On appeal from Superior Court of New Jersey, Chancery Division, Union County.
Botter, King and McElroy. The opinion of the court was delivered by McElroy, J.A.D.
The single issue raised by this appeal is whether the municipal defendant-appellant should pay interest to the plaintiff-respondent on an arbitrator's award where plaintiff, dissatisfied with that award, demanded that it be paid and at the same time sought an order to show cause vacating the award. The court below ruled that defendant must pay 8% straight interest on the award. We disagree and reverse.
The essential facts are not in dispute. Plaintiff is the labor organization authorized to represent all sergeants, lieutenants and captains employed in the police department of the City of Elizabeth. It entered into negotiations with defendant for a new contract to replace an agreement which would expire on May 31, 1979. The parties could not agree and plaintiff sought compulsory interest arbitration pursuant to N.J.S.A. 34:13A-16.*fn1 Hearings were held and the arbitrator on September 19, 1979 rendered his decision. Bound by statute (N.J.S.A. 34:13A-16(d)(2)) to choose between the final economic proposals of the parties as a package and, as to non-economic issues, between the final proposals of the parties on each issue, the arbitrator chose the city's economic package and did not choose any of plaintiff's non-economic proposals.
On October 12, 1979, 13 days after the date of the award, counsel for defendant wrote to plaintiff's attorney inquiring whether plaintiff intended to accept the arbitrator's decision and stated:
If there is to be no appeal, we would like to be formally so advised so that we may implement Arbitrator Collins' Award and execute a new Collective Bargaining Agreement reflecting that Award . . . .
On October 17, 1979 plaintiff's counsel advised that plaintiff would seek "court relief to set aside the award." He noted that under the statute plaintiff had 90 days from the date of the award to take such action and that he would "do so at my earliest convenience."*fn2 In this letter plaintiff's attorney stated:
In the meantime, it seems to me that the award must be implemented by the City regardless of the action we take. Firstly, let me point out to you that whatever increase the patrolmen received in January of 1979 comes under our old contract and therefore we are entitled to that money retroactively. I also suggest that you implement the July increase as well as the bonus since any determination certainly is not going to be less than the payments you are making and they can always be credited in the event we are successful in having the award set aside and in a subsequent arbitration getting the type of award that we have sought previously.
Defendant's attorney replied on October 26, 1979 stating
Plaintiff did not bring its action to vacate the award until December 3, 1979, 75 days after the date of award. Defendant was not served with the complaint until December 21, 1979.*fn3
The matter was heard on January 25, 1980. The trial court refused to vacate the arbitrator's award but ordered defendant to pay interest on the award at 8% from the date of its entry. On January 29, 1980 defendant moved that the trial court reconsider the award of interest or, alternatively, that the court modify the period during which interest was to accrue for a period of at least 60 days to allow the city to "enact the necessary ordinances to lawfully pay increased salaries to [the employees] and to make the ...