Hannant v. Abt

Hannant v Abt 2025 NY Slip Op 31741(U) May 13, 2025 Supreme Court, New York County Docket Number: Index No. 157521/2022 Judge: Lisa S. Headley Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service.

This opinion is uncorrected and not selected for official publication.

INDEX NO. 157521/2022 NYSCEF DOC. NO. 132 RECEIVED NYSCEF: 05/13/2025

SUPREME COURT OF THE STATE OF NEW YORK NEW YORK COUNTY PRESENT: HON. LISA S. HEADLEY PART 28 Justice - - -- - -- · -- -- - -- -- - - -- X INDEX NO. 157521/2022 GARY HANNANT, GARY HANNANT, CINDY HANNANT.

MOTION DATE 11/ 13/2024 Plaintiff, MOTION SEQ. NO. 003 - V - ERIC ABT , ROBERT WEINSTEIN, 855-857 NINTH AVENUE COR P., NEW NINTH AVENUE CORP., BOARD OF DIRECTORS OF NEW NINTH AVENUE CORP. , DECISI ON + ORDER ON AIRBNB, INC.,AIRBNB TRAVEL, LLC,AIRBNB STAYS, INC.,NEW BEDFORD MANAGEMENT CORP., SIREN MOTION MANAGEM ENT CORP., JOHN DOES Defendant

The following e-filed documents, listed by NYSCEF document number (Motion 003) 79, 80, 81 , 82, 83, . 85, 86, 87, 88, 89, 90, 91, 92, 93. 94, 95, 96, 97, 98, 99, 100,101, 108, 109, 110,1 11, 112, 113, 114, 115, 11 7, 119,120, 121, 122, 123, 124, 125, 126, 127, 129, 130 were read on this motion to/for VACATE/LIFT • STAY In the motion before this Court, the plaintiffs, Gary Hannant, as the Administrator of the Estate of Michael Hannan!, Gary Ilannant and Cindy Hannan!, ind ividually ("plaintiffs"), seek an Order I) to lift the stay of this action, and allow the plaintiffs to pursue their claims in court againS1 defendants, AIRB~B, INC., AIRB :B TRAVEL, LLC, and AlRBND STAYS, INC, ("Airbnb defendants" or ''Airbnb''); 2) to schedule a preliminary conference; and 3) to award attorneys' fees and costs to plaintiffs in the amount of$99,405.00. (See, NYSCEF Doc. Nos. 79 - JOI).

The Airhnb defendants filed a cross-motion seeking, an Order, inter alia, to enforce this Court's prior Order dated June 22, 2023, which compelled pla intiffs to pursue their claims in arbitration pursuant to the parties' arbitration agreement; and to direct the American Arbitrati on Association ("AAA") to rescind the administrath-eclosurc of this matler. (See. NYSCEF Doc. Nos. / 08 114). Plaintiffs also filed opposi1ion to the cross-motion (see. N YSCEF Doc. No. 119 - 122), and defendants filed a reply (see. N YSCEF Doc. !\lo. I 29). ln support of the motion to lift the stay, the Plainti ffs argue, inter alia, that the Airbnb Terms of Service agreement contains a California choice or law clause, and the Airbnb defendants violated California Code <!/'Civil l'rocedure § 1281.98 when Airbnb did not pay its arbitration fees 15752112022 HANNA NT, GARY ET AL va. ABT, ERIC ET AL Pago 1 of 5 Motion No, 003

