Cantor Fitzgerald Partners v. Municipal Partners, LLC
Summary of the case Cantor Fitzgerald Partners v. Municipal Partners, LLC
The Supreme Court, New York County, affirmed the order denying petitioners' motion to stay arbitration and granting respondent's cross motion to compel arbitration. The dispute involved fees and offsets for reimbursable overhead expenses under a contract. Petitioners argued the dispute arose when the respondent was not an NASD member, precluding arbitration. However, the court found that the issues were intertwined with the respondent's right to collect fees post-licensure, invoking NASD rules requiring arbitration.
Key Issues of the case Cantor Fitzgerald Partners v. Municipal Partners, LLC
- Arbitration eligibility under NASD membership
- Contractual rights and obligations post-termination
Key Facts of the case Cantor Fitzgerald Partners v. Municipal Partners, LLC
- Respondent's right to fees accrued post-licensure as an NASD member
- Petitioners failed to comply with documentation requirements extending into NASD membership period
Decision of the case Cantor Fitzgerald Partners v. Municipal Partners, LLC
Affirmed
Impact of the case Cantor Fitzgerald Partners v. Municipal Partners, LLC
The decision reinforces the applicability of NASD arbitration rules when disputes arise post-membership.
Opinions
Order, Supreme Court, New York County (Herman Cahn, J.), entered April 11, 2003, which denied petitioners’ motion to stay arbitration and granted respondent’s cross motion to compel arbitration, unanimously affirmed, with costs.
Petitioners contend that the dispute over fees and offsets for reimbursable overhead expenses, pursuant to the terms of the contract governing the business relationship of the parties, occurred during a period when respondent was not a member of the National Association of Securities Dealers (NASD), thus precluding arbitration. To the extent respondent challenged invoices for services, the contract set forth a procedure and time frame for such objections, without which respondent’s assent must be assumed, according to petitioners. But no objections survived the termination of the contract upon respondent’s licensure and membership in the NASD. Respondent’s right to fees, by the terms of the contract, did not accrue until such time as it was licensed as a broker-dealer and became an NASD member. Insofar as issues were intertwined regarding respondent’s right to collect fees, as offset against reimbursement due petitioners for services, and the adequacy of the invoices for such services, it cannot be said that the dispute preceded the termination of the agreement. The record evinces that at least some of the invoices and the objection period in connection therewith postdated respondent’s licensure and the termination of the contract, further undermining petitioners’ position that the dispute, in toto, is referable only to the contract period. Petitioners’ argument fails to account for their purported failure to comply with respondent’s contractual right to documentation in support of the invoices, which at least in part extended into the time frame when respondent was an NASD member, thus invoking the NASD rules requiring arbitration of disputes between parties. Petitioners’ reliance on Harriman Group v Napolitano (213 AD2d 159 [1995]), which involved a dispute under a contract existing at a time before any of the parties became NASD members, is misplaced.
Whether the arbitrators will exceed their authority with