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Cashan v. Malik Construction

October 18, 2007


On appeal from the Superior Court of New Jersey, Law Division, Burlington County, Docket No. L-1911-06.

Per curiam.


Argued October 3, 2007

Before Judges Cuff and Lisa.

This appeal involves an arbitration award arising out of a dispute over the performance of a construction contract. The contract provided that Malik Construction, Inc., a general contractor, would perform a whole home renovation and addition at the Moorestown home of plaintiffs, Calvin and Elizabeth Cashan. A dispute regarding the performance of the contract led to the arbitration, which resulted in an award favorable to plaintiffs. Plaintiffs sought to confirm the award and discharge the construction lien filed by defendant. Defendant sought to vacate the award. Judge Suter issued an order confirming the award, discharging the lien, and denying defendant's motion to vacate the award. This appeal followed.

Defendant argues that the arbitrator's rulings during the course of the protracted arbitration proceedings constituted sufficient misconduct to vacate the award. Alternatively, defendant urges that the award should be vacated on public policy grounds, contending that the arbitration process violated public policies underlying the Rules of Professional Conduct and due process requirements. We reject these arguments and affirm.

The May 6, 2003 construction agreement provided for a contract price of $1,224,983.75 for specified construction services to be performed by defendant on plaintiffs' home. The beginning date was June 2003, with substantial completion required by June 2004. As a result of sixty-seven change orders over the course of one year, the total price increased to more than $1.8 million. The agreement contained an arbitration clause, by which any controversy would be settled by the American Arbitration Association (AAA) under its Construction Industry Arbitration Rules. The agreement contained a termination clause, by which plaintiffs were authorized to terminate for failure of performance, on ten days notice, with a right to cure by defendant.

By June 2004, plaintiffs were dissatisfied with the progress and quality of defendant's work. By letter of June 23, 2004, they notified defendant of their intent to terminate the agreement, effective July 3, 2004. Although defendant contended it cured the alleged deficiencies, plaintiffs persisted in termination.

Defendant vacated the property and, through an AAA arbitration proceeding obtained leave to file a construction lien in the amount of $253,178 against plaintiffs' property. That arbitration proceeding is not the subject of this appeal.

Meanwhile, plaintiffs filed a demand for arbitration, seeking $75,000 in damages to compensate them for defendant's allegedly faulty and incomplete work. In its answering statement, defendant claimed the contract was wrongfully terminated, and it sought from plaintiffs total damages of $441,000. The AAA appointed Peter Liloia, III, Esquire to serve as arbitrator. Liloia was well-qualified and experienced in arbitrating construction disputes.

The arbitration began on April 19, 2005. It consumed thirty-four hearing dates spanning thirteen months, until May 2, 2006. Approximately eighteen witnesses testified and more than 500 exhibits, comprising at least nine binder books, plus plans, specifications, three expert reports and two videos were submitted in evidence. The proceedings were very contentious. There were many scheduling conflicts and delays. Although we do not have a verbatim record, it is readily apparent that the proceedings were marked by lengthy objections and arguments, as well as protracted examination and cross-examination of witnesses.

Plaintiffs' case-in-chief concluded on June 22, 2005, after thirteen hearing days. Defendant began presenting its case on June 23, 2005. The testimony of defendant's principal, Ric Malik, occupied six days. According to plaintiffs' counsel, William C. Mead, Jr., plaintiffs' case was needlessly extended by lengthy cross-examination and objections, and Ric Malik's testimony was repetitive and covered irrelevant evidence and issues. Mead further contended that the arbitrator granted wide latitude to both parties in his evidentiary rulings.

On November 17, 2005, the contentious nature of the proceedings reached a new high. Defendant contends that its expert witness was badgered and bullied with simultaneous cross- examination from Mead and his co-counsel, A. Fred Ruttenberg. Plaintiffs deny any impropriety, claim Mead alone conducted the cross-examination, and indeed contend it was defendant's attorney, I. Michael Heine, who acted improperly by attempting to assist the expert in answering questions by handing him a document. Then, when Ruttenberg objected, Heine went into an outburst "calculated to disrupt the proceeding." Objections and arguments were made, tempers flared, and a recess was taken.

Heine, Malik and the expert went outside of the building. Ruttenberg followed. When Heine and the expert reentered the building, Malik blocked the doorway in an effort to prevent Ruttenberg from reentering the building. According to Malik, Ruttenberg grabbed Malik's right arm, but lost his balance and fell to the ground. Malik stood over the fallen Ruttenberg, and Malik claims that Ruttenberg reached up and grabbed his testicles.

Ruttenberg denied initiating contact with Malik. He said Malik threw him to the ground, after which Malik stood in a boxing stance with his fists ...

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