SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO . A - 5399
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CASTLE REALTY MANAGEMENT, LLC, ASSIGNEE OF CC DAHMS, LLC t/a RE/MAX CONNECTION REALTORS, Plaintiff

- Respondent,

v. KEVIN BURBAGE, AUGUSTA INVESTMENTS, INC. d/b/a RE/MAX PREFERRED,
Defendants
- Appellants.

_______________________________

Argued May 4, 2017

– Decided Before Judges Lihotz and Whipple. On appeal from Superior Court of New Jersey, Chancery Division, Burlington County, Docket No. C - 118
- 15. Barry W. Rosenberg argued the cause for appellant. Christopher C. Fallon, III, argued the cause for respondent (Fox Rothschild LLP, attorneys; Mr. Fallon, Adam Busler and Nathan M. Buchter, on the brief).
PER CURIAM NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court . " A lthough it is posted on the internet , this opinion is binding only on the parties in the case and its use in other cases is limited . R .1:36
- 3.

July 13, 20172 A - 5399
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Plaintiff , Castle Realty Management, t/a R e /M ax Connection
Realtors and defendant , Augusta Investments, t/a Re/Max Preferred

are competing franchisees of Re/Max of New Jersey (Re/Max) . Kevin Burbage is a licensed real estate broker who worked for plaintiff
then left to work for defendant. Plaintiff filed this ten - count verified complaint and order
to show cause against Burbage and defendant in the Chancery Division , seeking equitable and monetary relief, alleging, among other things, Burbage violated the non

- compete clause of his employment agreement , and defen dant improperly solicited Burbage and its other employees , by engaging in unfair competition. Defendant moved to dismiss the complaint, arguing plaint iff's franchise agreement required dispute s be submitted to arbitration. In a June 14, 2016 order, supp orted by a written opinion, Judge Paula T. Dow denied the motion to dismiss. Judge Dow also denied defendant's motion for reconsideration. Plaintiff withdrew its requests for equitable remedies and the matter was transferred to the Law Division.
The de nial of defendant's motion to dismiss and compel arbitration, although not a final judgment, is appealable of right.
See R. 2:2
- 3(a)(3) (An order "denying arbitration shall also be deemed a final judgment of th e court for appeal purposes."); s ee also Jawo rski v. Ernst & Young US LLP , 441 N.J. Super. 464, 4723 A - 5399
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(App. Div. ) , certif. denied , 223 N.J. 406 (2015) . On appeal, defendant seeks reversal, maintaining plaintiff's action must be dismissed based on the arbitration clause in its franchise agreement with Re/Max. Defendant asserts the franchise structure
mandate s dispute resolution procedures among franchisees, as well as between franchisee and franchisor , and the contract clause barring a third

- party beneficiary's reliance was not applicable to this matte r. We are unpersuaded and affirm. As franchisees , plaintiff and defendant separately executed identical franchise agreements with Re/Max. The respective agreements contain identical provisions regarding the resolution of disputes arising from the r elationship with Re/Max. Section
15 contains the following provisions :

A. DISPUTE RESOLUTION.
The RE/ MAX Dispute Resolution System (" the RD R S") is a set of rules and procedures for the resolution of disputes, complaints, claims or other problems ("Dispute s") that arise between you and other affiliates of the R E/MAX Network of offices and real estate agents.

B. DISPUTES INVOLVING RE/MAX FRANCHISES, SALES ASSOCIATES OR THEIR RE/MAX AFFILIATES. In the event of a Dispute involving you, any other RE/MAX franchi see, any RE/MAX Sales Associate (whether affiliated with your Office or any other RE/MAX office) or other RE/MAX Affiliate, you agree to submit the Dispute to mediation and, if unsuccessful, to binding4 A - 5399
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C. ALTERNATIVES.
If the RD R S is not offered or otherwise available or the dispute is between RE/MAX Regional and Franchise Owner, the Dispute shall be submitted to an alternative mediation and arbitration system mutually acceptable to the parties of the D ispute. If the parties cannot agree on an alternative mediation and arbitration system, then the Dispute shall be submitted to the American Arbitration Association for mediation, and if unsuccessful, for binding arbitration in accordance with its Commerci al Mediation Rules or Commercial Arbitration Rules, as appropriate. Section 16 addresses the construction of the agreement and it s enforcement. Paragraph 16. N . specifically states :