[* 1] 1 of 5 INDEX NO. 157521/2022 NYSCEF DOC. NO. 132 RECEIVED NYSCEF: 05/13/2025 on time. Plaimi ih assert that the California couns have upheld that the untimely payment of arbi tration fees '·empowers a consumer .. . to withdraw from arbitration." (See, 11/YSC:EF Doc. No. ar page 2). Plainti lh also argue that the arbitrator closed the case and considered defendan t Airbnb's objection to the plaintiffs withdrawal from arbitration. Furthennore, Plaintiffs claim it would be contrary to the principles of collateral ~"1oppcl and judicial estoppel to relitigatc the issue tif the arbitrator by reopening thi s case. Id. In support of the cross-motion compelling arbitration, the defendants argue, inter alia, that the plaintiffs informed the American Arbitration Association thai they were unilaterally wilh<lrawing from the arbitration ba~ed on California Code ofCivil Procedure §1281.98, and then the arbilrntor administratively closed the arbitration as a result of the Plainti ll"s withdrawal from the arbitration. Defendants also argue that "California ·s arbitration rules should not apply to the panics· claims based in a New York-seated arbitration, and tbat even though §/2/1/.9/1 does not apply, the provision conflicts with the t\t\A consumer arbitration rules and is pre-empted by tbe Federal Arbitration Act ("fAA ..)." In opposition to the cross-mmion compelling arbitration, the plaintiffs emphasize that "the principle of judicial estoppel prevents /\irbnb from changing its position simply LO fullill its own interests.'' Plaintiffa conlend "Airbnb unequivoca lly slalt::d thal the 'court possesses no power to decide the arbitrability issue.· (NYSCEF Doc. No. 45, p. 1-1). Now, it has totally flip-flopped LO say that the Court should 'direct the AAA to rescind its administrative closure so arbitration may proceed'."' Thus, plaintiffs argue that the stay in this action should be lifted, and the arbitrator 's decision to close the case remains 11nal. This Court agrees.

Plainiifls also argue that pursuant to California Code o_( Civil Procedure §J 281.98, the consumer is allowed to unilalerally withdraw from arbitration without the blessing of the arbitrator.

Ct,/ Civ Proc Code§ l 281. CJ8. Speci lically, the provision states that " if the fees or costs required to cominue lhe arbitration proceeding are not paid within 30 days after the due date, the drafting party is in material breach of the arbitration agreement[.]'" id. Furthermore, Cal Civ Proc Code § J281.98(b) states that if the company ··materially breaches the arbitration agreement," then the "consumer may unilaterally elect 10 ••• (I) [wlithdraw the claim from arbitration and proceed in a court of appropriate jurisdiction."' id. Here. the plaintiffs contend the statutory language does not require the consumer to first obtain the arbitration provider's approval before exiting arbitration.

In addition, plaintiffs argue that since American Arbitration Association and the arbitrator are not 157521/2022 HANNA NT, GARY ET AL vs. ABT, ERIC ET AL Page 2 of 5 Motion No. 003

[* 2] 2 of 5 INDEX NO. 157521/2022 NYSCEF DOC. NO. 132 RECEIVED NYSCEF: 05/13/2025 parties to this case, this Court dt>es not have the authority to compt:I them to reopen the arbitration.

Th is Court also agrees.

Plaintiffs argue that the ehoice-ol~law clause incorporates state procedural rules for arbitration. Plaintiffs further argue FJ\A does not preempt the payment requirements set forth in sections 1281.97 to 1281.99 ... because ''[t]here is no federal policy favoring arbitration under a certain set o r procedural rules, so the FAA leaves room for states to coaet some rules affecting arbitration." See, NYSCEF Doc. No. 119, ci1i11g lo Gallo v. Wood Ranch USA, Inc , 81 Cal App 5th 621,639,297 Cal Rptr 3d 373, 385 (Cal Ct App 2022).

Lastly, as to the award o r altorneys' fees, the plainli !Ts argue they are entitled to compensation for all the ir work done that was connected to the moti()n to compel arbitration and everything thereafter inc luding this motion to lift the stay. Plaintiffs submit that according to sections 1281.98 and I 281. 99. these provisions provide for a mandatory award of attorneys' fees.

Discussion The issues presented before the Court are whether to compel arbitration after AA/I. closed the case for untimely payment t>ftheir fees, and whether the choice oflaw provision in the Airbnb 's Tenns of Service apply in this case. While it is true that the CnurL "has consistently recognized New York's long and strong puhlic p() licy favoring arbitration, i11 appreciation of that pol icy, New York courts interfere as little as possi hle with the freedom of consenting parties' to submit disputes to arbitration. [WJe have steadfastly discouraged courts from becoming unnecessarily entangled in arbitrations or from serving ' as a vehicle to protract litigation· ... IV111•. Uher Tech. , l11c., 2024 1'Y Slip Op 05869. 4 (Ct App. Nov.25. 2024). (/11/emal cilations omiued]. Upon review of the arbitration agreement, the choice of law provisions, and the defendants' irrefutable breach of the agreement, the motions shall be determined in accordance with th is decision.

