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Bernisky v. U.S. Logistics


June 19, 2008


On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, L-2622-06.

Per curiam.


Submitted June 2, 2008

Before Judges Parrillo, S.L. Reisner and Baxter.

Plaintiff Joseph Bernisky appeals from an August 4, 2006 order of the trial court dismissing his complaint without prejudice. We affirm.


This lawsuit arises from a contract of employment between Bernisky and defendant U.S. Logistics, Inc., which hired plaintiff as its sales director in 2005. The parties entered into an employment agreement dated July 6, 2005, signed by Bernisky and defendant John D. Colfer, President and CEO of U.S. Logistics. The pertinent section of the contract is paragraph 15, entitled "Settlement by Arbitration."

This section provides:

Any claim or controversy that arises out of or relates to this agreement, or the breach of it, shall be settled by arbitration in accordance with the rules of the American Arbitration Association. Judgment upon the award rendered may be entered in any court with jurisdiction. By agreeing to arbitration, the Employee does not waive his right to a trial by judge or jury. [emphasis added]

The highlighted section was added at Bernisky's request. In a faxed message from Colfer to plaintiff, Colfer stated that he had "modified the Employment Agreement to accommodate several of the changes you requested." These changes included plaintiff's right to a written warning prior to termination, as well as severance pay. Colfer's fax also stated that he "amended line 15 to state that you do not waive your right to have any dispute adjudicated in a court of law."

Nonetheless, Colfer left in the Agreement the language requiring the parties to submit any contractual dispute to arbitration. According to Bernisky's certification, he "relied" on Colfer's fax and "did not notice" when he signed the contract "that Mr. Colfer was still requiring me to proceed to Arbitration before I was able to seek my remedy in Court." In other words, plaintiff allegedly did not read the contract before he signed it.

In March 2006, Bernisky filed a lawsuit against defendants in the Law Division claiming that he had been wrongfully terminated from his position as sales director in violation of the Agreement, and seeking to be relieved of post-employment restrictions contained in the Agreement. He asserted a promissory estoppel claim based in part on the contract. He also asserted claims for defamation and that his termination was in violation of "the New Jersey Conscientious Employee Protection Act [,] N.J.S.A. 34:19-3" (CEPA). Defendants filed a motion to dismiss the complaint, contending that paragraph 15 of the agreement required plaintiff to submit his claims to non-binding arbitration before filing suit in court.

In an oral opinion placed on the record on August 4, 2006, the trial judge construed the contract as an "agreement that there would be arbitration, but that thereafter either party can pursue their remedies in a court of law in the event they didn't agree with the results of the arbitration." He specifically concluded that the "matter must be arbitrated prior to any judicial intervention in the case." Accordingly, he dismissed the complaint without prejudice, pending the contractually-required non-binding arbitration.


In considering matters outside the pleadings, the trial judge in effect converted defendants' motion to dismiss into a motion for summary judgment. R. 4:6-2. We review a trial judge's grant of summary judgment de novo, using the same standard employed by the trial court. Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608 (1998); Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). Moreover, "[a] trial court's interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference." Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995).

Neither party contends that the matter was not ripe for summary judgment. Rather, they disagree on the legal conclusions to be drawn from the contract and other evidence placed before the trial court. We conclude that summary judgment was properly granted dismissing the complaint without prejudice.

On this appeal, plaintiff contends that an arbitration clause is not enforceable unless it provides for binding arbitration; the clause is not enforceable because plaintiff did not knowingly consent to "Complete Litigation of his Controversy Twice;" the clause should not be enforced because it is ambiguous; and it should not be enforced because it will place an undue financial burden on plaintiff to potentially litigate his claims at arbitration and then in court. We find no merit in any of these arguments.

We begin by considering the trial court's construction of paragraph 15 of the contract, which contains the arbitration clause. "Basic contract principles apply when a court interprets an arbitration clause." Caruso v. Ravenswood Developers, Inc., 337 N.J. Super. 499, 505 (App. Div. 2001).

"Generally, [a court] determine[s] a written agreement's validity by considering the intentions of the parties as reflected in the four corners of the written instrument." Leodori v. Cigna Corp., 175 N.J. at 293, 302 (2003).

In interpreting a contract, "[i]t is not the real intent but the intent expressed or apparent in the writing that controls." "A contracting party is bound by the apparent intention he or she outwardly manifests to the other party. It is immaterial that he or she has a different, secret intention from that outwardly manifested." [Quigley v. KPMG Peat Marwick, LLP., 330 N.J. Super. 252, 266 (App. Div. 2000), certif. denied, 165 N.J. 527 (2000)(internal citations omitted).]

When the terms of a contract are clear and unambiguous, courts will enforce those terms as written. Kampf v. Franklin Life Ins. Co., 33 N.J. 36, 43 (1960).

Evidence of the circumstances is always admissible in aid of the interpretation of an integrated agreement, even where the contract is free from ambiguity, not for the purpose of changing the writing, but to secure light by which its actual significance may be measured. Such evidence is adducible simply as a means of interpreting the writing, -- not for the purpose of modifying its terms, but to assist in determining the meaning of what has been said. So far as the evidence tends to show, not the sense of the writing, but an intention wholly unexpressed, it is irrelevant. [Newark Publishers' Assoc. v. Newark Typographical Union, 22 N.J. 419, 427 (1956).]

