerial rights over the business. Id. at ¶¶ 93-105. The series of ensuing disputes
resulted in another settlement agreement in 2012 (the “2012 Settlement Agreement”). Id. at ¶¶ 118119; Cooper Decl., Ex. B. Unlike the 2005 Settlement Agreement, that agreement was executed by
all three of the parties to this litigation—Mr. Frydman, Mr. Warren Diamond, and Mr. Scott
Diamond.
The parties to the 2012 Settlement Agreement expressly ratified the provisions of the 2005
Settlement Agreement. Section 20 of the 2012 Settlement Agreement provides that “[e]xcept as
specifically amended by the terms hereof, the Parties hereto ratify and reaffirm each of the terms,
agreements, conditions, representations, warranties, and covenants set forth” in the 2005 Settlement
Agreement. 2012 Settlement Agreement § 20 (emphasis added). As the language of Section 20
suggests, some provisions of the 2005 Settlement Agreement were specifically amended in 2012. In
particular, Section 19 of the 2012 Settlement Agreement provides that:
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Should any dispute arise between the Parties which gives rise to injunctive or
equitable relief pursuant to the terms of this Agreement, the Operating Agreements
or the Settlement Agreements, then notwithstanding anything else contained in such
agreements, the party initiating an action seeking injunctive or equitable relief may at
his/her/its election bring such action in a court of competent jurisdiction, and each
of the other Parties hereby consent to same and shall not seek to dismiss or move
such action to arbitration or other adjudication.
2012 Settlement Agreement § 19.
This motion turns on the interpretation of this provision of the 2012 Settlement Agreement.
The plaintiff claims that it limits the scope of the broad arbitration agreement contained in the 2005
Settlement Agreement, and expressly allows him to bring any action seeking equitable relief in the
forum of his choosing. The defendants argue that it should be read not to limit the scope of the
parties’ commitment to arbitrate disputes, but, rather, as a standard “aid of arbitration” provision.
Given the particular (and arguably peculiar) language of the parties’ agreements in this case, the
Court must agree with the plaintiff.
B. Procedural History
The procedural history of this case begins before the complaint was even filed. On October
27, 2014, the plaintiff emailed a draft of the complaint to the defendants. Cooper Decl., Ex. D. In
his email, the plaintiff threatened that he would file the complaint unless the parties could resolve an
ongoing dispute. Id.
On October 30, 2014, before the complaint was filed, the defendants preemptively filed a
demand for arbitration with the American Arbitration Association (the “AAA”). Cooper Decl., Ex.
I. (The defendants do not explain how that action was consistent with the terms of the 2005
Settlement Agreement, which provides clear rules regarding the initiation of arbitration under its
terms, beginning with a notice to the opposing party. 2005 Settlement Agreement § 12.) On the
same day, the defendants commenced a declaratory judgment action in New York state court,

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seeking, among other things, a declaration that the arbitration clauses in the Operating Agreement,
and the 2005 and 2012 Settlement Agreements were valid and enforceable. Defs. Br. at 8.
The plaintiff commenced this action on November 3, 2014. This motion ensued. The
Court understands that the plaintiff has declined to participate in the AAA arbitration on the basis
that there is “no mandatory arbitration provision with respect to the matters asserted by the
Diamonds in [the AAA] arbitration . . . .” Cooper Decl., Ex. L, at 2.
II.

Analysis
The Federal Arbitration Act, 9 U.S.C. § 1 et seq. (the “FAA”), was enacted to “replace judicial

