Court Opinion

ID: 4565184
Source: CourtListenerOpinion
Date Created: 2020-09-14 14:06:59.505995+00
Date Added: 2024-06-11T12:41:01.993609
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NOT FOR PUBLICATION WITHOUT THE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-0370-19T3

ATLANTIC CITY BOARD OF
EDUCATION,

          Plaintiff-Respondent,

v.

ATLANTIC CITY EDUCATION
ASSOCIATION,

     Defendant-Appellant.
____________________________

                   Argued telephonically August 25, 2020 –
                   Decided September 14, 2020

                   Before Judges Geiger and Mitterhoff.

                   On appeal from Superior Court of New Jersey, Law
                   Division, Atlantic County, Docket No. L-2497-18.

                   Steven R. Cohen argued the cause for appellant
                   (Selikoff & Cohen, PA, attorneys; Steven R. Cohen, of
                   counsel and on the briefs; Hop T. Wechsler, on the
                   briefs).

                   Michael E. Riley argued the cause for respondent
                   (Riley & Riley, attorneys; Tracy L. Riley, on the brief).
PER CURIAM

      Defendant Atlantic City Education Association (Association) appeals

from a Law Division order vacating an arbitration award and holding that the

Collective Negotiations Agreement (CNA or Agreement) between the

Association and plaintiff Atlantic City Board of Education (Board) included the

right to deduct dental insurance premium contributions from employees'

salaries. For the reasons that follow, we reverse.

                                       I.

      We derive the following facts from the record. The Association is the sole

and exclusive labor representative for certain school employees of plaintiff,

including teaching staff and support personnel.

      The prior CNA expired on June 30, 2016.          The parties engaged in

collective negotiations for a successor agreement until February 2017.       On

February 13, 2017, Association President Marcia Genova sent an email to

Association members announcing a general meeting and ratification vote

scheduled for February 28, 2017, allowing members to become familiar with

State School Employee's Health Benefit Program (SEHBP) plans and related

salary deductions. Two days later, President Genova sent a follow-up email to

all twelve building representatives with an attached PowerPoint prepared by the

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Board to be shared with members. The PowerPoint identified the amounts to be

deducted from salaries for medical and dental insurance, based on the plans

chosen by the member.

      The ratification vote was to approve a proposed three-year CNA for the

period July 1, 2016 through June 30, 2019. The membership ratified the CNA

on February 28, 2017. The parties dispute whether the CNA authorized the

Board to deduct dental insurance contributions from members' salaries.

      Article XVI of the CNA governs health care insurance. Paragraph 16.1

provides:

                  In accordance with applicable law, all
            employees, with the exception of those who "opt out,"
            shall pay at least the legislated contribution
            requirements provided by P.L. 2011, c. 78 towards their
            health insurance premium which equates to Step 4 on
            the existing scale where it shall remain unless
            renegotiated at a later time.

                   No employee's health care contribution shall be
            less than 1.5% of his or her base salary. The Board will
            assume the remaining costs for health benefits [with]
            co-pays of ten dollars ($10.00) and a deductible of two
            hundred dollars ($200.00) per individual and four
            hundred dollars ($400.00) per family. The prescription
            co-pay is fifteen dollars ($15.00) for branded drugs and
            five dollars ($5.00) for generic drugs. All mail order
            prescriptions shall be zero ($0.00) co-pay. The medical
            plan in existence as of June 30, 2016 shall remain in
            place for the 2016-2017 school year. Effective July 1,
            2017 the coverage shall be available through the School

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            Employees'    Health        Benefits       Program
            ("SHBP/SEHBP") for medical, prescription, dental and
            vision.

