Court Opinion

ID: 9752836
Source: CourtListenerOpinion
Date Created: 2023-08-28 18:36:58.133374+00
Date Added: 2024-06-11T09:46:51.460326
License: Public Domain

O’HERN, J.,
dissenting.
The majority has encouraged three lawsuits where one would have sufficed.1 Such a result runs counter to every statement this Court makes on the need to find methods to resolve disputes other than through litigation. See, e.g., Faherty v. Faherty, 97 N.J. 99, 105 (1984) (“In this state, * * * arbitration is a favored remedy.”) The diversion of cases from the usual trial pattern “to alternative programs of dispute resolution has come to be viewed as an effective means to dispense justice quickly and efficiently while easing the ever-increasing burden on limited court resources.” Supreme Court Committee on Complementary Dispute Resolution Programs (Burlington County Project), Final Report 1 (March 23, 1984).
Central to such alternatives is encouraging parties to resolve their own differences. In this case the parties did exactly that. They agreed in writing that the accountant selected by their attorneys “shall make a report of his findings which shall be binding and conclusive on both parties.” This voluntary settlement should have ended this aspect of the dispute between the parties. We have caused a rerun of the controversy by permitting the accountant’s judgment to be the subject of another lawsuit.
*255How can we explain the judicial resistance, exemplified by the majority, to accepting an accountant as the arbitrator of the parties’ case? The parties have quite plainly chosen another to resolve their dispute. The decisions of that third party, especially one selected in the context of a judicial proceeding, should not be challenged in a new lawsuit.
Chief Justice Burger traced the historic reluctance of courts to support arbitration to the ancient antipathy of equity against specific performance of arbitration agreements:
The need for the law [the Federal Arbitration Act] arises from ... the jealousy of the English courts for their own jurisdiction____ This jealousy survived for so lon[g] a period that the principle became firmly embedded in the English common law and was adopted with it by the American courts. [Southland Corp. v. Keating, — U.S.-,-, 104 S.Ct. 852, 859, 79 L.Bd. 2d 1, 13-14 (1984) (quoting H.R. Rep. No. 96, 68th Cong., 1st Sess. 1-2 (1924)).]
It is mindless jealousy today, no longer rooted in reality. At least our common-law predecessors had sensible reasons for opposing arbitration — they wanted to collect the fees for their court: “[T]he main purposes of the King’s justice were political and financial, in consolidating and unifying the kingdom and in bringing fees into the royal treasury.” Sayre, “Development of Commercial Arbitration Law,” 37 Yale L.J. 595, 598 (1928). One of the goals of a modern system of justice should be to avoid causing separate trials to exist where one trial would suffice.
We need not cite outside critics to assess the status of the justice system in New Jersey. Our Committee on Civil Case Management and Procedures (Schreiber Committee) sees “the rising tide of litigation, increases in the time and costs required for disputes to be resolved, and the growing public perception of our justice system as cumbersome and inefficient, meting out frustration and delay rather than fairness,” as calling for change. “Simply stated,” it continues, “any revamping of our present system must have a single goal: to scale down the extensive nature of litigation so that a fair disposition can be obtained expeditiously and inexpensively.” Toward a Theory of Civil Case Management 25-26 (June 1984). What could be *256more expeditious and inexpensive than having these two parties resolve a dispute over the valuation of stock through the judgment of an accountant?
If we are truly serious about developing desirable alternatives to litigation, our guiding principle should be strengthening the systems that encourage that end, not weakening them. I believe it weakens such systems to look for fine distinctions that make the dispute-resolver subject to lawsuits by disgruntled participants. Judges do not permit themselves to be so sued. Bradley v. Fisher, 80 US. (13 Wall.) 335, 20 L.Ed. 646 (1872). We should not permit other dispute-resolvers to be sued.2
The majority makes a point of saying that the accountant did not perform the role of an arbitrator because “arbitrators typically act in an adjudicatory mode. They may receive the evidence of witnesses or the views of a party to a dispute only in the presence of, or on notice to, all parties, and may adjudge the matters to be resolved only on what is presented in the course of an adversary proceeding.” Ante at 249.