indisposition to arbitration with a national policy favoring [it] . . . .” Hall St. Assocs., L.L.C. v. Mattel,
Inc., 552 U.S. 576, 581 (2008) (internal quotation marks omitted) (alteration in original). The FAA
“is an expression of ‘a strong federal policy favoring arbitration as an alternative means of dispute
resolution.’” Ross v. Am. Express Co., 547 F.3d 137, 142 (2d Cir. 2008) (quoting Hartford Accident &
Indem. Co. v. Swiss Reinsurance Am. Corp., 246 F.3d 219, 226 (2d Cir. 2001)). Section 2 of the FAA
provides that “[a] written provision in . . . a contract evidencing a transaction involving commerce to
settle by arbitration a controversy thereafter arising out of such contract . . . shall be valid,
irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation
of any contract.” 9 U.S.C. § 2.
Arbitration agreements are contracts, “on equal footing with other contracts,” so courts
must “enforce them according to their terms.” Rent–A–Center, West, Inc. v. Jackson, 561 U.S. 63, 67
(2010) (internal citation omitted). Indeed the purpose of the FAA was “to make arbitration
agreements as enforceable as other contracts, but not more so.” Opals on Ice Lingerie v. Body Lines Inc.,
320 F.3d 362, 369 (2d Cir. 2003) (emphasis in original) (quoting Prima Paint Corp. v. Flood & Conklin
Mfg. Co., 388 U.S. 395, 404 n.12 (1967). “[A] party may be compelled to arbitrate a dispute only to
the extent he or she has agreed to do so.” Nayal v. HIP Network Servs. IPA, Inc., 620 F.Supp.2d 566,
569 (S.D.N.Y. 2009) (citation omitted).
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A court must evaluate four factors when deciding a motion to compel arbitration:
[F]irst, it must determine whether the parties agreed to arbitrate; second, it must
determine the scope of that agreement; third, if federal statutory claims are asserted, it
must consider whether Congress intended those claims to be nonarbitrable; and
fourth, if the court concludes that some, but not all, of the claims in the case are
arbitrable, it must then decide whether to stay the balance of the proceedings pending
arbitration.
JLM Indus., Inc. v. Stolt-Nielsen SA, 387 F.3d 163, 169 (2d Cir. 2004) (quoting Oldroyd v. Elmira Sav.
Bank, FSB, 134 F.3d 72, 75-76 (2d Cir. 1998), abrogated on separate grounds by Katz v. Cellco P’ship, - F.3d -- , No. 14-138, 2015 WL 4528658 (2d Cir. July 28, 2015)).
In deciding a motion to compel arbitration, “the court applies a standard similar to that
applicable [to] a motion for summary judgment. If there is an issue of fact as to the making of the
agreement for arbitration, then a trial is necessary.” Bensadoun v. Jobe-Riat, 316 F.3d 171, 175 (2d Cir.
2003). Thus, “it is proper (and in fact necessary) to consider . . . extrinsic evidence when faced with
a motion to compel arbitration.” BS Sun Shipping Monrovia v. Citgo Petroleum Corp., No. 06 Civ. 839
(HB), 2006 WL 2265041, at *3 n.6 (S.D.N.Y. Aug. 8, 2006) (citing Sphere Drake Ins. Ltd. v. Clarendon
Nat. Ins. Co., 263 F.3d 26, 32 (2d Cir. 2001)).
A. Agreement to Arbitrate
The party seeking to compel arbitration “must make a prima facie initial showing that an
agreement to arbitrate existed before the burden shifts to the party opposing arbitration to put the
making of that agreement ‘in issue.’” Hines v. Overstock.com, Inc., 380 F. App’x 22, 24 (2d Cir. 2010).
To satisfy the initial burden, the moving party need not establish that “the agreement would be
enforceable, merely that one existed.” Id. (emphasis in original). Once the party has made a prima
facie showing that an agreement existed, the party “seeking to avoid arbitration generally bears the
burden of showing the agreement to be inapplicable or invalid.” Harrington v. Atl. Sounding Co., Inc.,
602 F.3d 113, 124 (2d Cir. 2010) (citing Green Tree Fin. Corp.-Alabama v. Randolph, 531 U.S. 79, 91–92
(2000)). See also Schreiber v. K–Sea Transp. Corp., 879 N.E.2d 733 (2007).
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Since arbitration agreements are considered contracts, Nat'l Credit Union Admin. Bd. v.
Goldman, Sachs & Co., 775 F.3d 145, 148 (2d Cir. 2014), whether the parties entered into a binding
arbitration agreement is governed by state contract law principles. Specht v. Netscape Commc'ns Corp.,
306 F.3d 17, 27 (2d Cir. 2002). In this case, the two relevant contracts—the 2005 Settlement
Agreement and the 2012 Settlement Agreement—are both expressly governed by New York law.
2005 Settlement Agreement § 23; 2012 Settlement Agreement § 24(a).
The defendants have met their burden to show that an agreement to arbitrate existed.
Indeed, none of the parties to this litigation disputes that the 2005 Settlement Agreement is a
binding agreement, or the scope of the arbitration provisions laid out in that agreement. Nor do
they contend that the 2012 Settlement Agreement is unenforceable. The parties have not briefed the
issue whether the 2005 Settlement Agreement is binding on Mr. Scott Diamond, who was not a
signatory to that agreement.2 However, given that there is no dispute that the 2005 Settlement
Agreement is an enforceable agreement between Mr. Frydman and Mr. Warren Diamond and that
the 2012 Settlement Agreement is an enforceable agreement, binding on all three parties to this
action, the Court need not decide that issue.
B. Scope of Agreement to Arbitrate
The dispute between the parties can be framed within the second inquiry required by
Oldroyd—do the plaintiff’s claims fall within the scope of the parties’ agreement to arbitrate?3

