Court Opinion

ID: 7802391
Source: CourtListenerOpinion
Date Created: 2022-08-22 14:08:31.962497+00
Date Added: 2024-06-11T16:29:27.392113
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NOT FOR PUBLICATION WITHOUT THE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-2039-20

FORESIGHT CONSTRUCTION
LLC,

          Plaintiff-Appellant,

v.

VALLEY RENAISSANCE
URBAN RENEWAL ENTITY,
LLC,

     Defendant-Respondent.
____________________________

                   Argued May 24, 2022 – Decided August 22, 2022

                   Before Judges Currier and Smith.

                   On appeal from the Superior Court of New Jersey, Law
                   Division, Essex County, Docket No. L-0040-21.

                   Martin P. Skolnick argued the cause for appellant
                   (Skolnick Legal Group, PC, attorneys; Martin P.
                   Skolnick and Scott H. Bernstein, on the briefs).

                   Karim G. Kaspar argued the cause for respondent
                   (Lowenstein Sandler LLP, attorneys; Karim G. Kaspar
                   and Craig Dashiell, on the brief).
PER CURIAM

                                        I.

      In 2015, Valley Renaissance Urban Renewal Entity, LLC (VRURE) hired

Foresight Construction, LCC (Foresight) as its general contractor to convert an

abandoned factory into condominiums. The parties executed a contract whereby

VRURE agreed to pay $5,190,000 for Foresight's services.             The parties

anticipated that project completion time was twelve months.         The contract

contained other relevant terms language including: a liquidated damages clause

for delay; an arbitration clause to settle any disputes stemming from the project;

and language awarding attorney's fees to the prevailing party in a dispute. The

agreement contained additional language designating the Federal Arbitration

Act (FAA) as the law governing the proceedings. Procedurally, the arbitration

was to be conducted using the American Arbitration Association's (AAA)

Construction Industry Arbitration rules.

      Project delays occurred, but by June 2017, VRURE had paid Foresight

$5,115,552.78 for construction services rendered. The parties disputed the

cause of the delays and who would be responsible for paying related damages.

Eventually, VRURE terminated Foresight as general contractor, due to its failure

to complete the work.

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      In August 2018, Foresight filed suit against VRURE seeking an additional

$1.2 million in payments. VRURE moved to compel arbitration, and its motion

was granted by the court. Foresight then initiated arbitration proceedings. At

arbitration, VRURE counterclaimed against Foresight, seeking damages for

Foresight's alleged failure to finish the job. The parties mutually selected Harry

E. McLellan, III (McLellan) as their arbitrator. Prior to the hearing, McLellan

convened the parties for an initial conference, then had a series of follow-up pre-

hearing conferences by phone. McLellan gave the parties three options for

rendering an award: a simple abbreviated award, a reasoned award, or an award

containing detailed findings of fact and conclusions of law. The parties agreed

that McClellan would submit a reasoned award at the conclusion of the

arbitration. Further, the parties agreed that expert 1 witnesses could not attend

the arbitration hearings during witness testimony and that the hearings would be

conducted without a stenographer.

      The arbitration hearings took place over five days and were conducted in

August and September 2020. At the conclusion of witness testimony, McLellan

asked the parties "if they believed that they were afforded a full and fair

1
  The parties agreed that only they and their legal representatives could attend
the hearings.
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                                        3
opportunity to present their respective cases." Both parties answered in the

affirmative and neither party raised any objections.

      In October 2020, McLellan issued a reasoned award, granting Foresight's

claim of $343,852.41, representing the balance owed under the contract, and

$90,000, representing Foresight's delay damages.       McLellan also granted

VRURE's set-off claims totaling $426,000. He denied VRURE's claims for

liquidated damages and payment under the agreement. Therefore, Foresight's

net award was $7,852.41. McLellan denied both parties' requests for attorney's

fees and costs because he found no party prevailed.

      Foresight filed an order to show cause to vacate the arbitration award.

VRURE cross-moved to confirm the award. Prior to argument on the cross-

motions, VRURE submitted a certification from McLellan. McLellan stated that

he made "complete" professional experience and affiliation disclosures as

required by AAA construction arbitration rules. He then detailed the procedural

history of the arbitration, from initial conference to issuance of the reasoned

award.

