Court Opinion

ID: 4524726
Source: CourtListenerOpinion
Date Created: 2020-04-13 14:07:38.451402+00
Date Added: 2024-06-11T09:26:11.894969
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NOT FOR PUBLICATION WITHOUT THE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-2978-18T1

PATERSON MEDICAL PLAZA,
LLC,

          Plaintiff-Respondent,

v.

LITANA DEVELOPMENT, INC.,

     Defendant-Appellant.
_____________________________

                    Argued telephonically March 25, 20201 –
                    Decided April 13, 2020

                    Before Judges Fuentes, Mayer and Enright.

                    On appeal from the Superior Court of New Jersey, Law
                    Division, Passaic County, Docket No. L-4395-16.

                    Robert Ethan Bennet argued the cause for appellant
                    (Tesser & Cohen, attorneys; Danielle E. Cohen and
                    Robert Ethan Bennett, on the briefs).

1
  This matter was argued telephonically in accordance with the Chief Justice
Rabner's March 15, 2020 Notice to the Bar.
            Mandelbaum Salsburg PC, attorney for respondent
            (Ryan M. Buehler, on the brief). 2

PER CURIAM

      Defendant Litana Development, Inc. (Litana) appeals from a February 22,

2019 order denying its motion to confirm an arbitration award and March 1 and

March 8, 2019 orders compelling re-arbitration.         We reverse the orders

compelling re-arbitration and remand the matter to the trial court to confirm the

arbitration award and to consider the additional relief requested in Litana's

motion to confirm the award.

      Plaintiff Paterson Medical Plaza, LLC (PMP) contracted with Litana for

construction of a medical facility. Upon completion of the work, Litana claimed

PMP failed to pay for all work and services performed pursuant to the parties'

written contract and signed change orders.

2
  On January 28, 2020, the day before the originally scheduled argument date,
counsel for Paterson Medical Plaza, LLC advised that he could not appear
because his legal services had been terminated by the client. Counsel requested
an adjournment of the January 29, 2020 argument to allow the client to retain
new counsel and we adjourned the matter to March 25, 2020. Because Paterson
Medical Plaza, LLC is a corporation, Rule 1:21-1(c) requires any appearance in
court be "through an attorney authorized to practice law in this State." Despite
several inquiries by staff at the Appellate Division Clerk's Office, Paterson
Medical Plaza, LLC failed to retain new counsel and therefore we consider the
written arguments in the merits brief filed on behalf of Paterson Medical Plaza,
LLC.
                                                                         A-2978-18T1
                                       2
        Litana claimed its last day of work on the project was August 9, 2016. A

few days later, PMP terminated the contract with Litana. On October 24, 2016,

Litana filed a construction lien claim against PMP's property in the amount of

$272,050.

        PMP immediately filed an order to show cause and verified complaint

seeking to discharge Litana's construction lien. In the verified complaint, PMP

claimed Litana's lien amount was "willfully exaggerated." In addition to the lien

discharge, PMP sought damages for breach of contract, breach of the implied

covenant of good faith and fair dealing, lost profits, and unjust enrichment.

Litana filed an answer and counterclaim. In its counterclaim, Litana requested

damages based on breach of contract.

        The trial court denied PMP's application to discharge the lien. Thereafter,

PMP filed a motion to compel arbitration. In a March 13, 2017 order, the judge

compelled the parties to arbitrate their disputes and retained jurisdiction to

enforce the arbitrator's award. 3

        Arbitration hearings were held over a five-day period in 2018. PMP's

claim before the arbitrator focused solely on discharging the construction lien.

PMP argued the lien amount alleged by Litana was grossly overstated. In

3
    The trial court stayed the litigation pending the arbitration.
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                                           3
arbitration, Litana sought in excess of $1 million in damages, plus interest and

attorney's fees. Litana arrived at that amount based on the parties' written

contract, signed change orders, and its alleged additional costs associated with

the project.

      The arbitrator heard testimony from the parties' witnesses and reviewed

documents provided in support of their claims. Based on the testimony and

documents, the arbitrator found Litana's lien claim was not overstated and

ordered PMP to pay Litana the sum of $552,202.22.

      In his April 17, 2018 single-spaced, seven-page written award, the

arbitrator determined Litana's work and services under the base contract and

signed change orders totaled $4,682,314.81. 4 The arbitrator rejected some of

Litana's claimed $808,202.22 in additional documented expenses and its claimed

additional work in the amount of $47,620. He concluded there was no writing

memorializing the $47,620 sum and therefore denied Litana's request for

payment of that amount. The arbitrator also rejected Litana's claim that it

allegedly advanced $420,000 to PMP, finding "little persuasive explanation . . .

