Environmental Chemical Corporation v. Coastal Environmental Group, Inc.

Coastal Environmental Group, Inc. (Coastal) (plaintiff) was subcontracted by Environmental Chemical Corporation (ECC) (defendant) to collect and remove debris in Long Island, New York, following Hurricane Sandy. Both ECC and Coastal incurred unexpected costs in doing the cleanup work. As a result, ECC refused to pay Coastal, saying its extra costs were more than it owed Coastal. Coastal commenced arbitration against ECC, claiming lack of payment as agreed. Prior to commencing arbitration, Coastal informed ECC’s counsel that its co-counsel was also Signature Bank’s counsel. ECC counsel repeatedly referred in writing to Signature Bank’s financial interest and involvement in the arbitration. Coastal disclosed this relationship more explicitly to ECC after issuance of a partial final award. In that post-hearing disclosure, Coastal revealed that all proceeds from Coastal’s contract with ECC were assigned to Signature Bank. Following this disclosure, ECC filed a petition to vacate the arbitration alleging that (1) the award was procured by fraud and undue means, (2) the concealment of Signature Bank’s role in the arbitration by Coastal was prejudicial, (3) the concealment prevented the arbitrator from considering various issues, and (4) the arbitrator exceeded his authority by invoking estoppel, which neither party briefed. Coastal cross-moved to affirm the award.