      The CNA contains no other language addressing employee contributions

to dental insurance premiums. Nor was any memorandum of agreement, side

agreement, contribution rate summary, or PowerPoint pertaining to employee

contribution to dental insurance premiums incorporated into or appended to the

CNA.1

      In July 2017 as to twelve-month employees and September 2017 as to ten-

month employees, the Board began deducting a percentage of the insurance

premiums for dental and vision health care from their salaries.2 The amount of

the deductions purportedly mirrored those contained in the Board's contract

1
  During oral argument before this court, the parties acknowledged that they did
not enter into any such memorandum of agreement or side agreement. They
further acknowledged there were no letters, emails, or other written
communications confirming any verbal agreement regarding employee dental
insurance contributions.
2
  The Association ultimately waived any claim regarding amounts deducted for
vision care benefits, leaving the deduction for dental benefits as the sole issue.

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                                        4
proposal and the PowerPoint conveyed to the Association.3 The Association

filed a grievance disputing the new deductions.

      Paragraph 28.1 states the "Agreement constitutes the entire Agreement

between the parties and encompasses all matters that were the subject of

negotiations or could have been the subject of negotiations. Neither party shall

be required to negotiate on any matters except as provided for negotiations of a

successor Agreement." In turn, Paragraph 2.3 states the "Agreement shall not

be modified in whole or in part by the parties except by an instrument in writing

duly executed by both parties."

      The CNA contains a multi-step grievance procedure culminating in

binding arbitration.   Paragraph 3.7 states that "[t]he arbitrator shall limit

themsel[f] to the issue(s) submitted to him/her and shall consider nothing else.

He/she can add nothing to nor subtract anything from the Agreement between

the parties or any policy of the Board of Education. The award of the arbitrator

shall be binding."

      The grievance remained unresolved and proceeded to binding arbitration.

In January 2018, the Public Employment Relations Commission appointed an

3
   Because there are no writings addressing employee contribution to dental
insurance premiums other than the PowerPoint provided by the Board, the
alleged agreement for such contributions must have been verbal.
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arbitrator to hear and decide the stipulated issue of whether the Board "violated

the contract between the parties or applicable law by deducting Chapter 78

premiums for dental[,] and if so[,] what shall be the remedy?"

      The arbitration took place on May 1, 2018, with each party relying on the

submitted documentation, oral argument, and the opportunity to submit post-

hearing briefs, without calling any witnesses or submitting any affidavits in

support of their respective positions. As a result, the arbitration record did not

contain evidence of any oral agreement reached by the negotiating teams for

Association members to contribute to dental premiums, much less any proof that

the contract ratified by the Association included employee dental insurance

contributions.

      On June 25, 2018, the arbitrator rendered her award and made the

following findings of fact. The arbitrator noted that, after the Legislature enacted

P.L. 2011, c. 78 (Chapter 78), the prior CNA, which expired on June 30, 2016,

began Chapter 78 deductions. The parties engaged in collective negotiations for

a successor agreement until early Spring 2017. The CNA incorporated the

provisions of Chapter 78 by reference. Chapter 78, in turn, provides: "As used

in this section, 'cost of coverage' means the premium or periodic charges for

medical and prescription drug plan coverage, but not for dental, vision, or other

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health care, provided under the State Health Benefits Program or the School

Employees' Health Benefits Program . . . ."

      Regarding ratification of the new CNA and payroll deductions, the

arbitrator found:

            The Association was either informed of or agreed to
            enrollment in the State School Employees Health
            Benefits Program ("SEHBP" or "SHBP") as of July 1,
            2017. On February 13, 2017, Association President
            Marcia Genova sent an email announcing a general
            meeting of the unit membership, and advising the
            ratification vote would occur on February 28, 2017, to
            give Association members time to become familiar with
            the SEHBP plans and required deductions.

                   On February 15, 2017, Genova forwarded
            another email to all [twelve] building representatives,
            with an attached PowerPoint presentation to be shared
            with members.        Exhibit B-4 is the PowerPoint
            document, identifying the amounts to be deducted from
            salaries, depending on the plan chosen by the employee,
            for both medical and dental insurance. On February 28,
            2017, the [Association] members ratified the proposed
            contract by a vote of 686 to 101. It is not clear from the
            record what specific terms the Association members
            ratified.

                  The Board acknowledges that beginning in the
            2017-2018 school year, it included the costs of dental
            premiums when calculating the Chapter 78
            contributions each unit member would make. The new
            dental deductions began on July 1, 2017 for 12-month
            employees and on September 1, 2017 for 10-month
            employees.

