Court Opinion

ID: 4531692
Source: CourtListenerOpinion
Date Created: 2020-05-05 14:08:12.78113+00
Date Added: 2024-06-11T12:29:20.073947
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NOT FOR PUBLICATION WITHOUT THE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." Alt hough 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-0777-18T2

RALPH MITSCHELE, JR., and
NORMAN MITSCHELE, JR.,

         Plaintiffs-Respondents,

v.

WILF/MITSCHELE JOINT
VENTURE, and WILF LAW FIRM,
LLP,

         Defendants,

and

NORTHFIELD-LIVINGSTON
DEVELOPERS,     LLC,   HILLSIDE
HEIGHTS,   LLC,    W&M    JOINT
VENTURE LLC, ZYGMUNT WILF,
LEONARD WILF, MARK WILF, and ELI
PECHTHOLD,

     Defendants-Appellants.
___________________________________

MARK       WILF,    ZYGMUNT        WILF,
LEONARD WILF, and ELI PECHTHOLD
individually and derivatively on behalf of
W&M        JOINT     VENTURE,       LLC,
HILLSIDE HEIGHTS, LLC, EDGEMERE
ESTATES, INC. and NORTHFIELD-
LIVINGSTON DEVELOPERS, LLC,
directly and derivatively on behalf of
W&M JOINT VENTURE, LLC,

      Plaintiffs-Appellants,

v.

RALPH MITSCHELE, JR., and NORMAN
MITSCHELE, JR.,

      Defendants-Respondents,

and

DEERCO, INC., and EXEX, INC.,

     Defendants.
___________________________________

            Argued February 5, 2020 – Decided May 5, 2020

            Before Judges Koblitz, Gooden Brown and Mawla.

            On appeal from the Superior Court of New Jersey,
            Chancery Division, Essex County, Docket Nos. C-
            000212-14 and C-000217-14.

            Sheppard A. Guryan argued the cause for appellants
            (Lasser Hochman, LLC, attorneys for appellants; John
            R. Wenzke and Sheppard A. Guryan, of counsel and
            on the briefs; Bruce H. Snyder, on the brief).

            Alan M. Lebensfeld argued the cause for respondents
            (Lebensfeld Sharon & Schwartz PC, attorneys for

                                                                   A-0777-18T2
                                    2
            respondents; Alan M. Lebensfeld, of counsel and on
            the brief).

PER CURIAM

      This appeal concerns the January 23, 2015 court confirmation of an

arbitration that arose out of a dispute between the parties to a joint venture.

On January 4, 2000, Northfield Livingston Developers, LLC, which was

owned by Mark Wilf, Zygmunt Wilf, Leonard Wilf, and Eli Pechthold (the

Wilfs), and Deerco, Inc. and ExEx, Inc., which were owned by Norman

Mitschele, Jr. and Ralph Mitschele, Jr. (the Mitscheles), entered into a joint

venture agreement (JVA) for the purpose of developing a forty-lot, single-

family home subdivision in Livingston, referred to as the Hillside Heights

project. To that end, the joint venture formed three entities, Hillside Heights,

LLC, Edgemere Estates, Inc., and W&M Joint Venture, LLC, which were all

owned fifty percent by the Wilfs, and fifty percent by the Mitscheles.

      Numerous disputes between the Mitscheles and Wilfs arose regarding

the management and operation of the joint venture, and in February 2011, t he

Mitscheles commenced an arbitration proceeding. After nine days of hearings,

on August 25, 2014, the arbitrator entered a final award in favor of the

Mitscheles, which included a $2 million liquidated damages award.

      On September 7, 2018, after appeal to the Chancery Division, a final

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                                      3
judgment essentially affirmed the $2 million monetary award to the

Mitscheles, and required the Wilfs to pay $123,350.33 in legal fees related to

the confirmation of the arbitration award.       The Wilfs, individually and

derivatively on behalf of W&M Joint Venture, LLC, Hillside Heights, LLC,

Edgemere Estates, Inc.      and   Northfield Livingston Developers, LLC

(collectively, appellants), appeal various orders that modified and affirmed the

final award in arbitration, as well as the award of legal fees.      We affirm

substantially for the cogent reasons expressed by Judge Thomas M. Moore.

                                       I.

      Deerco and ExEx owned the property upon which the Hillside Heights

project was to be built. Pursuant to the JVA, Deerco and ExEx transferred

their property to the joint venture, and the Mitscheles were credited with a $4

million capital contribution. The Wilfs were required to contribute $4 million

as their capital contribution; $2 million was paid to Deerco and ExEx upon the

transfer of the property to Edgemere and Hillside, and the additional $2

million was to be paid as needed for joint venture expenses.

