Stay of Arbitration Based on Fraud Must be Brought within 20 Days

Recently, in State Farm v. DeSarbo, 2008 NY Slip Op 4993, 2008 N.Y. App. Div. LEXIS 4813 (2008), New York's Third Department concluded that where a valid agreement to arbitrate exists, the issue of the policyholder's compliance with the terms of the agreement had to be raised by seeking a stay within 20 days of service of the intent to arbitrate, even where basis to avoid coverage was fraud. Action alleging the policyholder's failure to cooperate and fraud could not circumvent 20 day rule. This ruling is significant by reinforcing the strict standard for staying arbitrations in New York.