Court Opinion

ID: 4430879
Source: CourtListenerOpinion
Date Created: 2019-08-20 19:48:40.702495+00
Date Added: 2024-06-11T14:51:11.561694
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NOT FOR PUBLICATION WITHOUT THE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-1266-16T4

BRUCE STEVENS, individually and
on behalf of TERRAFORM, LLC,

        Plaintiffs-Appellants,

v.

JOSEPH CAPPADORA, C.P.A. and
BERKSHIRE VALLEY ASSOCIATES, LLC,

     Defendants-Respondents.
___________________________________

              Argued March 6, 2018 – Decided July 17, 2018

              Before Judges Yannotti and DeAlmeida.

              On appeal from Superior Court of New Jersey,
              Law Division, Passaic County, Docket No.
              L-2957-15.

              Kenneth S. Thyne argued the cause for
              appellants (Roper & Thyne, LLC, attorneys;
              Kenneth S. Thyne, on the brief).

              Elie B. Gold argued the cause for respondents
              (Gold Law, PC, attorneys; Elie B. Gold, on the
              brief).

PER CURIAM

        Plaintiffs Bruce Stevens and Terraform, LLC appeal an order

dismissing their complaint with prejudice and compelling them to
submit their claims to arbitration. We vacate the order and remand

for entry of a statement of reasons by the trial court.

                                      I.

     On August 27, 2015, plaintiffs filed a complaint in the Law

Division, alleging breach of contract and related claims against

defendants     Joseph    Cappadora,    C.P.A.,    and     Berkshire    Valley

Associates, LLC.        Plaintiffs' claims arise from a Joint Venture

Agreement (JVA), which contains a clause in which the parties

agreed that "any dispute, claim, or controversy concerning" the

agreement "shall be settled by binding arbitration . . . ."

     On or about September 24, 2015, defendants filed an answer,

which set forth no affirmative defenses referencing arbitration.

In addition, the answer demanded that "all issues" be tried by a

jury and contained a certification from defendants' attorney that

"no other . . . [a]rbitration [p]roceeding is contemplated."

     On February 3, 2016, plaintiffs moved pursuant to Rule 4:23-

5(a)(1) to suppress defendants' answer and affirmative defenses

without prejudice for failing to respond to plaintiffs' discovery

demands.     The trial court granted plaintiffs' motion on February

19, 2016.

     On or about April 22, 2016, plaintiffs moved pursuant to Rule

4:23-5(a)(2)    to   suppress    defendants'     answer    and   affirmative

defenses with prejudice for failing to respond to plaintiffs'

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discovery     demands.      On     June       8,     2016,   plaintiffs   received

defendants' discovery responses and, as a result, withdrew the

motion.

      On June 13, 2016, the parties filed a consent order vacating

the February 19, 2016 order suppressing defendants' answer and

affirmative defenses without prejudice.                 The parties also agreed

to extend the discovery end date from August 2, 2016 to October

2, 2016.    Trial was scheduled for October 24, 2016.

      On September 15, 2016, defendants filed two motions.                          One

motion sought to dismiss the complaint on the merits, or, in the

alternative, to grant defendants leave to file an amended answer.

The   amended    answer    submitted          with    the    motion   included        an

affirmative defense raising the JVA's arbitration clause for the

first time.     The other motion sought to compel arbitration.

      On September 22, 2016, defendants served discovery demands

and deposition notices on plaintiffs.

      On October 19, 2016, the trial court denied defendants' motion

to dismiss the complaint and denied defendants leave to file an

amended answer.

      On   October   20,   2016,    the       trial    court   entered    an     order

dismissing the complaint with prejudice and compelling the parties

to submit all claims to arbitration.               The court's findings of fact

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and conclusions of law consisted of the following handwritten

paragraph on the October 20, 2016 order:

           Application granted.   The court was unaware
           this motion was pending when it decided the
           other motions as this decision renders those
           decisions moot.   This court finds that the
           arb[itration] provision which was negotiated
           between the parties and a component of the
           consideration exchanged or promised to be
           exchanged was not waived.

This appeal followed.

                                     II.

      "[A]rbitration    .   .    .   is    a   favored   means       of   dispute

resolution."    Hojnowski v. Vans Skate Park, 187 N.J. 323, 342

(2006); see, e.g., Martindale v. Sandvik, Inc., 173 N.J. 76, 84-

85   (2002);   Garfinkel    v.   Morristown       Obstetrics     &    Gynecology

Assocs., 168 N.J. 124, 131 (2001).             The Uniform Arbitration Act,

N.J.S.A. 2A:23B-1 to -32, provides that agreements to arbitrate

are valid unless there are grounds that "exist at law or in equity

for the revocation of a contract."                N.J.S.A. 2A:23B-6.           "An

arbitration agreement is a contract and is subject, in general,

to the legal rules governing the construction of contracts."

McKeeby v. Arthur, 7 N.J. 174, 181 (1951).            The Supreme Court has

recognized that the parties may waive an arbitration agreement.

