Court Opinion

ID: 4214907
Source: CourtListenerOpinion
Date Created: 2017-10-26 13:11:26.027271+00
Date Added: 2024-06-11T14:41:53.254813
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NOT FOR PUBLICATION WITHOUT THE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-3325-16T1

SAND CASTLE DEVELOPMENT, LLC,

              Plaintiff-Appellant,

v.

AVALON DEVELOPMENT GROUP, LLC,
CHRISTOPHER SMITH, SIGNATURE
BUILDING SYSTEMS OF PA, LLC,
and JUSTIN DEPHILLIPS,

          Defendants-Respondents.
__________________________________________

              Argued September 18, 2017 – Decided October 26, 2017

              Before Judges Messano and Accurso.

              On appeal from Superior Court of New Jersey,
              Law Division, Cape May County, Docket No. L-
              0176-16.

              Michael E. Holzapfel argued the cause for
              appellant   (Becker,  LLC, attorneys; Mr.
              Holzapfel, on the briefs).

              Katrina M. Register argued the cause for
              respondents Signature Building Systems of PA,
              LLC and Justin DePhillips (Trimble & Armano,
              attorneys; John W. Trimble, Jr. and Ms.
              Register, on the brief).
PER CURIAM

     Plaintiff    Sand   Castle     Development,    LLC,        entered   into    a

construction    agreement    (the    Contract)     with    defendant       Avalon

Development Group, LLC, to demolish an existing motel and construct

twenty-four    condominium   units    utilizing     modular       construction.

Avalon, in turn, entered into a "Master Purchase Agreement" (MPA)

with defendant Signature Building Systems of PA, LLC, whereby

Signature agreed to manufacture and deliver the modular units.

Avalon's     representative,      defendant   Christopher           Smith,     and

Signature's Director of Sales and Marketing, defendant Justin

DePhillips, executed the MPA and a separate purchase order for the

units.   Apparently, to assure favorable tax-exempt status for the

project, the MPA and purchase order were modified to include

plaintiff.     Its principal executed copies of both and forwarded

them to Signature with a deposit of $300,000.1

     After the motel was demolished, disputes broke out between

the parties, leading ultimately to the filing of plaintiff's

complaint    naming   Avalon,   Smith,    Signature       and    DePhillips      as

defendants and asserting breach of contract, fraud and other causes

of action.

1
  The second MPA was identical to the original, except it added
plaintiff as the "owner."

                                      2                                   A-3325-16T1
     The    Contract    between   plaintiff   and   Avalon   contained    no

arbitration provision.      However, the MPA contained two provisions

that are the crux of the present appeal.        Section 15(e), entitled

"Mandatory Mediation," provided:

            If at any time there is a claim or dispute
            arising out of or relating to this Agreement,
            including the alleged breach, termination or
            validity thereof, the Parties shall within ten
            (10) days following mailing by either party
            of written notice of a dispute, engage in
            face-to-face negotiations in an attempt to
            resolve the dispute and shall, upon failing
            to negotiate a resolution, choose a mutually
            agreeable third party neutral, who shall
            mediate the dispute between the Parties. . . .
            If the Parties are unable to resolve the
            dispute in good faith within six (6) months
            of the date of the initial demand by either
            party for such fact finding, the dispute shall
            be finally determined by a court of competent
            jurisdiction as set forth in Section 15(f).
            Neither party may bring any court proceedings
            until completion of the mediation process, the
            Court shall dismiss such action with prejudice
            and the party bringing such action shall
            reimburse the other party for all its costs
            and expenses in defending same.

            [(Emphasis added).]

Section     15(f),     entitled   "Dispute    Resolution     Arbitration,"

provided:

            Mindful of the high cost of litigation, not
            only in dollars, but also in time and energy,
            the parties intend to and do hereby establish
            the   following    out-of-court   alternative
            dispute resolution procedure to be followed
            in the event any controversy or dispute shall
            arise out of, or relating to this contract or

                                     3                             A-3325-16T1
            relating to any change orders or other changes
            or addendums to this contract. If a dispute
            develops between the parties to this contract,
            the parties will submit to binding arbitration
            to address any controversy or claim arising
            out of, or relating to this contract or
            relating to any change orders or other changes
            or addendums to this contract. The arbitration
            shall be conducted by and according to the
            rules and procedures of Construction Dispute
            Resolution Services, LLC.     The Arbitration
            Award shall be binding upon the parties and
            shall be enforceable in any court of competent
            jurisdiction.

            [(Emphasis added).]

