Court Opinion

ID: 4531980
Source: CourtListenerOpinion
Date Created: 2020-05-06 14:08:23.946517+00
Date Added: 2024-06-11T12:30:47.585922
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NOT FOR PUBLICATION WITHOUT THE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-4531-18T3

RAYMOND ZECCA, BARBARA
ZECCA, RAYMOND GAISER,
and JOAN GAISER,

          Plaintiffs-Respondents,

v.

MONTEREY CONDOMINIUM
ASSOCIATION, INC.,

     Defendant-Appellant.
_____________________________

                   Argued March 31, 2020 – Decided May 6, 2020

                   Before Judges Yannotti, Hoffman and Firko.

                   On appeal from the Superior Court of New Jersey, Law
                   Division, Cape May County, Docket No. L-0301-17.

                   Joseph Christopher Gillin-Schwartz argued the cause
                   for appellant (Barry Corrado Grassi & Gillin-Schwartz,
                   PC, attorneys; Joseph Christopher Gillin-Schwartz, on
                   the briefs).

                   Anne Patricia Ward argued the cause for respondents
                   (Ehrlich Petriello Gudin & Plaza, attorneys; Anne
                   Patricia Ward, on the brief).
PER CURIAM

      Defendant Monterey Condominium Association, Inc. appeals from an

April 10, 2019 Law Division order, which confirmed a $38,703 counsel fee

award entered by the arbitrator under American Arbitration Association (AAA)

Rule 47(d)(ii), pursuant to N.J.S.A. 2A:23B-25(b) and (c), to plaintiffs Raymond

Zecca, Barbara Zecca, Raymond Gaiser, and Joan Gaiser.           Defendant also

appeals from a June 11, 2019 order awarding additional counsel fees in the

amount of $5,803.10. We affirm both orders.

                                       I.

      The following facts are derived from the motion record. Plaintiffs are unit

owners at Monterey Condominium in Wildwood Crest, which is operated by

defendant. The Master Deed for the complex allows owners to rent their units

to third parties privately or through the Monterey Rental Program (MRP). The

MRP partially covers some of the overhead expenses of renting the units in

exchange for a share of the profits. Plaintiffs chose not to partake in the MRP

and rented their units on their own.

      In April 2016, defendant's management committee decided to impose an

annual assessment of $400 on unit owners who did not participate in the MRP

to "bear a 'fair share' of the cost of the 'enforcement' activities," such as

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regulating excessive noise, use of glass containers by the pool, and hanging

towels over the balconies. 1

      Plaintiffs filed a complaint and, on September 26, 2017, filed an amended

complaint, challenging the assessments. In their pleadings, they contended the

assessments were unlawful because they coerced plaintiffs into participating in

the MRP, discriminated against them for not participating, and were

unauthorized by defendant's governing documents.           Specifically, plaintiffs

argued that the assessments were unenforceable because defendant did not

properly notice or vote upon them. Additionally, plaintiffs asserted that if the

assessments were deemed valid, they should have been computed based upon

each unit owner's proportionate share of the common elements.

      Defendant filed an answer, moved to dismiss the matter, and refer the

parties to binding arbitration pursuant to paragraph twenty-three of the Master

Deed, which provides:

            [I]n the event there is an irreconcilable dispute between
            and among the members of the [a]ssociation or the
            [m]anagement [c]ommittee involving either the
            management of the [a]ssociation, the project, or the
            enforcement of any rights or responsibilities created by

1
  The president of the association certified that there are thirty-four units at the
complex. Three of the unit owners chose not to rent through the MRP, and two
owners filed the matter under review.

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              virtue of this Master Deed, the [b]y-[l]aws, the [r]ules
              and [r]egulations, and other documents and instruments
              appertaining to the [c]ondominium project, all such
              parties shall agree to submit those matters to an
              arbitrator, which said arbitrator shall be annually
              designated by the [a]ssociation for arbitration prior to
              the institution of any judicial proceedings.

