SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO . A

- 0935

- 19T2 1567 SOUTH REALTY, LLC and BUTLER NISSAN, Plaintiff s - Appellants,

v. STRATEGIC CONTRACT BRANDS, INC., d/b/a AUTOSTONE FLOOR SYSTEMS , Defendant

- Respondent.

______________________________

Submitted May 19, 2020

– Decided July 9, 2020 Before Judges Hoffman and Firko. On appeal from the Superior Court of New Jersey , Chancery Divi sion, Morris County, Docket No. C

- 0000 61

- 19. Bruce E. Baldinger, attorney for appellants. Brach Eichler LLC, attorneys for respondent (Anthony M. Rainone, of counsel and on the brief; Mark E dward Critchley, on the brief).
PER CURIAM NOT FOR PUBLIC ATION WITHOU T THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet , this opinion is binding only on the parties in the case and its use in other cases is l imited. R. 1 :36

- 3.2 A

- 0935

- 19T2

Plain tiffs 1567 So uth Realty, LLC and Butler Nissan appeal from an October 18, 2019 Chancery Division order dismis sing their complaint and compelling arbitration. We affirm. On March 1 4, 2018, Butler Nissan and defendant Strategic Contract Brands, Inc., D/B/A AutoStone Flo or Systems (AutoStone) entered into a
commercial construction contract for AutoStone to install new flooring at Butler Nissan's motor vehicle dealership. The original contract price of $75,000 was later amended to $78,045. Kev i n DiPiano, the president of Butler Nissan, signed the contract on behalf of Butler Nissan

. 1 The arbitr ation provision at issue
states : Arbitration. If a controversy or dispute arises out of or

related to AutoStone's performance under this Contract, and if said dispute cannot be se ttled between the parties to this Contract themselves, the parties hereto hereby a gree to settle the dispute as provided under the Federal Arbitration Act, by binding arbitration according to the Commercial Arbitration Rules of the American Ar bitration Ass ociation [AAA] , and the judgment upon the award rendered by the arbitration(s) may be entered in any court having jurisdiction thereof. The parties hereto further agree that a controversy be submitted to one or three arbitrator(s), at either party's optio n, selected from the panels of arbitrators of the [AAA]. All requests for arbitra tion shall be submitted to the Dallas office of the [AAA] and all arbitration

1 DiPiano also serves as the president of 15 67 South Realt y , owner of t he property where Butler Nissan operates.3 A

- 0935

- 19T2 administration costs shall be borne equally by all of the parties to the dispute. The contract also included the following venue provision: "The law of the State of Texas s hall g overn this [c] ontract, with venue to be in any court of competent jurisdiction in Dallas County, Texas." AutoStone allege d that after it completed the floor i nstallation o n April 10, 2019, Butler Nissan owed a remaining balance of $40,545 on the contract

. Butler Nissan's representative sent emails to AutoStone complaining of problems with the overall quality of Auto St one's workmanship, including use of inadequ ate materials , and unevenness and "pooling" in the flooring. After Butler Nissan refuse d to pay its remaining balance, AutoStone filed a construction lien against Butler Nissan's property on May 31, 2019, pursuant to
N.J.S.A. 2A:44A

- 1 to

- 38.
I n Jun e 2019 , plaintiffs filed a Chancery Division complaint in Morris County, seeking removal of th e construction lien and alleging AutoStone violated the New Jersey Consumer Fraud Act (CFA) , N.J.S.A. 56:8

- 1 to

- 20. On August 16, 2019, AutoStone filed a motion to di smiss plainti ffs' complaint , pu rsuant to the arbitration provision in its construction contract, and sought to bind 1567 South Realty to the arbitration provision in the contract as an alter
ego of Butler Nissan

.4 A

- 0935

- 19T2

On October 18, 2019, the motion judge issu ed an order g ranting AutoStone's motion to dismiss and compel ling arbitrat ion. Relying on Roman v. Berg e n Logistics, LLC , 456 N.J. Super. 157 (App. Div. 2018), the judge found the parties were sophisticated commercial entities, had equal bargaining power, and entered into a comme rcial construction contract at arm's