      Numerous disputes between the Mitscheles and Wilfs arose regarding

the management and operation of the joint venture. Those disputes increased

in 2010, and the Mitscheles called for the replacement of Neidich & Co.,

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                                      4
which had also served as the Wilfs' accountant, as the joint venture's

accountant, and the escrowing of the joint venture's proceeds until their

disputes could be addressed. In February 2011, the Wilfs unilaterally shut

down the Hillside Heights project.        That same month, the Mitscheles

commenced an arbitration proceeding pursuant to the JVA.

      In December 2011, the parties retained a retired federal judge to serve as

arbitrator. The arbitrator's engagement letter provided:

                  The proceeding shall be conducted as a self-
            administered arbitration but will be governed by the
            Commercial Arbitration Rules of the American
            Arbitration Association and by the terms of Article
            XV(c) of the parties' [JVA] dated January 4, 2000. . . .
            Any [a]ward shall be binding upon the parties;
            judgment may be entered upon said [a]ward in a court
            of competent jurisdiction; and such judgment may be
            enforced according to law.

                  ....

                   The [a]rbitrator's authority to conduct the
            arbitration proceeding shall be exclusive and
            complete. The [a]rbitrator shall have the power to
            grant such legal and equitable remedies on a
            provisional or final basis as a trial court of competent
            jurisdiction could grant in similar cases.

      In their statement of claims, respondents alleged that "[t]he action

involve[d] contractual, business tort and statutory claims arising from a real

estate development joint venture," which appellants have "repudiated."

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                                      5
Alleged default events included:

            •     Causing payment of alleged "expenses" that are
                  not legitimate joint venture expenses to
                  affiliated persons and entities, notably Leonard
                  Wilf and Concord Developers, another entity
                  controlled by Wilf;

            •     Improperly stating joint venture expenses and
                  thereby unjustly enriching themselves or
                  affiliated persons or entities;

            •     Making unauthorized payments from joint
                  venture funds;

            •     Upon information and belief, commingling joint
                  venture assets with assets of other entities or
                  persons;

            •     Unreasonably withholding or improperly stating
                  distributions owed to the joint venture partner,
                  Mitschele;

            •     Causing joint venture tax returns to be filed
                  without notice to or timely review by Mitschele,
                  with personal liability borne by Ralph and
                  Norman Mitschele;

            •     Refusing to disclose financial records and
                  supporting documents and to make reasonable
                  responses to requests for financial records;

            •     Failing to maintain accurate financial records;

            •     Refusing Mitschele's right to participate equally
                  in the operation and management of the joint
                  venture;

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                                      6
            •     Refusing to continue with reasonable efforts to
                  develop the remaining lots; and

            •     Refusing to remove Neidich & Company (the
                  accountants for other Wilf entities and the
                  Wilfs, personally) as the accountants for the
                  joint venture, despite written notice by the
                  Mitscheles of Neidich's conflict of interest and
                  demand for the appointment of a neutral
                  accounting firm.

      Appellants do not dispute respondents sought more than $2 million,

requesting the following relief:

            •     An accounting of all revenues, expenses,
                  disbursements and profits of the joint venture;

            •     Distribution of sums owned to Mitschele after
                  an accounting, disgorgement and reimbursement
                  of all monies improperly paid or applied;

            •     An award of compensatory, consequential,
                  punitive and treble damages, as applicable;

            •     Just and equitable apportionment of all
                  remaining joint venture assets, to include
                  adjustment of the parties' respective capital
                  accounts when and if necessary;

            •     An award of pre-judgement and post-judgment
                  interest;

            •     An award of attorneys' fees as allowed by
                  contract or by statute, and as otherwise allowed
                  in arbitration;

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                                     7
            •     An award of costs, to include the arbitrator's
                  fees and fees incurred for accounting
                  professionals;

            •     A final determination of all other remaining
                  rights of the parties to the joint venture;

            •     Dissolution of the joint venture; and

            •     Such other and further relief as the arbitrator
                  deems just.

      In their response to the statement of claims and counterclaim, appellants

alleged that the action involved "contractual and common-law claims arising

from a real estate development joint venture," and by way of counterclaim

asserted various breaches by respondents and sought an award in their favor.

                                       II.

