Defective Arbitration Demands and Threshold Arbitrability Questions Under Article 75

By: Jeffrey M. Haber 

One of the first questions confronting a party served with a notice of intention to arbitrate is when it must seek judicial intervention if it intends to challenge arbitration. CPLR 7503(c) provides the answer. Under the statute, a party served with a notice of intention to arbitrate generally must seek a stay of arbitration within twenty days after service of the notice or risk being precluded from later objecting to the arbitration. Not surprisingly, disputes frequently arise over whether the twenty-day period was properly triggered and whether any exception permits judicial review after the deadline has expired.

New York courts have recognized important exceptions to CPLR 7503(c)’s preclusive effect. For example, a party may challenge arbitration after the twenty-day period where it disputes the existence of an agreement to arbitrate. Similarly, a notice of intention to arbitrate containing material defects or inaccuracies may be insufficient to trigger the running of the statutory period. These principles reflect the judiciary’s continuing gatekeeping role under CPLR Article 75 in resolving fundamental issues of arbitrability before a matter proceeds to arbitration.

In Matter of Ean Holdings, LLC v. Samuels, 2026 N.Y. Slip Op. 51647(U) (Sup. Ct., Queens County Sept. 22, 2026), the motion court addressed both exceptions. Although the petitioner commenced its Article 75 proceeding more than twenty days after service of the arbitration demand, the motion court held that the petition to stay was not barred because the petitioner challenged the existence of an agreement to arbitrate and because the notice of intention to arbitrate contained material defects. The motion court further held that a dispute concerning whether an insured vehicle was involved in the underlying accident presented a threshold factual issue requiring a framed-issue hearing before arbitration could proceed.

Matter of Ean Holdings, LLC v. Samuels

Ean Holdings arose from a motor vehicle accident that allegedly occurred in Queens County, New York. Respondents Christina M. Samuels and Justin A. Batson Kirk (“respondents”) claimed that they sustained injuries while riding as passengers in a Nissan rental vehicle bearing an Ohio license plate and owned by petitioner EAN Holdings, LLC (“petitioner”).

In the MV-104 submitted with their uninsured motorist (“UM”) arbitration demand,[1] respondents identified the adverse vehicle as a 2008 Lexus bearing a New York license plate. The Lexus was registered to proposed additional respondent Awadram Rambali and insured by proposed additional respondent LM General Insurance Company (“LM General”) under an automobile insurance policy in effect on the date of the accident.

Respondents contacted LM General to open a claim. In a letter dated November 17, 2025, LM General denied the claim on the ground that its insured bore no legal responsibility for the accident. LM General stated that photographs of its insured’s vehicle showed no damage, an event-data-recorder report demonstrated no impact involving the vehicle on the date of the accident, and Rambali and his wife had each submitted an affidavit denying involvement in the occurrence. LM General’s denial was therefore based on its position that the Lexus was not involved in the accident, rather than on the absence, cancellation, or nonrenewal of insurance coverage.

On March 2, 2026, respondents served by certified mail a Notice of Intention to Arbitrate naming “Enterprise Insurance Company” as the respondent. The notice was addressed to a post office box in Lexington, Kentucky, maintained by Rental Claims Services, EAN’s third-party claims administrator. The notice identified the operative insurance policy only as “policy # ?” and did not state the location of the accident, the amount claimed, the claimants’ addresses, or the identity and address of the self-insured owner of the rental vehicle.

EAN commenced the proceeding on April 7, 2026, seeking a stay of the UM arbitration. Respondents opposed the petition as untimely under CPLR 7503(c), arguing that EAN had commenced the proceeding more than 20 days after service of the Notice of Intention to Arbitrate. The motion court determined that the petition was not barred.