    Additionally, paragraph 15(g) entitled, "Jury Trial Waiver"

provided in capital letters, "EACH PARTY TO THIS AGREEMENT HEREBY

EXPRESSLY    WAIVES    THE   RIGHT    TO       TRIAL    BY    JURY    IN    ANY   ACTION,

PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THEM AGAINST THE

OTHER ON ALL MATERS ARISING OUT OF THIS AGREEMENT."                               Finally,

paragraph 15(j) provided the agreement would be "governed . . .

in accordance with the laws . . . of Pennsylvania."

    Avalon     filed    an   answer    before          the    parties      consented      to

mediation,    which    proved   unsuccessful.                 Prior   to    filing      its

responsive    pleading,      Signature         moved     to    compel      arbitration.

Plaintiff and Avalon both filed opposition.

    In a thoughtful written opinion, Judge J. Christopher Gibson

first noted that while the parties failed to reference the choice

of law provision in the MPA, Pennsylvania law regarding the

                                           4                                       A-3325-16T1
enforceability of contractual arbitration provisions "generally

mirror[ed]" New Jersey law.            Judge Gibson rejected plaintiff's

argument that the MPA was a contract of adhesion. He also rejected

plaintiff's      contention     that   Sections    15(e)   and    15(f)    were

ambiguous, or that plaintiff could not be compelled to arbitrate

its   disputes    with   Avalon    because   the   contract      contained    no

arbitration provision.         Lastly, Judge Gibson rejected plaintiff's

claim that Signature's assertion of rights under the arbitration

provision was untimely.

      He entered an order staying any further proceedings and

compelling plaintiff to arbitrate its claims against Avalon and

Signature.     This appeal followed.

      Plaintiff reiterates its arguments that the MPA's arbitration

provision is ambiguous because it does not clearly provide for

arbitration as the proper forum, and, as a contract of adhesion,

the doctrine of contra proferentem applies and the MPA must be

strictly construed against Signature and in favor of plaintiff.

Plaintiff also argues that it was error to compel arbitration of

its   claims   against   Avalon    because   the   Contract      contained    no
                           2
arbitration provision.

2
  In Point III of its brief, plaintiff argues Judge Gibson made
factual findings unsupported by the record on issues not raised
                                   (footnote continued next page)

                                        5                              A-3325-16T1
     We have considered these arguments in light of the record and

applicable legal standards.          We affirm, substantially for the

reasons expressed by Judge Gibson.        We add only the following.

     We   review   de   novo   the   trial   court's    order   compelling

arbitration.   Hirsch v. Amper Fin. Servs., LLC, 215 N.J. 174, 186

(2013).   "In reviewing such orders, we are mindful of the strong

preference to enforce arbitration agreements."              Ibid.   We must

first determine whether the parties have entered into a valid and

enforceable agreement to arbitrate disputes. Id. at 187. Second,

we must determine whether the dispute falls within the scope of

the agreement.     Id. at 188.

     Agreements to arbitrate must "be the product of mutual assent,

as   determined    under   customary     principles    of   contract     law."

Atalese v. U.S. Legal Servs. Grp., L.P., 219 N.J. 430, 442 (2014),

cert. denied, __ U.S. __, 135 S. Ct. 2804, 192 L. Ed. 2d 847

(2015) (quoting NAACP of Camden Cty. E. v. Foulke Mgmt. Corp.,

(footnote continued)
by Signature's motion, citing the judge's reference to Smith as
plaintiff's agent in its dealings with Signature.     We find any
reference was irrelevant to the legal conclusions reached by the
judge, which were firmly tethered to the provisions of the MPA and
applicable case law. In Point IV of its brief, plaintiff argues
it was error for Judge Gibson to apply Pennsylvania law, since
Signature argued New Jersey law was applicable. However, plaintiff
does not assert any meaningful difference exists between the two,
which, based upon our review of the record, was the only point
Judge Gibson intended to make in his opinion.     These arguments
require no further discussion. R. 2:11-3(e)(1)(E).

                                     6                                 A-3325-16T1
421 N.J. Super. 404, 424 (App. Div.), certif. granted, 209 N.J.

96 (2011), appeal dismissed, 213 N.J. 47 (2013)).                     "[B]ecause

arbitration involves a waiver of the right to pursue a case in a

judicial forum,     courts take particular care in assuring the

knowing assent of both parties to arbitrate, and a clear mutual

understanding of the ramifications of that assent."                  Id. at 442-

43 (internal quotations omitted).

      Plaintiff contends the MPA is inherently ambiguous as to

compelling arbitration as the proper forum for dispute resolution.

It cites Section 15(e)'s language that any "dispute shall be

finally determined by a court of competent jurisdiction as set

forth in Section 15(f)," and the latter section's provision

requiring binding arbitration.