      After a nine-day testimonial arbitration, on August 25, 2014, the

arbitrator entered a final award, determining that the Wilfs had materially

breached the JVA and, pursuant to the election of remedies provision set forth

in that agreement, the Mitscheles were entitled to termination of the joint

venture and recovery of "its prior contributions to the [j]oint [v]enture," in the

amount of $2 million. The arbitrator explained:

                  Th[e] disputes [between the Wilfs and
            Mitscheles] multiplied in 2010, and the Mitscheles
            reasonably called for the replacement of Neidich &
            Co. as the [j]oint [v]enture's accountants and the

                                                                        A-0777-18T2
                                       8
     escrowing of proceeds from the sale of [one of the
     lots] (consistent with prior practice throughout the
     years) until present disputes regarding such things as
     proper charges to the funds of the [j]oint [v]enture
     could once again be addressed. If for no other reason,
     the Mitscheles were justified in criticizing the decision
     of Neidich & Co. to book the reversal of Hillside
     Heights expenses (with resulting substantial additional
     phantom income which imposed heightened tax
     liability upon the Mitscheles) for the calendar year
     2009. . . . No satisfactory explanation for the
     backdating of these reversals to the year 2009 was
     presented on the record of this arbitration. Whether
     out of anger, a calculated desire to generate leverage
     or otherwise, the Wilfs then unilaterally shut down the
     project, a breach of their primary obligation to co-
     manage the [j]oint [v]enture in its basic, underlying
     business:    the sale of lots and construction of
     homes. . . .

           ....

     Unlike the [Wilfs], the [Mitscheles] committed no
     breaches or acts of default under the JVA.

            This [a]rbitrator finds and determines that the
     Wilfs' refusal to continue or resume the Hillside
     Heights development, thereby bringing the work of the
     [j]oint [v]enture to a standstill and completely
     frustrating its business purpose was a material breach
     of the JVA and was an uncured "default under the
     [JVA]" . . . which throws this matter clearly into the
     provisions of Article XV(b) . . . . That default permits
     the [Mitscheles] . . . to pursue such remedies as are
     available to them under that Article.

As to the remedies available to the Mitscheles under Article XV(b), the

                                                                 A-0777-18T2
                               9
arbitrator stated:

             [O]ption (i) under Article XV(b) is neither applicable
             to the present controversy nor sought by the
             Mitscheles herein.

                    Option (ii), however, which permits a party "to
             terminate this [a]greement and recover its prior
             contributions to the [j]oint [v]enture" is applicable and
             available to the Mitscheles . . . . Pursuant to Article
             XI of the [JVA] which is specifically directed to
             [t]ermination, "the [j]oint [v]enture shall be dissolved
             and wound up in accordance with . . . those provisions
             of New Jersey Statutes that speak to such issues,
             except insofar as such provisions may be at variance
             with the terms of this [a]greement." The "prior
             contributions to the [j]oint [v]enture" made by the
             Mitscheles are a net of $2,000,000, the return of which
             will be discussed hereafter.[4] Thus, the Mitscheles
             have established entitlement to that sum.            Any
             argument that some or all of the $2,000,000 balance in
             their capital contribution has been satisfied by
             distribution of proceeds of sale from the developed
             lots is unpersuasive. No matter how those payments
             might have been carried on the books and records,
             these were distributions of profits on the sales of
             houses, not returns of "prior contributions" of capital.

                    As noted in the quotation above, immediately
             after the expression of the optional remedies available
             to a non-defaulting party, the following language
             appears:

                     The return of such contributions shall
                     constitute and be liquidated and agreed
                     damages and upon payment thereof, the
                     parties thereto shall be relieved of any
                     further liability to each other, it being

                                                                         A-0777-18T2
                                      10
                   expressly understood that such remedy, if
                   elected, shall then be the sole and
                   exclusive right and remedy of the non-
                   defaulting party, and constitutes a fair and
                   reasonable remedy for the damage
                   sustained as a result of the breach. Under
                   no circumstances shall either [j]oint
                   [v]enturer be liable to the other for any
                   damages other than specified above
                   whether such damages are direct or
                   consequential.

                  That limitation of remedies is as comprehensive,
            complete and unambiguous as it could possibly be.
            Any deviation or qualification placed upon those
            terms would violate both the parol evidence rule and
            the clauses governing integration and modification in
            the [JVA]. . . .

                   ....

                   Due to the limitation of damages clause,
            including a specific provision that "the parties thereto
            shall be relieved of any further liability to each other,"
            [the Mitscheles'] recovery in this matter is strictly
            limited to the $2,000,000 discussed above, and no
            sums are recoverable by [the Wilfs].
            ________
            4
              At the outset of the [j]oint [v]enture the Mitscheles
            contributed [forty] lots valued at a total of $4,000,000
            and, within a matter of months thereafter received
            $2,000,000 in partial redemption of that capital
            contribution.

      As to the termination, dissolution, and winding up of the joint venture,

the arbitrator explained:

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                                      11
       Pursuant to the powers conferred upon this
[a]rbitrator in the retention letter previously described
herein, and upon the joint application of the [p]arties,
the undersigned will enter a declaratory judgment that
the JVA is terminated and the [j]oint [v]enture is
dissolved. . . .

