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First Financial Equities, Inc. v. Anderson

July 24, 2009

FIRST FINANCIAL EQUITIES, INC., PLAINTIFF-RESPONDENT,
v.
ARTHUR ANDERSON, DEFENDANT-APPELLANT.



On appeal from Superior Court of New Jersey, Law Division, Bergen County, No. L-5877-07.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted June 30, 2009

Before Judges Skillman and Wefing.

Defendant Arthur Anderson appeals from a trial court order denying his motion to dismiss the complaint in favor of arbitration. Plaintiff has not participated in this appeal. After reviewing the record in light of the contentions advanced on appeal, we reverse.

Defendant Anderson is a mortgage broker who was employed by Countrywide Financial. Plaintiff First Financial Equities, Inc. ("FFE") is a mortgage banker licensed by the State of New York. In late 2005, FFE approached Anderson, and he eventually agreed to join FFE as the Director of Sales in New York. The parties executed a detailed employment agreement setting forth the terms of his compensation and responsibilities, which involved opening and managing an FFE office in Newburgh, New York.

Article 3 of this employment agreement dealt with defendant's compensation. It set his first year's base salary at $10,000 per month, provided he met his "Targeted Milestones," and it also provided for various bonuses and commissions. Paragraph 3.4 was headed "Contingent Bonus" and provided the following:

The Company shall pay the Employee a gross amount of $100,000 within 30 days of the Commencement Date, and a gross amount of $100,000 on each 30 day anniversary following the first month anniversary of the Commencement Date for five consecutive months, for a total aggregate gross payment of $600,000 (each payment, a "Contingent Bonus Payment" and, collectively, the "Contingent Bonus"). Each Contingent Bonus Payment shall be conditioned upon the execution and delivery by the Employee of a promissory note secured by a mortgage (the "Note"), in the form attached hereto as Exhibit A, which shall provide that the Contingent Bonus plus interest shall be returned to the Company if the Employee is not employed by the Company on the third anniversary of the Commencement Date.

In conjunction with that employment agreement, Anderson executed a series of promissory notes to FFE, each in the amount of $100,000. Each note contained the following provision:

The holder of this Note [FFE] agrees that this Note shall become null and void and of no further force and effect if the maker is employed by the holder on January 31, 2009. It is understood and agreed that the holder and the maker of this Note have entered into an Employment Agreement for the services of the maker. The terms and conditions of the Employment Agreement are specifically incorporated herein and made a part hereof as though set forth herein at length verbatim. (Emphasis added)

Further, each note stated that it was to be "strictly governed and controlled by the Laws of the State of New Jersey" and that the jurisdiction and venue for any disputes between the parties would "exclusively be situated in the Superior Court of New Jersey, Bergen County."

Section 8 of the employment agreement dealt with dispute resolution and choice of law. It provided that it was to be governed by and construed in accordance with New York law. In the event of a dispute, the parties were to attempt to negotiate a resolution in good faith. If that proved unsuccessful, either party could call for mediation, but the period of mediation could not exceed thirty days. Paragraph 8.4 provided in pertinent part:

Subject to the duty to negotiate and mediate set forth above, all disputes, claims, or causes of action arising out of or relating to this Agreement or the validity, interpretation, breach, violation, or termination thereof not resolved by Mediation, shall be finally and solely determined and settled by arbitration, to be conducted in the State of New York, USA, in accordance with the Commercial Arbitration Rules of the American Arbitration Association ("AAA") in effect at the date of arbitration ("Arbitration").

In late 2006, the State of New York suspended FFE's mortgage banking license. According to Anderson, the principal of FFE arranged for his employment with another entity and assured him that if he accepted this position, he would have no further liability to FFE under the promissory notes he had executed earlier in the year. Anderson accepted that position but that employment relationship ended in 2007. The circumstances of ...


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