Court Opinion

ID: 6221776
Source: CourtListenerOpinion
Date Created: 2022-02-15 15:07:35.908847+00
Date Added: 2024-06-11T08:57:24.161314
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NOT FOR PUBLICATION WITHOUT THE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-3348-20

ERECTION & WELDING
CONTRACTORS,

          Plaintiff-Respondent,

v.

ARCO CONSTRUCTION GROUP
and ANGEL CABRERA,

          Defendants-Appellants,

and

MONROE TOWNSHIP,

     Defendant.
_______________________________

                   Submitted December 14, 2021 – Decided February 15, 2022

                   Before Judges Rothstadt, Mayer, and Natali.

                   On appeal from the Superior Court of New Jersey, Law
                   Division, Middlesex County, Docket No. L-2829-21.

                   Joseph J. Hocking, attorney for appellants.

                   Frederick A. Jacob, attorney for respondent.
PER CURIAM

      Defendants ARCO Construction Group, Inc. (ARCO) and its principal,

Angel Cabrera, appeal from a June 11, 2021 order compelling arbitration of their

dispute with plaintiff, Erection and Welding Contractors, LLC, and requiring

ARCO to file a demand for arbitration with the American Arbitration

Association (AAA) and pay the filing fee. 1 The motion judge entered the order

after finding it was undisputed that, under the parties' agreement, ARCO had the

exclusive option to litigate or arbitrate disputes and that it exercised its option,

which obligated ARCO to file for arbitration and pay the required fee, subject

to adjustment by the arbitrator, if warranted.

      On appeal, defendants do not challenge the order compelling arbitration,

but argue there was no legal basis for the judge to order that ARCO file for

arbitration and pay the required fee. They also contend, for the first time on

appeal, that two arbitration clauses in the parties' contract were in conflict and

should have been interpreted to mean that either party had a right to compel

1
  The same order dismissed with prejudice plaintiff's claims against defendant
Monroe Township. Neither party appeals from that provision and the Township
did not participate in this appeal, although ARCO's amended notice of appeal
named the Township as an appellant.
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arbitration, and, therefore, because plaintiff filed this action, it should have been

compelled to file the arbitration and pay the required fee.

      We conclude, under the facts of this case, ARCO's argument is without

any merit. We affirm as there was no dispute ARCO had the exclusive right to

compel arbitration and originally asserted its right to arbitrate the parties'

dispute, which resulted in the dismissal of a complaint plaintiff filed years

earlier seeking the same relief as in this action.

      The facts taken from the motion record are summarized as follows. On

July 30, 2010, ARCO, as the general contractor on a project for Monroe

Township, entered into a contract with plaintiff to perform services as a

subcontractor on the project. The contract contained two provisions relating to

the arbitration of disputes arising from the parties' agreement. 2

2
   Section AF of the parties' agreement was captioned "Dispute Resolution."
Section AF(1) stated as follows: "At the sole and exclusive option of [ARCO],
any and all disputes arising from or related to the [s]ubcontract or the breach
thereof shall be decided by binding arbitration in accordance with the
[c]onstruction [i]ndustry [a]rbitration [r]ules of the American Arbitration
Association then applicable." (Emphasis added). It also stated in Section AF(2)
that "The [s]ubcontractor expressly agrees to arbitrate all disputes and this
obligation as provided in the [s]ubcontract shall be specifically enforceable
under applicable law." Section AG, entitled "Actions and Proceedings and
Applicable Law," stated in pertinent part that "Any and all disputes arising from
or relating to the [s]ubcontract or the breach thereof shall be decided by binding

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                                         3
      In 2012, ARCO began making untimely payments to plaintiff and other

subcontractors. In March 2012, plaintiff requested full payment from ARCO

and that if payment was not made, plaintiff would "commenc[e] an arbitration"

as "[a]rbitration [was] required under section AF of the contract between the

parties."

    In June 2012, Monroe Township began making only partial payments to

ARCO due to the disputes between ARCO and its subcontractors, which caused

ARCO to file a demand for arbitration against the Township. Plaintiff did not

participate in that arbitration. 3 The arbitration terminated when ARCO and

Monroe Township resolved their dispute through mediation in 2014.