      Plaintiff relies upon our decision in Rockel v. Cherry Hill

Dodge, 368 N.J. Super. 577, 581 (App. Div. 2004), where we found

the   plaintiff    signed   two      "separate    and     somewhat     disparate

arbitration     clauses."       We    concluded    "the     presence     of   two

conflicting arbitration provisions, the expression of a waiver of

the right to trial by jury in small print, and the absence of any

other clear warning or caution of the waiver of statutory rights,

require[d] a rejection of [the] defendant's attempt to compel

arbitration."     Id. at 587.

                                       7                                 A-3325-16T1
       Unlike    the     provisions      at    issue    in     Rockel,     the     MPA's

alternative dispute resolution scheme was unambiguous.                             Under

paragraph       15(e),      any   party       could    compel    mediation.             If

unsuccessful, "the dispute shall be finally determined by a court

of competent jurisdiction as set forth in Section 15(f)." Section

15(f) clearly and unequivocally compelled the parties to submit

the dispute to "binding arbitration," after which any award "shall

be enforceable in any court of competent jurisdiction."                           Unlike

the provisions at issue in Rockel, Section 15(g) of the MPA

clearly advised the parties they were waiving their right to a

jury    trial.         We   conclude     the    agreement      was   unambiguous         —

arbitration was the appropriate forum for resolving any dispute

and the court's role was limited to enforcement of any award.

       Plaintiff's contention that the MPA was a contract of adhesion

is equally unavailing.            Whether a contract is an unconscionable

contract of adhesion, and therefore unenforceable, requires a

fact sensitive inquiry.            Martindale v. Sandvik, Inc., 173 N.J.

76, 90 (2002).         To determine unconscionability in this context,

we consider: "[(1)] the subject matter of the contract, [(2)] the

parties'    relative        bargaining    positions,         [(3)]   the   degree       of

economic compulsion motivating the adhering party, and [(4)] the

public interests affected by the contract."                    Delta Funding Corp.

                                          8                                      A-3325-16T1
    v. Harris, 189 N.J. 28, 40 (2006) (internal quotation marks and

    citation omitted).

        None of these factors weighs in favor of plaintiff.                   The

    record demonstrates plaintiff was not an "average member of the

    public," Atalese, supra, 219 N.J. at 442, thereby triggering the

    level of increased scrutiny the Court has applied to consumer

    contracts.      Rather, plaintiff was engaged in a multi-million

    dollar real estate development and entered into the MPA to obtain

    favorable tax treatment.          There was no evidence that plaintiff

    was at an unfair disadvantage or that any public interest was

    implicated.3

        Lastly, plaintiff argues it cannot be compelled to arbitrate

its     claims     against   Avalon    because   the   Contract   contained    no

arbitration agreement.           It cites our decision in Angrisani v.

Financial Technology Ventures, L.P., 402 N.J. Super. 138 (App.

Div. 2008), for support.           It is true that Angrisani involved two

contracts, one that contained an arbitration provision and one

that did not.        Id. at 145.      However, that is where any similarity

to this case ends.

3
  Plaintiff's argument that the doctrine of contra proferentem
applies lacks sufficient merit to warrant extensive discussion.
R. 2:11-3(e)(1)(E). "[C]ontra proferentem may be employed as a
doctrine of last resort[,]" and "is only available in situations
where the parties have unequal bargaining power."    Pacifico v.
Pacifico, 190 N.J. 258, 268 (2007).

                                          9                             A-3325-16T1
     In Agrisani, the plaintiff executed an employment contract

with his employer that contained an arbitration provision and a

second    stock   purchase   agreement     with   another   defendant      that

contained no arbitration provision. Ibid. He brought suit against

both defendants and the trial court dismissed both complaints and

compelled arbitration of all the plaintiff's claims under both

agreements.       Id. at 146-47.     We reversed and bifurcated the

plaintiff's actions because the plaintiff could not be compelled

to arbitrate claims against the non-employer defendant simply

because    the    employment    agreement     contained     an   arbitration

provision.    Id. at 152.

     Plaintiff conceded at oral argument that its claims against

Avalon were intertwined to some degree with its claims against

Signature, such that conducting both an arbitration and a trial

was impractical and unwarranted.           The Court recently clarified

that factual "intertwinement" of claims "as a theory for compelling

arbitration"      should   be   rejected    "when    its    application       is

untethered to any written arbitration clause between the parties,

evidence of detrimental reliance, or at a minimum an oral agreement

to submit to arbitration."      Hirsch, supra, 215 N.J. 192-93.          Here,

however,      plaintiff      sued   Avalon,       Signature      and     their

representatives, all of whom were signatories to the MPA, which

                                    10                                 A-3325-16T1
contained    a   clear,   unambiguous   and   enforceable   arbitration

agreement.

    Affirmed.

                                  11                            A-3325-16T1