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IN RE GRAND AND MERCER STREET CORPORATION, ET AL., Petitioners-Respondents, v. STEPHANIE EISENBERG, ET AL., Respondents-Appellants.

The arbitrators did not exceed their authority by voiding a shareholders agreement that authorized them to decide any controversy or claim arising out of or relating to it, and then, in effect, writing a new shareholders agreement for the parties ( see Matter of Silverman [Benmor Coats], 61 N.Y.2d 299, 307-308; Integrated Sales v. Maxwell Corp., 94 A.D.2d 221, 225). Such remedy rationally addresses the deadlocks caused by an agreement that required shareholder unanimity with respect to all matters of management, impeding even normal operations, and none of the award's provisions violates a strong public policy ( see Silverman, 61 N.Y.2d at 308). Moreover, respondents, who participated in what was an extensive arbitration proceeding, and who themselves affirmatively sought to arbitrate the effect of the agreement on the corporation's governance, will not be heard to argue that the arbitrators were without authority to grant any relief that rationally determined that issue, including rescission of the shareholders agreement ( see id. at 309, citing, inter alia, Rochester City School Dist. v. Rochester Teachers Assn., 41 N.Y.2d 578, 583; see also Matter of Shannon [Liberty Mut. Ins. Co.], 236 A.D.2d 231). The award of attorneys' fees should be vacated given an arbitration clause that does not expressly provide therefor. We have considered and rejected respondents' other arguments.

THIS CONSTITUTES THE DECISION AND ORDER OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.

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IN THE MATTER OF GRAND MERCER ST. CORP
(Mar 2, 2004)