Court Opinion

ID: 8375201
Source: CourtListenerOpinion
Date Created: 2022-10-21 14:07:28.551877+00
Date Added: 2024-06-11T16:46:29.984873
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE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 limited. R. 1:36-3.

                                                        SUPERIOR COURT OF NEW JERSEY
                                                        APPELLATE DIVISION
                                                        DOCKET NO. A-0514-21

JESSICA SCIARETTA,

          Plaintiff-Respondent,

v.

DOMINIC SCIARETTA,

          Defendant-Respondent,

and

DONALD J. SCIARETTA,
trustee for the DONALD
J. SCIARETTA FAMILY
DYNASTY TRUST AGREEMENT
OF 2003,

     Defendant-Appellant.
______________________________

                   Argued October 4, 2022 – Decided October 21, 2022

                   Before Judges Gilson, Rose, and Gummer.

                   On appeal from the Superior Court of New Jersey,
                   Chancery Division, Family Part, Somerset County,
                   Docket No. FM-18-0682-20.
            Gregory J. Hazley argued the cause for appellant
            (DeCotiis, Fitzpatrick, Cole & Giblin, LLP, attorneys;
            Benjamin Clarke and Gregory J. Hazley, on the briefs).

            Bilal Hill argued the cause for respondent Jessica
            Sciaretta.

PER CURIAM

      Plaintiff Jessica Sciaretta sued her husband, defendant Dominic Sciaretta,

for divorce.   She also asserted claims against Dominic's father, defendant

Donald Sciaretta, who is the trustee of a family trust that owns the marital home

where Jessica and Dominic had lived. 1 Before their marriage, Jessica and

Dominic had signed a prenuptial agreement that stated Jessica would receive the

marital home if the parties got divorced.      The prenuptial agreement also

contained an arbitration provision.

      Donald appeals from an order compelling him to arbitration. He argues

that he is not a party to the prenuptial agreement. The family court reasoned

that Jessica had sufficiently alleged facts to support claims of promissory and

equitable estoppel against Donald and Jessica had reasonably relied on the

promise that she would receive the marital home. Accordingly, the family court

held that Donald could be compelled to arbitration as a third party bound to the

1
 To avoid confusion, and meaning no disrespect, we use the parties' first names
because they share the same last name.
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                                       2
prenuptial agreement, including its arbitration provision.     Because Donald

disputes Jessica's allegations of promissory and equitable estoppel, we reverse

and remand.

      On remand, the family court is to conduct an evidentiary hearing to

determine if Donald is bound to the prenuptial agreement. If the court finds that

Donald is bound, then all parties can be compelled to arbitration. If the court

finds that Donald is not bound to the arbitration provision, then the disputes

between Jessica and Dominic can proceed to arbitration and the arbitrator will

determine what impact, if any, the absence of Donald's and the trust's

participation in the arbitration has on the disputes between Jessica and Dominic.

                                       I.

      Jessica and Dominic were married in April 2015. 2        They have three

children, one of whom was born in 2016, and twins born in 2018.

      Shortly before their marriage, Jessica and Dominic signed a premarital

agreement (the prenuptial agreement).       Among other things, the prenuptial

agreement stated that Jessica and Dominic each waived "any right to a division

of assets that would otherwise arise by reason of the [m]arriage . . . as well as

2
  We summarize the facts relevant to the order compelling arbitration. In doing
so, we make no factual determinations and recognize that certain facts are in
dispute.
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                                       3
any right to receive alimony or spousal support" and that Jessica would "receive

title to the [marital home,]" as well as "exclusive occupancy of the [marital

home]" "[i]n the event of the [c]essation of the [m]arriage . . . so long as there

is a child or children born to, or adopted by" Jessica and Dominic.

      The prenuptial agreement also provided that Jessica and Dominic were to

"submit all claims and disputes arising out of or related to [the prenuptial

agreement] and the relationships between [Jessica and Dominic] contemplated

by [the prenuptial agreement] to final and conclusive arbitration" and that the

arbitration would be governed by the New Jersey Arbitration Act, (NJAA),

N.J.S.A. 2A:23B-1 to -36.

      In anticipation of their marriage, the Donald J. Sciaretta Family Dynasty

Trust Agreement of 2003 (the Family Trust) purchased a house in Peapack, New

Jersey where Jessica and Dominic lived during their marriage (the marital

home). Donald is the trustee and settlor of the Family Trust, and the Family

Trust holds title to the marital home.