N. NO LIABILITY TO OTHERS; NO OTHER BENEFICIARIES . We will not, because of this Agreement or by virtue of any approvals, advice or services provided to you, be liable to any person or legal entity who is not a party to this Agreement. You understand that you are not a third party beneficiary of any other franchise agreement between us and other RE/MAX franchisees and that you have no independent right to enforce the terms of, or require performance under, any other franchise agreement. When Burbage left his employment with plaintiff and joined
defend ant's office, plaintiff initiated this action. Plaintiff alleged Burbage breached his employment contract. Other counts5 A - 5399
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in the complaint alleged Burbage and defendant engaged in slander, trade libel , unfair competition , and conspiracy, as well as misappr opriat ing trade secrets and confidential information. Initial disagreements arose regarding discovery and venue.
Defendant moved to dismiss the complaint and transfer the matter to the RE/Max Dispute Resolution System, pursuant to paragraph 15 of each p arties' franchise agreement. Following oral argument, Judge Dow entered an order which temporarily enjoined Burbage from contacting plaintiff's employees and using its trade secrets . On
the ret urn date of the order to show case , the pending motions

were adjourned and the parties were directed to proceed to mediation , which proved unsuccessful. Plaintiff withdrew its request for injunctive relief and
moved to transfer the matter to the Law Division. O ral argument on the outstanding motions was conducted on June 10, 2016 . Construing the respective franchise agreements, Judge Dow concluded defendant had no right to force plaintiff to an arbitral forum. Plaintiff's motion to transfer the action to the Law Division was granted. Defendant's motion for reco nsideration was denied. This appeal ensued. We "review the denial of a request for arbitration de novo."
Frumer v. Nat'l Home Ins. Co. , 420 N.J. Super. 7, 13 (App. Div. 2011). Whether parties have contracted to arbitrate as well as6 A - 5399
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the applicability and scope of an arbitration agreement is a legal issue, subject to this court's plenary review. See A talese v. U.S. Legal Servs. Grp., L.P. , 219 N.J. 430, 44 5
- 4 6 (2014) ("O ur review of a contract, generally, is de novo, and therefore we owe no special deference to the trial court's . . . interpretation. Our approach in construing an arbitration provision of a contract is governed by the same de novo standard of review. ") (c itations omitted) , cert. denied , ___ U.S. ___, 135 S. Ct. 2804, 192 L. Ed.
2d 847 ( 2015 ). "Arbitrability . . . whether the parties have agreed to submit to an arbitrator or a court the authority to decide whether a dispute is subject to arbitration" is an issue "for a court to resolve" absent a specific agreement to the contrary. Morgan v. Sanford Brown Inst . , 225 N.J. 289, 295
- 96 n.1, (2016). An agreement to arbitrate, like any other

contract, "must be the product of mutual assent, as determined under c ustomary principles of contract law." NAACP of Camden Cnty. E. v. Foulke Mgmt. , 421 N.J. Super. 404, 424 (App. Div.), certif. granted , 209 N.J. 96 (2011), and appeal dismissed , 213 N.J. 47 (2013). A legally enforceable agreement requires "a meeting of th e minds." Morton v. 4 Orchard Land Trust , 180 N.J. 118, 120 (2004). Parties are not required "to arbitrate when they have not agreed to do so." Volt Info. Scis. v. Bd. of Trs. of Leland Stanford Jr. Univ. , 489 U.S. 468, 478, 109 S. Ct. 1248, 1255, 103 L. Ed. 2d 488, 499 (1989); see Garfinkel[ v. Morristown Obstetrics & Gynecology Assocs., P.A.] , 168 N.J. [124,] 1327 A - 5399
- 15T4 [(2001)] ("'[O]nly those issues may be arbitrated which the parties have agreed shall be.'" (quoting In re Arbitration Between Grover & Univer sal Underwriters Ins. Co. , 80 N.J. 221, 228 (1979))). Mutual assent requires that the parties have an understanding of the terms to which they have agreed. "An effective waiver requires a party to have full knowledge of his legal rights and intent to surr ender those rights." Knorr v. Smeal , 178 N.J. 169, 177 (2003) (citing W. Jersey Title & Guar. Co. v. Indus. Trust Co. , 27 N.J. 144, 153 (1958)). "By its very nature, an agreement to arbitrate involves a waiver of a party's right to have . . . claims and de fenses litigated in court." Foulke , supra , 421 N.J. Super. at 425. [ Atalese , supra , 219 N.J. at 4 42.] Consequently, " a court may in validate an arbitration clause 'upon such grounds as exist at law or in equity for the revocation of any contract.' " Id. at 441. (quoting Martindale v. Sandvik,

Inc. , 173 N.J. 76, 85 (2002) ) . "O ur state - law jurisprudence makes
clear ' that when a contract contains a waiver of rights

— whether in an arbitration or other clause

— the waiver must be clearly and unmistakably est ablished.' " Morgan , supra , 225 N.J. at 308
- 09 (quoting Atalese , supra , 219 N.J. at 444). "N o magical language is required to accomplish a waiver of rights in an arbitration agreement ." Id. at 309. Furthermore, " ' courts operate under a presumption of arbitrability in the sense that an order to arbitrate the particular grievance should not be denied unless it8 A - 5399
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may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute.'" Griff in v. Burlington Volkswagen, Inc. , 411 N.J. Super. 515, 518 (App. Div. 2010) (quoting EPIX Holdings Corp. v. Marsh &
McLennan Cos. , 410 N.J. Super. 453, 471 (App. Div . 2009) ) ; c f. , Yale Materials Handling Corp. v. White Storage & Retrieval Sys.,