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            [Footnotes and citations omitted.]

      The arbitrator determined the issue involved "contract interpretation and,

therefore, the Association has the burden of proof." She noted that the record

contained no evidence regarding "the employees' review of the PowerPoint" or

"the specific terms discussed or voted on during the ratification meeting/vote."

The arbitrator engaged in the following analysis:

            I find that Article 16.1 of the Agreement contains the
            only reference to health insurance. Article 16 contains
            no provision authorizing the payment of employee
            contributions toward dental premiums.                The
            PowerPoint, which does contain the dental deductions
            is not referenced in the Agreement nor attached as an
            appendix, notwithstanding the fact that the parties have
            included several pages of appendices at the end of the
            Agreement.

                   Chapter 78 does not mandate contributions to
            dental insurance, but specifically excludes the cost of
            dental and vision premiums in the "cost of coverage" -
            a key component of the formula for determining
            deductions. By excluding these components in the cost
            of coverage, I believe the legislature intended parties
            covered by collective negotiations agreements to
            determine, through collective negotiations, their own
            appropriate dental and vision rates. If parties choose to
            enroll in the state health benefits programs, they will
            have access only to those dental plans provided therein,
            but they must still negotiate the specific dental
            contribution rates up to the maximum set by regulation.
            The Division of Pensions and Benefits' Dental Rates
            fact sheet (Exhibit B-1) only identifies the maximum
            rates employees may be asked to contribute. The fact

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                                       8
sheet, by its terms, does not require or authorize the
Board to determine the rates it chose unilaterally.
N.J.A.C. 17:9-9.1(c)(4), cited by the Board, appears to
require certain dental contributions. That section
provides:

      4. If an employer elects to participate in
      the Employee Dental Plans, the employee's
      share of the cost for the Plans may be
      determined by a formula different from
      that used to determine the employee's share
      of the cost of health coverage. The
      employee may pay a share of the cost of
      dental coverage for the employee and for
      the employee's covered dependents as
      required by a collective negotiations
      agreement. The employer may establish by
      ordinance or resolution, rules for the
      employee's share of the cost for those
      employees not covered under a collective
      negotiations agreement . . . . (emphasis
      added)

       However, the use of the term "may" in the above
paragraph means bargaining unit employees are
permitted to contribute toward dental premiums, not
that they are required to do so. The rule is consistent
with Chapter 78 which also permits, but does not
mandate, employee contributions toward dental
premiums. The last line of the rule contemplates that
for non-unit employees, the employer may set dental
contribution rates unilaterally, but does not contain the
same authorization for bargaining unit employees.
Their deductions will be negotiated by parties and
included in their collective Agreements.

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                           9
     The Arbitrator engaged in the following analysis in determining the Board

did not prove the membership approved the dental contributions.

                  The Board argues the vote was based on
           information presented by the [Association] to the
           membership, including the dental deductions, and
           proves the membership approved the dental deductions.
           No witness verified that members who voted for
           ratification actually received, reviewed and approved
           the dental deduction alleged to have been approved.
           The Association argues that the PowerPoint contained
           a mistake and the mistake was later corrected. No
           witness in this hearing testified about the alleged
           mistake, or its correction. No witness verified the
           alleged mistake or its correction. In this case, the
           Agreement itself is the best evidence and it contains no
           reference to dental contributions.

                  The Association proved that the Board and
           Association did not negotiate or agree to the dental
           contribution rates asserted by the Board. The
           Agreement contains no reference to the alleged rates.
           Moreover, the parties did not attach them to the
           Agreement nor include them as an appendix. There is
           no signed memorandum of agreement or side agreement
           in the record demonstrating the parties' agreement to
           these rates. I do not find that the PowerPoint
           presentation and ratification vote results alone are
           sufficient proof of an agreement on dental insurance.

