The Supreme Court, Suffolk County recently issued a decision on the applicability of NY General Business Law § 399-c to an arbitration clause in AIA contract. In a Tozzi v. McLoughlin Construction Corporation, Ind. No. 615869/2021, the plaintiff sued his contractor alleging breach of contract, fraud and willful exaggeration of a mechanic’s lien. Plaintiff hired defendant to demolish and reconstruct a beachfront summer home.
Defendants moved to compel arbitration based on the contract. Plaintiff and defendants used contract AIA document a 101–2017, the standard form of agreement between owner and contractor. Article 6 of the agreement contained the “arbitration clause.” Plaintiff opposed the motion stating that the arbitration clause violated New York General Business Law (GBL) § 399–c and that the defendants failed to proceed to mediation as a condition precedent to the arbitration. It has been held that an arbitration clause in a single-family residential construction contract is void as in violation of consumer protection of GBL § 399-c.
In granting the defendants’ motion to compel arbitration, the court noted New York’s long and strong public policy favoring arbitration. It found that GBL 399–c did not apply to this issue since the statute defines a consumer as a natural person residing in New York and the plaintiff is a resident of Wyoming. The court found the arbitration clause to be unambiguous. Finally, the court declined to rule upon whether defendants had to mediate as a condition precedent since that issue was for the arbitrator to decide under the subject arbitration clause.
 See Byrnes v. Castaldi, 72 AD3d 718 (2d Dept. 2010).