Section 20 of the 2012 Settlement Agreement states that the parties to that agreement, including Mr. Scott Diamond,
“hereby ratify and reaffirm each of the terms, agreements . . . set forth in each of the Operating Agreements and
Settlement Agreements and acknowledge that such agreements constitute the valid and legally enforceable undertakings
and obligations of Parties.” 2012 Settlement Agreement § 20. The Court observes that the provision uses the words
“ratify” and “reaffirm,” each of which may connote a reaffirmation of an existing obligation, as opposed to the creation
of a new one. Similarly, the Court observes the absence of an article before the final word “Parties” in this provision.
That omission may be a typographical error, but may also suggest an understanding by the parties to the 2012 Settlement
Agreement that the ratification did not apply to “all” parties or “the” parties, but rather to a selection of “some” parties.
In the absence of briefing, the Court will not rule on the effect of this provision.
3 In this case, the first and second Oldroyd tests are logically intertwined. Here, driven by the language of the Second
Circuit’s decision in National Union Fire Ins. Co.—which frames the first inquiry as whether an agreement to arbitrate
exists “at all”—the Court has answered that question in the affirmative, and then framed the substantive dispute to
require an answer to the following question—how does the 2012 Settlement Agreement modify the scope of the
arbitration provision in the 2005 Settlement Agreement? The same substantive question could also be framed as an
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Whether a dispute is arbitrable rests on the answer to two questions: “(1) whether there exists a valid
agreement to arbitrate at all under the contract in question . . . and if so, (2) whether the particular
dispute sought to be arbitrated falls within the scope of the arbitration agreement.” National Union
Fire Ins. Co. v. Belco Petroleum Corp., 88 F.3d 129, 135 (2d Cir.1996). “There is a strong federal policy
favoring arbitration as an alternative means of dispute resolution. In accordance with that policy,
[courts] will ‘construe arbitration clauses as broadly as possible,’ resolving ‘any doubts concerning
the scope of arbitrable issues . . . in favor of arbitration.’” Oldroyd, 134 F.3d at 76 (citations omitted).
“The parties may, however, limit by agreement the claims they wish to submit to arbitration.
‘If the parties make such an intention clear, the federal policy favoring arbitration must yield.’”
Hartford Acc. & Indem. Co. v. Swiss Reinsurance Am. Corp., 246 F.3d 219, 226 (2d Cir. 2001) (quoting
New York v. Oneida Indian Nation, 90 F.3d 58, 61 (2d Cir. 1996)). Courts must treat agreements to
arbitrate like any other contract. See Volt Info. Sciences, Inc. v. Board of Trustees of Leland Stanford Jr.
Univ., 489 U.S. 468, 478 (1989). “Where the parties to an arbitration agreement specifically have
excepted a certain type of claim from mandatory arbitration, it is the duty of courts to enforce not
only the full breadth of the arbitration clause, but its limitations as well.” Oneida, 90 F.3d at 62
(emphasis added). The Supreme Court has explained that:
the FAA does not require parties to arbitrate when they have not agreed to do so,
nor does it prevent parties who do agree to arbitrate from excluding certain claims
from the scope of their arbitration agreement. It simply requires courts to enforce
privately negotiated agreements to arbitrate, like other contracts, in accordance with
their terms.
Volt Info., 489 U.S. at 478 (internal citations omitted).
The parties do not appear to dispute whether this litigation would fall within the scope of
the broad arbitration provision of the 2005 Settlement Agreement described above had it remained
unmodified. The plaintiff contends, however, that the parties’ broad agreement to arbitrate in that

analysis within the first Oldroyd test by posing the question—is the 2005 Settlement Agreement’s arbitration provision
applicable to this dispute? The result under either approach is the same.