There is nothing in the law that requires that every dispute between parties be resolved in a trial-type hearing before it is
The majority's opinion also casts doubt on what I-wouId otherwise have considered the judicial immunity of special masters appointed under Southern Burlington Cty. NAACP v. Township of Mount Laurel, 92 N.J. 158 (1983). Considering the authority of those masters — "limited to rendering opinions, proposing findings, issuing recommendations, and assisting the court in other similar ways as it may direct," id. at 284—I doubt whether they could withstand the analysis the majority employs in this case.
*257considered an arbitration. After all, arbitration has only three principal characteristics:
(1) It is the voluntary reference of a dispute by the parties to (2) an arbitrator or arbitrators chosen by the parties who (3) agree the decision will be final and binding. [A. Simpson, Jr., Whither Judicial Arbitration in New Jersey 12 (March 9, 1982) (unpublished manuscript available at State Library) (emphasis in original).] 3
In Barcón Assocs., Inc. v. Tri-County Asphalt Corp., 86 N.J. 179 (1981), we said:
Arbitration is “a substitution, by consent of the parties, of another tribunal for the tribunal provided by the ordinary processes of law,” and its object is "the final disposition, in a speedy, inexpensive, expeditious and perhaps less formal manner, of the controversial differences between the parties.” [Id. at 187 (quoting Eastern Eng’g Co. v. City of Ocean City, 11 N.J.Misc. 508, 510-11 (Sup.Ct.1933)).]
N.J.S.A. 2A:24-2, part of our Arbitration Act, is not confining. It provides simply: “2 or more persons by their agreement in writing may submit to arbitration a controversy existing between them at the time of the agreement * * Moreover, the statute is not the preemptive source of the power of parties to enter into a submission of a dispute as at common law. See Hoboken Mfrs. R.R. Co. v. Hoboken R.R. Warehouse & S.S. Connecting Co., 132 N.J.Eq. 111, 116-17 (Ch. 1942), aff'd, 133 N.J.Eq. 270 (E. & A. 1943).
Of course parties can agree to follow the procedures established by the American Arbitration Association, which contain the usual trial format, or they can agree to any other kind of procedure to be used in resolving the dispute. See Scherk v. *258Alberto-Culver Co., 417 U.S. 506, 94 S.Ct. 2449, 41 L.Ed.2d 270, (1974); see also Note, “Labor Arbitration in New Jersey,” 14 Rutgers L.Rev. 143, 172 (1959).
We should not confine arbitral immunity to strictly structured formats. These parties agreed to submit their dispute to resolution by a third party. Courts should remain open to more loosely structured methods that will evolve to meet the needs of society: “Courts set the patterns and define the parameters of justice. They have a primary role to play, then, in developing new dispute resolution mechanisms.” Jaffe & Stamato, Dispute Resolution: Complementary Programs and the Courts 13 (January 1983) (unpublished paper available from the Administrative Office of the Courts). We are shirking that primary role in this case, retreating to formalisms that suggest an underlying hostility to innovations in the judicial process. Our predecessors’ hostility was at least motivated by self-interest in protecting the revenues of the crown courts.
The precedent cited by the majority for support of its decision is unpersuasive. The historical basis for the judicial distinction between appraisement and arbitration springs from a different source. Common-law courts in states that had legislative bans on arbitration of entire disputes developed the concept of appraisement as distinguished from arbitration to enable the parties to resolve their contractual disputes privately. See School Dist. No. 1 of Silver Bow Cty. v. Globe & Republic Ins. Co. 146 Mont. 208, 404 P.2d 889, 892 (1965); see also Polley’s Lumber Co. v. United States, 115 F.2d 751, 753 (9th Cir.1940) (contract provisions that do not purport to oust courts of jurisdiction are valid under Montana law; referral of determination of value to third person upheld). That distinction, made to advance the purpose of private ordering of disputes, is being turned on its head to hinder such ordering now. Elberon Bathing Co., Inc. v. Ambassador Ins. Co., Inc., 77 N.J. 1 (1978), is actually consistent with such private ordering although it vacated the appraisers’ award because of misconduct. As Judge Conford wrote there: “It is not in the public interest *259to encourage litigation over procedures which were designed to resolve disputes without litigation.” Id. at 14.
