Garrity v. Lyle Stuart, Inc.

Garrity (plaintiff) is the author of two books that Lyle Stuart, Inc. (Lyle) (defendant) published. The publishing contracts contained arbitration clauses, but neither provided for an award of punitive damages. The parties got into a disagreement and Garrity sued for damages. Garrity then brought a second lawsuit, alleging “malicious” withholding of $45,000 in royalties for the purpose of coercing her into dropping the first lawsuit. The second lawsuit was sent to arbitration, as required by the contract. The parties participated in the selection of arbitrators and attended arbitration. Garrity petitioned the arbitrators for both compensatory and punitive damages. Lyle objected to Garrity’s standing and the way the arbitration was conducted, but did not specifically object to the request for punitive damages. The arbitrators rejected Lyle’s objections and Lyle walked out of the arbitration. The arbitrators awarded Garrity $45,000 in compensatory damages and $7,500 in punitive damages. Garrity filed a motion with the trial court to confirm the award, to which Lyle objected, for the first time, that the arbitrators’ punitive damages award was beyond the scope of authority of the arbitrators. Garrity argued that this objection had been waived because it was not raised at the arbitration. The trial court confirmed the award. The court of appeals affirmed. Lyle appealed to the Court of Appeals of New York.