In this case, while the agreement could have been more artfully drafted, its terms are unambiguous in the sense that they are susceptible of only one meaning. See Nester v. O'Donnell, 301 N.J. Super. 198, 210 (App. Div. 1977). Paragraph 15 provides that the parties will arbitrate in the event that a claim or controversy arises between them relating to the Agreement, but also gives plaintiff the right to a trial by judge or jury.

Examining the intent of the parties as it appears in the contract, and in the other evidence the parties provided, it is clear that they included the final provision to preserve plaintiff's right to a trial. This final sentence, however, does not eliminate his agreement to arbitrate. In fact, the sentence recites that "By agreeing to arbitration" he did not give up his trial right. This sentence can only be understood as indicating that plaintiff agreed to arbitration.

Thus, reading the arbitration clause logically, as a whole, see ibid., the final clause allows plaintiff to seek relief in court after pursuing his claims at arbitration. There is no other construction that will give effect to all of the provisions of paragraph 15. Plaintiff's contention, that although he negotiated paragraph 15, he signed the contract without "noticing" its provisions, is legally unavailing. "[U]nder basic contract law, 'one who signs a contract which he had an opportunity to read and understand is bound by its provisions.'" Nur v. K.F.C., U.S.A., Inc., 142 F. Supp. 2d 48, 51 (D.D.C. 2001)(citations omitted).

We turn next to plaintiff's challenges to the validity of paragraph 15. Our courts will generally enforce arbitration clauses, which are favored in our law, so long as they are not unconscionable or otherwise subject to being set aside under generally applicable contract principles. See Delta Funding Corp. v. Harris, 189 N.J. 28, 38-39 (2006); Rudbart v. N. Jersey Dist. Water Supply Commn., 127 N.J. 344, 356 (1992).

Generally, "courts should enforce contracts as made by the parties." Honoring an agreement to submit a matter to arbitration is consistent with the premise that, as long as the agreement does not violate public policy, parties may bargain freely. [Marchak v. Claridge Commons, Inc., 134 N.J. 275, 281 (1993) (citations omitted).]

These principles apply to arbitration clauses in employment contracts as well.

[T]he question of enforceability is determined not on the basis of whether the arbitration agreement is contained in an application for employment or in an employment contract, but rather whether the arbitration provision qualifies as a valid and enforceable contract. [Martindale v. Sandvik, Inc., 173 N.J. 76, 87 (2002).]

In this case, the arbitration clause was part of a negotiated contract which was subject to arms-length bargaining. It was not part of a consumer contract or a contract of adhesion, and contrary to plaintiff's contentions, we perceive nothing unconscionable or unfairly burdensome about an agreement to engage in non-binding arbitration before commencing litigation. Compare Delta Funding Corp. v. Harris, supra, 189 N.J. at 39-40. Moreover, as the Court noted in Delta Funding, where a party is obligated to arbitrate a claim arising under a statute that entitles a prevailing plaintiff to attorney fees, counsel fees are also available for the time spent at arbitration. Id. at 44-45. Consequently, if plaintiff prevails in his CEPA cause of action, he may be able to recover counsel fees for time spent arbitrating that claim. See N.J.S.A. 34:19-5.*fn1

Finally, we find no merit in plaintiff's contention that agreements to engage in non-binding arbitration, as opposed to binding arbitration, are unenforceable or otherwise disfavored in the law. None of the statutes or cases plaintiff cites support his argument. In fact, in automobile negligence cases, the Legislature has mandated that the parties participate in non-binding arbitration, N.J.S.A. 39:6A-25, in order to "ease the burden and congestion of the State's courts." N.J.S.A. 39:6a-24. As with this contract, a party dissatisfied with the outcome of the arbitration may demand a trial de novo in Superior Court.*fn2 See N.J.S.A. 39:6A-31.

Moreover, in Cohen v. Allstate Ins. Co., 231 N.J. Super. 97 (App. Div.), certif. denied, 117 N.J. 87 (1989), we specifically approved a non-binding arbitration clause in a contract for uninsured motorist (UM) benefits:

Although the public policy of this State is to favor arbitration as a means of settling disputes which otherwise would go to court, it is equally true that the duty to arbitrate, and the scope of the arbitration, are dependent solely on the parties' agreement. The parties may shape their arbitration in any form they choose and may include whatever provisions they wish to limit its scope. . . . It is also significant that, although the legislature has mandated binding arbitration of PIP claims at the option of the insured and has required non-binding arbitration of certain automobile tort claims, it has not required arbitration of UM claims at all. Thus the ascertainable public policy here is to encourage resort to arbitration while preserving full flexibility to the parties to elect or reject, and to structure and limit, that process as they choose. [Id. at 100-01 (emphasis added)(citations omitted).]

In this case, as in Cohen, plaintiff agreed to a hybrid procedure in which he would submit disputes to arbitration, but he retained the right to file a lawsuit if he was dissatisfied with the result. That agreement is enforceable.


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