                  Finally, it is beyond the scope of my authority
           under Article 3.7 of the contract "to add to" the terms
           of the Agreement. I believe enforcing the Board's
           proposed dental contributions would improperly add to
           the terms of the Agreement, and I decline to do so.

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                                     10
      The arbitrator determined the Board violated Paragraph 16.1 of the CNA

when it imposed the new dental insurance deductions, concluding that "[n]o

applicable law was shown to have required the deductions." Accordingly, the

arbitrator sustained the grievance and ordered the Board to cease deducting

dental premium contributions from members and to reimburse the amounts

previously deducted by issuing checks or credits to employees toward future

health insurance contributions.

      On October 8, 2018, the Board filed this action seeking to vacate the

arbitration award. It alleged the award contained mistakes of fact and law. The

Association opposed the action, moved to dismiss the complaint with prejudice,

and sought an award of attorneys' fees and costs.

      The trial court heard oral argument on November 30, 2018 and issued an

August 12, 2019 order and written opinion vacating the arbitration award. It

determined the award was contrary to public policy and not reasonably debatable

given the "undisputed facts." It found the record "establishe[d] that the parties

engaged in negotiations, reached an agreement, and subsequently had a

ratification vote that included the dental premiums." It noted that information

"regarding the medical and dental premiums and contributions by members was

distributed to the Association and members prior to the ratification vote." That

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information included a PowerPoint prepared by the Board, which set forth "the

details of the dental premiums." Accordingly, it concluded "the arbitrator's

interpretation of the CNA regarding dental premiums is not supported by the

facts." Based on its review of the evidence, the court stated it was "left with no

other option other than to vacate the award, enforce the agreement and allow the

Board to continue to deduct dental premiums."

      Noting this case involved a grievance arbitration, the court explained that

it must determine if the award is reasonably debatable (i.e., "whether the award

draws its essence from the [CNA]" and "whether the award violates the law or

public policy").

      The court emphasized the PowerPoint advised the membership that the

annual cost for dental premiums was $655 for family coverage, $401 for member

and spouse coverage, $486 for parent and child coverage, and $230 for single

coverage. It noted the CNA stated that medical, dental, and vision coverage

shall be available through the SHEBP and that no employee's health care

contribution should be less than 1.5% of their salary.

      The court determined that the award "was not drawn from the agreement

between the parties." It found the arbitrator "ignored the undisputed agreement

between the parties regarding dental premiums" and "ignored and gave no

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meaning or weight to the PowerPoint."        The court found "the PowerPoint

reflected the true meeting of the minds of the agreement between the parties"

and "is part of the contract." The court was "satisfied that the PowerPoint

contained sufficient detail to inform the members."       It noted "[t]he Board

collected dental premiums by applying the same formula as permitted under the

legislative contribution requirements provided by Chapter 78."

      Regarding public policy, the court stated "Chapter 78[] increased the

amount that all public employees must contribute to their pension and health

care insurance plans," by requiring "that all employees contribute at least one-

and-one-half percent of compensation toward the cost of health coverage."

      The court held the public policy of this State "envisions contribution by

public employees towards their benefits including[] dental benefits."            It

concluded Chapter 78 was intended "to establish a mandatory minimum

contribution standard that all state employees must pay for their health insurance

benefits, based on a sliding scale tied to income level," with "employees paying

at least 1.5% of the cost of coverage for all types of insurance." The court found

this was "precisely the formula used the Board."

      The court noted the award allows Association members to enjoy dental

benefits without contributing to its cost, contrary to public policy and the

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agreement of the parties. It held the Board did not violate the CNA when it

imposed payroll deductions for dental insurance premiums because the CNA

included employee contributions towards those premiums.

      On appeal, the Association argues the trial court misconstrued the narrow

statutory exceptions for vacating an arbitration award by holding the award was

not reasonably debatable because the award did not consider evidence extrinsic

to the CNA. In addition, the Association contends the court misinterpreted

Chapter 78 as requiring mandatory minimum employee dental contributions of

1.5 percent, notwithstanding express statutory language excluding dental

benefits from the cost of coverage under SEHBP. It further contends the court

ignored long-recognized public policy that employee health care contributions

are negotiable unless preempted by statute.