4
  This amount represents the original contract amount of $4,051,000, plus a
December 31, 2013 written change order for $414,314.81, plus an October 6,
2014 written change order for $175,000, plus a September 18, 2015 written
change order for $42,000.
                                                                        A-2978-18T1
                                       4
as to why payments totaling $420,000 were made by Litana to PMP." The

arbitrator concluded the $420,000 sum represented "the return to PMP of unused

proceeds of the construction loan." The arbitrator "accept[ed] the testimony and

proofs presented by Litana with regard to the balance of the additional

documented expenses it claim[ed]," determining the sum of $388,202.22 was

sufficiently documented. The arbitrator calculated the total work and services

provided by Litana to PMP was valued at $5,070,517.03. 5

      The arbitrator denied Litana's request for interest, attorney's fees, and

costs, finding the parties had a "good faith dispute[]" and Litana lacked

documentation related to some of the work because the parties had a

"cooperative and informal relationship."

      At the arbitration, PMP did not claim it was owed any money but argued

it was entitled to set-off amounts against Litana's claims. The arbitrator rejected

certain of PMP's set-off claims based on alleged deficiencies and incomplete

work performed by Litana and explained why he rejected those set-off amounts.

The arbitrator also denied PMP's claim for lost profits as speculative.

5
  The arbitrator arrived at this amount by adding the base contract and change
order work, totaling $4,682,314.81, plus the additional work performed by
Litana in the amount of $388,202.22.

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                                        5
      However, the arbitrator awarded PMP the following credits: $80,000 for

stucco work not completed by Litana; $34,000 for elevator repair work; $4750

for the elevator room HVAC; and $4300 for installation of the elevator room

floor. The total amount credited to PMP by the arbitrator was $123,050. The

arbitrator's credit calculation in favor of PMP far exceeded Litana's suggested

credit of $15,000 for the work it did not perform.6 The arbitrator determined

PMP paid Litana a total of $4,395,264.81.

      Deducting the amount paid by PMP, and crediting PMP for defective work

and work not performed by Litana, the arbitrator concluded Litana was owed

$552,202.22.7

      Dissatisfied with the award, PMP sought a modification from the

arbitrator. Based on his review of the post-arbitration submissions, the arbitrator

denied PMP's request to modify the award because "[t]here [were] no 'clerical,

typographical, technical, or computational errors in the [a]ward.' I see no reason

6
  PMP claims the arbitrator's award failed to consider a $15,000 credit.
However, the arbitrator credited PMP in an amount nearly ten times the credit
amount Litana argued should be applied for incomplete work.
7
  The arbitrator's ultimate award reflects his determination that $5,070,517.03
represented the work and services provided by Litana, minus PMP's payment to
Litana in the amount of $4,395,264.81, minus the total credit due to PMP in the
amount of $123,050.
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                                        6
to re-determine the merits of this matter even if I had the power to do so." In a

May 15, 2018 decision, the arbitrator affirmed his prior award.

      On June 26, 2018, Litana filed a motion to confirm the arbitration award

and for other relief. PMP filed a cross-motion for modification, correction, or

vacation of the award.

      The motion judge heard argument on the parties' motions in October 2018.

At the conclusion of the argument, the judge requested the parties provide

additional information.

      After receiving the parties' supplemental submissions, the judge asked

counsel to reargue the motions on February 22, 2019. In a decision placed on

the record on that date, the judge denied Litana's motion to confirm the

arbitration award. In orders dated March 1 and March 8, 2019, the judge vacated

the arbitration award and ordered re-arbitration before the same arbitrator.

      The judge explained he read the arbitrator's decision "probably five or six

times" and stated, "quite frankly, I can't follow it." He found the arbitrator "was

required to provide a reasoned decision" and did not "give a well-reasoned

second opinion." The judge indicated the arbitrator needed "to opine with more

specificity . . . . And while [the arbitrator] put a lot of information in, I don't

find that it particularly was well reasoned or reasoned at all . . . . "

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                                          7
      On appeal, Litana argues the judge erred by declining to confirm the

arbitrator's award, vacating the arbitration award, and ordering re-arbitration.

      "[T]he scope of review of an arbitration award is narrow." Fawzy v.

