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Cable Management Services, Inc. v. Berkowitz

April 1, 2009

CABLE MANAGEMENT SERVICES, INC., RCH TELECOMMUNICATIONS, INC., AND ROBERT C. HALGAS, PLAINTIFFS-APPELLANTS/ CROSS-RESPONDENTS,
v.
PETER BERKOWITZ, DEFENDANT-RESPONDENT/CROSS-APPELLANT.



On appeal from the Superior Court of New Jersey, Law Division, Burlington County, Docket No. L-3583-07.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued March 4, 2009

Before Judges Fisher and Baxter.

Plaintiffs, Cable Management Service, Inc., RCH Telecommunications, Inc., and Robert C. Halgas (CMS), appeal from a February 29, 2008 Law Division order that confirmed an arbitration award against CMS and entered judgment in favor of defendant, Peter Berkowitz, in the amount of $75,000 of severance pay. CMS maintains that the Law Division erred by:

1) rejecting its contention that the arbitrator lacked authority to award severance pay; 2) failing to correct a miscalculation in the amount of severance pay that was awarded; and 3) denying its request for counsel fees. In his cross-appeal, Berkowitz challenges the Law Division's refusal to award him counsel fees and post-award interest. We affirm in part, and remand on the issue of post-award interest.

I.

CMS is a multi-state corporation that installs cable television service and internet access for various corporate clients. Pursuant to a September 24, 2001 employment agreement, CMS hired Berkowitz as Director of Operations for a period of one year or until terminated by mutual agreement. In section 8, the employment agreement specified that "controversies arising out of or relating to the employment relationship created by this Employment Agreement, or the breach thereof . . . shall be submitted to mediation and/or arbitration in lieu of adjudication through any federal, state or local court system . . . ."

In 2006, CMS assigned Berkowitz to the position of senior vice president of Telecom, which was a division of CMS. When Telecom's recurring losses could not be reversed, CMS decided to cease operation of Telecom. Upon being notified that his position was being eliminated, Berkowitz raised age discrimination and wage violation claims. After a period of negotiations, the parties entered into a separation agreement and general release (separation agreement) on February 23, 2007.

In relevant part, the separation agreement provided that if CMS terminated Berkowitz, CMS would be obligated to pay him $2,884.62 per week from the date of separation through August 31, 2007, a period of approximately twenty-seven weeks. The separation agreement also provided that Berkowitz was entitled to revoke his approval of the separation agreement, provided he did so no later than twenty-one days from February 23, 2007. However, in the event Berkowitz properly exercised his right of revocation, CMS would have no obligation to "pay the sums or provide the benefits otherwise provided for in [the Separation] Agreement." Finally, section 12 of the separation agreement specified that any litigation concerning the separation agreement could be brought only in state or federal court in the District of New Jersey.

On April 6, 2007, forty-two days after he signed it, Berkowitz sent CMS a letter by fax and by overnight mail revoking the February 23, 2007 separation agreement. On April 25, 2007, Berkowitz invoked his right to arbitration under section 8 of the employment agreement by filing a demand for arbitration with the American Arbitration Association.

Because neither side arranged for a court reporter to transcribe the arbitration proceedings, no verbatim record was prepared; however, the parties agree that the arbitrator made specific interim rulings that have a significant bearing on the issues presented to us on appeal.

In particular, during the arbitration proceeding, CMS argued that the arbitrator lacked authority to award Berkowitz the $2,884.62 weekly severance payments that are specified in the separation agreement. CMS argued before the arbitrator that the separation agreement had no arbitration clause and instead required all disputes arising out of the separation agreement to be resolved in state or federal court. The parties agree that on the second day of the arbitration proceeding, the arbitrator rejected CMS's argument that severance pay could not be awarded, even if Berkowitz proved a violation of the separation agreement. The parties further agree that CMS did not file an action in the Law Division seeking to halt the arbitration proceeding before it began, nor by way of order to show cause after the adverse decision by the arbitrator that monetary damages could potentially be awarded to Berkowitz.

On December 10, 2007, at the conclusion of the arbitration proceedings, the arbitrator issued a three-page decision concluding that Berkowitz's effort to revoke the separation agreement was "untimely," and therefore the separation agreement remained "in full force and effect." After finding that Berkowitz was terminated without cause and was consequently entitled to severance payments, the arbitrator awarded Berkowitz the "six months of ...


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