       However, the next step after the dissolution of a
partnership (or a [j]oint [v]enture) is the winding up of
its business. That undertaking, or legal proceeding if
necessary, is not within the jurisdiction of this
[a]rbitrator. . . .

      ....

      Furthermore, numerous items and issues will
have to be addressed in the winding up of the business
of this [j]oint [v]enture which are well outside the
record generated in this arbitration. . . . Furthermore,
this winding up will necessarily involve several
persons and entities who are not parties either to the
JVA or this arbitration. Those parties include Hillside
Heights, Edgemere, and each of the Wilfs
individually, as well as any third-party debtors or
creditors of the [j]oint [v]enture, the Township of
Livingston,[] and any potential purchasers of the
remaining lots. In addition, as part of the winding up
process, the [j]oint [v]enture will have to file
necessary federal and state tax returns and discharge
any liabilities which it may have to any taxing
authority.

      ....

       Accordingly, this [a]rbitrator will include in this
[f]inal [a]ward a directive that the parties proceed
forthwith with the winding up of the business of the
[j]oint [v]enture. However, that undertaking must

                                                             A-0777-18T2
                          12
      take place outside the confines of this arbitration.

The final arbitration award provided:

      1.    Ralph Mitschele, Jr. and Norman Mitschele, Jr.
      are hereby [a]warded jointly, the sum of $2,000,000
      against the [r]espondent W&M Joint Venture, LLC.

      2.     The nominal [r]espondents Edgemere Estates,
      Inc. and Hillside Heights, LLC are dismissed from this
      arbitration.

      3.     The parties to this arbitration are hereby
      awarded a declaratory judgment that the [JVA] is
      hereby terminated and W&M Joint Venture, LLC (the
      [j]oint [v]enture entity) is hereby dissolved.

      4.     The parties are directed to proceed with the
      winding up of the business of the [j]oint [v]enture and
      W&M Joint Venture, LLC either through agreement
      or, if necessary, by seeking the aid and supervision of
      a court of competent jurisdiction, acting pursuant to
      applicable provisions of the [JVA] and the laws of the
      State of New Jersey.

      5.    All other claims asserted by any party herein,
      including claims for awards of costs and/or attorneys'
      fees are denied and dismissed. [The Mitscheles] and
      [the Wilfs] will each bear their own costs and
      attorneys' fees as incurred.

      6.     The fees and expenses payable to this
      [a]rbitrator . . . will be billed and then satisfied from
      the [p]arties' deposits . . . . Throughout this matter,
      each side has been responsible for [fifty percent] of
      the [a]rbitrator's fees and that will remain the case.
      No portion of this obligation will be shifted from one
      party to another. These fees will remain as incurred.

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                               13
                                       III.

      The Mitscheles asked the court, pursuant to N.J.S.A. 2A:23B-23(a), to

modify the final arbitration award based "upon the ground that the [a]rbitrator

refused to consider evidence which would have been material to the

controversy," that Hillside and Edgemere were joint venture entities and

"proper and necessary parties to the [a]rbitration" over whom the arbitrator had

jurisdiction, and that the remaining lots held by Hillside and Edgemere "would

be subject to satisfaction of the [a]rbitrator's [f]inal [a]ward." Alternatively,

the Mitscheles sought confirmation pursuant to N.J.S.A. 2A:23B-24(b) and

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

      Pursuant to N.J.S.A. 2A:23B-24(a), the Wilfs sought to summarily

modify and then confirm the modified award based upon the ground that "the

arbitrator made an award on a claim not submitted to the arbitrator."

Alternatively, the Wilfs sought to vacate the final arbitration award on the

grounds that it was "procured by undue means," its issuance "constituted

[a]rbitrator misconduct," and the arbitrator exceeded his authority.

      On January 23, 2015, Judge Moore granted the Mitscheles' motion

pursuant to N.J.S.A. 2A:23B-24(a)(3), modifying the final arbitration award

and determining that it was enforceable against all three joint venture entit ies.

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                                      14
Judge Moore also confirmed the modified award. In doing so, he stated:

                 The evidence . . . unequivocally shows that the
           parties intended the joint venture entities to be a part
           of the arbitration and in fact seems to indicate that it
           was so obvious to the parties that Edgemere, Hillside,
           and W & M all constituted the embodiment of the
           joint venture that the parties did not even feel it
           necessary to have to explain that to the arbitrator.

                 As such, I do find on this record that the parties
           did intend Edgemere and Hillside, as well as W & M,
           to be part of the arbitration.

The judge modified the form of the award "to include Edgemere and Hillside

as part of the arbitration and allow recovery against the three joint venture

entities: Edgemere, Hillside, and W & M."