      Notably, the Board does not argue that the omission of dental insurance

premium contribution in the CNA was due to mistake or that the CNA should

be reformed to include such contributions by bargaining unit members.

                                       II.

      Our review of a trial court decision vacating a labor arbitration award is

guided by certain well-established principles. We review a trial court's decision

on a motion to vacate an arbitration award de novo. See Yarborough v. State

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                                      14
Operated Sch. Dist. of City of Newark, 455 N.J. Super. 136, 139 (App. Div.

2018) (citing Minkowitz v. Israeli, 433 N.J. Super. 111, 136 (App. Div. 2013)).

However, "[j]udicial review of an arbitration award is very limited." Bound

Brook Bd. of Educ. v. Ciripompa, 228 N.J. 4, 11 (2017) (quoting Linden Bd. of

Educ. v. Linden Educ. Ass'n ex rel. Mizichko, 202 N.J. 268, 276 (2010)). "The

public policy of this State favors arbitration as a means of settling disputes that

otherwise would be litigated in a court." Badiali v. N.J. Mfrs. Ins. Group, 220
N.J. 544, 556 (2015) (citing Cty. Coll. of Morris Staff Ass'n v. Cty. Coll. of

Morris, 100 N.J. 383, 390 (1985)). To ensure the finality and the expeditious

and inexpensive nature of binding arbitration, there is "a strong preference for

judicial confirmation of arbitration awards," particularly in public-sector labor

disputes. Borough of E. Rutherford v. E. Rutherford PBA Local 275, 213 N.J.
190, 201 (2013) (quoting Middletown Twp. PBA Local 124 v. Twp. of

Middletown, 193 N.J. 1, 10 (2007)).

      We apply "an extremely deferential review when a party to a collective

bargaining agreement has sought to vacate an arbitrator's award." Policemen's

Benevolent Ass'n, Local No. 11 v. City of Trenton, 205 N.J. 422, 428 (2011).

"In the public sector, an arbitrator's award will be confirmed 'so long as the

award is reasonably debatable.'" Linden Bd. of Educ., 202 N.J. at 276 (quoting

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                                       15
Middletown Twp. PBA Local 124, 193 N.J. at 11). An award is "reasonably

debatable" if it is "justifiable" or "fully supportable in the record." Policemen's

Benevolent Ass'n, 205 N.J. at 431 (quoting Kearny PBA Local No. 21 v. Town

of Kearny, 81 N.J. 208, 223-24 (1979)). Under this standard, a reviewing court

"may not substitute its own judgment for that of the arbitrator, regardless of the

court's view of the correctness of the arbitrator's position." N.J. Transit Bus

Ops., Inc. v. Amalgamated Transit Union, 187 N.J. 546, 554 (2006) (citing State

v. Int'l Fed'n of Prof'l & Technical Eng'rs, Local 195, 169 N.J. 505, 514 (2001)).

      N.J.S.A. 2A:24-8 sets forth the grounds for vacating an arbitration award.

Pertinent to this appeal, a court must vacate an arbitration award: "Where the

award was procured by corruption, fraud or undue means; . . . [or] [w]here the

arbitrators exceeded or so imperfectly executed their powers that a mutual, final

and definite award upon the subject matter submitted was not made." N.J.S.A.

2A:24-8(a), (d).

      Additionally, when reviewing an arbitrator's interpretation of a public-

sector contract, "a court 'may vacate an award if it is contrary to existing law or

public policy.'" Middletown Twp. PBA Local 124, 193 N.J. at 11 (quoting N.J.

Tpk. Auth. v. Local196, Int'l Fed'n Prof. Tech. Eng'rs, 190 N.J. 283, 294 (2007)).

Heightened scrutiny is required "when an arbitration award implicates 'a clear

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                                       16
mandate of public policy.'" Int'l Fed'n Prof. Tech. Eng'rs, 190 N.J. at 294

(quoting Weiss v. Carpenter, Bennett & Morrissey, 143 N.J. 420, 443 (1996)).