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agreement was modified and superseded by Section 19 of the 2012 Settlement Agreement (“Section
19”).4 The plain language of Section 19 supports the plaintiff’s position.
Section 19 of the 2012 Settlement Agreement provides that:
Should any dispute arise between the Parties which gives rise to injunctive or
equitable relief pursuant to the terms of this Agreement, the Operating Agreements
or the Settlement Agreements, then notwithstanding anything else contained in such
agreements, the party initiating an action seeking injunctive or equitable relief may at
his/her/its election bring such action in a court of competent jurisdiction, and each
of the other Parties hereby consent to same and shall not seek to dismiss or move
such action to arbitration or other adjudication.
2012 Settlement Agreement § 19. It is clear from the text of this provision (“notwithstanding
anything else contained in such agreements”) that it modifies the agreements in the 2005 Settlement
Agreement. Reasonably, the defendants do not dispute this point. Defs. Br. at 18.
The parties do, however, dispute the meaning of Section 19. The plaintiff argues that
Section 19 provides the parties an alternative to arbitration for all actions—such as this one—in
which a party seeks equitable relief. The defendants argue that Section 19 was intended to be a
narrow exception to the parties’ broad agreement to arbitrate, and that the plaintiff’s interpretation
of Section 19 would render the parties’ agreement to arbitrate meaningless because any party could
avoid arbitration by simply including any type of claim of injunctive or equitable relief in his
complaint. Instead, the defendants contend, the provision should be read like a standard “aid of
arbitration” provision of the sort that allows a party to an arbitration agreement to seek equitable or
injunctive relief either to enforce an arbitral award or to maintain the status quo pending arbitration.
Defs. Br. at 21.
The defendants’ argument founders on the plain language of the 2012 Settlement
Agreement. “In interpreting a contract under New York law, ‘words and phrases . . . should be