Inc. , 240 N.J. Super. 370, 374 (App. Div. 1990) (A "court may not rewrite a contract to broaden the scope of arbitration . . . ."). We turn to the agree ment under review. In our review of an arbitration agreement, the agreement's terms "are to be given their plai n and ordinary meaning." M.J. Paquet v. N.J. DOT , 171 N.J. 378, 396 (2002). We are tasked with discerning "the intent of the parties." Kieffer v. Best Buy , 205 N.J. 213, 223 (2011). If the meaning of a provision is ambiguous, the provision should be co nstrued against the drafter because, "as the drafter, it chose the words that may be sus ceptible to different meanings. " Id. at 224. [ Roach v. BM Motoring, LLC , 228 N.J. 163, 174 (2017).] Specifically, " [i]t is . . . the intent expressed or apparent in the writing that controls. " Garfinkel , supra , 168 N.J. at 135 (quoting Quigley v KPMG Peat Marwick, LLP , 330 N.J. Super. 252 , 266 (App. Div. ) , certif. denied , 165 N.J. 527 (2000 ) ); s ee also Marchak v. Claridge Commons, Inc. , 134 N.J. 275, 282 (1993) ( In evaluating the existence of an agreement to arbitrate, a court9 A - 5399
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"consider[s] the contractual terms, the surrounding circumstances, and the purpose of the contract." ) . Here, plaintiff's franchise agreement with Re/Max and defendant's agreement with Re/Ma x each contain a dispute resolution clause requiring mediation and arbitration. Defendant's position is plaintiff's agreement mandates it arbitrate not only disputes with its franchisor Re/Max , but also disputes with any other Re/Max franchisee , including the issues raised in this matter . T he question is whether defendant can rely on the clause in plaintiff's agreement with Re/Max to compel it arbitrat e its claims with defendant and Burbage. The spe cific language of paragraph 15. B. states:
In the event of a Dispute involving you, any other RE/MAX franchisee, any RE/MAX Sales Associate (whether affiliated with your Office or any other RE/MAX office) or other RE/MAX Affiliate, you agree to submit the Dispute to mediation and, if unsuccessful, to binding ar bitration using the RD R S, if it is then available. Logically, t his clause appears to support defendant's position
that Re/Max intended to require all franchisees to resolve disagreements using arbitration. However, the clause does not stand alone. It is followed by paragraph 16 . N . , which suggests
such a possibility is foreclosed by stating: " Y ou understand that you are not a third party beneficiary of any other franchise10 A - 5399
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agreement between us and other Re/Max franchise es and that you have no independent r ight to enforce the terms of, or require performance under, any other franchise agreement." Our Supreme Court mandates arbitration clauses must clearly show the parties to the agreement understand and agree to waive their right to proceed before our courts. Atalese , supra , 219

N.J. at 442
- 43 ("Moreover, because arbitration involves a waiver
of t he right to pursue a case in a judicial forum, 'courts take particular care in assuring the knowing assent of both parties to arbitrate, and a clear mutual understanding of the ramifications of that assent.'") (quoting Foulke , supra , 421 N.J. Super. at
425 ). Here, an ambiguity exists in the scope of matters covered by paragraphs 15 and 16. In such an instance, the agreement should be "strictly construed ," which would reject the position taken by defendant that plaintiff unequivocally agreed to submit to

a rbitration its claims against defendant and Burbage. See Roach , supra , 228 N.J. at 179. Consequently, we must reject defendant's a rgument suggesting
the third

- party beneficiary clause applies to non

- Re/Max franchisees making it inapplicable to this dis pute. The appeal does not present , and we do not comment on Re/Max 's rights to compel plaintiff's or plaintiff's obligations to its franchisor; notably Re/Max is not a party to this litigation . " The standard11 A - 5399
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applied by courts in determining thi rd
- party b eneficiary status is ' whether the contracting parties intended that a third party should receive a benefit which might be enforced in the courts .'" Reider Cmtys. v. N. Brunswick , 227 N.J. Super. 214, 222 (App. Div. 1988) (quoting Brooklawn v. Brooklawn Ho us . Corp. , 124 N.J.L. 73, 77 (E. & A. 1940) ), certif. denied , 113 N.J. 638 (1988) . "[T] he intention of contracting parties to benefit an unnamed third party must be garnered from an examination of the contract and a consideration of the circumstances attendant to its execution. " Ibid. Accordingly, our interpretation of paragraph 16.N. excludes enforcement of the agreement by non - parties to that contract , and only " a person for whose benefit a contract is made may sue on the contract in any court ." Id. at 221. We affirm the June 14, 2016 order as well as the July 26, 2016 order denying reconsideration. We remand the matter to the Law Division for further disposition. Affirmed .