- length

. The judge
not ed Butler Nissan did not allege fraud, duress, or that the arbitration provision was inconspicuous. Additionally, the judge found no evidence the contract was invalid or u nenforceable. Thus, s he ruled, "[T] he parties entered into a valid
agr eement to arbitrate claims arising out of or related to [AutoStone] 's perfor mance pursuant to the March 14 [c] ontract." The judge then analyzed whether the dispute fell within the sc ope of the
Ma rch 14 contract. Sh e reasoned that the underling dispute was AutoStone's performance pursuant to the contract and Butler Nissan alleged dissatisfaction about the installation and products used. Thus, she concluded whether the construction li en was timely filed fell within the scope of the contract because the v alidity of the lien necessitated an evaluation of AutoStone's performance

. The judge also concluded AutoStone proved 1567 South Realty and Butler Nissan were alter egos and compelled t he arbitratio n apply to 1567 South Realty5 A

- 0935

- 19T2

because the companies operate d at the same business address, had the same president and Butler Nissan failed to dispute the claim

. On November 1, 2019, plaintiffs filed a notice of appeal. On February 12, 2020, the motion j udge granted plaintiffs' request to stay arbitration pending appeal.
I Plaintiff s argue the arbitration provision is unenforceable because it failed to advise Butler Nissan that its statutory rights were being waived. Specifically, plaintif fs contend At alese 2 applies to this case. They further assert the judge failed to analyze the facts under the CFA

. We appl y a de novo standard of review when reviewing a motion judge's determination of the enforceability of a contract. Goffe v. Foulke Mgmt. Corp. , 238 N.J. 191, 207, 208 (2019). When reviewing arbitration clauses within contracts, "the enforceability of arbitr ation provisions is a question of law; therefore, it is one to which we need not give deference to the analysis by the
trial cour t." Ibid.
Th e Federal and New Jersey Arbitration Acts express a general policy favoring arbitration. Atalese , 219 N.J. at 440; see also 9 U.S.C. §§ 1 to 16;

2 Atalese v. U.S. Legal Services Group, L.P. , 219 N.J. 430 (2014)

.6 A

- 0935

- 19T2

N.J.S.A. 2A:23B

- 1 to

- 32. "The public policy of this State favors arbitration as a means of set tling dispute s that otherwise would be litigated in a court." Badiali v. N.J. Mfrs. Ins. Grp. , 220 N.J. 544, 55 6 (2015). Although enforcement is generally favored, it "does not mean that every arbitration clause, however phrased, will be enforceable." A talese , 219 N .J. at 441. A valid arbitration clause "must state its purpose clearly and unambiguously." Id. at 435. Further, an arbitration agreement "must be the product of mutual assent," which "requires that the parties have an understanding of the te rms to which they have agreed." Id. at 442 (quoting NAACP of Camden Cty. E. v. Foulke Mgmt. , 421 N.J. Super. 40 4, 424 (App. Div. 2011)). Our Supreme Court clearly set forth that a party "cannot be required to arbitrate when it cannot fairly be ascertaine d from the co ntract's language that [he or] she knowingly assented to the provision's terms or knew that arbitra tion was the exclusive forum for dispute resolution." Kernahan v. Home Warranty Adm'r of Fla., Inc. , 236 N.J. 301, 322 (2019). We reject plai ntiffs ' conte ntion that Atalese applies here and controls the outcome of this case. Atalese arose in the contex t of a consumer fraud action, involving an average member of the public. T he Court observed that "[b]y its very nature, an agreement to arbitra te involves a waiver of a party's right to have7 A

- 0935

- 19T2

her claims and defenses litigated in court." 219 N.J at 442. Nevertheless, "an average member of the public may not know

