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Court Discusses Arbitration in Will Dispute


The Facts of the Case:

A and B are husband and wife. They are shareholders in a radiology practice together with doctor-one and doctor-two. In 2004, they entered into an agreement where disputes arising therefrom are subject to arbitration. On 16 March 2007, B died leaving a will dated 12 March 2007. A New York Probate Lawyer said on 24 May 2007, B’s will was admitted to probate, a will contest proceeding, and letters testamentary issued to C. On 22 January 2008, B’s husband, A, died leaving a will dated 12 March 2007. On 28 February 2008, A’s will was admitted to probate and letters testamentary also issued to C as executor of A’s estate. A and B were survived by three children, X, Y and Z. A and B were shareholders in a radiology practice together with doctor-one and doctor-two. Thus, petitioner C, in his capacity as executor of each estate, commenced a separate discovery proceeding against the radiology practice and doctor-one seeking the recovery of retirement benefits which allegedly are being improperly denied to A and B’s estate by the said radiology practice at doctor-one’s direction; petitioner also asks the court to stay the arbitration proceedings instituted by doctor-one against X and another entity. Doctor-one now moves for an order dismissing the petitions in their entirety, or, in the alternative, either staying the discovery proceedings until after final resolution of the ongoing arbitration proceedings, or transferring the petitions to the Supreme Court in New York County.

The Ruling of the Court:

A New York Last Will and Testament Lawyer said as repeatedly held, arbitration is strongly favored. Courts should interfere as little as possible with the freedom of consenting parties to arbitrate. When faced with a broad arbitration clause, the only inquiry for the court to make is whether there is a reasonable relationship between the subject matter of the dispute and the underlying contract. Historically, public policy precluded the arbitration of a dispute concerning the probate or construction of a will, but this prohibition does not extend to all disputes that impact upon the distribution of a decedent’s estate. Where the decedent is a party to the agreement, issues concerning termination of the agreement or its enforcement are subject to arbitration. The court must only consider: whether the parties agreed to arbitrate the subject matter in dispute and whether this particular dispute is encompassed within an arbitration clause.

Here,a New York Probate Litigation Lawyer said the parties are signatories to a 2004 Agreement where they agreed to arbitrate disputes arising under that agreement. Thus, their estates are bound by the agreement to arbitrate. The only issue is whether this dispute over retirement benefits and insurance proceeds constitutes a dispute arising under the 2004 agreement and, therefore, is subject to arbitration. On this note, the court find that the issues presented in the discovery proceedings are indeed subject to arbitration since entitlement to the retirement benefits and insurance proceeds are issues which are necessarily and logically dependent on a determination of who owns the radiology practice. Notably, a justice of the court has already decided that the issue of who owns the said practice, which involves a determination as to the validity of the purported transfers to X and doctor-one’s right to a buyback, is a dispute arising under the 2004 Agreement subject to arbitration. Thus, the issues of whether A and B’s estates are entitled to the retirement benefits and the insurance proceeds is similarly a dispute arising under the 2004 Agreement which is subject to arbitration. Consequently, it is no longer necessary for the court to address doctor-one’s other grounds for dismissal based upon collateral estoppel, untimeliness or waiver.

The argument that submitting the issues in the discovery proceeding to arbitration will deprive A and B’s other children of an opportunity to be heard is bereft of merit. If doctor-one’s claim to the insurance proceeds was asserted in Surrogate’s Court, the petitioner as the fiduciary of the estate would be the interested party charged with defending the estate against the claim. The children’s only remedy would be a surcharge against the fiduciary in the accounting proceeding if he failed to properly defend the claim. It must be noted that A and B agreed during their lifetimes to arbitrate disputes arising under the 2004 Agreement. Thus, their estates and, as a result, their beneficiaries, are bound by the said agreement.

In sum, the motion to dismiss the petitions is granted.

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