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Bastone v. Dial-a-House: Court Upholds Association's Requirement That Members to Submit to Arbitration

In Bastone v. Dial-A-House, Inc., the New York Supreme Court addressed whether Board members were obligated to submit inter-member disputes to arbitration. The court held that disputes between Board members required arbitration, and denied a request to stay arbitration proceedings.

Michael Bastone, Dial-A-House, Inc., and Herb Golden, were members of the Long Island Board of REALTORS® (LIBOR). Each participated in the same Multiple Listing Service (MLS). A dispute arose over a commission claim for brokerage services resulting from the MLS. LIBOR advised Bastone that the Board's constitution and bylaws required such controversies to be submitted to arbitration and that, by virtue of his membership, he was bound by that requirement. Bastone disagreed and sought a court order staying arbitration. He contended that: (1) a valid arbitration agreement had not been entered, and that the issue involved was not arbitrable; (2) the MLS was unconstitutional, an illegal restraint of trade, and a deprivation of due process; and (3) the notice of intention to arbitrate failed to comply with state law and LIBOR rules.

The New York Supreme Court addressed and cited case law regarding the following issue: "whether the parties entered into a valid contract for arbitration"? The court rejected Bastone's first point, noting that under LIBOR's constitution and bylaws, any controversy between member brokers relating to the business of real estate must be submitted to arbitration. The court also noted that when brokers applied for LIBOR membership, they agreed in writing to submit disputes to arbitration. Further, the court noted that commission disputes between brokers fell squarely within the ambit of disputes contemplated under the agreement to arbitrate.

The New York Supreme Court found no merit to Bastone's contention that the MLS was unconstitutional. The court also noted that, rather than denying due process, arbitration has long been favored as a means of conserving time and resources of the courts and the contracting parties. Additionally, the court found that although the notice of intention to arbitrate failed to include procedural warning language, this failure was not sufficient basis to grant the stay of arbitration. As a result of its findings, the court denied the application for a stay of arbitration, and the parties were directed to proceed to arbitration.

Bastone v. Dial-A-House, Inc., 420 N.Y.S.2d 467 (N.Y. Sup. Ct. 1979).