– without some explanatory
comment

– that arbitration is a substitute for the right t o have one's claim adjudicated in a court of law." Ibid. The Court found the arbitration provision in Atalese deficient and unenforceable because it: 1) did not include any explanation that the plaintiff was waiving her right to seek relief in court; 2) d id not explai n what arbitration is or how it differs from seeking judicial relief; and 3) lacked the plain lang uage necessary to convey to the average consumer that he or she is waiving the right to sue in court. Id. at 446. The Court held, "T he absence o f any languag e in the arbitration provision that plaintiff was waiving her statutory right to seek relief in a court of law renders the provision unenforceable." Id. at 436. Here, we acknowledge there is no language explaining what arbitration is and how it serves as a replacement for judicial relief. The language of the provision does not convey that plaintiff is waving a constitutional right to seek relief in a court of law. While the language required in Atalese to satisfy one ' s knowing waiver of a b asic right

ma y be simple in its words, it is crucial in its significance. Without a reference to a waiver of a right, we recognize an average consumer cannot know with8 A

- 0935

- 19T2

certainty "that arbitration is a substitute for the right to have one's claim adjudicat ed in a court of law." Id. at 442. However, p laintiff s are not average consumer s and the contract was not a "consumer contract of adhesion where one party possessed superior bargaining power and was the more sophisticated party[,]" Delta Funding Corp. v. Harris , 18 9 N.J. 28, 40 (2006); instead , it was a negotiated contract between sophistica ted business entities. Neither party here is an average member of the public. Plaintiff s are sophisticated enough to operate a car dealership , an LLC , and negotiat e contracts w ith customers on a daily basis

. We therefore find the heightened standard of Atalese does not apply here

. Additionally, the arbitration provision states the arbitration would be conducted under a specified set of rules, the AAA, which sophis ticated parti es could consult if needed. See GAR Disability Advocates, LLC v. Taylor , 365 F. Supp. 3d 522, 531(D. N.J. 2019) (discussing commercial entities entering into a contract and concluding that plaintiff ' s assertion that Atalese applied was mispla ced because t he parties were both sophisticated and not average consumers). The judge found a valid arbitration agreement pursuant to Roman because both parties were sophisticated w ith equal bargaining power and executed a
contract at "arms

- length." The judge then e valuated the arbitration provision9 A

- 0935

- 19T2

and found plaintiffs did not allege any fraud, duress or coercion. Sh e similarly found there was no evidence that the contract was not negotiated, or the
arbitration agreement was inconspicuous. Therefore, s he ruled the provision must be enforced. We agree with the judge and see no reason to disturb her conclusions of law or fact.
P laintiffs additionally argue the dispute at issue is outside the scope of the arbitration provision, asserting it app l ies only to disputes arising from "AutoStone's performance under this contract." Specifically, plaintiffs contend AutoStone's constructio n lien falls outside of the scope of the arbitration agreement and the terms of the agreement are ambiguous. "A court must l ook to the la nguage of the arbitration clause to establish its boundaries. Importantly, 'a court may not rewrite a contract to br oaden the scope of arbitration.'" Hirsch v. Amper Fin. Servs. , LLC, 215 N.J. 174, 188 (2013) (quoting Garfinkel v. Morristown Obstetrics & Gyn e cology Assocs.,
P.A. , 168 N.J. 124, 132 (2001)). Arbitrability of a particular claim "depends not upon the char acterization of the claim, but upon the relationship of the claim to the subject matter of the arbitration clause." Wasserste in v. Kovatch , 261 N.J. Super. 277, 286 (App. Div. 1993 ) (quotation marks and citations omitted).10 A