      In opposition filed to defendant's motion, plaintiffs argued that the

arbitration clause was unenforceable because it failed to designate an arbitrator

or the rules governing arbitration.

      The trial court conducted oral argument on the motion to dismiss on

January 24 and February 9, 2018. On January 24, defendant requested the court

apply the rules of the AAA to the arbitration proceeding, and on February 9,

plaintiffs requested an award of counsel fees be included in the arbitration

proceeding.

      On February 9, 2018, the trial court granted defendant's motion, dismissed

plaintiffs' amended complaint without prejudice, and compelled arbitration,

ordering that "[t]he parties will be bound by the rules of the [AAA]." The court

also ordered that unless one of the parties moved to vacate the arbitration award

within forty-five days of its entry, the award would be binding on the parties.

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       The Honorable George L. Seltzer, J.A.D. (Ret.) was appointed to arbitrate

the dispute. On May 17, 2018, Judge Seltzer conducted oral argument and

determined that the issues could be decided as a matter of law.

       On May 21, 2018, Judge Seltzer issued a written partial decision and

award, voiding the assessment on the ground of insufficient notice. He found:

             I agree that the assessment was, if adopted at all, not
             imposed at a meeting of which adequate notice was
             provided and direct that the amounts already collected
             be returned to plaintiffs.

                   ....

             [T]he [c]ondominium is run by a management
             committee and th[e] meetings of the management
             committee at which a binding vote is to be taken, with
             four non-relevant exceptions, must be preceded by
             "adequate" notice to the members of the [a]ssociation.

             [Footnote omitted].

       The arbitrator reasoned that "[t]he term 'adequate notice' is not defined

[by the New Jersey Condominium Act (NJCA)2] but notice can hardly be

adequate if it does not inform the person being noticed as to what is to occur"

and in this case, the published agenda lacked "implicit reference to the possible

2
    N.J.S.A. 46:8B-1 to -38.
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adoption of a new assessment of limited applicability." Thus, Judge Seltzer

concluded:

             As I view the published agenda there is simply no
             indication of the intention to vote on the imposition of
             a new assessment binding on non-participating [u]nit
             owners. The notice—as to that item—cannot be said to
             [be] adequate.

      In reaching that determination, Judge Seltzer declined to resolve the

remaining issues because there was insufficient evidence in the record, and his

decision rendered them moot.       Finally, he ordered defendant to return to

plaintiffs all monies collected pursuant to the invalid assessment.

      On June 18, 2018, plaintiffs filed an application with the arbitrator seeking

reimbursement of the counsel fees and costs they incurred under AAA Rule

47(d)(ii). Defendant moved to dismiss the application, arguing it "violate[d] the

provisions of [Rule]1:4-8," and cross-moved for counsel fees after plaintiffs did

not withdraw their fee application.

      On August 16, 2018, Judge Seltzer heard oral argument on the counsel

fees applications. He issued a written partial decision and award granting

counsel fees to plaintiffs and denied same to defendant. The arbitrator supported

that conclusion by finding he was authorized under AAA Rule 47(d)(ii) to award

counsel fees because both parties requested them. Judge Seltzer reasoned:

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            Both parties sought counsel fees. The matter was to be
            governed by the rules of the AAA which include a
            provision that the request for fees by both parties is
            tantamount to a submission of that issue for
            determination.

                   ....

            I award fees to plaintiffs because they prevailed,
            because absent the award of fees there is no incentive
            to attack a minimal fine or assessment, and because the
            other basis for the attack on the assessment had a
            rational foundation. I decline to award fees to
            defendant because such an award would effectively
            punish plaintiffs for prevailing and because I am
            satisfied that given the lack of notice, defendant[] could
            not have prevailed no matter how rational a basis the
            other defenses might have [been].

