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Riding v. Towne Mills Craft Centre

January 29, 2001

ANNE RIDING,
PLAINTIFF-RESPONDENT,
V.
TOWNE MILLS CRAFT CENTRE, INC., A NEW JERSEY CORPORATION DOING BUSINESS AS HOUSE OF MARBLES TEIGN VALLEY GLASS AND BOVEY POTTERY,
DEFENDANT-APPELLANT,
AND
WILLIAM BAVIN, INDIVIDUALLY AND AS OWNER OF TOWNE MILLS CRAFT CENTRE, INC.,
DEFENDANT.



The opinion of the court was delivered by: LaVECCHIA, J.

Argued October 10, 2000

On appeal from the Superior Court, Appellate Division.

This appeal presents the question whether a successful age discrimination plaintiff, when seeking confirmation of an arbitrator's award, may move for counsel fees pursuant to N.J.S.A. 10:5-27.1, the fee-shifting provision of the New Jersey Law Against Discrimination (LAD), N.J.S.A. 10:5-1 to -42. Despite plaintiff's failure to raise her claim for counsel fees during the arbitration or before the time either party could reject the award and request a trial de novo, a majority of the Appellate Division held in an unpublished opinion that the counsel fees request may be heard in a post-arbitration application to the trial court. The appeal is before the Court on the basis of the dissent below.

I.

In 1997, plaintiff Anne Riding filed a complaint alleging age discrimination under the LAD against Towne Mills Craft Centre, Inc. and William Bavin. Bavin has since been dismissed from the action. Among the prayers for relief in Riding's Complaint was a claim for counsel fees. The case was selected for non-binding arbitration under Rule 4:21A-1 pursuant to a pilot program operating in Somerset County. In her Arbitration Statement of the Case, plaintiff sought a total of $57,404.52 in various forms of damages. It is undisputed that neither in that Statement nor at any time during the arbitration did plaintiff or defendant raise the issue of counsel fees.

An arbitrator found in favor of plaintiff and awarded damages in the amount of $38,240. No mention was made of counsel fees in the arbitration award. Before the fiftieth day following the arbitrator's award, plaintiff moved to confirm the award and requested counsel fees and costs in the amount of $9,743.78. Defendant did not contest the confirmation but did oppose the request for fees, contending that because the issue was not placed before the arbitrator plaintiff's application was actually an attempt to modify the award beyond the thirty-day time frame for modification provided in Rule 4:21A-6.

The trial court confirmed the award but denied the fees, holding that plaintiff's application constituted an impermissible request for modification. Plaintiff appealed, contending that the request for fees was not a modification but merely an application for fee shifting under the LAD, to which she was entitled as a matter of law. N.J.S.A. 10:5-27.1

A divided panel of the Appellate Division reversed. Citing the remedial nature of the LAD and the importance of fee shifting in discrimination suits, the Appellate Division held that plaintiff was a "prevailing party" entitled as a matter of law to counsel fees absent special circumstances to the contrary. The majority did not agree with the trial court's implicit holding that plaintiff waived fees by not raising the issue with the arbitrator. The Appellate Division analogized to federal case law allowing a statutory fee application to be made after settlement of a discrimination action, notwithstanding the settlement's silence on the issue. The Appellate Division majority held that there was no waiver of the statutory counsel fees here, and allowed the application to be made to the trial court after confirmation of the arbitration award.

The dissenting member of the panel asserted that the majority's holding thwarted the salutary policies underlying the arbitration process. Noting that the purpose of arbitration is to save judicial resources and promote the efficient, speedy, and inexpensive adjudication of disputes, the dissent stated that the majority opinion contravened those goals in two ways. First, a defendant cannot know whether to accept or reject the arbitrator's award when the counsel-fee issue is left open until after the award is confirmed; thus, to protect himself a defendant would have to request a trial de novo. Also, the majority's resolution would require post-arbitration judicial proceedings, contrary to the intent of the arbitration process to conserve the expenditure of judicial resources on arbitrated disputes.

We now affirm the judgment of the Appellate Division.

II.

A.

This case appears to implicate two competing policies. On the one hand, we have the strong legislative policy to provide fee shifting for successful LAD claimants. On the other is the policy of encouraging prompt and efficient resolution of all disputes in a given legal controversy through our arbitration processes, thus minimizing the need to expend judicial resources on those diverted cases. The question here is not which policy prevails, but rather how to reconcile the two.

