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Vollers Excavating & Construction, Inc. v. Watchung Square Associates

July 27, 2009


On appeal from the Superior of New Jersey, Law Division, Somerset County, Docket No. L-547-02.

Per curiam.


Argued January 20, 2009

Before Judges Carchman, Sabatino and Simonelli.

Defendant Watchung Square Associates, L.L.C. (Watchung), the owner of the Watchung Square Mall located on Route 22 in Watchung, appeals from a February 11, 2008 judgment of the Law Division confirming an arbitration award in favor of defendants Joseph A. Natoli Construction Corporation (Natoli) in the amount of $3,754,512.06; Star Lo Electric Company (Star Lo) in the amount of $542,261.89 (as part of Natoli's award) and plaintiff Vollers Excavating & Construction, Inc. (Vollers) in the amount of $4,179,820.01. Challenging this arbitration, which consumed five years and over 100 hearings, not on the quantum of the award but on the alleged failure of one of the arbitrators, Philip S. Inglis, to reveal his relationship with Natoli, Watchung sought post-arbitration discovery to further explore the relationship. Implicit in Watchung's efforts was an attempt to demonstrate bias as a basis for vacating the award. In a well-reasoned thirty-one-page opinion, Judge Accurso denied the relief and confirmed the award. Defendant appeals and we affirm.

These are the relevant facts that emerge from the record. As we noted, Watchung is the owner of the Watchung Square Mall. In 1999, Watchung contracted with Natoli as general contractor for the construction of this shopping mall. Natoli subcontracted with Vollers for a portion of the site work and subcontracted with Star Lo for the electrical work. The contract between Watchung and Natoli contained an arbitration clause that required all disputes to be submitted to binding arbitration in accordance with the rules of the American Arbitration Association (AAA). The contract between Natoli and Vollers and the contract between Natoli and Star Lo contained the same clause.

Disputes between the parties arose, and in February 2002, Watchung filed a demand for arbitration with AAA against Natoli. Natoli filed a counter-demand for arbitration against Watchung. In March and April 2002, the AAA sent a list of potential arbitrators and their resumes to Watchung and Natoli. Inglis's name was one of those on the list. Inglis's resume stated that he was a past board member of the Building Contractors Association of New Jersey (BCANJ).

On June 15, 2002, the AAA advised counsel for Watchung and Natoli by letter that it had appointed Inglis, Arie Leegwater and Vincent A. Marella as the arbitrators for this case. Later that month, the AAA provided the parties with the arbitrators' disclosures and informed the parties that they had five business days to raise any objections. Absent objection, the arbitrators' appointments would be confirmed.

Inglis's disclosure states, "I am known to the law firm of Budd, Larner, Gros[s], Rosenbaum, [and] Sade but not Michael M. Rosenbaum, Esq. I am known to [Natoli] thru the [BCANJ], Jo[seph] Natoli, Paul Natoli." Neither Watchung nor Natoli objected to any of the arbitrators, and on July 11, 2002, the AAA informed the parties that the appointments had been confirmed.

Vollers filed an action in the Law Division against Watchung, Natoli, Star Lo and others. Following motion practice, the suit was stayed, and the claims raised in the law suit were consolidated with the pending arbitration.

Once Vollers and Star Lo were joined, the arbitration panel (the panel) held three administrative hearings before beginning the evidentiary hearings. The first of these hearings occurred on October 16, 2002. At this hearing Inglis disclosed that he had been to the Watchung Square Mall project site (the "Project Site") in connection with his work in the BCANJ summer work program. Inglis explained that one of the students in the program worked for Natoli, and that Inglis had visited with the student in Natoli's trailer at the Project Site. No party raised any objections to Inglis' continued participation. On January 20, 2003, the panel held the second administrative hearing. At that hearing, Inglis disclosed that after reviewing Watchung's list of experts, he realized that he knew one of them, Harold Tepper. Inglis stated that Tepper was a professor at New Jersey Institute of Technology who Inglis knew through the BCANJ's Student Chapter Program. Inglis also stated that he met Tepper between six and ten times when he had spoken to Tepper's students. No party objected.

On September 9, 2003, the panel held the first evidentiary hearing. At that hearing, Inglis placed the following statement on the record:

I just want to put one thing on the record and I don't think there's any real problem with it, but I think we all ought to understand this.

There are a number of us sitting at this table that either know each other or know of each other or whose reputations precede us in some fashion. We've made, the three of us arbitrators have made all of the disclosures that I can think of. I've been very careful and I know my fellow[] arbitrators have looked at the witnesses['] names as they came in and we have been quick to disclose anything. The case is such that probably another witness or two will be coming in and who knows, we may know them, it's a big business but a small world.

And I just want to caution everybody, and we are all trying to do the right thing, and I'm sure we are going to do the right thing, but it's a small business and there's a lot of people involved here.

Another disclosure was forthcoming for on October 9, 2003, Inglis disclosed that he was an adjunct professor at Rutgers University and that one of his students worked for Natoli. Watchung's counsel asked how Inglis found out about this student's employment. Natoli responded that he received a list of participants, and this list contained the students' names, phone numbers, addresses and employers. Counsel for Natoli stated that this student had no involvement in this matter and did not even know it existed. Counsel for Watchung stated he had no objection.

Inglis corresponded with the AAA and restated the additional disclosures. The AAA forwarded Inglis's letter to the parties that same day and informed them that they must file any objections by May 3, 2004. On May 6, 2004, the AAA sent the parties a letter stating that no ...

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