    On November 30, 2015, plaintiff filed a complaint asserting claims against

ARCO involving the Monroe project. 4 ARCO responded on January 22, 2016,

arbitration in accordance with the [c]onstruction [i]ndustry [a]rbitration [r]ules
of the American Arbitration Association then applicable."
3
    In February 2014, ARCO successfully petitioned a specially appointed
arbitrator to join subcontractors to the arbitration, including plaintiff. Although
the arbitrator's joinder award stated "ARCO ha[d] elected to arbitrate its disputes
with its subcontractors" and "[t]herefore, all said contractors [were] free to bring
whatever claims they may have [had] against ARCO," plaintiff did not bring any
claims against ARCO or otherwise participate in that arbitration.
4
  In its complaint, plaintiff asserted causes of action for breach of contract,
Cabrera's personal liability, misrepresentation, breach of fiduciary duty,

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                                         4
with a letter to plaintiff demanding arbitration of the claims plaintiff raised in

its complaint. Also, on July 22, 2016, defendant filed an answer, which asserted

the court lacked jurisdiction because ARCO invoked its right to arbitrate and

pleaded arbitral jurisdiction as an affirmative defense.

   On April 10, 2017, plaintiff acceded to ARCO's arbitration demand. On that

date, the parties filed a stipulation of dismissal which stated: "[ARCO] having

elected to arbitrate this matter in accordance with the Arbitration Clause of the

applicable contract; it is hereby stipulated that this matter is dismissed, with

prejudice, to allow the parties to proceed to arbitration." (Emphasis added).

However, neither party filed for arbitration. Instead, the parties unsuccessfully

engaged in settlement discussions over the course of the ensuing three years.

   On June 29, 2018, plaintiff's counsel wrote to ARCO's attorney stating if

payment of the money allegedly owed to his client was not paid by July 6, 2018,

"we will move to arbitration." Unable to reach a resolution, on October 6, 2020,

plaintiff requested ARCO set dates for arbitration. ARCO refused, asserting it

believed that plaintiff had the right to file for arbitration at any time since

"ARCO invoked the arbitration clause" in 2016 and that plaintiff's claims were

consumer fraud, and unjust enrichment. Plaintiff also asserted claims involving
another project, however those claims were resolved separately.
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                                        5
time-barred because plaintiff could have filed for arbitration, but it did not

without any agreement to toll the statute of limitations on those claims.

    On January 12, 2021, plaintiff filed the complaint in this action,5 and it

applied for the entry of an order to show cause, seeking, among other relief, an

order compelling ARCO to file for arbitration. On April 14, 2021, 6 a Law

Division judge entered an order to show cause requiring ARCO to appear and

be heard on why judgment should not be entered against it, including an order

to "compel arbitration" or grant "such other relief as the court deem[ed]

equitable and just." ARCO responded by filing a motion to dismiss plaintiff's

complaint with prejudice and to compel plaintiff to "pursue its claims against

ARCO in an arbitration that plaintiff initiates with the [AAA]."

      On June 11, 2021, a different judge considered the parties' arguments

before entering the order under appeal. During the hearing, ARCO's counsel

acknowledged the parties' contract granted ARCO the "unilateral" right to

decide whether a dispute is arbitrated or litigated. However, according to

ARCO's counsel, "the fact that [ARCO] ha[d] a right to decide whether a claim

5
  Plaintiff amended its complaint in February 2021. It asserted the same claims
against ARCO as alleged in plaintiff's 2015 complaint.
6
  The delay from January to April stemmed from plaintiff initially filing their
complaint and order to show cause in an incorrect venue.
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w[ould] be decided in arbitration or in litigation d[id] not ipso facto make

[ARCO] a claimant if it decide[d] to elect to arbitration." (Emphasis added).

      The judge found it was undisputed that the parties agreed to arbitrate the

claims raised and that ARCO had the exclusive option to arbitrate claims. He

reasoned: ARCO "elected for arbitration [and] ha[d] the sole determination

whether [claims] go[] to trial [or] arbitration. [It did not] want to go to trial,

[ARCO] want[ed] to go to arbitration, [it] need[ed] to file the claim in AAA."

As to who should pay for the filing fees, the judge stated, "Somehow I think the

folks at [AAA] will be able to figure this out, assess the right fee, and resolve

this matter." The judge concluded by directing that "[a]ll claims for damages

and things w[ould] be submitted to arbitration." This appeal followed.

      Our review of a motion judge's order compelling arbitration is "de novo."