     In rejecting the Wilfs' arguments, he explained:

                  I think [Block v. Plosia, 390 N.J. Super. 543
           (App. Div. 2007) is] distinguishable from what we
           have here, very distinguishable.        In Block, the
           arbitrator was governed by the arbitration agreement
           which specifically limited the scope of the arbitration
           as follows: [t]he parties do agree to submit all matters
           in difference before them to the award and final
           determination of an arbitrator selected by them.

                 In this matter, [the arbitrator's] jurisdiction was
           governed by his retention letter to the parties and the
           [JVA]. No such provision agreeing to limit the
           matters exist in either of those governing documents.

                 ....

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                                    15
             And, in this matter, we have the following: [t]here is a
             limitation, [the JVA] . . . limit[s] its remedy to either a
             specific performance or return of capital contribution
             ....

                    . . . [I]n finding the Wilfs to be the breaching
             party, finding the Mitscheles to be entitled to a
             remedy, [the arbitrator] meticulously framed his award
             to fit within parameters provided by the parties and
             the governing instrument.

      Judge Moore also appointed a receiver for all three entities, "to liquidate

the corporation or the partnership assets, to satisfy the responsibilities, and

distribute whatever is left."

      Appellants' counsel argued, in a dispute over the form of the order, that

the receiver should be required to perform an accounting of the joint venture as

part of the winding up, which the judge denied, viewing it as a collateral attack

on the damages awarded by the arbitrator.

      Judge Moore denied the Wilfs' motion for reconsideration, explaining:

             Put simply, the Wilfs assert that because there was not
             an affirmative claim for capital contributions put forth
             by the Mitscheles, the arbitrator did not have the
             authority to award capital contributions. The Wilfs
             assert this argument is supported by the holding of
             Block.

                   . . . Unlike Block, the parties here sought,
             among other relief, an accounting, damages and
             remedies in accordance with the [JVA]. Moreover,
             pursuant to the retention letter, both parties agreed

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                                       16
that the arbitrator's authority to conduct the arbitration
proceeding shall be exclusive and complete. The
arbitrator shall have the power to grant such legal and
equitable remedies on a provisional or final basis as a
trial court of competent jurisdiction could grant in
similar cases.

      ....

      . . . [T]he [c]ourt finds and reaffirms that there
is no question that the arbitrator had the jurisdiction
under the relief requested to award the damages as
outlined above to the Mitscheles. But really, in my
view, the focus of the Wilfs' argument is not whether
the parties left the door open for a return of capital
contributions as relief, instead they argue that the
Mitscheles had not put in the return of capital
contribution into the issue in their asserted claims.
[The Wilfs' counsel] referred to that as no opportunity
to be heard, lack of due process.

      I don't buy that at all. I don't find that to be
accurate and even a cursory reading of the Mitschele
statement of claims shows as much. Multiple claims
allege misuse of joint venture funds and assets which
would necessarily incorporate capital contributions as
part of the joint venture's funds and assets. Moreover,
the claims include failure to maintain accurate
financial records, which would implicitly and
necessarily include records for the use and return of
capital contributions. . . .

      Thus, the [c]ourt finds that not only were there
capital contributions at issue before the arbitrator as a
necessary component of the claims put forth by the
Mitscheles, but, again, that [the arbitrator] had the
authority to award those damages and capital
contributions under the retention agreement, the

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                          17
            [JVA], and the statement of claims provided by the
            parties. Those are really the three documents that I'm
            considering:     retention agreement, [JVA], and
            statement of claims.

                   Moreover, the [c]ourt finds it unpersuasive that
            as only specific performance and capital contributions
            can be awarded under the [JVA] that the Wilfs had no
            notice of the possibility of an award as given by [the
            arbitrator]. . . .

      Regarding the Wilfs' argument that they were entitled to an order

directing the receiver to conduct a post-award accounting, the judge stated:

            We're not going to order the receiver to conduct an
            accounting of each party's interest from the beginning
            of the [JVA].

            . . . [I]t's the opinion of the [c]ourt that the issues
            related to the parties' conduct with each other and the
            joint venture should have been and in fact was, part of
            the arbitration. The outcome of that arbitration has
            been confirmed by this [c]ourt, . . . to go back now
            and order that an accounting be made from inception
            would to a significant extent undo the outcome of that
            arbitration. It's neither sensible nor appropriate. The
            receiver . . . has accounted for any funds he received
            or expended in undertaking his duties. But that is the
            extent of any further accounting which should occur.

                  ....

                  The Wilfs' position is inconsistent with the
            purpose and terms of the [JVA], specifically [XV(b)]
            as well as commonsense. . . .