      Thereafter, plaintiffs filed an application for a specific sum of counsel fees

under AAA Rule 47(d)(ii) and defendant cross-moved for reconsideration of the

arbitrator's decision. On November 19, 2018, Judge Seltzer awarded plaintiffs

$38,703 and denied defendant's motion for reconsideration. Relying upon AAA

Rule 47(d)(ii), Judge Seltzer found "an award of . . . fees [is authorized] if all

parties have requested such an award or it is authorized by law or their

arbitration agreement." He stated Rule 47(d)(ii) would be meaningless if it were

limited to "fees permitted by the agreement to arbitrate or the appropriate law."

Defendant refused to pay the $38,703 sum to plaintiffs.

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      Consequently, plaintiffs filed a motion to confirm the arbitration awards

entered on May 21, August 16, and November 19, 2018, and requested an award

of counsel fees incurred relative to filing the motion under N.J.S.A. 2A:23B-

25(b). Defendant filed a cross-motion to vacate the award under N.J.S.A.

2A:23B-23(4).

      On April 5, 2019, the court heard oral argument on the motions.

Thereafter, on April 10, 2019, the court granted plaintiffs' motion and entered

an order confirming the arbitration awards and $38,703 in counsel fees.

Applying a de novo review, the court found that the arbitrator acted within the

scope of his authority and that his award did not contain any error of law. In its

comprehensive oral decision, the court noted that the arbitrator was "confronted

with . . . consent of the parties as well as his consideration with regard to what

was just and equitable in the overall award." The court found:

            [B]ased on this record it is appropriate to confirm the
            award of Judge Seltzer that also includes attorney's fees
            because . . . the gate was opened and . . . by virtue of
            the consent of the parties . . . Judge Seltzer had the
            proper scope and the ability to render attorney's fees in
            this particular case.

      The court entered an order that day confirming the arbitration awards and

entering judgment against defendant in the sum of $38,703. Plaintiffs' request

for counsel fees in conjunction with their motion to confirm the arbitration

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awards was granted pending a certification of services to be submitted to the

court. The court accordingly denied defendant's cross-motion to vacate the

awards.

      On June 11, 2019, the court entered another order, awarding plaintiffs

counsel fees and costs in the sum of $5,803.10, relative to their motion to

confirm the arbitration awards.

      Defendant appeals from the April 10, 2019 and June 11, 2019 orders

confirming the arbitration awards, denying its motion to vacate the awards, and

granting additional counsel fees to plaintiffs. On appeal, defendant contends the

trial court erred in confirming the arbitration awards because the arbitrator did

not have unbridled discretion to award counsel fees under AAA rules,

warranting reversal. We are not persuaded by defendant's argument.

                                       II.

      The scope of judicial review of an arbitration award is limited. Tretina

Printing, Inc. v. Fitzpatrick & Assocs., 135 N.J. 349, 357 (1994). An arbitrator's

decision is not to be cast aside lightly, Linden Bd. of Educ. v. Linden Educ.

Ass'n ex rel. Mizichko, 202 N.J. 268, 276 (2010) (quoting Bd. of Educ. of the

Alpha v. Alpha Educ. Ass'n, 190 N.J. 34, 42 (2006)), and is "entitled to a

presumption of validity," Twp. of Wyckoff v. PBA Local 261, 409 N.J. Super.

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344, 354 (App. Div. 2009). "As the decision to vacate an arbitration award is a

decision of law, this court reviews the denial of a motion to vacate an arbitration

award de novo." Minkowitz v. Israeli, 433 N.J. Super. 111, 136 (App. Div.

2013) (quoting Manger v. Manger, 417 N.J. Super. 370, 376 (App. Div. 2010)).

