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First Financial Equities, Inc. v. Anderson


July 24, 2009


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

Per curiam.


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 what led to that result are not contained in the record before us and are not material to the question on appeal.

In August 2007 FFE filed suit in Bergen County to collect upon these notes, contending that Anderson, being no longer employed by FFE, was in default. Anderson, relying on the language in the employment agreement, sought to dismiss the suit in favor of arbitration. The trial court denied his motion, and he has appealed.

The first issue which confronts us is whether this appeal should be dismissed as interlocutory. In Wein v. Morris, 194 N.J. 364 (2008), the Supreme Court held that an order compelling arbitration is a final judgment for purposes of appeal. The Court did not address the converse, an order denying arbitration. We note that our practice in this area has not been entirely uniform. Alfano v. BDO Seidman, LLP, 393 N.J. Super. 560 (App. Div. 2007) (reviewing an order denying a motion to compel arbitration, leave to appeal having been granted); Jansen v. Salomon Smith Barney, Inc., 342 N.J. Super. 254 (App. Div.) (proceeding directly to the merits of an appeal of an order denying arbitration), certif. denied, 170 N.J. 205 (2001).

Anderson's appeal has been pending before this court for nearly one year, and he has fully briefed the merits of his position that arbitration is the appropriate remedy for resolution of this dispute. We are satisfied that it would not advance substantial justice between the parties if we were to dismiss this appeal as interlocutory. We thus elect not to address that question and to proceed directly to the merits of the underlying appeal.

We are guided in our analysis by the following settled principles. "[A]rbitration is . . . 'favored as a means of resolving disputes[.]'" Angrisani v. Fin. Tech. Ventures, L.P., 402 N.J. Super. 138, 148 (App. Div. 2008) (quoting Martindale v. Sandvik, Inc., 173 N.J. 76, 84 (2002)). "The affirmative policy of this State, both legislative and judicial, favors arbitration as a mechanism to resolve disputes." Alfano, supra, 393 N.J. Super. at 575. "A strong public policy favors 'arbitration as a means of dispute resolution' and requires 'liberal construction of contracts in favor of arbitration.'" Bruno v. Mark MaGrann Assocs., 388 N.J. Super. 539, 545 (App. Div. 2006) (quoting Young v. Prudential Ins. Co. of Am., 297 N.J. Super. 605, 617 (App. Div.), certif. denied, 149 N.J. 408 (1997)). "An agreement to arbitrate should be read liberally in favor of arbitration." Angrisani, supra, 402 N.J. Super. at 148 (quoting Marchak v. Claridge Commons, Inc., 134 N.J. 275, 282 (1993)). "[D]oubts concerning the scope of arbitrable issues must be resolved in favor of arbitration, over litigation." Alfano, supra, 393 N.J. Super. at 576. "An agreement relating to arbitration should thus be read liberally to find arbitrability if reasonably possible." Jansen, supra, 342 N.J. Super. at 257.

Here, the parties' agreement included a very broad arbitration clause, under which they agreed to submit to arbitration "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 . . . ." The notes at issue, moreover, not only refer to the employment agreement, they specifically direct that the terms of that employment agreement are incorporated into the body of the notes and made a part of the notes.

We are satisfied that the trial court's order disregarded both the strong public policy favoring arbitration and the clear language of the parties' agreement. The order under review is reversed.


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