                  . . . [I]t seems highly unlikely that the arbitrator

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                                     18
            could have intended to completely undermin[e] his
            final award by so rigidly requiring the application of
            [N.J.S.A.] 42:1A-41 and 45 that it would undo his
            decision. Further, article 11 of the [JVA] entitled
            termination provides that where the joint venture is
            terminated pursuant to the terms of the agreement, it
            "shall be dissolved and wound up in accordance with
            those provisions of the New Jersey statutes that speak
            to such issues except in so far as such provisions may
            be at variance with the terms of this agreement."

                  This provision makes clear to me that the [JVA]
            was designed to avoid the type of logically
            inconsistent results suggested here.          Applying
            [N.J.S.A.] 42:1A-41 in the manner presented by the
            Wilfs would . . . effectively render futile the remedy
            provision [XV(b)], upon which the arbitrator's final
            award was grounded and would transform these
            proceedings into an empty, very lengthy and
            expensive exercise.

In April 2016, the court issued an order denying the Wilfs' application.

      The Wilfs then moved for a redetermination of the disposition of funds

held in escrow by the receiver based upon the filing of the joint venturers'

2010-2015 tax returns and Section 704 of the Internal Revenue Code.

      In March 2017, Judge Moore denied the Wilfs' motion, explaining:

            [The first issue] before the [c]ourt is a narrow one,
            whether the so-called accounting performed by [the
            receiver]'s accountant for the JVA wind up in
            preparation of the filing of those tax returns changes
            the analysis under the JVA or the New Jersey Statute.
            I don't think it does.

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                                     19
      ....

       I'm just not persuaded that this particular
activity which triggered this new motion gives the
[c]ourt     reason    to    reconsider    its   previous
determination.       There's no indication that the
arbitrator's final award was premised on the notion
that at the end of the wind up of the joint venture, each
party would still zero out. . . .

      . . . A capital account analysis prepared for five
years of tax return[s] showing that the capital accounts
do not equal zero is simply not enough for the [c]ourt,
particularly in light of the explanations that the
Mitscheles give for that as to how it's treated. It's
simply not enough for the [c]ourt to reopen its
analysis of the arbitrator's decision, especially when
the arbitrator found fault on the . . . party alleging it's
owed money. It would turn the whole situation on its
head.

      ....

       . . . The tax code, in my view, provides no basis
for the [c]ourt to reconsider its previous findings or to
disturb the distribution of money as envisioned by [the
arbitrator] in the arbitration award. That's really
central to this and the other . . . findings. To do
anything else . . . would render it meaningless, which I
don't think [the arbitrator] intended.

       . . . [T]he potential tax consequences that will
follow the distribution of the money held by the
receiver is no reason to disturb the findings of the
arbitrator or the previous rulings of the [c]ourt, rather
the taxes paid will have to be adjusted to accurately
reflect gains and losses . . . . To vacate a previous
decision based on tax consequences of carrying it out

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                          20
              would be backwards and just not appropriate.

      In September 2018, the court entered a final order and judgment

awarding the Mitscheles the net sum of $1 million and required that such funds

remain in escrow with the receiver, pending determination of this appeal. On

October 17, 2018, an amended final order and judgment was entered to fix the

amount of the Wilfs' supersedeas bond.

                                        IV.

      After de novo review, Goffe v. Foulke Mgmt. Corp., 238 N.J. 191, 207

(2019), we affirm Judge Moore's decisions substantially for the thoughtful and

thorough reasons he placed on the record. We add the following discussion.

      While the arbitrator may have accorded relief not specifically sought by

either party, it was well within his discretion and the provisions of both the

arbitration agreement and JVA to do so. Because the return of prior capital

contribution was agreed-upon liquidated damages, set forth in Article XV of

the JVA, the arbitrator was authorized to award respondents $2 million in

liquidated damages, an amount equal to their prior capital contribution.           A

"liquidated    damages    provision[]    in   a   commercial   contract   between

sophisticated parties [is] presumptively reasonable [and enforceable] and the

party challenging the clause bears the burden of proving its unreasonablenes s."

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                                        21
Metlife Capital Fin. Corp. v. Wash. Ave. Assocs. LP, 159 N.J. 484, 496

(1999).

      Arbitration is "a favored means of dispute resolution." Hojnowski v.

Vans Skate Park, 187 N.J. 323, 342 (2006). "The object of arbitration is the

final disposition, in a speedy, inexpensive, expeditious, and perhaps less

formal manner, of the controversial differences between the parties." Id. at

343 (quoting Carpenter v. Bloomer, 54 N.J. Super. 157, 162 (App. Div. 1959)).