      In February 2021, the Law Division denied Foresight's motion and granted

VRURE's cross-motion. The court made several findings: the contract between

the parties called for binding arbitration in the event of a dispute, with no

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provision for judicial review; McLellan acted "within his discretion and

authority" when he barred the parties' experts from attending the arbitration

hearings; neither McLellan's experience in construction law and arbitration nor

his alleged failure to disclose his current work or professional affiliations were

evidence of bias or corruption; McLellan's certification was not improper, and

was "a recitation of events and not a submission in favor of or against either

party"; and finally, neither party was a prevailing party and therefore not entitled

to fees and costs.

      Foresight raises multiple points on appeal, contending the trial court erred

by not: overturning certain evidential decisions made by McLellan; finding

McLellan exceeded his powers by misinterpreting the parties' agreement and

failing to issue a reasoned award; finding McLellan disregarded the law by

accepting certain testimony and failing to award attorney's fees to Foresight;

determining that McLellan committed misconduct or showed partiality; and in

not striking McLellan's certification.

                                         II.

      In reviewing the order confirming the award, we owe no special deference

to the trial court's interpretation of the law and the legal consequences that flow

from the established facts. Yarborough v. State Operated Sch. Dist. of City of

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                                         5
Newark, 455 N.J. Super. 136, 139 (App. Div. 2018) (citing Manalapan Realty,

L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995)). Therefore, we

review the trial court's decision on a motion to vacate an arbitration award de

novo. Ibid. (citing Minkowitz v. Israeli, 433 N.J. Super. 111, 136 (App. Div.

2013)). This standard is consistent with federal arbitration law, which the

parties agreed would apply in the event they had a dispute. See Metromedia

Energy, Inc. v. Enserch Energy Servs., 409 F.3d 574, 579 (3d Cir. 2005)

(applying the de novo standard of review in reviewing an order vacating an

arbitration award under the FAA).

      We defer to a trial court's factual findings if they are supported by

substantial, credible evidence in the record. Lee v. Brown, 232 N.J. 114, 126-

27 (2018); Zaman v. Felton, 219 N.J. 199, 215 (2014). When we compare our

use of deference to the federal standard, we find that judicial review of

arbitration awards under the FAA is "extremely deferential."       Metromedia

Energy, Inc, 409 F.3d at 578 (citation omitted). "Vacatur is appropriate only in

'exceedingly narrow' circumstances . . . ." Ibid. (quoting Dluhos v. Strasberg,

321 F.3d 365, 370 (3d Cir. 2003)). The "exclusive" grounds for vacating an

arbitration award are provided in 9 U.S.C. § 10. Hall St. Assocs., L.L.C. v.

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                                       6
Mattel, Inc., 553 U.S. 576, 584 (2008). Thus, where the FAA controls, an award

may be vacated only:

            a. where the award was procured by corruption, fraud,
            or undue means;

            b. where there was evident partiality or corruption in
            the arbitrators, or either of them;

            c. where the arbitrators were guilty of misconduct in
            refusing to postpone the hearing, upon sufficient cause
            shown, or in refusing to hear evidence pertinent and
            material to the controversy; or of any other misbehavior
            by which the rights of any party have been prejudiced;
            or

            d. where the arbitrators exceeded their powers, or so
            imperfectly executed them that a mutual, final, and
            definite award upon the subject matter submitted was
            not made.

            [9 U.S.C. § 10.]

      "Under the FAA, courts may vacate an arbitrator's decision 'only in very

unusual circumstances.'" Oxford Health Plans LLC v. Sutter, 569 U.S. 564, 568

(2013) (quoting First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 942

(1995)). "When an arbitrator resolves disputes regarding the application of a

contract, and no dishonesty is alleged, the arbitrator's 'improvident, even silly,

factfinding' does not provide a basis for a reviewing court to refuse to enforce

the award." Major League Baseball Players Ass'n v. Garvey, 532 U.S. 504, 509

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                                        7
(2001) (quoting United Paperworkers Int'l Union v. Misco, Inc., 484 U.S. 29, 39

(1987)).

