Thaler v. Skydell , 150 A.D.2d 261 ( 1989 )

Order, Supreme Court, New York County (Irma Santaella, J.), entered on or about July 5, 1988, which denied the petition for a stay of arbitration, unanimously reversed, on the law, with costs, and the petition granted.

Petitioner, a former partner with respondent in an accounting firm, was served with a demand for arbitration seeking damages for breach of a restrictive covenant barring petitioner from rendering accounting services to any client of the firm within five years following withdrawal from the partnership. On or about December 1976, petitioner resigned from the partnership and thereafter allegedly performed services in contravention of the restrictive covenant.

An earlier demand for arbitration arising out of the same dispute was filed on February 9, 1988. In an order from which no appeal was taken, the same court that rendered the order now on appeal permanently stayed arbitration, finding the claim to be barred by the six-year Statute of Limitations governing actions for breach of contract. The only difference between the earlier demand for arbitration and the present demand is the additional conclusory allegation that the breach of contract was "fraudulently concealed.”

Even assuming that the prior order is not dispositive, and assuming that in the abstract there could be a cause of action for fraud under these circumstances independent of the claim for breach of contract, there is nevertheless no factual basis to conclude that any fraud is presented here. There was no proof or allegation below that petitioner concealed his activities. To the contrary, respondent alleged that when questioned, petitioner freely admitted performing services for former clients of the partnership. Clearly, the demand is barred by a six-year Statute of Limitations calculated from the time of the breach, and is therefore not arbitrable. (CPLR 7502 [b]; Matter of United Nations Dev. Corp. v Norkin Plumbing Co., 45 NY2d 358, 363.) Concur—Kupferman, J. P., Carro, Asch, Smith and Rubin, JJ.