      "[T]he scope of review of an arbitration award is narrow. Otherwise, the

purpose of the arbitration contract, which is to provide an effective, expedient,

and fair resolution of disputes, would be severely undermined."        Fawzy v.

Fawzy, 199 N.J. 456, 470 (2009).        Thus, "courts grant arbitration awards

considerable deference."    Borough of E. Rutherford v. E. Rutherford PBA

Local 275, 213 N.J. 190, 201 (2013).

      "[W]hen binding arbitration is contracted for by litigants, the judiciary's

role to determine the substantive matters subject to arbitration ends."

Minkowitz v. Israeli, 433 N.J. Super. 111, 134 (App. Div. 2013). The party

seeking to vacate the award bears the burden of establishing a basis to vacate.
Id. at 136.   We review the trial court's decision to vacate or enforce an

arbitration award de novo. Manger v. Manger, 417 N.J. Super. 370, 376 (App.

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                                       22
Div. 2010).

      Block does not add support to appellants' argument. There, the question

presented was:

              whether an arbitrator retained pursuant to the parties'
              written agreement to "submit all matters in difference
              between them" to arbitration had the authority under
              the Arbitration Act to award statutory treble damages
              and counsel fees, in circumstances in which the
              advance statement of issues submitted by the parties to
              the arbitrator made no reference to statutory claims
              nor contained any demands for treble damages or
              statutory fees.

              [Block, 390 N.J. Super. at 545.]

We held that "in the absence of indicia that all parties to the arbitration have

reasonable advance notice that the scope of the arbitration includes potential

liability for treble damages and counsel fees, an arbitrator may not impose

such extraordinary relief in the award." Ibid.

      Here, unlike in Block, all the parties had advance notice that the scope of

the arbitration included the potential liability for the return of the prior capital

contributions to the non-defaulting party because such a remedy was agreed to

by the parties and stated in the JVA.

                                         V.

      Appellants contend that the trial court erred in granting the Mitscheles

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                                        23
legal fees pursuant to N.J.S.A. 2A:23B-25(c). They argue that "[t]he statute

only permits such an award if the underlying arbitration award found

entitlement to such fees," and since the arbitrator "already ruled that the

Mitscheles were not entitled to legal fees for the remedies they pursued under

the JVA," the Mitscheles were not entitled to an award of legal fees.

      In denying the Mitscheles' request for pre-award legal fees and

arbitration fees, the arbitrator explained:

             Although the [Mitscheles] did succeed in securing the
             return of the balance of their capital contributions to
             the [j]oint [v]enture, they were unsuccessful in
             pursuing their several claims for damages. All claims
             of the [Wilfs] were also denied.            Under these
             circumstances, it cannot be said that there was truly a
             prevailing party in this matter. Accordingly, although
             this [a]rbitrator has the discretion to do so (see AAA
             Rule 47(d)(ii)), [1] there is no basis for a recovery by
             any party against another of all or part of its attorneys'
             fees. Furthermore, in contrast to the remedy of
             specific performance set forth in Article XV(b)(i) of
             the JVA, the recovery of capital contributions under
             subsection (ii) does not require an award of attorneys'
             fees. Each side in this matter is required to bear the
             fees of its own counsel, and they will remain as
             incurred.

1
    American Arbitration Association (AAA), Commercial Arbitration &
Mediation Procedures, Rule 47(d)(ii) (2013) states: "The award of the
arbitrator(s) may include: . . . an award of attorneys' fees if all parties have
requested such an award or it is authorized by law or their arbitration
agreement."

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                                       24
      The court awarded respondents $123,350.33 in legal fees and costs

pursuant to N.J.S.A. 2A:23B-25(c) (emphasis added) (footnote omitted), which

provides:

            On application of a prevailing party to a contested
            judicial proceeding pursuant to section 22, 23, or 24 of
            this act, the court may add reasonable attorney's fees
            and other reasonable expenses of litigation incurred in
            a judicial proceeding after the award is made to a
            judgment confirming, vacating without directing a
            rehearing, or substantially modifying or correcting an
            award.

      As a general matter, New Jersey "disfavors the shifting of attorneys'

fees." Litton Indus., Inc. v. IMO Indus., Inc., 200 N.J. 372, 385 (2009). "[A]

prevailing party can recover those fees if they are expressly provided for b y

statute, court rule, or contract." Ibid. (quoting Packard-Bamberger & Co., Inc.

v. Collier, 167 N.J. 427, 440 (2001)); see also R. 4:42-9(a).

      Where attorney's fees are authorized, however, "the decision to award or

deny attorney's fees rests within the sound discretion of the trial court." Desai

v. Bd. of Adj. of Phillipsburg, 360 N.J. Super. 586, 598 (App. Div. 2003).