      In February 2020, Jessica filed a complaint for divorce against Dominic.

Thereafter, she filed an amended complaint asserting claims of promissory and

equitable estoppel against Donald as trustee of the Family Trust. Donald moved

to dismiss Jessica's claims against him, arguing those claims were barred as a

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                                         4
matter of law because he could not be compelled to make distributions from the

Family Trust. Jessica opposed that motion and cross-moved to file a second

amended complaint.

      In her proposed second amended complaint, Jessica alleged that Donald

had been involved in the negotiation of the prenuptial agreement because

Dominic had told her that Donald required Jessica to sign the prenuptial

agreement before their marriage. Jessica also asserted that Dominic had told her

that Donald had agreed that the marital home would be transferred to her in the

event of divorce.        She pointed out that Dominic was represented in the

negotiations of the prenuptial agreement by an attorney who had represented

Donald for years and that the attorney had drafted the Family Trust documents.

In addition, Jessica filed a certification stating that she would not have signed

the prenuptial agreement if she had not been assured that the marital home would

be transferred to her.

      Donald and Dominic each filed certifications in opposition to Jessica's

request to file a second amended complaint. Donald certified that prior to 2020,

he had not seen the prenuptial agreement and did not have any knowledge of its

contents. Donald also certified that he did not make any promises to Jessica or

Dominic concerning the marital home and that, throughout the duration of their

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                                        5
marriage, neither Jessica nor Dominic ever requested that the marital home be

transferred to them.

      Dominic certified that he never had conversations with his father

regarding the prenuptial agreement or the transfer of the marital home to Jessica.

Dominic also certified that he never gave his attorney permission to discuss the

prenuptial agreement with Donald.

      On December 4, 2020, the family court issued an order that granted

Donald's motion to dismiss the claims against him and permitted Jessica to file

a second amended complaint, without claims against Donald. The family court

also ordered that the disputes between Jessica and Dominic were to proceed to

arbitration in accordance with the prenuptial agreement.

      We granted Jessica's motion for leave to appeal the order dismissing her

claims against Dominic and denying her motion to amend the complaint with

claims against Donald. We then reversed that order holding that Jessica had

pled facts in her amended complaint and her proposed second amended

complaint sufficient to support her claims of promissory and equitable estoppel

against Donald. Sciaretta v. Sciaretta, No. A-1343-20 (App. Div. June 16, 2021)

(slip op. at 13-16). We did not express any opinion about the merits of Jessica's

claims and pointed out that to survive a motion to dismiss Jessica did not have

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                                        6
to prove her claims; rather, she had to make allegations which, if proven, would

constitute valid claims. Id. at 15.

      Following our decision and remand, Jessica attempted to commence

arbitration in accordance with the family court's December 4, 2020 order.

Donald, however, refused to participate in the arbitration, arguing that he was

not a party to the prenuptial agreement. In response, Jessica filed a motion to

compel Donald to submit to arbitration or, in the alternative, to have the divorce

proceedings heard in the family court.      Dominic and Donald opposed that

motion. Dominic insisted that the divorce proceedings continue in arbitration.

Donald contended that Jessica's claims against him should be heard in court.

      On September 7, 2021, the family court issued a written opinion and order

granting Jessica's motion to compel Donald to participate in arbitration. 3 The

court recognized that Donald was not a signatory to the prenuptial agreement

and that Jessica had not proven detrimental reliance at that point in the

proceedings.   The family court reasoned, however, that Donald should be

compelled to arbitration because Jessica sufficiently alleged facts demonstrating

3
  Originally, the order was dated August 27, 2021, but, thereafter, the family
court clarified that the parties were not served with the order until September 7,
2021. The court, therefore, clarified that the order will be deemed to have been
filed and served on September 7, 2021.
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                                        7
she had detrimentally relied on Donald's promise regarding the marital residence

and that the promise was integral to the resolution of the divorce matter. In

addition, the family court reasoned that Donald was the only person who could

provide Jessica's bargained-for relief and that without Donald's participation as

the trustee of the Family Trust, the arbitration might become a forum without a

remedy.

      "Orders compelling arbitration are deemed final for purposes of appeal."