Cole v. Jersey City Med. Ctr., 215 N.J. 265, 276 (2013).                   Waiver

of an agreement to arbitrate a dispute may be demonstrated by

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"clear and convincing evidence that the party asserting it chose

to seek relief in a different forum."               Spaeth v. Srinivasan, 403
N.J. Super. 508, 514 (App. Div. 2008).

       "Waiver is the voluntary and intentional relinquishment of a

known right."        Knorr v. Smeal, 178 N.J. 169, 177 (2003).             A waiver

need not be express and can be found if "the circumstances clearly

show that the party knew of the right and then abandoned it, either

by   design    or    indifference."        Ibid.      A    party   may    waive    an

arbitration agreement by participating "in prolonged litigation,

without a demand for arbitration or an assertion of a right to

arbitrate."         Hudik-Ross, Inc. v. 1530 Palisade Ave. Corp., 131
N.J. Super. 159, 167 (App. Div. 1974).

       In Cole, the Court instructed a trial court considering

whether a party has waived an arbitration provision to engage in

a    fact-sensitive      analysis   focused    on    the    party's      litigation

conduct:

              [a]mong other factors, courts should evaluate:
              (1) the delay in making the arbitration
              request; (2) the filing of any motions,
              particularly dispositive motions, and their
              outcomes; (3) whether the delay in seeking
              arbitration was part of the party's litigation
              strategy;   (4)   the  extent   of   discovery
              conducted; (5) whether the party raised the
              arbitration    issue    in   its    pleadings,
              particularly as an affirmative defense, or
              provided other notification of its intent to
              seek arbitration; (6) the proximity of the
              date on which the party sought arbitration to

                                       5                                    A-1266-16T4
           the date of trial; and (7) the resulting
           prejudice suffered by the other party, if any.

           [Id. at 280-81].

     Whether a party waived its right to arbitration is a legal

determination subject to de novo review.          See Manalapan Realty

L.P. v. Twp. Comm., 140 N.J. 366, 378 (1995). The factual findings

of the waiver determination are entitled to deference and are

subject to review for clear error.       See Rova Farms Resort, Inc.

v. Investors Ins. Co. of Am., 65 N.J. 474, 483-84 (1974).

     Plaintiffs argue that the trial court failed to make findings

of fact with respect to the factors set forth in Cole and, had the

court done so, would necessarily have concluded that defendants

waived their right to arbitration.         In particular, plaintiffs

argue that defendants, who did not raise the arbitration clause

as an affirmative defense in their answer, waited over a year from

the filing of the complaint to move to compel arbitration.         In the

interim, defendants produced discovery, moved for substantive

relief,   secured   a   discovery   extension,   and   served   discovery

demands on plaintiffs.     In addition, during that time, plaintiffs

filed two discovery-related motions.      At the time that defendants

moved to compel arbitration the trial date was approximately a

month away.   Defendants, on the other hand, argue that they played

a passive role while the matter was pending in the trial court,

                                    6                             A-1266-16T4
taking no steps expressly constituting a waiver of arbitration

under the standards set forth in Cole.                 They, in effect, argue

that the trial court adopted the arguments they made against wavier

in support of their motion to compel arbitration.

     Because the trial court did not enter a written or oral

statement   of   reasons      explaining      its    decision   to    dismiss      the

complaint we are unable to determine if the court applied the Cole

factors when deciding defendants' motion.                A trial judge has an

obligation to render "an opinion or memorandum decision, either

written or oral, [with] find[ings of] fact[] and . . . conclusions

of law thereon . . . on every motion decided by a written order

that is appealable as of right . . . ."                 R. 1:7-4(a).      "When a

trial court issues reasons for its decision, it 'must state clearly

[its] factual findings and correlate them with relevant legal

conclusions,     so    that   parties   and    the    appellate      courts     [are]

informed    of   the    rationale   underling         th[ose]   conclusion[s]."

Avelino-Catabran v. Catabran, 445 N.J. Super. 574, 594-95 (App.

Div. 2016) (alterations in original) (quoting Monte v. Monte, 212
N.J. Super. 557, 565 (App. Div. 1986)).                 "[A]n articulation of

reasons is essential to the fair resolution of a case."                   O'Brien

v. O'Brien, 259 N.J. Super. 402, 407 (App. Div. 1992).

     "While the failure to provide reasons necessitates a remand,

we are left with the option of remanding for a statement of reasons

                                        7                                     A-1266-16T4
or reversing and remanding for consideration of the motion . . .

anew."    Allstate Ins. Co. v. Fisher, 408 N.J. Super. 289, 303

(App.    Div.   2009).    We   determine   that   the   latter   option    is

appropriate here.

     The order under review is vacated.           The matter is remanded

and the court is directed to consider the motion anew and enter a

new order with a written or oral statement of reasons in conformity

with Rule 1:7-4(a).      We do not retain jurisdiction.

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