      Arbitration is "a method of dispute resolution involving one or more

neutral third parties who are usu[ally] agreed to by the disputing parties and

whose decision is binding."       Fawzy v. Fawzy, 199 N.J. 456, 468 (2009)

(alteration in original) (quoting Wash. Auto. Co. v. 1828 L St. Assocs., 906 A.2d
869, 878 (D.C. 2006)). "'[A]rbitration . . . is a favored means of dispute

resolution[,]' . . . [and] [i]t is well-settled that New Jersey's strong public policy

favors settlement of disputes through arbitration." Curran v. Curran, 453 N.J.

Super. 315, 320 (App. Div. 2018) (alterations in original) (quoting Minkowitz,
433 N.J. Super. at 131).

      This method of dispute resolution "can attain its goal of providing final,

speedy and inexpensive settlement of disputes only if judicial interference with

the process is minimized . . . ." Fawzy, 199 N.J. at 468 (quoting Barcon Assocs.,

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

is also "a strong preference for judicial confirmation" of those awards. Linden

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Bd. of Educ., 202 N.J. at 276 (quoting Middletown Twp. PBA Local 124 v. Twp.

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

      "From the judiciary's perspective, once parties contract for binding

arbitration, all that remains is the possible need to: enforce orders . . . which

have been ignored; confirm the arbitration award; correct or modify an award;

and in very limited circumstances, vacate an award." Curran, 453 N.J. Super. at

321 (internal citations omitted) (quoting Minkowitz, 433 N.J. Super. at 134).

Otherwise, "the purpose of the arbitration contract . . . would be severely

undermined." Ibid. (quoting Minkowitz, 433 N.J. Super. at 134). "Because

arbitration is so highly favored by the law, the presumed validity of the

arbitration award is entitled to every indulgence, and the party opposing

confirmation has the burden of establishing statutory grounds for vacation."

Pressler & Verniero, Current N.J. Court Rules, cmt. 3.3.3. on R. 4:5-4 (2020).

      Our Legislature adopted the New Jersey Arbitration Act (the Act), N.J.S.A

2A:23B-1 to -32, in 2003, which "sets forth the details of the arbitration

procedure that will apply unless varied or waived by contract . . . including those

detailing the method for initiation of the proceedings; the conduct of the

arbitration process itself; and the issuance of the award." Fawzy, 199 N.J. at

469-70 (internal citations omitted). The Act also dictates when a trial court

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"shall vacate an award made in [an] arbitration proceeding[,]" including when

"an arbitrator exceed[s] the arbitrator's powers . . . ." N.J.S.A. 2A:23B-23(a)(4).

Here, defendant argues that the trial court erred in failing to vacate the

arbitrator's award of counsel fees because the arbitrator exceeded his powers in

making that award.

      The parties' arbitration was subject to the rules of the AAA, which defined

the scope of the arbitrator's powers.       Rule 47(a) of AAA's Commercial

Arbitration Rules and Mediation Procedures allows an arbitrator to "grant any

remedy or relief that the arbitrator deems just and equitable and within the scope

of the agreement of the parties . . . ." More specifically, Rule 47(d)(ii) provides

that an arbitrator may include "an award of attorney['s] fees if all parties have

requested such an award or it is authorized by law or their arbitration

agreement."3

      Defendant surmises that Rule 47(d)(ii) provides three possible avenues for

an award of fees including: the award is authorized by law; the award is

3
  Contrary to defendant's suggestion that the traditional "American Rule" should
be adhered to, Rule 47(d)(ii) displaces it in this case. Because N.J.S.A. 2A:23B-
21(a) allows for an award of attorney's fees "if such an award is authorized by
law . . . or by the agreement of the parties to the arbitration proceeding[,]" and
the parties were bound by the rules of the AAA by a court order, imposing those
rules on their agreement, any decision made by the arbitrator regarding fees is
subject to those rules.
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authorized by an arbitration agreement; or all parties have requested an award

of fees. First, defendant contends that the award of counsel fees was not

sanctioned by law because the Arbitration Act limits such awards to those

"authorized by law in a civil action involving the same claim . . . ." N.J.S.A.