Hirsch v. Amper Fin. Servs., LLC, 215 N.J. 174, 186 (2013) (citing R. 2:2-3(a);

GMAC v. Pittella, 205 N.J. 572, 587 (2011)). Donald now appeals from the

order compelling him to submit to arbitration. Donald, however, did not seek a

stay of the arbitration.   Instead, he refused to sign an agreement with the

arbitrator. Jessica filed a motion to compel Donald to sign the arbitration

agreement and to pay a share of the arbitrator's fees. In March 2022, the family

court issued an order and ruled that Donald did not have to sign the arbitration

agreement, but that he would be bound by the arbitration. We granted Jessica's

motion to include that March 2022 order in the record on this appeal.

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                                       8
                                        II.

      On appeal, Donald argues that the family court erred in compelling him

to arbitration because he never agreed to arbitrate the claims Jessica has asserted

against him. Donald contends that he never signed the prenuptial agreement and

that he should not be compelled to arbitration on theories of estoppel because he

disputes the facts supporting Jessica's estoppel claims. Donald also contends

that Jessica's claims against him are distinct from her claims against Dominic

and that they are not integral to the divorce proceedings.

      We use a de novo standard of review when determining the enforceability

of an arbitration agreement. Goffe v. Foulke Mgmt. Corp., 238 N.J. 191, 207

(2019) (citing Hirsch, 215 N.J. at 186). Moreover, the question of whether a

party is bound to arbitrate a dispute is a question of law, and we conduct a

plenary review of such legal issues. See Morgan v. Sanford Brown Inst., 225

N.J. 289, 302-03 (2016) (citing Atalese v. U.S. Legal Servs. Grp., L.P., 219 N.J.

430, 445-46 (2014)); Hirsch, 215 N.J. at 186.

      Arbitration is fundamentally a matter of contract. NAACP of Camden

Cnty. E. v. Foulke Mgmt. Corp., 421 N.J. Super. 404, 424 (App. Div. 2011).

Accordingly, the NJAA allows arbitration agreements to be regulated under

general contract principles, and a court may enforce or invalidate an arbitration

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                                        9
clause under principles of contract law. N.J.S.A. 2A:23B-6(a); Flanzman v.

Jenny Craig, Inc., 244 N.J. 119, 133-34 (2020).

      The NJAA enunciates a policy favoring arbitration. Atalese, 219 N.J. at

440. The preference for arbitration, however, "is not without limits." Hirsch,

215 N.J. at 187 (quoting Garfinkel v. Morristown Obstetrics & Gynecology

Assocs., P.A., 168 N.J. 124, 132 (2001)). Generally, parties "'cannot be required

to submit to arbitration any dispute which [they have] not agreed so to submit.'"

Angrisani v. Fin. Tech. Ventures, L.P., 402 N.J. Super. 138, 148 (App. Div.

2008) (quoting AT&T Techs., Inc. v. Commc'ns Workers of Am., 475 U.S. 643,

648 (1986)). "An agreement to arbitrate, like any other contract, 'must be the

product of mutual assent, as determined under customary principles of contract

law.'" Atalese, 219 N.J. at 442 (quoting NAACP of Camden Cnty. E., 421 N.J.

Super. at 424). "[B]ecause arbitration involves a waiver of the right to pursue a

case in a judicial forum, 'courts take particular care in assuring the know ing

assent of [the] parties to arbitrate, and a clear mutual understanding of the

ramifications of that assent.'" Id. at 442-43 (quoting NAACP of Camden Cnty.

E., 421 N.J. Super. at 425).

      An arbitration agreement can be enforced by or against a non-signatory

through principles of contract law, including equitable estoppel or agency.

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                                      10
Hirsch, 215 N.J. at 188-89, 192-93; Alfano v. BDO Seidman, LLP, 393 N.J.

Super. 560, 568-69 (App. Div. 2007). "To establish equitable estoppel, parties

must prove that an opposing party 'engaged in conduct, either intentionally or

under circumstances that induced reliance, and that [they] acted or changed their

position to their detriment.'" Hirsch, 215 N.J. at 189 (alteration in original)

(quoting Knorr v. Smeal, 178 N.J. 169, 178 (2003)). "In other words, equitable

estoppel . . . requires detrimental reliance." Ibid. It "cannot be applied solely

because the parties and claims are intertwined . . . ." Id. at 193. Moreover,

"[e]quitable estoppel should be used sparingly to compel arbitration." Id. at 179.

It is "more properly viewed as a shield to prevent injustice rather than a sword

to compel arbitration." Id. at 180.

