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High Voltage Engineering Corporation

December 09, 1999


Before Judges Havey, Keefe and A.A. Rodr¡guez.

The opinion of the court was delivered by: Havey, P.J.A.D.


Submitted November 8, 1999 - Decided December 9, 1999

By order dated September 15, 1997, Judge Hamlin in the Chancery Division confirmed an arbitration award in favor of plaintiff High Voltage Engineering Corporation (High Voltage). Relative to this appeal, the Judge confirmed the arbitrators' determination that: (1) defendant Pride Solvents & Chemical Company of New Jersey, Inc. (Pride) breached an August 25, 1989 Settlement Agreement between the parties by filing a complaint in the Law Division against High Voltage concerning High Voltage's duty to remediate an industrial site being purchased by Pride; and (2) High Voltage was entitled to reasonable counsel fees as damages as a result of Pride's breach. Judge Hamlin referred the matter to a Special Master to fix the fees and costs owed to High Voltage. The Master awarded High Voltage $84,605.59. By final judgment dated October 9, 1998, Judge Messina adopted the Master's findings and directed that the counsel fees owed to High Voltage be deposited with the Clerk of the Superior Court subject to High Voltage's satisfaction of terms fixed by the arbitrators.

Pride appeals, arguing that the arbitration award must be vacated because: (1) the arbitrators exceeded their authority in awarding counsel fees in contravention of the "American Rule"; (2) the award of fees was not based on any evidence in the arbitration record; and (3) the award was "[n]either [m]utual, [f]inal [n]or [d]efinite." We reject the contentions and affirm.

Prior to 1978, High Voltage was the owner of an industrial site located in Middlesex County. From the 1930's through 1978, it conducted manufacturing operations at the site, resulting in contamination of the soil and groundwater. In 1978, High Voltage sold the site to Mellen Chemicals, Inc. (Mellen). After discovering the contamination in 1985, Mellen instituted suit against High Voltage in the United States District Court under the New Jersey Environmental Cleanup Responsibility Act (ECRA), N.J.S.A. 13:1K-6 to -14. In 1987, Mellen entered into negotiations to sell the site to Pride, subject to ECRA compliance by High Voltage. *fn1

In order to effectuate the sale to Pride, Mellen and the parties executed a Settlement Agreement on August 25, 1989. Pursuant to the Settlement Agreement, High Voltage entered into an Administrative Consent Order (ACO) with the NJDEP under which it assumed responsibility for remediation of the site. The Settlement Agreement provided that High Voltage had the exclusive right to negotiate with the NJDEP in achieving ECRA compliance. Pertinent here was a provision for arbitration of "[a]ny controversy or claim arising out of or relating to this Agreement, or the breach thereof . . . ." The arbitrators were directed to:

interpret the provisions of this Agreement in accordance with New Jersey law, but shall not have the authority or power to modify or alter any condition or provision of this Agreement, or any modification thereof, or to render any award which by its terms has the effect of altering or modifying any express condition or provision of this Agreement or modification thereof.

On March 16, 1993, Pride instituted an action in the Chancery Division demanding injunctive relief and compelling High Voltage to comply with the NJDEP's ACO as required by the Settlement Agreement. High Voltage counterclaimed, alleging that it was entitled to counsel fees because Pride breached the Settlement Agreement by initiating a lawsuit instead of submitting the remediation issue to arbitration. High Voltage also demanded counsel fees as a prevailing party under the New Jersey Environmental Rights Act, N.J.S.A. 2A:35A-10, and the Frivolous Lawsuit Act, N.J.S.A. 2A:15-59.1. As a result of the litigation, the NJDEP inspected the site and, on September 29, 1993, concluded that High Voltage was not in compliance with the ACO and ordered High Voltage to take remedial action. Pride thereupon voluntarily dismissed its complaint without prejudice. High Voltage's counterclaim for counsel fees was dismissed with prejudice. On High Voltage's appeal, we affirmed in part and reversed in part, concluding that High Voltage was entitled to submit the issue of Pride's breach of the Settlement Agreement to arbitration.

After a hearing the arbitrators determined that Pride had breached the Agreement by instituting its action instead of submitting to arbitration. The panel determined that High Voltage was entitled to counsel fees as damages incurred as a result of the lawsuit, but directed that the fees be paid into an escrow account, subject to High Voltage's compliance with the NJDEP's cleanup conditions.

High Voltage filed an action in the Chancery Division seeking to confirm the arbitration award and for a remand to the arbitration panel to determine the amount of counsel fees. Pride filed a separate action in the Law Division seeking to vacate or modify the award. After the matters were consolidated, Judge Hamlin, as noted, confirmed the award and referred the matter to a Special Master to quantify the amount of fees and costs due to High Voltage by order dated September 15, 1997. Upon the Master's finding that High Voltage was owed $84,605.59, Judge Messina entered a final judgment confirming the Master's findings on October 9, 1998.


An arbitrator's authority to resolve a dispute is based upon the contract between the parties. Communications Workers of Am., Local 1087 v. Monmouth County Bd. of Soc. Servs., 96 N.J. 442 (1984). "Thus, the jurisdiction and authority of the arbitrator are circumscribed by and limited to the powers delegated to him." Id. at 448 (citing Kearny PBA Local #21 v. Town of Kearny, 81 N.J. 208, 217 (1979)); Ridgefield Park Educ. Ass'n v. Ridgefield Park Bd. of Educ., 78 N.J. 144, 155 (1978)). Consequently, "[a]ny action taken beyond that authority is impeachable." In re Arbitration Between Grover and Universal Underwriters Ins. Co., 80 N.J. 221, 229 (1979) (holding that arbitrator's authority is limited to carrying out intent that case be decided in accordance with law).

It is now settled that an arbitration award may be vacated only in cases of fraud, corruption or similar wrongdoing as provided by the arbitration statute, N.J.S.A. 2A:24-8. In re Arbitration Between Tretina Printing, Inc. and Fitzpatrick & Assocs., 135 N.J. 349, 355-59 (1994). Under Chief Justice Wilentz's Concurring opinion in Perini Corp. v. Greate Bay Hotel & Casino, Inc., 129 N.J. 479 (1992), endorsed in Tretina, an award should not be vacated even though it may be based on a mistake in law. Id. ...

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