      In reviewing an application to vacate an arbitration award under the FAA,

"courts . . . have no business weighing the merits of the grievance [or]

considering whether there is equity in a particular claim." Ibid. (alteration in

original) (quoting Misco, Inc., 484 U.S. at 37). "Our role in reviewing the

outcome of the arbitration proceedings is not to correct factual or legal errors

made by an arbitrator." Major League Umpires Ass'n v. Am. League of Pro.

Baseball Clubs, 357 F.3d 272, 279 (3d Cir. 2004). "It is only when the arbitrator

strays from interpretation and application of the agreement and effectively

'dispenses his own brand of industrial justice' that his [or her] decision may be

unenforceable." Garvey, 532 U.S. at 509 (quoting United Steelworkers of Am.

v. Enter. Wheel & Car Corp., 363 U.S. 593, 597 (1960)).

                                       III.

      Foresight alleges error by McLellan that can be grouped into two areas,

errors committed during and after the arbitration hearing. In each instance, our

review leads us to defer to the trial court's findings, because they are supported

by substantial, credible evidence in the record. Lee, 232 N.J. at 126-127.

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      Foresight argues that McLellan committed two evidential errors during

the hearing. First, it contends McLellan should have barred VRURE's damage

proofs because their documentary proofs at arbitration were not appended to a

certification or affidavit. Foresight posits that McLellan's failure to bar the

evidence represented a "disregard of the law" sufficient to vacate the award

under 9 U.S.C. § 10. Second, Foresight contends that VRURE provided an

insufficient foundation for the admission of certain punch list proofs. Foresight

argues that McLellan's admission and consideration of these proofs should result

in vacation of the award. We are not persuaded.

      The parties agreed to conduct the arbitration using AAA's construction

arbitration rules. Rule 352 of the rules provides in pertinent part:

            (a) The parties may offer such evidence as is relevant
            and material to the dispute and shall produce such
            evidence as the arbitrator may deem necessary to an
            understanding and determination of the dispute.
            Conformity to legal rules of evidence shall not be
            necessary.

            (b) The arbitrator shall determine the admissibility,
            relevance, and materiality of the evidence offered.

2
 Construction Industry Arbitration Rules and Mediation Procedures, AMERICAN
ARB. ASS'N (July 1, 2015), www.adr.org/construction.
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                                        9
      The record shows that McLellan admitted both parties' submissions into

evidence pursuant to his discretion and authority under Rule 35. Foresight has

not made a showing under 9 U.S.C. § 10 to support vacating the award based on

evidence related error.

      Foresight next argues that McLellan erred by ignoring the plain language

of the construction agreement. Foresight posits that VRURE failed to act on its

set-off claims within twenty-one days of learning about them, thereby waiving

the claims pursuant to the agreement. They also contend McLellan failed to add

interest to their damages award as required under the agreement.

      Foresight's arguments do not fall into the parameters of the statute that

would permit this court to vacate the arbitration award. See 9 U.S.C. § 10.

McLellan heard all the evidence and rendered an award.          We do not find

McLellan "so imperfectly executed [his powers] that a mutual, final, and definite

award upon the subject matter submitted was not made." 9 U.S.C. § 10(d).

      Foresight next argues that the award should be vacated because McLellan

failed to issue a "reasoned award." We disagree. The parties agreed at the initial

case management conference to accept a reasoned award from McLellan. Their

award options under Rule 47 of AAA's construction arbitration rules included

"a reasoned opinion, an abbreviated opinion, [or] findings of fact [and]

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                                       10
conclusions of law." The record shows that McLellan issued a reasoned award

consistent with the parties' agreement and the AAA rules.

      Finally, Foresight argues the award should be vacated because McLellan

failed to award it attorney's fees and costs as a prevailing party. Once again, we

are not persuaded. McLellan's award was partly in favor of Foresight, and partly

in favor of VRURE. He concluded that neither party prevailed, and therefore

he made no award of attorney's fees.        Foresight has not demonstrated any

violation of the FAA to vacate the award.

      Foresight has failed to meet its burden to show that any of the criteria for

vacating an arbitration award under 9 U.S.C. § 10 have been met. As our review

of an arbitration award is extremely deferential, Metromedia Energy, Inc, 409

F.3d at 578, we see no reason to disturb the arbitrator's decision.

      Affirmed.

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