First, the motion court applied the exception recognized in Matarasso v. Continental Casualty Co., 56 N.Y.2d 264, 267 (1982), under which a court may consider an otherwise untimely stay application when the petitioner contends that no agreement to arbitrate exists.[2] EAN relied on the sworn petition of its senior liability administrator, who attested that neither EAN nor its affiliate, ELRAC, LLC, doing business as Enterprise Rent-A-Car, had any affiliation with an entity named “Enterprise Insurance Company.”[3] He further attested that no entity bearing that name had issued coverage to respondents and that “no such entity entered into any agreement to arbitrate with respondents.”[4] Respondents did not refute those assertions.[5] The motion court therefore concluded that EAN’s petition fell within the Matarasso exception.[6] 

Second, the motion court concluded that respondents’ Notice of Intention to Arbitrate contained material defects and thus did not trigger CPLR 7503(c)’s 20-day period.[7] A notice containing “material inaccuracies,” explained the motion court, is “defective and insufficient to trigger the running of the twenty-day period.”[8] 

The motion court observed that the notice “name[d] a different entity than the rental agreement,” identified the relevant coverage only as “policy # ?,” and “omit[ted] the location of the accident, the amount claimed, the claimants’ addresses, and the identity and address of the self-insured owner of the rental vehicle.”[9] Respondents acknowledged the defect and misnomer.[10] The motion court also rejected respondents’ contention that EAN’s actual receipt of the notice cured its deficiencies, explaining that “proper delivery does not remedy the inaccuracies in the notice.”[11] 

After resolving the timeliness issue, the motion court considered whether the record warranted a stay of arbitration. As an initial matter, the motion court addressed the burdens applicable to the motion: “[t]he party seeking a stay of arbitration has the burden of showing the existence of sufficient evidentiary facts to establish a preliminary issue which would justify the stay.”[12] Once the petitioner makes that showing, “the burden is on the party opposing the stay to rebut the prima facie showing.”[13] “Where a triable issue of fact is raised, the Supreme Court, not the arbitrator, must determine it in a framed-issue hearing, and the appropriate procedure under such circumstances is to temporarily stay arbitration pending a determination of the issue.”[14] 

Upon review of the parties’ submissions, the motion court found that petitioner “set forth evidentiary facts sufficient to establish a preliminary issue as to whether there was insurance coverage for the vehicle involved in the accident,” thereby shifting the burden to respondents to rebut petitioner’s prima facie showing.[15] In support of the petition, EAN submitted respondents’ Notice of Intention to Arbitrate and accompanying MV-104 accident report, the title and registration for the rental vehicle, the rental agreement summary, EAN’s New York State Certificate of Self-Insurance, DMV records relating to the adverse Lexus, and its pre-arbitration discovery demands. EAN argued that the accident did not involve an uninsured vehicle because the rental vehicle was owned by EAN, a self-insured entity, and the adverse vehicle identified by respondents was insured by LM General.[16]

Respondents did not challenge the admissibility or form of those records. In fact, noted the motion court, respondents’ own submissions corroborated the existence of coverage.[17] 

Respondents nevertheless argued that UM arbitration was warranted because LM General had denied their claim after the submission of affidavits of non-involvement.[18] In reply, petitioner contended that “involvement and coverage present[ed] distinct questions.”[19] Petitioner maintained that the Lexus indisputably carried insurance coverage on the accident date, while the evidence submitted by LM General created a factual dispute about whether that vehicle had actually been involved.[20]

The motion court agreed that the record presented a factual issue concerning the Lexus’s involvement.[21] It found that LM General’s denial, “premised upon non-involvement rather than upon cancellation or non-renewal,” raised “a triable issue of fact as to whether the identified, insured adverse vehicle was involved in the accident.”[22]

Accordingly, the motion court granted EAN’s petition to the extent of temporarily staying the UM arbitration, joined Rambali and LM General as additional respondents, and directed a framed-issue hearing to determine “whether the adverse vehicle, owned by Rambali and insured by LM General, was involved in the September 26, 2025 accident.”[23] 

Takeaway

EAN Holdings reinforces several important principles concerning arbitrability, the scope of CPLR 7503(c), and the court’s role in resolving threshold disputes before arbitration proceeds.

First, the decision serves as a reminder that CPLR 7503(c)’s twenty-day deadline, while strictly enforced, is not absolute. A party that challenges the existence of an agreement to arbitrate is not necessarily foreclosed from seeking judicial relief merely because more than twenty days have elapsed since service of the notice of intention to arbitrate. In EAN Holdings, the motion court held that EAN could seek a stay notwithstanding the passage of the statutory period because it asserted that neither it nor any affiliated entity had agreed to arbitrate with respondents.