      An arbitrator exceeds her authority where she ignores "the clear and

unambiguous language of the agreement." City Ass'n of Supervisors & Adm'rs

v. State Operated Sch. Dist. of City of Newark, 311 N.J. Super. 300, 312 (App.

Div. 1998). "Thus, an arbitrator may not disregard the terms of the parties'

agreement, nor may [s]he rewrite the contract for the parties." Cty. Coll. of

Morris, 100 N.J. at 391 (citation omitted).

      "Although arbitrators may not look beyond the four corners of a contract

to alter unambiguous language, where a term is not defined, it may be necessary

for an ‘arbitrator to fill in the gap and give meaning to that term.'" Policemen's

Benevolent Ass'n, 205 N.J. at 430 (quoting Linden Bd. of Educ., 202 N.J. at

277). If contract terms are unspecific or vague, "extrinsic evidence may be used

to shed light on the mutual understanding of the parties." Hall v. Bd. of Educ.

of Twp. of Jefferson, 125 N.J. 299, 305 (1991).

      Although the arbitrator is not free to contradict the express language of a

contract, "an arbitrator may 'weav[e] together' all those provisions that bear on

the relevant question in coming to a final conclusion." Policemen's Benevolent

Ass'n, 205 N.J. at 430 (alteration in original) (quoting N.J. Transit Bus

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                                       17
Operations, 187 N.J. at 555). "[S]o long as the contract, as a whole, supports

the arbitrator's interpretation, the award will be upheld." Ibid.

      Here, the express terms of the CNA are clear and unambiguous and do not

require employees to contribute to the cost of dental benefits. Moreover, there

was no past practice of employees contributing to the cost of dental benefits.

      The award was not contrary to existing law. Chapter 78 does not mandate

employees to contribute to dental insurance premiums. On the contrary, the

statute excludes "premium or periodic charges" for dental care "provided under

the [SEHBP]" from the definition of cost of medical coverage provided pursuant

to Chapter 78. N.J.S.A. 52:14-17.28(c). Instead, employee contributions to

dental insurance premiums is subject to negotiation and agreement. To that end,

N.J.A.C. 17:9-9.1(c)(4) provides:

            If an employer elects to participate in the Employee
            Dental Plans, the employee's share of the cost for the
            Plans may be determined by a formula different from
            that used to determine the employee's share of the cost
            of health coverage. The employee may pay a share of
            the cost dental coverage for the employee and for the
            employee's covered dependents as required by a
            collective negotiations agreement.

The CNA reflects no such agreement.

      The Arbitrator correctly concluded that N.J.S.A. 52:14-17.28(c) and

N.J.A.C. 17:9-9.1(c)(4) do not mandate employee contributions to dental

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                                       18
insurance. Accordingly, neither the CNA as written nor the arbitration award

violate public policy.

      While the Board and the Association apparently engaged in unspecified

negotiations regarding employee contributions to dental insurance premiums,

the Board produced no evidence of the substance of such negotiations and any

resulting agreement because it elected not to present any testimony, affidavits,

or exhibits, other than the PowerPoint, at the arbitration hearing. Absent this

proof, the arbitrator correctly concluded that the record did not support imposing

salary deductions for dental benefits. Moreover, the Board drafted the CNA. If

an agreement as to contribution to dental benefits was reached, it was incumbent

on the Board to include those terms in the CNA through express language or

appendices. It did not.

      We reiterate that the Board did not argue before the arbitrator, the trial

court, or this court that dental benefit contribution language was inadvertently

omitted from the executed CNA or that the contract should be reformed to

correct that error. In the absence of such argument, neither the arbitrator nor the

trial court was free to add additional language to the CNA imposing such

contributions where the CNA was not ambiguous and there was no past practice

of contributing to those premiums. The trial court erred in doing so.

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                                       19
     In sum, we are satisfied that the arbitrator's award is reasonably debatable

and did not violate existing law or public policy. We reverse the order that

vacated the arbitration award and reinstate the remedy the award imposed.

     Reversed.

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