2A:23B-21(b).    Because the governing law in this case is the NJCA, and

defendant claims there is no fee-shifting provision in the NJCA for unit owners

to collect counsel fees for litigating assessments believed to be unfair, defendant

contends the arbitrator's award was not authorized by law. Second, because the

parties did not have an agreement about fee shifting, defendant argues the

arbitrator had no authority to award counsel fees.

      Defendant concedes that Judge Seltzer could consider fees under Rule

47(d)(ii) because both parties requested them. However, defendant claims the

arbitrator's determination that fees were "just and equitable" under Rule 47(a)

was insufficient to actually grant plaintiffs those fees. Defendant contends Rule

47(d)(ii) is a "procedural gate" that allows the arbitrator to consider the

application for fees, but requires independent legal authority to make the award,

above and beyond Rule 47(a). Defendant's argument lacks merit.

      Rule 47(d)(ii) clearly and unambiguously allows the arbitrator to award

counsel fees when both parties request fees. Here, since both parties demanded

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                                       13
counsel fees in their respective pleadings, and the issue of counsel fees was

addressed by the trial court before the matter was referred to arbitration, the

arbitrator had the authority to grant those fees under the AAA rules.

      Moreover, section twenty-three of the Master Deed does not specify who

will arbitrate the dispute or what rules will govern. We note that when defendant

moved to compel arbitration, defendant's counsel asked the court to apply the

AAA rules to cure that deficiency over plaintiffs' objection.

      Judge Seltzer aptly explained that "[o]nce the award of fees comes within

the jurisdiction of the arbitrator, the award [is] limited only by the proper

exercise of the arbitrator's decision in determining what is just and equitable."

We conclude Judge Seltzer acted within the scope of his authority under the

AAA rules in awarding counsel fees.

      Defendant cites three out-of-state cases in support of its "procedural gate"

position. None of these cases are precedential, but we briefly address them. 4

First, defendant cites Beacon Towers Condo Tr. v. Alex, 473 Mass. 472 (2016).

The Massachusetts Court held "if AAA Rule 47(a) were interpreted to permit an

4
  Out-of-state decisions are neither binding nor controlling on our court. See,
e.g., In re Advisory Op. No. 01-2008, 201 N.J. 254, 268 (2010); Meadowlands
Basketball Assocs. v. Dir., Div. of Taxation, 340 N.J. Super. 76, 83 (App. Div.
2010); Marx v. Friendly Ice Cream Corp., 380 N.J. Super. 302, 310 (App. Div.
2005).
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                                      14
arbitrator to award attorney's fees whenever it is 'just and equitable,' . . . the

effect would be to render superfluous AAA Rule 47(d)(ii), the more specific

AAA Rule governing the award of attorney's fees." Id. at 477. Defendant

contends that holding stands for the proposition that even if the issue of fees

came under the arbitrator's jurisdiction, the decision to award the fees still

requires a substantive legal foundation, not simply that the award is "just and

equitable."

      Defendant is correct that Beacon stands for the principle that, as between

Rule 47(a) and Rule 47(d)(ii), the former "is the general rule setting forth the

permissible scope of an arbitration award" while the latter "is the specific rule

governing when an award may include attorney's fees" and therefore, the one

that was applied in that case. Ibid. However, Beacon does not address the issue

of interpreting the language contained in Rule 47(d)(ii), and did not involve all

parties requesting an award of fees. Indeed, the only issue presented was that

Rule 47(d)(ii) was not met in any capacity—not by law, agreement, or request—

and the only basis for the arbitrator's award was that it was "just and equitable."

Therefore, we are unpersuaded by the holding in Beacon.

