Alleged Mistake Insufficient to Avoid Arbitration

The parties agreed to arbitrate plaintiff’s action for personal injuries arising from a car accident. Prior to agreeing to arbitrate, defendant’s insurance carrier informed plaintiff’s counsel that the policy bodily injury limits were 100,000/300,000. The arbitration agreement included a high-low provision that would restrict any award to an amount of nothing to $50,000. Thereafter (presumably after realizing that term), plaintiff’s counsel refused to arbitrate claiming that he had been mistaken about the policy’s limitations. Supreme Court refused to compel arbitration.

In reversing, the Second Department reiterated the well-settled rule that arbitration agreements are governed by ordinary contract rules. For plaintiff to vitiate the arbitration agreement based on unilateral mistake would require a showing of fraud or wrongful conduct by the other party. To rescind the agreement would require to demonstrate that ordinary care was used.

Finding neither element in this case, the Second Department mandated arbitration.

Maynard v. Smith

Contact Information