Zafar v. Fast Track Leasing, LLC
Docket: 2017-00246
Court: Appellate Division of the Supreme Court of the State of New York; June 27, 2018; New York; State Appellate Court
Original Court Document: View Document
Kamal Zafar and others (plaintiffs) appealed an order from the Supreme Court of Queens County, which granted Fast Track Leasing, LLC and its principals' (defendants) motion to compel arbitration and stay court proceedings related to a 2014 service agreement. The agreement mandated arbitration for any disputes and included a provision acknowledging it was executed voluntarily. Fast Track terminated the agreement due to Jamal Zafar’s criminal conviction for fraud, citing a moral turpitude clause that allowed termination for actions that could damage the company’s reputation. The plaintiffs alleged fraud, unjust enrichment, and breach of fiduciary duty in their lawsuit. The Appellate Division affirmed the lower court’s order, upholding the arbitration requirement. A party cannot be forced to arbitrate a dispute unless there is clear evidence that both parties expressly agreed to arbitrate. Under federal and New York law, a broadly worded arbitration provision is considered separate from other contractual terms unless there is evidence of a pervasive fraudulent scheme affecting the entire agreement, including the arbitration clause. In this case, the arbitration clause in the 2014 agreement, along with its other provisions, indicates that the plaintiffs clearly agreed to arbitrate the issues at hand. The plaintiffs’ vague claims of fraud did not demonstrate that any alleged fraud constituted a grand scheme impacting the entire agreement. Therefore, the court upheld the decision to grant the defendants' motion to compel arbitration and stay all proceedings pending arbitration, in accordance with CPLR 7503 and 9 USC 1, 3.