      The prenuptial agreement contains a clear and enforceable arbitration

provision.   It states that Jessica and Dominic "shall submit all claims and

disputes arising out of or related to [the prenuptial agreement] and the

relationships between [Jessica and Dominic] . . . to final and conclusive

arbitration . . . ." It is undisputed that Donald was not a signatory to the

prenuptial agreement. Nevertheless, if Donald knew of the prenuptial agreement

and its promise concerning the marital home, Jessica would have the grounds to

compel him to arbitration based on estoppel. See id. at 189, 193.

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                                       11
      The family court reasoned that Donald could be compelled to arbitration

because Jessica sufficiently alleged facts demonstrating she had detrimentally

relied on the promise that she would receive the marital home. Donald and

Dominic, however, dispute Jessica's factual assertions. Consequently, before

Donald can be compelled to arbitration, the family court must hold an

evidentiary hearing and determine whether there is a factual basis to compel

Donald to arbitration. See id. at 193 ("[E]quitable estoppel does not apply

absent proof that a party detrimentally rel[ied] on another party's conduct.").

Given the parties' conflicting certifications, that determination will require the

family court to make credibility findings.

      Donald also argues that Jessica's claims against him are not integral to the

resolution of the divorce proceedings. In that regard, Donald contends that the

Family Trust's ownership of the marital home and its financial support of Jessica

and Dominic are only some of the issues that will need to be resolved during the

divorce proceedings. Donald's argument mischaracterizes and minimizes the

centrality of the marital home in the divorce proceedings. Donald, as trustee of

the Family Trust, can provide Jessica with the marital home as called for in the

prenuptial agreement. Nevertheless, although Jessica's claims against Donald

are intertwined with her claims against Dominic, the intertwinement of the

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                                       12
claims is insufficient, by itself, to compel Donald to submit to arbitration. See

id. at 192-93. The Court has cautioned that "when parties have not expressly

agreed to arbitrate their disputes . . . careful scrutiny is necessary to determine

whether arbitration is nonetheless appropriate." Id. at 196.

      We therefore reverse the September 7, 2021 order compelling Donald to

submit to arbitration. We remand and direct that the family court con duct an

evidentiary hearing to determine if there are facts to support Jessica's claims of

estoppel.   Before us, Jessica also argued that she could compel Donald to

arbitration based on agency. "Agency has been applied to bind nonsignatories

to arbitration agreements." Alfano, 393 N.J. Super. at 569; see also Hirsch, 215

N.J. at 192 (recognizing that New Jersey law allows arbitration to be compelled

based on agency). The family court did not rely on agency in its September 7,

2021 order. Provided that the parties are given the opportunity to conduct

reasonable discovery on the issue of agency, and the family court makes factual

findings, we perceive no reason why the family court could not also consider

agency as a ground for compelling all parties to arbitration.

      The evidentiary hearing in the family court should take place before the

arbitration hearing.   The parties have informed us that the arbitrator has

scheduled the arbitration hearing for December 2022. We encourage the family

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                                       13
court to conduct the evidentiary hearing as soon as possible.        The factual

contentions set forth in the certifications of Jessica, Donald, and Dominic do not

require extensive discovery, and the family court has the discretion to expedite

and limit discovery. See Major v. Maguire, 224 N.J. 1, 24 (2016) (noting that

"Family Part judges have broad discretion to permit, deny, or limit discovery in

accordance with the circumstances of the individual case"). Accordingly, the

family court should expeditiously conduct a hearing and make findings of facts

and conclusions of law on whether Donald should be compelled to arbitration.

If Donald is compelled to arbitration, then the family-court action should be

stayed pending the completion of the arbitration. N.J.S.A. 2A:23B-7(g); see

also GMAC, 205 N.J. at 583, n.7 (explaining that N.J.S.A 2A:23B-7(g) "only

enable[s] [a] trial court to 'stay' the claims").

      If Donald is not compelled to arbitration, any remaining claims against

him should be stayed while Jessica and Dominic complete the arbitration.

Although not mandatory, when significant overlap exists between parties and

issues, claims against parties who have not agreed to arbitrate should be stayed

pending the arbitration. See Alfano, 393 N.J. Super. at 577; N.J.S.A. 2A:23B-

7(g) (explaining that "[i]f the court orders arbitration, the court on just terms

shall stay any judicial proceeding that involves a claim subject to the

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arbitration"). The arbitrator will need to determine what effect the lack of

Donald's participation has on the enforceability of all or any part of the

prenuptial agreement.

      Reversed and remanded for proceedings consistent with this opinion. We

do not retain jurisdiction.

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