Fawzy, 199 N.J. 456, 470 (2009).               Our Supreme Court has held that

"[a]rbitration can attain its goal of providing final, speedy and inexpensive

settlement of disputes only if judicial interference with the process is minimized;

it is, after all, 'meant to be a substitute for and not a springboard for litigation. '"

Barcon Assocs., Inc. v. Tri-County Asphalt Corp., 86 N.J. 179, 187 (1981)

(quoting Korshalla v. Liberty Mut. Ins. Co., 154 N.J. Super. 235, 240 (Law Div.

1977)).    With this goal in mind, "[a]rbitration should spell litigation's

conclusion, rather than its beginning . . . . " Borough of E. Rutherford v. E.

Rutherford PBA Local 275, 213 N.J 190, 201 (2013) (quoting N.J. Tpk. Auth.

v. Local 196, I.F.P.T.E., 190 N.J. 283, 292 (2007)).

      "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.

Grp., 220 N.J. 544, 556 (2015). As a result, "courts grant arbitration awards

considerable deference."      E. Rutherford PBA Local 275, 213 N.J. at 201.

Because a trial court's decision to affirm or vacate an arbitration award is a

decision of law, our review is de novo. Minkowitz v. Israeli, 433 N.J. Super.

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                                           8
111, 136 (App. Div. 2013) (citing Manger v. Manger, 417 N.J. Super. 370, 376

(App. Div. 2010)).

      N.J.S.A. 2A:23B-22 sets forth the standard for confirming an arbitration

award. The statute provides:

            After a party to an arbitration proceeding receives
            notice of an award, the party may file a summary action
            with the court for an order confirming the award, at
            which time the court shall issue a confirming order
            unless the award is modified or corrected pursuant to
            section 20 or 24 of this act or is vacated pursuant to
            section 23 of this act.

            [N.J.S.A. 2A:23B-22 (emphasis added).]

      Arbitration awards may be vacated, modified, or corrected by a court if

(1) "procured by corruption, fraud, or other undue means"; (2) the arbitrator was

partial or corrupt, or committed misconduct thereby prejudicing the parties'

rights; (3) the arbitrator refused to postpone the hearing when there was

sufficient cause to do so, failed to consider material evidence, or otherwise

inappropriately conducted the hearing so as to prejudice the rights of the parties;

(4) the arbitrator exceeded his or her powers; (5) there was no agreement to

arbitrate; or (6) the arbitration was conducted without sufficient notice,

substantially prejudicing the rights of the parties. See N.J.S.A. 2A:23B-23(a).

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                                        9
      A court may also modify or correct an award if (1) there was an evident

mathematical mistake; (2) the arbitrator made an award on a claim not submitted

to arbitration; or (3) "the award is imperfect in a matter of form not affecting the

merits of the decision . . . ." N.J.S.A. 2A:23B-24(a).

      A court may only confirm, vacate, modify, or correct arbitration awards

on the grounds provided in the statute. See N.J.S.A. 2A:23B-20 to -24. The

statute "directs a court to correct errors; it does not provide for remand to the

arbitrator." Tretina Printing, Inc. v. Fitzpatrick & Assocs., Inc., 135 N.J. 349,

360 (1994). As our Supreme Court stated in Tretina:

            the Legislature intended that courts correct mistakes
            that are obvious and simple – errors that can be fixed
            without a remand and without the services of an
            experienced arbitrator . . . . [I]n the absence of a
            statutory provision or an authorization in the arbitration
            agreement, a court that is asked to vacate, modify, or
            confirm an award usually has no power, except by the
            consent of the parties, to recommit the matter to the
            arbitrator.

            [Id. at 360-61.]

      Here, PMP's request to discharge the construction lien and Litana's claim

for monies owed by PMP were decided by the arbitrator. The judge's inability

to follow the arbitrator's decision is not one of the enumerated statutory grounds

to vacate, modify, or correct an arbitration award.

                                                                            A-2978-18T1
                                        10
      The judge cited no statutory basis for vacating the arbitration award. The

judge's failure to understand how the arbitrator arrived at the award is not

sufficient ground to vacate the award. The arbitrator considered the evidence

and testimony presented, and then articulated his findings in support of the

award. Having reviewed the record, we discern no basis to vacate the arbitration

award or compel re-arbitration.

      Therefore, we reverse the judge's orders denying Litana's motion to

confirm the arbitration award and compelling re-arbitration. We remand the

matter to the trial court to enter an order reinstating and confirming the

arbitration award.     Because the motion judge did not consider Litana's

application to enforce the construction lien or award attorney's fees, interest, and

costs, the judge shall consider these issues on remand. We take no position on

the disposition of these issues.

      Reversed and remanded. We do not retain jurisdiction.

                                                                            A-2978-18T1
                                        11