- 0935

- 19T2

At the same time, arbitration "is a favored means of dispute resolution." Cole v. Jersey City Med. Ctr. , 215 N.J. 265, 276 (2013) (quoting Hojnowski v.
Vans Skate Park , 1 87 N.J. 323, 342 (2006)), and that New Jersey courts have a "strong preference to enf orce arbitration agreements . . . ." Hirsch , 215 N.J. at 186. "Because of the favored status afforded to arbitration, '[a]n agreement to
arbitrate should be read liberal ly in favor of arbitration.'" Garfinkel , 168 N.J. at 132 (quoting Marchak v. Claridg e Commons, Inc. , 134 N.J. 275, 282 (1993)). "[U]nless the arbitration clause is not susceptible of an interpretation that covers the asserted dispute, the ma tter is arbit rable[.]" Amalgamated Transit Union, Local 880 v. N.J. Transit Bus Operations, Inc. , 200 N.J. 105, 125 (2009) (citations and quotation marks omitted). The motion judge relied on Griffen v. Burlington Volkswagen, Inc., 411 N.J. Super. 515, 518 (App. Div. 2 010), and interpreted the arbitration provision broadly. She found the construction lien fell within the scope of the arbitration provision because the validity of the lien necessitated an evaluation of defendant's performance pursuant to the March 14 con tract. AutoStone filed a construction lien because Butler Nissan failed to pay its r emaining balance under the contract , after claiming AutoStone 's workmanship was defective . The contract is the underlying issue, and but for Butler Nissan fa iling to pay,11 A

- 0935

- 19T2

AutoStone would not have filed the construction lien. We find no error in the motio n judge's reasoning

. Additionally, plaintiffs cite to Malick v. Seaview Lincoln Mercury , 398 N.J. Super. 182, 187 (App. Div. 2008) to support the ir proposit ion that
"Aut oStone's performance" is ambiguous and therefore its meaning should be interpreted against it as the drafter of the contract. However, Malick concerned a high

- low agreement between two parties during a personal injury trial. While
t he propos ition itself can be applied generally, the facts of the Malick case have no relation to the facts here. T he express words of the arbitration provision
state , "If a controversy or dispute arises out of or related to AutoStone's performance under this Contr act . . ." A utoStone's performance is not ambiguous as the construction lien was filed in relation to its alleged inadequate performance.
II Plaintiff s further argue the judge improperly ignored the corporate forms of both Butler Nissan and 15 67 South R ealty in orde r to find 1567 South Realty bound by the arbitration provision of the contract. Specifically, plaintiffs argue the judge finding common ownership, common management and common place
of business is not enough to support piercing the corporate veil

. Plaint iffs assert12 A

- 0935

- 19T2

AutoStone failed to present any evidence to suggest that "disregarding the corporate form was necessary to prevent fraud or injustice." Since arbitration agreements are treated as contracts, the general rule is that only contract ual parties a re required to arbitrate disputes pursuant to the agreement. See Livadas v. Bradshaw , 512 U.S. 107, 127 (1994) ("[E]nforcement [of an arbitration agr eement] turns exclusively on the fact that the contracting parties consented to any arbitrati on at all."); see also Century Indem. Co. v. Certain Underwriters at Lloyd's, London , 584 F.3d 513, 526

- 27 (3d Cir. 2009). There are several exceptions wherein a non - signatory may compel or may be compelled to arbitrate a dispute notwithstanding the fact that it did n ot sign the arbitration agreement. See generally Jansen v. Salomon Smith Barney, Inc. , 342 N.J. Super. 254, 259

- 60 (App. Div. 2001 ). The exceptions are rooted in contra ct and agency law and include: 1) incorporation by reference; 2) assumpti on; 3) agency ; 4) veil piercing/alter ego; 5) equitable estoppe l/third

party beneficiary; and 6) assignment/succession. See Arthur Andersen LLP v. Carlisle , 556 U .S. 624, 631 (2009). The burden of proof is on the party seeking to pierce the corporate veil

. Richard A. Pulaski Constr. Co. v. Air Frame Hangars, Inc. , 195 N.J. 457, 472 (2008); Verni ex rel. Burstein v. Harry M. Stevens, Inc. , 387 N.J. Super. 160,13 A

- 0935

- 19T2

199 (App. Div. 2006). That burden is by clear and convincing evidence. See United Food & Commer cial Workers Union v. Fleming Foods E., Inc. , 105 F. Supp. 2d 379, 388 (D.N.J. 2000)
I n order to warrant finding an alter ego of a parent corporation, a party must establish two elements: 1) that the subsidiary was dominated by the parent corporation, an d 2) that adh erence to the fiction of separate corporate existence would perpetrate a fraud or injustice, or otherwise circumv ent the law. State Department of Environmental Protection v. Ventron Corp. , 94 N.J. 473, 500