Second, EAN Holdings highlights the importance of a properly drafted notice of intention to arbitrate. The motion court reiterated that a notice containing “material inaccuracies” is “defective and insufficient to trigger the running of the twenty-day period.” As the motion court noted, the demand misidentified the respondent, failed to identify the applicable policy, and omitted several basic pieces of information concerning the claim. Because the notice was materially defective, the motion court concluded that the twenty-day clock never began to run.

Third, EAN Holdings underscores the court’s gatekeeping function when it comes to arbitrability. The motion court emphasized that disputes concerning arbitrability remain questions for judicial determination, not for the arbitrator. Although respondents sought uninsured motorist benefits, the evidence demonstrated that the adverse vehicle identified in their own submissions was insured on the date of the accident. The real dispute concerned whether that vehicle was involved in the accident at all. Because that question affected respondents’ entitlement to uninsured motorist arbitration, it constituted a threshold issue for the court to resolve.

Finally, EAN Holdings illustrates the burden-shifting framework applicable to the challenge to petitions to stay arbitration. Once EAN produced documentary evidence establishing the existence of insurance coverage, the burden shifted to respondents to rebut that prima facie showing. When the competing submissions revealed a factual dispute concerning the involvement of the insured Lexus, the motion court ordered a framed-issue hearing. As the motion court observed, where a triable issue of fact is raised, “the Supreme Court, not the arbitrator, must determine it in a framed-issue hearing.”

__________________________________

Jeffrey M. Haber is a partner and co-founder of Freiberger Haber LLP.

This article is for informational purposes only and is not intended to be, and should not be, taken as legal advice.

Unless otherwise stated, Freiberger Haber LLP’s articles are based on recently decided published opinions or litigation releases and not on matters handled by the firm.

__________________________________

[1] An MV-104 is the New York State Department of Motor Vehicles Report of Motor Vehicle Accident, commonly referred to as the driver’s accident report. Under New York Vehicle and Traffic Law § 605, a driver must generally file an MV-104 with the DMV when an accident causes death, personal injury, or property damage exceeding the statutory threshold.

[2] See also Matter of Progressive Specialty Ins. Co. v. Louis, 122 A.D.3d 637 (2d Dept. 2014); Matter of Allstate Ins. Co. v. Marke, 121 A.D.3d 1107 (2d Dept. 2014).

[3] Slip Op. at *2.

[4] Id. 

[5] Id.

[6] Id., citing Matter of Progressive Specialty Ins. Co. v. Louis, 122 A.D.3d 637 (2d Dept. 2014); Matter of Allstate Ins. Co. v. Marke, 121 A.D.3d 1107 (2d Dept 2014).

[7] Id.

[8] Id., citing Matter of State Farm Ins. Co. v. Williams, 50 A.D.3d 807, 809 (2d Dept. 2008); Matter of Allstate Ins. Co. v. Lichtenstein, 24 A.D.3d 662, 663 (2d Dept. 2005); Matter of Northern Assur. Co. of Am. v. Bollinger, 256 A.D.2d 580, 581 (2d Dept. 1998).

[9] Id.

[10] Id. State Farm, 50 A.D.3d at 809; Allstate, 24 A.D.3d at 663; Northern Assur., 256 A.D.2d at 581.

[11] Id., citing Northern Assur., 256 A.D.2d at 581.

[12] Id., quoting Matter of American Protection Insurance Co. v. DeFalco, 61 A.D.3d 970, 972 (2d Dept. 2009).

[13] Id., quoting Matter of Hertz Corp. v. Holmes, 106 A.D.3d 1001, 1002 (2d Dept. 2013).

[14] Id., quoting Hertz, 106 A.D.3d at 1002, and citing Matter of Allstate Ins. Co. v. Aizin, 102 A.D.3d 679, 681 (2d Dept. 2013); Matter of Utica Mut. Ins. Co. v. Leconte, 3 A.D.3d 534, 535 (2d Dept. 2004).

[15] Id. at *3.

[16] Id.

[17] Id.

[18] Id.

[19] Id.

[20] Id.

[21] Id.

[22] Id. at 3-4.

[23] Id. at *4.