Home -> Law Blog Directory -> Labor & Employment Law Blogs -> New York Public Personnel Law

Labor & Employment Law

: New York Public Personnel Law

Arbitrating a dispute involving a settlement agreement that does not contain an arbitration provision

Arbitrating a dispute involving a settlement agreement that does not contain an arbitration provision
Matter of Hendrick Hudson Cent. School Dist. v Falinski, 2010 NY Slip Op 01965, decided on March 9, 2010, Appellate Division, Second Department

In response to the Hendrick Hudson Central School District petition to ?permanently stay arbitration,? Joanne Falinski filed a cross-petition seeking a court order to compel the arbitration of the issue.

Supreme Court denied the school district?s petition and the Appellate Division affirmed the lower court?s determination.

Although the Appellate Division noted that ?the instant dispute? that Falinski sought to arbitrate arose from a ?separately executed indemnification agreement that contained no arbitration clause,? it said that there was another settlement agreement between the parties that did contain and arbitration clause. Accordingly, the Appellate Division ruled that Supreme Court was correct when it ?read the two agreements together.?

In addition, the Appellate Division found that the school district was estopped from avoiding the enforcement of the indemnification agreement because:

1. It was aware of the existence of that agreement as part of the settlement agreement;

2. The parties conducted themselves in reliance on the indemnification agreement; and

3. Falinski would be prejudiced if the school district avoided enforcement of the indemnification agreement since she accepted the terms of the settlement agreement and performed thereunder.

Another element the court said supported the Supreme Court?s ruling: Falinski was entitled to rely upon the letter of the school district?s former Superintendent of Schools advising her that the school district ?ratified and confirmed all actions taken and signatures executed with regard to the settlement agreement, [which] included execution of the indemnification agreement" (emphasis in the decision).?

The Appellate Division rejected Hendrick Hudson?s theory that the indemnification agreement was unenforceable in view of the provisions of Retirement and Social Security Law §113(a), ?Suspension of state and local provisions requiring termination of service or retirement on account of age,? and §470, ?Temporary suspension of retirement negotiations.?

The court said that the agreement was, in fact, enforceable as §§113(a)* and 470** are contained in the law establishing the New York State Employees' Retirement System and ?exists separately from the New York State Teachers' Retirement System.?

* RSSL §113(a) addresses membership in "any public pension or retirement system (emphasis supplied). The several ?optional retirement plans? available to certain employees of the State University, the State Department of Education, the statutory contract colleges at Cornell and Alfred Universities and the community colleges are not a ?public pension or retirement system? of this State.

** RSSL §470 addresses negotiating retirement benefit ?provided by or to be provided by a public retirement system (emphasis supplied),? or payments to a fund or insurer [i.e., the several ?optional retirement plans,? which are not public retirement systems of this State, available to certain employees of the State University, the State Department of Education, the statutory contract colleges at Cornell and Alfred Universities and the community colleges], to provide an income for retirees or payment to retirees or their beneficiaries.

Full post as published by New York Public Personnel Law on March 15, 2010 (boomark / email).