- 01 (1983)

. In determining whether t he first elem ent has been satisfied, courts consider whether "the parent so dominated the subsidiary that it had no separate

e xistence but was merely a conduit for the parent." Id. at 501 ; See Interfaith Cmty. Org. v. Honeywell Int'l, Inc. , 215 F. Supp. 2 d 482, 497 (D .N.J. 2002) ("veil

- piercing is proper when a subsidiary is an alter ego or instrumentality of the parent corporat ion

. "). In determining corporate dominance, courts engage in a fact

- specific inquiry considering whether the subsidiary was gross ly undercapit alized, the day

- to

- day involvement of the parent's directors, officers and personnel, and whether the subsidiary fails to observe corporate formalities, pays no dividends, is insolvent, lacks corporate records, or is merely a facade.14 A

- 0935

- 19T2

Bd. of T rs. v. Foodto wn, Inc. , 296 F.3d 164, 172 (3d Cir.2002); Seltzer v. I.C. Optics, Ltd. , 339 F. Supp. 2d 601, 610 (D.N.J.2004).
P laintiff s rel y on Ventron and argue AutoStone failed to meet its burden of establishing 1567 South Realty constitutes an alter ego of Butler Ni ssan. In
Ventron , our Supreme Court explained the "purpose of the doctrine of piercing the corporate veil is to prevent an independent corporation from being used to defeat the ends of justice, to perpetrate fraud, to accomplish a crime, or

o therwise to e vade the law." I f that purpose would be served, "courts may pierce the corporate veil by finding that a subsidiary was a mere instrumentality of the parent corporation." Ibid. (internal quotations and citation omitted). Here, the motion ju dge found tha t Butler Nissan a nd 1567 South Realty operate at the same business address with the same president. The judge found
that plaintiff s failed to dispute the alter ego claim ; therefore, she compelled the arbitration to apply to 1567 South Realty as an alter e go. The record s upports this finding as undisputed. We note that the relevant evidence that would have
defeated Autostone's alter ego claim would have been readily available to plaintiffs, if such evidence existed . Having come forward with none, plainti ffs failed to pro vide the court with any basis to reject Autostone's alter ego claim. Based on this record, which also reflects that plaintiffs have share d the same15 A

- 0935

- 19T2

attorney, we discern no reason to disturb the motion judge's ruling on the al ter ego issue

. III Lastly, p la intiffs argue that AutoStone's construction lien claim is "based on New Jersey law and may be asserted only in the [c] ourts of New Jersey." This argument lack merit. A forum selection clause in a c ontract is enforceable unles s: 1) it is a result of "fraud, undue influence, or overweening bargaining power;" 2) it violate s "a strong public policy;" or 3) enforcement would be seriously inconvenient for the trial. Kubis & Perszyk Assocs., Inc. v. Sun M icrosystems, Inc. , 146 N.J. 176,
186

- 88 ( 1996) (citing M/S Bremen v. Zapata Off

- Shore Co. , 407 U.S. 1, 10

- 15 (1972)). The terms of the forum selection clause are clear and unambiguous. Those terms must be "given their 'plain and ordinary meaning.'" Neste r v. O'Donnell , 301 N.J. Sup er. 198, 210 (App. Div. 1997) (quoting Kaufman v. Provident Life and Cas. Ins. Co. , 828 F. Supp. 275, 283 (D.N.J. 1992)).
T he contract under review contained a venue clause stating, "The law of the State of Texas Shall govern th is Contract, with venue to b e in any cour t of competent jurisdiction in Dallas County, Texas." Texas i s an appropriate venue16 A

- 0935

- 19T2

because AutoStone 's headquarters is there. Plaintiffs could have insisted upon a revision of the venue location during contract n egotiations: alternatively, plaintiffs co uld have chosen a contractor with headquarters in New Jersey or elsewhere. W e find no basis to disturb the judge's determination finding the venue provision enforceable. Affirmed.