Trial courts have broad discretion in determining "when, where, and under

what circumstances counsel fees may be proper." Enright v. Lubow, 215 N.J.

Super. 306, 313 (App. Div. 1987). We will only disturb a trial court's award of

fees in "the rarest of occasions, and then only because of a clear abuse of

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                                     25
discretion." Litton Indus., 200 N.J. at 386 (quoting Packard-Bamberger, 167
N.J. at 444).

      Here, there was a statutory basis for the legal fees award. The clear and

unambiguous language of N.J.S.A. 2A:23B-25(c) specifically authorized the

court to grant such post-award legal fees and costs. Indeed, respondents were

the "prevailing party" to a "contested judicial proceeding" to confirm their

arbitration award. See N.J.S.A. 2A:23B-25(c).

      Appellants' argument that pursuant to the holding in Rock Work, Inc. v.

Pulaski Constr. Co., 396 N.J. Super. 344 (App. Div. 2007), respondents were

not entitled to the award of legal fees and costs under N.J.S.A. 2A:23B-25(c)

was rejected by the trial court and is rejected by us.

      In Rock Work, 396 N.J. Super. at 353, we held that the Arbitration Act

did not apply to the arbitration at issue, thereby resolving the issue before the

appellate court. Nevertheless, we proceeded to analyze the issues, assuming

that the Arbitration Act had applied.       Although we couched the issue as

whether, under N.J.S.A. 2A:23B-25(c), the successful party, the defendant,

was entitled to post-award legal fees for obtaining confirmation of the

arbitration award, we actually analyzed the issue as whether the defendant was

entitled to pre-award legal fees from the arbitrator. We said:

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                                      26
       Last, we consider [the defendant's] argument
that it was entitled to an award of fees incurred in
obtaining confirmation of the arbitration award. The
only authority cited for that proposition is the
Arbitration Act, and in particular N.J.S.A. 2A:23B-
25(c) . . . .

      We assume that the argument for fees was based
on the possibility that we might have decided that the
Arbitration Act applied to this case. Since we have
accepted [the defendant's] contrary contention, there is
no basis for awarding fees. . . .

       Were we to assume that the Arbitration Act
provisions on attorney's fees applied here, we would
still not grant the relief requested by [the defendant]
because there was a substantial question about
whether the act applied and because we are satisfied
for the following reasons that under the act [the
defendant] was not entitled to receive an attorney's fee
award from the arbitrators.

      The Arbitration Act adopts the American Rule
except when fee-shifting occurs "by the agreement of
the parties to the arbitration proceeding." N.J.S.A.
2A:23B–21(b). The question, as we perceive it, is
whether an express agreement is required or whether
an implied agreement will do. In this case, [the
defendant] concedes that there was no express
agreement for fee-shifting but argues that an
agreement may be implied because the arbitration
agreement called for "all claims, disputes and other
matters in question arising out of or relating to" the
contract to be resolved in the arbitration, [the
unsuccessful party] submitted to AAA arbitration, and
the applicable AAA rule, CIAR 46(d), stated that fees
may be awarded if both sides ask for them.

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                         27
            [Rock Work, 396 N.J. Super. at 355-56.]

       We held that unless the parties had agreed to grant the arbitrator the

authority to grant pre-award legal fees, the arbitrator could not do so. Id. at

357.   Although we analyzed the issue only under section (b) of N.J.S.A.

2A:23B-21, as it pertains to pre-award legal fees and costs from the arbitrators,

we applied that same analysis to conclude that the defendant was not entitled

to post-award legal fees and costs from the court for confirming the arbitration

award section (c) of the statute.

       As Judge Moore pointed out, the Rock Work court's ruling on N.J.S.A.

2A:23B-25(c) was clearly dicta, as it had already determined that the

Arbitration Act did not apply.       Judge Moore's conclusion that N.J.S.A.

2A:23B-25(c) authorizes the grant of post-award legal fees in a confirmation

proceeds, and that the Rock Work holding does not preclude such an award, is

supported by the facts and law.

       Respondents were also entitled to post-award legal fees and costs

because the JVA does, in fact, contain an express agreement on attorneys' fees.

Article XVI (c) provides:

            Attorneys' Fees. In the event any action or proceeding
            is commenced to obtain a declaration of rights
            hereunder, to enforce any provision hereof, or to seek
            rescission of this Agreement for default contemplated

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                                     28
           herein, whether legal or equitable, the prevailing party
           in such action shall be entitled to recover its
           reasonable attorneys' fees in addition to all other relief
           to which it may be entitled.

     The trial court did not err by awarding respondents post-award legal fees

and costs under N.J.S.A. 2A:23B-25(c).

     Affirmed.

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