The history of our mandatory arbitration statutes for certain automobile accident claims, N.J.S.A. 39:6A-24 to -35, and for personal injury claims within a designated amount, N.J.S.A. 2A:23A-20a, as well as the Court Rules implementing those laws have been reviewed before by this Court. Hartsfield v. Fantini, 149 N.J. 611, 615-16 (1997); see also Pressler, Current N.J. Court Rules, comment 1 on R. 4:21A-1 (2001) (discussing history of rules governing mandatory arbitration program). The success of the arbitration program over the years spawned experimentation or "pilot projects" in some vicinages that, by order, expanded the mandatory arbitration program to apply to other classes of actions. Ibid. Such an order was the source of authority for this case proceeding to arbitration in the Somerset vicinage in 1998.

Building on the experience gained from the various pilot projects, the amendments to the Court Rules effective September 2000 enlarged the categories of actions that are mandatorily arbitrable. Currently, non-binding arbitration is mandatory for applicable cases in Tracks I, II, and III. R. 4:21A-1(a)(1), (2), and (3). Statutory fee-shifting cases, like the LAD, are not among the mandatorily arbitrable cases, but may proceed to arbitration if the parties voluntarily agree. R. 4:21A-1(b). Hence, the means of integrating an LAD action, including fee shifting, with the processes of non-binding arbitration require resolution, not only for this case, but also for those LAD actions that may proceed to arbitration in the future.

B.

Mandatory non-binding arbitration operates under strict time frames that help guide the parties' expectations. Once a matter has been assigned for mandatory arbitration, a party must promptly seek to remove the case from that process if arbitration is not suitable for the controversy. R. 4:21A-1(c). After the arbitration hearing is conducted and the arbitrator's award issues, an order is entered dismissing the action unless one of the following occurs:

(1) within 30 days after filing of the arbitration award, a party thereto files with the civil division manager and serves on all other parties a notice of rejection of the award and demand for a trial de novo . . .; or

(2) within 50 days after the filing of the arbitration award, the parties submit a consent order to the court detailing the terms of settlement and providing for dismissal of the action or for entry of judgment; or

(3) within 50 days after the filing of the arbitration award, any party moves for confirmation of the arbitration award and entry of judgment thereon. [R. 4:21A-6(b).]

Here, both parties allowed thirty days to expire after the arbitrator ruled in favor of plaintiff. After neither party requested a trial de novo, plaintiff properly moved to confirm within the fifty-day window. With the motion to confirm, plaintiff also requested an award of counsel fees, claiming that, until then, she was not a "prevailing party" entitled to fees under N.J.S.A. 10:5-27.1. Defendant responded that it was lulled into believing that the arbitrator's award encompassed defendant's entire liability to plaintiff, and that under typical arbitration procedures plaintiff was foreclosed from seeking to "modify" that award after the thirty days expired. See N.J.S.A. 2A:24-9 (setting forth limited grounds for modification or correction of an award). Plaintiff characterizes that result as allowing a rule on process to trump specific statutory rights. There is some merit to both parties' arguments.

Fee shifting is an important remedial component of the LAD, as the Appellate Division majority recognized:

LAD is remedial legislation to be given a liberal interpretation consistent with an approach sympathetic to its objective of ending discrimination. Counsel fee awards in LAD cases should be the rule rather than the exception to encourage litigants to combat discrimination in our State. Even good faith in defense of a LAD action is not a defense to a fee claim by a prevailing plaintiff.

Defendant does not dispute that plaintiff is a "prevailing party" in the context of the LAD's fee-shifting provision, N.J.S.A. 10:5-27.1. It is also undisputed that, at the arbitration hearing, neither party addressed the issue of fees. The arbitration award was similarly silent on the subject. Notwithstanding that the arbitration award did not consider and reject on the merits a fee request, defendant contends that plaintiff's application for fees essentially sought a "modification" of the award. The Appellate Division was not persuaded by defendant's argument that it relied on an expectation that the award comprised its entire liability to plaintiff when it allowed the time for requesting a de novo trial to pass. Instead, the majority concluded that plaintiff's ...


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