The Court observes that the plaintiff has brought this action only against parties to the 2012 Settlement Agreement,
and not against any persons or entities that signed the 2005 Settlement Agreement, but not the 2012 Settlement
Agreement.
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given their plain meaning,’ and the contract ‘should be construed so as to give full meaning and
effect to all of its provisions.” LaSalle Bank Nat. Ass’n v. Nomura Asset Capital Corp., 424 F.3d 195,
206 (2d Cir. 2005) (quoting Shaw Group, Inc. v. Triplefine Int’l Corp., 322 F.3d 115, 121 (2d Cir. 2003)).
The Court must, therefore, be guided by the plain language of the 2012 Settlement Agreement.
Section 19 expressly provides that any “party initiating an action seeking injunctive or
equitable relief may at his/her/its election bring such action in a court of competent jurisdiction . . .
.” 2012 Settlement Agreement § 19. This provision must be read in accordance with its plain
meaning—parties to the 2012 Settlement Agreement have the right to bring an action seeking
equitable relief in court. The provision goes on to establish firmly that the right of the parties to
pursue such litigation is not in aid of arbitration, but that, rather, it is a substitute for arbitration:
“each of the other Parties hereby consent to same and shall not seek to dismiss or otherwise move
such action to arbitration or other adjudication.” Id. (emphasis added). Remember, too, that Section
19 expressly provides that its provisions apply “notwithstanding anything else contained in” the
2005 Settlement Agreement. All of which makes it clear that Section 19 establishes Mr. Frydman’s
right to bring an action seeking equitable relief—such as this one—in the court of his choice,
notwithstanding the broad arbitration provisions of the 2005 Settlement Agreement. This result is
mandated by the clear meaning of the words that the parties chose to reflect their agreement in this
case.
The defendants argue that Section 19 should be read as an aid of arbitration provision, but
they are unable to support their interpretation with the plain language of the contract itself. The
language of Section 19 differs markedly from common aid of arbitrations provisions. Such
provisions typically provide that litigation is permitted only in order to assist or supplement
anticipated or pending arbitration. See, e.g., American Arbitration Association Guide to drafting
dispute resolution clauses, Model Preliminary Relief Clause, 26 West’s Legal Forms, Alt. Disp. Res. §
1.8 (“Either party . . . may, without waiving any remedy under this agreement, seek from any court
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having jurisdiction any interim or provisional relief that is necessary to protect the rights or property
of that party, pending the establishment of the arbitral tribunal (or pending the arbitral tribunal’s
determination of the merits of the controversy).”).
The arbitration clause in the Operating Agreement contained precisely this type of language.
The clause allowed litigation for only two narrow purposes—provisional relief in aid of arbitration
or to enforce the right to a payment of a sum certain. Section 10.12 of the Operating Agreement
provided that:
The parties will submit any dispute under this Agreement to an arbitrator to be
settled by arbitration. [. . .] Further, the parties hereto expressly agree that
proceeding to arbitration and obtaining an award thereunder will be a condition
precedent to bringing or maintaining any action in any court with respect to any
dispute arising under this Agreement, except for the institution of a civil action to
maintain the status quo during the pendency of any arbitration proceeding and
except for an action to enforce the right to payment of a sum certain.
Cooper Decl., Ex. C § 10.12. The parties knew how to write a limited aid of arbitration provision.
Instead, they wrote, and agreed to, Section 19, which is explicitly a provision that supports litigation
in lieu of arbitration, not in aid of it.
The Court is obligated to enforce the parties’ current agreement to arbitrate—and its current
limitations. “[W]hile the FAA expresses a strong federal policy in favor of arbitration, the purpose
of Congress in enacting the FAA ‘was to make arbitration agreements as enforceable as other
contracts, but not more so.’” JLM Industries, Inc., 387 F.3d at 171 (emphasis original) (quoting Cap
Gemini Ernst & Young, U.S., L.L.C. v. Nackel, 346 F.3d 360, 364 (2d Cir. 2003)). The Court cannot
accept the defendants’ invitation to re-write Section 19 into an aid in arbitration provision simply
because that reading promotes arbitration. In Section 19, the parties have clearly agreed to allow the
plaintiff to bring “an action seeking injunctive or equitable relief” in this court, and have further
agreed not to remove “such action” to arbitration. Therefore, the Court must deny the defendants’
request to compel the plaintiff to arbitrate this case; the 2012 Settlement Agreement does not
require that result. Rather, it expressly prohibits it.
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In their brief, the defendants allude to the possibility that the Court might find that Section
19 carves the plaintiff’s claims for equitable relief out of the scope of the 2005 Settlement
Agreement, but that his legal claims must be pursued in arbitration. See Reply at 8 (“Should the
Court find Plaintiff’s purported claims for equitable relief to be nonarbitrable, those claims should
be stayed pending resolution of the arbitration.”). The defendants did not provide support for that
conclusion in their brief, however. Instead, they left substantively unchallenged the plaintiff’s
argument that the text of Section 19 supports the conclusion that the entirety of his action can be
brought in this Court.
Indeed, by its plain language, Section 19 does not apply only to claims for equitable relief, but
to any action seeking equitable relief. Section 19 then prohibits the removal to arbitration not of “such
claims requesting equitable relief,” or similar language, but rather “such action.” And Section 19 is
introduced with broad language that seems to encompass the entirety of any dispute giving rise to
equitable relief. 2012 Settlement Agreement § 19 (“Should any dispute arise between the Parties
which gives rise to injunctive or equitable relief . . . .”). In the absence of a substantive
counterargument from the defendants on this point at this time, the Court will construe Section 19
to encompass the entirety of this action—which is on its face “an action seeking injunctive or
equitable relief”—not merely claims for equitable relief arising under this action.5
IV.

Conclusion
For the foregoing reasons, Defendants’ motion to compel arbitration and to dismiss the

complaint is denied. In light of the Court’s ruling on the motion, the defendants’ request that the
Court impose sanctions is also denied. 6

Perhaps as a consequence of the procedural context of this motion, the defendants did not argue that the language of
Section 19 is ambiguous—for example that it permits the simultaneous litigation of a single dispute in two separate
fora—an arbitration for legal relief and a court proceeding for equitable relief. Such an argument is not before the Court
now; the Court does not, however, preclude such an argument in the future.
6 Defendants also assert that they are entitled to an award of attorney’s fees and costs under the 2012 Settlement
Agreement’s covenant not to sue, which, the defendants argue, explicitly prohibits the plaintiff from “[b]ringing an
action for any claims sounding in fraud, and/or based on any claims or alleged conduct prior to December 12, 2012 . . . .”
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The Clerk of Court is instructed to terminate the motion pending at docket number 16.
SO ORDERED.
Dated: September 10, 2015
New York, New York

_____________________________________
GREGORY H. WOODS
United States District Judge

Defs. Br. at 25. As a procedural matter, the Court cannot rule on a breach of contract claim in the context of a motion
to compel arbitration. Defendants’ request is denied without prejudice.

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