      Defendant also relies upon Henry v. Imbruce, 178 Conn. App. 820 (2017),

which dealt with the Connecticut Unfair Trade Practices Act (CUTPA). The

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                                       15
Connecticut court held that "[i]f both parties sought attorney's fees . . . then both

parties agreed pro tanto to submit that issue to arbitration, and the arbitrators

had jurisdiction to consider that issue and to award them." Id. at 842 (second

alteration in original) (emphasis added) (citation omitted). The Henry court then

cited AAA Rule 47(d)(ii), that the arbitrator may award fees upon the parties'

request, an authorization of law, or agreement and footnoted "[w]e note also that

CUTPA expressly authorizes attorney's fees." Id. at 842-43, n.10.

      The Henry court clearly noted that "the parties agreed to expand the scope

of the arbitration beyond the original agreements" and empowered the arbitrator

"to award attorney's fees . . . ." Id. at 843. We do not view the Henry case as

supporting defendant's contention that a substantive legal foundation is

necessary to pass the "procedural gate." Rather, the court simply noted that the

arbitrator likely had an additional source of authority in law to grant the award,

while relying on the consent of the parties. Thus, the holding in Henry bolsters

plaintiffs' contention that a dual request for fees confers jurisdiction upon AAA

arbitrators to not only consider the award of fees but to grant them.

      Lastly, defendant contends Interchem Asia 2000 PTE Ltd. v. Oceana

Petrochemicals AG, 373 F. Supp. 2d 340 (S.D.N.Y. 2005), supports its position

that a party's request for fees merely submits the issue to the jurisdiction of the

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                                        16
arbitrator but does not provide an independent basis for an award. Like Beacon

and Henry, Interchem Asia does not support that proposition. In fact, the case

clearly held "[b]oth parties in their submissions to the arbitration requested

attorney's fees, and therefore the [a]rbitrator was authorized to grant [the]

request for fees in his [a]ward." Id. at 354. Contrary to defendant's contentions,

this case, like the others, supports plaintiffs' arguments. 5

      Moreover, in denying defendant's motion for reconsideration, Judge

Seltzer reasoned:

             Once the award of fees comes within the jurisdiction of
             the arbitrator, the award [is] limited only by the proper
             exercise of the arbitrator's discretion in determining
             what is just and equitable. AAA Rule 47(a) ("The
             arbitrator may grant any remedy or relief that the
             arbitrator deems just and equitable and within the scope
             of the agreement of the parties . . ."). I have reviewed

5
   Defendant mischaracterizes the findings and conclusions in Interchem Asia.
For example, defendant's brief includes a citation with the explanatory
hypothetical of, "we would confirm the award if we independently found legal
grounds to do so" for the premise that the court required independent legal
grounds to confirm the arbitrator's award. The court concluded, based on both
parties submitting a request for fees, that "the award of attorney's fees . . . was
within the scope of the [a]rbitrator's authority." Ibid. Independent legal grounds
were not needed for that purpose, but for the court's later conclusion that "[t]he
[a]rbitrator's reference in one part of the [a]rbitration [a]ward to his award of
attorney's fees as an imposition of sanctions does not change the fact that such
an award was within the scope of the [a]rbitrator's authority." Ibid. The court
reasoned that "even absent a plausible reading free of error, we would confirm
the award if we independently found legal grounds to do so." Ibid. (emphasis
added). The holding is irrelevant to the matter under review.
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                                        17
            the billing and although the amounts are not always
            easy to determine, I am satisfied that each entry
            represents a reasonable and necessary expenditure of
            legal effort.

      The arbitrator was correct in defining the scope of his consideration in

awarding fees. Since the matter was referred to Judge Seltzer under Rule

47(d)(ii), he was not limited by law or agreement, only Rule 47(a), mandating

the remedy chosen be "just and equitable." We note that defendant did not argue

the amounts sought were unreasonable.

      The findings of the arbitrator and his award of counsel fees to plaintiffs

are supported by the competent credible evidence presented to him, and we

discern no basis to disagree with those factual findings. The trial court correctly

confirmed the arbitrator's award and we discern no abuse of discretion.

      Affirmed.

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