Hirsch v. Amper Fin. Servs., LLC, 215 N.J. 174, 186 (2013). Therefore, "we

need not give deference to the analysis by the trial court." Goffe v. Foulke

Mgmt. Corp., 238 N.J. 191, 207 (2019). "In reviewing such orders, we are

mindful of the strong preference to enforce arbitration agreements, both at the

state and federal level." Hirsch, 215 N.J. at 186. "However, the preference for

arbitration 'is not without limits.'" Id. at 187 (quoting Garfinkel v. Morristown

Obstetrics & Gynecology Assocs., P.A., 168 N.J. 124, 132 (2001)).

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                                        7
      Applying that standard, we first turn to defendants' appellate argument

that, despite there being no dispute before the motion judge that ARCO had the

unilateral right to demand arbitration, conflicting arbitration provisio ns in the

parties' contract must be interpreted to require both parties to arbitrate all claims

relating to the contract "without regard to whether ARCO elects arbitration." As

this argument was not raised before the judge, we will not consider it now on

appeal, see Zaman v. Felton, 219 N.J. 199, 227 (2014) ("declin[ing] to consider

questions or issues not properly presented to the trial court when an opportunity

for such a presentation is available" (quoting Nieder v. Royal Indem. Ins. Co.,

62 N.J. 229, 234 (1973))), especially since ARCO is estopped from taking a

contrary position before us than it did before the motion judge and, even earlier,

when plaintiff filed its original complaint in 2015 that led to the action's

dismissal with prejudice. See Kimball Int'l, Inc. v. Northfield Metal Prods., 334

N.J. Super. 596, 608 (App. Div. 2000) ("[J]udicial estoppel is an 'extraordinary

remedy,' which should be invoked only 'when a party's inconsistent behavior

will otherwise result in a miscarriage of justice.'" (quoting Ryan Operations G.P.

v. Santiam-Midwest Lumber Co., 81 F.3d 355, 365 (3d Cir. 1996))).

      We reach the same conclusion as to arguments on appeal about defendants'

claimed defenses to plaintiff's claim. According to defendants, the judge should

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                                         8
have considered various defenses that they contend they had as to plaintiff's

claims, including that the claims were time-barred and that plaintiff waived its

claims by not participating in ARCO's 2014 arbitration with Monroe Township

that resulted the settlement between those two parties. These contentions were

also not raised before the motion judge.

      Defendants' remaining argument is that the motion judge erred by

compelling ARCO to file a demand for arbitration where both parties requested

the court to compel the other to arbitrate and their agreement was silent on the

mechanics of which party must file and pay the filing fee.         According to

defendants, their primary concern is that the motion judge's decision "has the

potential of undermining and prejudicing ARCO's argument that plaintiff's

claims are time-barred because it requires ARCO to initiate the arbitration

proceeding.    An arbitrator could interpret [that] as placing within ARCO's

exclusive control when and whether plaintiff's claims were ever brought forward

in arbitration."

      We conclude from our review of defendants' remaining contention that it

is without sufficient merit to warrant discussion in a written opinion, Rule 2:11-

3(e)(1)(E), especially since, when plaintiff filed its first complaint in 2015,

plaintiff yielded to ARCO's demand for arbitration and entered into a stipulation

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                                        9
of dismissal with prejudice so that its claims would be determined in accordance

with ARCO's contractual right to arbitration. Under these circumstances, as the

motion judge determined, to the extent there remains any dispute about which

party must pay the arbitration filing fee, ARCO was properly compelled to pay

the fee and to then let the arbitrator determine who should be responsible, in the

same manner that all the other claims arising from the contract, and defenses

thereto, would also be decided—through arbitration. EPIX Holdings Corp. v.

Marsh & McLennan Cos., 410 N.J. Super. 453, 473, (App. Div. 2009) ("If these

factual allegations '"touch matters" covered by the parties' contract, then those

claims must be arbitrated, whatever the legal labels attached to them.'" (quoting

Genesco, Inc. v. T. Kakiuchi & Co., 815 F.2d 840, 846 (2d Cir. 1987))).

      There is nothing about the motion judge's decision that barred any of

defendants' defenses or otherwise caused prejudice to them. All the judge did

was ensure the parties' original agreement to arbitrate and their subsequent

agreement to dismiss plaintiff's earlier complaint in favor of arbitration were

properly enforced. Whether any or all of plaintiff's claims became stale during

the intervening years is for the arbitrator to decide.

      Affirmed.

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