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Resolving disputes pursuant to the arbitration clause set out in the the City Manger's employment contract held not against public policy

Resolving disputes pursuant to the arbitration clause set out in the City Manger's employment contract held not against public policy
Matter of City of Newburgh v McGrane, 2009 NY Slip Op 51463(U), Supreme Court, Orange County, Judge Robert J. Onofry, [Not selected for publication in the Official Reports]

In 2006 the City of Newburgh?s then City Council adopted a resolution authorizing the Mayor to enter into an Employment Agreement Jean-Ann McGrane as its City Manager.

The agreement was for an initial three year term effective June 1, 2006 and provided for ?an automatic three (3) year renewal unless notice of termination was given by either party at least six (6) months prior to the termination date.?

On January 12, 2009, the current City Council adopted a resolution terminating McGrane's employment as City Manager, ?effective immediately.? McGrane, in response, filed a demand for arbitration on February 13, 2009 seeking an award for all of her remaining unpaid salary and benefits to which she claimed she was entitled pursuant to the parties Employment Agreement.

The City then filed a petition pursuant to CPLR Section 7503, seeking the issuance of an Order permanently staying the arbitration proceeding commenced by McGrane, and vacating her Demand for Arbitration upon the ground that the Employment Agreement was void and unenforceable as a matter of New York State Constitutional Law.

The City contended:

"(a) The agreement is void as against public policy since it contracts for governmental services to be provided to the City beyond the duration of the City Council which authorized the Agreement, and the attempt by the previous City Council to bind a successor Council is illegal and ultra vires;

"(b) As the Agreement provides for a term of employment greater than that which is provided for in the City Charter, it is illegal and violative of that Charter, as well as the New York State Constitution;

"(c) By adopting a resolution, rather than a local law, providing for a specific term of office for the City Manager, the previous City Council violated the rule of legislative equivalency; and

"(d) By failing to hold a public referendum before curtailing the ability of a future City Council to terminate the City Manager at will, the previous City Council violated Section 23(2)(f) of the Municipal Home Rule Law."

Rejecting the City's contentions, Judge Onofry ruled that the Employment Agreement entered into by the City and McGrane indicated, in clear and unambiguous terms, an intent by the parties to arbitrate all disputes arising out of the Agreement.

Judge Onofry then held that the arbitration provision was enforceable according to its terms, and that the Employment Agreement entered between the City and former City Manager McGrane was not void as against public policy and did not represent an impermissible curtailment of the current City Council's ability to terminate the City Manager on an "at will" basis. Accordingly, there was not bar to submitting the dispute to arbitration.

The court then denied City?s petition seeking to permanently stay the arbitration proceeding and directed the parties to proceed to arbitration.

The decision is posted on the Internet at:
http://www.courts.state.ny.us/reporter/3dseries/2009/2009_51463.htm

Full post as published by New York Public Personnel Law on August 24, 2009 (boomark / email).