Herc, the law that governs is California law based on Section 14 of the Airbnb 's Terms ()f Service. (See, Nl~W:EF Doc . .l\1o. 82). According to the AAA arbitration agreement and letter submitted to the defendants, payment must be made pursuant to the deadline provided of April 8, 2024. (See. NYSCEF Doc. No. 8./). Dascd on the correspondence letters submitted by AAA, the attorneys for plaintiffs and the attorneys for defendants (see. N'YSCF.F Doc. Nos. 90, 92. 93. a11d 95), the defcndanb did not remit payment in accordance with the deadline, there was no consent to extend the payment deadl ine, and the plaintiffs elected to withdraw lrom arbitration.

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Plaintiffs submit supptirting documents indicating that the Airbnb defendants received multi ple notices and demands for payment within the indicated 30 • day period. On March 7, 2024, AAA sent a letter and invoice demanding payment within 30 days, with an April 8, 2024 due date. (NYSCEF Doc. No. 87). Thereafter. !\!\A sent reminder notices 10 /\irbnb on April 1, 2024, April 7. 2024 and April 8, 2024. (NYSCcF Doc. Nos. 88, 89. and 90). /\irbnb sent payment on the outstanding balance on April 17, 2024, but was nine day~ lute, and AAA confirmed that they would close the case. (See, NYSCEF Doc. Nos. 80 and 93). On May 3, 2024, AAA issued a leuer lo the Airbnb defendants stating that it was refunding the late monies paid by AA/\. (See, NYSCF.F Doc.

No. 98).

The defendants materially breached the arbitration agreernt:nt by fail ing to remit payment on time, and according to Cal Civ Proc Code§ 1281.91/(h). the plaintiffs may ··unilaterally elect to withdraw the claims from arbi1rcuion and proceed in a court or appropriate jurisdiction" - which is the plaintiffs' application before this Coun. See. Cal Civ Proc Code§ I 281.98(b){J) . The Court linds that since i\irbnb defendants have not complied with the arbitration payment requirement, the arbitrator closed the case pursuant Lo the letter of the law. Id. Since the arbitrator followed the law in closing lhe case, this Court would be remiss in overturning the AAA 's decision.

Noncthcle~s. the parties will have the opportunily to present this case before the court. Thus, the plaintiffs' application to Iii\ the stay in this action is granted, and the defendants' cross-motion to compel arbitration is denied. According ly, the stay on this action is lifted, and the parties are directed lo schedule a preliminary conference with the assigned justice presiding over 1his case in Part 59.

Lastly, !he ponion of the plaintiffs' motions seeking attomeys' fees is denied with leave to renew at the time o r trial or resolution of' this action.

Accordingly, it is hereby ORDERED the plaintiffs motion to lift the stay or this action. and 10 allow Lhe plaintiffs to pursue their claims against the Airbnb defendants is GRANTF.O; and it is further ORDERED that this action is hereby restored to the Court·s calendar in Part 59, and 1he panics are directed to schedule a preliminary conference with Part 59; and it is further ORDERED that the ponion of'the plaintiffs' motion seeking ailomeys' fees is DENTED with leave to renew at the time <>f' trial or resolution of' this case; and it is ru1iher

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ORDERED that the defendants · cross-motion for an Order to enforce this Court's prior Order dated June 22, 2023, which compelled plaintitls to pursue their claims in arbitration is DENIED; and ic is further ORDERED that any requested relief sought not expressly addressed herein has nonetheless been considered; and it is further OROF.RF. D thut within 30 days of entry, plaintiff.~ ~hall serve a copy of this Decision/Order upon the defendants with notice of entry.

This constitutes the Decision and Order of the Court.

5113/2025 DATE

~ CHECK ONE: CASE DISPOSED NON-FINAL DISPOSITION GRANTED □ DENIED GRANTED I.N PAR'T 0 OTHER APPLICATION: SETTLE ORDER SUBMIT ORDER CHECK IF APPROPRIATE: INCLUDES TRANSFER/REASSIGN FIDUCIARY APPOINTMENT □ REFERENCE

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