The majority relies on Gammel v. Ernst & Ernst, 245 Minn. 249, 72 N.W.2d 364 (1955), because that court makes the same distinctions as the majority. The Minnesota court described the defendant firm “not as an arbiter but as an accountant-evaluator.” Id. at 256, 72 N.W.2d at 369 (quoting Sanitary Farm Dairies, Inc. v. Gammel, 195 FI 2d 106, 115 (8th Cir.1952)). This merely states the result without explaining the difference. The absence of trial-like procedures should not dictate the result. The preoccupation of common-law courts with trial-like procedures stemmed from a unique historical perspective: courts had held that agreements to submit to arbitration were revocable; when statute law made the agreement to submit irrevocable, the courts insisted upon the procedures as a way of vindicating “the law of the land.” Sayre, supra, 37 Yale L.J. at 612, 616.
The majority’s distinction between an “appraiser” and an “arbitrator” is bottomed on a too simple idea of determining the “value” of a close corporation. The accountants cannot be considered arbitrators, the majority says, since they “simply rendered a singular determination — a finding of fact by which the parties had agreed to be bound.” Ante at 251. That “finding of fact,” however, is the end product of “an entirely different approach than the valuation of any other asset.” Lavene v. Lavene, 162 N.J.Super. 187, 193 (Ch.Div.1978). Recently, we observed: “There are probably few assets whose valuation imposes as difficult, intricate and sophisticated a task as interests in close corporations.” Bowen v. Bowen, 96 N.J. 36, 43 (1984) (quoting Lavene v. Lavene, 148 N.J.Super. 267, 275 (App.Div.), certif. denied, 75 N.J. 28 (1977)). More importantly, our cases have recognized that it is the judge’s job to arrive at the values of assets for distribution. See, e.g., Bowen, supra, 96 N.J. at 43; Rothman v. Rothman, 65 N.J. 219, 232 (1974); Lavene, supra, 148 N.J.Super. at 275. What judges must do—and what these defendants were hired to do—is more *260than “identifying, measuring, recording and communicating.” Ante at 246. This kind of valuation calls for weighing, comparing, and ultimately, judging. We should not be blinded by the defendants’ professional title of “accountant” so that we fail to see what it is they actually did.
The pivotal question here is not what we call the defendants, nor even how they acted, but whether these parties agreed to a resolution of their dispute by the third person. See Penn Cent. Corp. v. Consolidated Rail Corp., 82 A.D.2d 208, 441 N.Y.S.2d 266, 270, 271 (1981) (use of the word “appraisal” instead of “arbitration” is not controlling; the question is whether the third party’s function is to resolve the very dispute between the parties). Thus a stipulation in a construction contract that an architect’s certificate would be binding on the parties would immunize the architect’s decision in the role of arbiter, but not immunize delay or failure to come to a decision. E.C. Ernst, Inc. v. Manhattan Constr. Co., 551 F.2d 1026, 1033 (5th Cir.), modified, 559 FI 2d 268 (1977), cert. denied sub nom. Providence Hosp. v. Manhattan Constr. Co., 434 U.S. 1067, 98 S.Ct. 1246, 55 L.Ed.2d 769 (1978); see also Tamari v. Conrad, 552 F.2d 778 (7th Cir.1977) (arbitral immunity extends to cases in which arbitrator’s authority to resolve dispute is challenged; individuals familiar with commodities future business serving as arbitrators at request of Chicago Board of Trade are immune); Larry v. Penn Truck Aids, Inc., 567 F.Supp. 1410 (E.D.Pa. 1983) (member of special joint committee of labor and management created to resolve disputes clothed with immunity); Wilder v. Crook, 250 Ala. 424, 34 So.2d 832 (1948) (supervising engineer as arbiter of contract dispute enjoys immunity); Craviolini v. Scholer & Fuller Associated Architects, 89 Ariz. 24, 357 P. 2d 611 (1961) (architects would enjoy immunity in role as arbiter but acts complained of were not in that capacity).
Of course this immunity can be lost for misconduct, Baar v. Tigerman, 140 Cal.App.3d 979, 189 Cal.Rptr. 834 (1983) (arbitrator not immune from claim for delay in decision), and the parties will be protected from misconduct. Cf. Terminal *261Constr. Corp. v. Bergen Cty. Hackensack River Sanitary Sewer Disk Auth., 34 N.J.Super. 478, 504 (App.Div.1954) (engineer’s certificate in construction contract is conclusive in absence of fraud or arbitrary action), modified, 18 N.J. 294 (1955); see also Barcon Assos., Inc. v. Tri-County Asphalt Corp., 86 N.J. 179 (1981) (undisclosed affiliation with party taints judgment; every arbitrator must make full disclosure of party relationships). But no such allegations were made here and the accountant’s value was accepted by the court.
