A Kings County Judge has vacated a stay of a case pending arbitration because defendant failed to comply with discovery requests. In 528-538 W. !59th St. LLC v. Soloff Management Corp., Supreme Court, Kings County. 37782/05, a discovery schedule was ordered by the judge to in the Supreme Court. The parties then agreed to binding arbitration, and the Supreme Court case was stayed. The arbitration agreement specifically noted that the parties would continue with discovery. After members of the first arbitration panel resigned, a new arbitration agreement was entered into, without a specific mention of the outstanding discovery. Defendants refused to comply with the discovery demands, arguing that the second arbitration agreement did not provide for discovery. The arbitration panel advised that they could not reach a decision without the discovery.
Based these facts, the court held that the defendants breached the covenant of good faith and fair dealing, and frustrated the arbitration process. Based upon the doctrine of frustration, the court lifted the stay of the Supreme Court case, and ordered all parties to complete discovery.
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