These precedents establish that we should be focusing on function, not form. Employing the test of “functional comparability,” the Sixth Circuit has concluded that in light of the encouragement of arbitration and the necessity for arbitrators to facilitate the policy, “ ‘it follows that the common law rule protecting arbitrators from suit ought not only be affirmed, but, if need be expanded.’ ” International Union, United Automobile, Aerospace & Agric. Implement Workers v. Greyhound Lines, Inc., 701 W.2d 1181, 1186 (6th Cir.1983) (quoting Hill v. ARO Corp., 263 F.Supp. 324, 326 (N.D.Ohio 1967)).
We are currently exploring unique proposals for methods of dispensing justice that will enable people to resolve their disputes fairly, efficiently, and swiftly. Their forms differ vastly, and include, as well, non-binding arbitration and mediation. A variety of legal disputes are amenable to such disposition, including neighborhood and family problems, minor criminal matters, and landlord-tenant disputes. Naturally, we will be able to shape the rules and procedures for the degree of formality and type of hearing that we want in any particular case: “As the alternative dispute resolution movement grows in New Jersey, the need to clearly define the legal issues of confidentiality, liability and enforceability becomes paramount.” Report of Municipal Court Programs Subcommittee of the Supreme Court Committee on Complementary Dispute Resolution Programs 9 (March 14, 1981). The qualification and
*262training of mediators and arbitrators, especially in the fields of divorce and custody, are subjects that must be addressed as these programs expand. See Report of the State Family Court Committee to the June 24, 1983 Judicial Conference 47. Surely, no one would question that a CPA would have the requisite qualifications or training to serve these parties. I regretfully conclude that we have taken a step backward in this case by clouding the issues of liability of participants in such programs. Only recently, we said:
It is fair and reasonable that parties who have agreed to be bound by arbitration in a formal, written separation agreement should be so bound. Rather than frowning on arbitration of alimony disputes, public policy supports it. We recognize that in many cases arbitration of matrimonial disputes may offer an effective alternative method of dispute resolution. As commentators have noted, the advantages of arbitration of domestic disputes include reduced court congestion, the opportunity for resolution of sensitive matters in a private and informal forum, reduction of the trauma and anxiety of marital litigation, minimization of the intense polarization of parties that often occurs, and the ability to choose the arbitrator. See Comment, 15 Wake Forest L.Rev., supra, at 490. In this sensitive and intensely private area of domestic disputes, arbitration expressly contracted for by the spouses is highly desirable. [Faherty v. Faherty, supra, 97 N.J. at 107 (1984).]
I am confident that the effects of this decision can be modified by rules created for court-annexed dispute programs. We should not insist that every such program be court-annexed, but should extend immunity to the “honorable men” or women chosen by the parties to make “the final settlement of the dispute.” Gotshal, supra note 4.
I would reverse the judgment and hold the dispute-resolver immune.
For affirmance — Justices CLIFFORD, SCHREIBER, HANDLER and POLLOCK — 4.
For reversal — Chief Justice WILENTZ, and Justices O’HERN and GARIBALDI — 3.

At oral argument, it was conceded that just as the husband may make a claim of negligence on the part of the accountant in evaluating the stocks that were to be assigned to the wife, so too the disgruntled wife may have a cause of action against the accountant. The wife and husband had jointly sought to vacate the settlement.

In this regard, it is ironic that if the court had simply had the accountant appointed as an independent expert to aid the court under Rule 5:3-3 there would be little doubt in my mind that the testimony and report would be privileged. See Rainier's Dairies v. Raritan Valley Farms, Inc., 19 N.J. 552, 559-60 (1955) (statements made in judicial proceeding absolutely privileged). True, the accountant would be subject to cross-examination, but here the parties agreed to waive that right by letting him make the report outside of the courtroom.

Judge Simpson traced the history of arbitration from antiquity to modern times:
Another definition of arbitration, by a man who considers it art rather than science, follows:
“Arbitration is a simple, uncomplicated system, created through need by trial and error, whereby mankind has settled and does settle disputes of every kind or nature through the acceptance of the judgment of one or more reasonable and competent honorable men as the final settlement of the dispute.” [Simpson, supra, at 9-10 (quoting Gotshal, "The Art of Arbitration,” 48 A.B.A.J. 553 (1962)).]