July 27, 2009
VOLLERS EXCAVATING & CONSTRUCTION, INC., PLAINTIFF-RESPONDENT,
WATCHUNG SQUARE ASSOCIATES, L.L.C., DEFENDANT-APPELLANT, AND JOSEPH A. NATOLI CONSTRUCTION CORPORATION, HOME DEPOT, INC., DAYTON HUDSON, INC., DAVID MANDELBAUM, FLEET NATIONAL BANK, FIDELITY LAND DEVELOPMENT CORPORATION, STAR LO ELECTRIC COMPANY, INDUSTRIAL CONCRETE CONSTRUCTION OF N.J., INC., AND P.A. MARCHETTA, A.I.A., DEFENDANTS-RESPONDENTS.
On appeal from the Superior of New Jersey, Law Division, Somerset County, Docket No. L-547-02.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
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 objections had been received and that Inglis's appointment was reaffirmed.
Following an off-the-record discussion among the arbitrators at the June 2, 2004 hearing, Inglis stated
The [arbitrators] and all of you know each other to one degree or another. Obviously we've gotten to know you over these hearings. We've known some of you before and we've disclosed that. We've tried to be extremely open and factual about our disclosures, myself and others, even to the extent sometimes . . . I think it's been to the extreme or the unnecessary extreme, but we've done it.
Inglis continued on to request that conversations between the arbitrators and the representatives or parties be limited going forward to nothing more than "good morning" and "good night."
At the evidentiary hearing on September 22, 2004, Inglis made another disclosure following an off-the-record discussion among the arbitrators, the parties and their respective attorneys.*fn1 Inglis disclosed that there were two social functions to which he, Joseph Natoli and members of Joseph Natoli's firm had been invited.*fn2 Inglis stated that he wished to attend these functions, but wanted to be certain that none of the parties objected. Inglis also declared that he would not interact with Joseph Natoli or any member of his firm at these functions. No party objected. Inglis followed this with a letter to the AAA. The AAA forwarded this letter to the parties, no one objected, and Inglis's appointment was affirmed once again.
At the evidentiary hearing on November 10, 2004, Natoli's counsel disclosed on the record that Joseph Natoli was a member of the Industrial Advancement Program (IAP). The IAP sponsors, in part, the educational and information programs of the BCANJ. Natoli's counsel stated that the previous evening, Joseph Natoli recused himself from voting on a budget when he realized that part of the budget included funds disbursed to pay Inglis for the consulting work he performed for the BCANJ. Inglis then added that he previously disclosed that he is an associate member of the BCANJ, a member of the Association of General Contractors of America (AGCA) and that he previously served as a member of the board of directors of the BCANJ. Inglis continued that he is currently a consultant to the BCANJ "in their educational ventures," and that these ventures include teaching at various colleges throughout New Jersey. Inglis stated that as a consultant, the BCANJ compensates him on a monthly basis for ten months a year and pays for the expenses he incurs attending "such things as the AGC[A] convention and education and supervisory training committee meetings of the AGC[A]." Finally, Inglis concluded:
And I'm pretty sure I divulged all of that, maybe not quite in detail as I just have, some time ago.
Quite frankly, I had no idea that Mr. Natoli served on that board, and I'm really not even familiar with it because all my associations with the staff of the BCA[NJ] and  how they take whatever they do with all these other boards and agencies that they are involved with, I have no idea, and have no interest to know.
No party raised an objection, and the only comment made about the situation was a joke made by counsel for Watchung. Inglis memorialized his disclosure in a letter to the AAA, the AAA forwarded the letter to the parties, no parties objected and the AAA again reaffirmed Inglis's appointment.
As the hearings continued and additional facts were forthcoming, Inglis reacted when relevant names were mentioned. At the evidentiary hearing on April 12, 2005, one of Watchung's witnesses mentioned March Associates, the contractor that built the Target and Home Depot in the Watchung Square Mall, while testifying. Inglis stated once again that he was "very much involved" with the BCANJ and has worked as a consultant to the BCANJ "and their educational programs." Inglis also disclosed that March Associates was a member of the BCANJ, that March had employed a few students from BCANJ's Summer Work Program and that he had taught one or two of March Associates's employees at Rutgers. Watchung's counsel acknowledged that no one from March Associates would be testifying. There were no objections placed on the record, but again Watchung's counsel did make a joke.
At a later point during that same hearing, Inglis disclosed that he stopped consulting for the BCANJ on December 31, 2004, but that he was still an associate member. Inglis memorialized these disclosures with a letter to the AAA, the AAA forwarded this letter to the parties, no party objected and Inglis's confirmation was again reaffirmed.
After almost five years and over one hundred hearing dates, on August 2, 2007, the panel issued an award against Watchung and in favor of Natoli in the amount of $3,754,512.06, Vollers in the amount of $4,179,820.01 and Star Lo Electric in the amount of $542,261.89 (included in Natoli's award). On August 8, 2007, Natoli moved to confirm the arbitration award pursuant to N.J.S.A. 2A:24-7. Vollers and Star Lo, respectively, soon followed.
On September 10, 2007, Watchung served a subpoena duces tecum upon BCANJ seeking documents and a deposition of a BCANJ representative regarding Inglis's, Joseph Natoli's and Paul Natoli's involvement with the BCANJ from 1996 to 2007.*fn3 BCANJ moved to quash, and Watchung filed a cross-motion to compel discovery. On September 27, 2007 Natoli also filed a cross motion to quash.
Following argument, Judge Accurso found that Watchung had failed to make the prima facie showing required for its discovery demand and granted BCANJ's motion to quash. Watchung moved for reconsideration.
In support of its motion to vacate, Watchung argued that following "the shockingly one-sided award," it conducted an investigation to determine if any of the arbitrators had a possibility of bias or partiality. To summarize, Watchung alleged that this investigation revealed, that:
[Inglis] enjoyed a revenue stream from BCANJ before and during the arbitration during a time when Joseph Natoli and his son, Paul, were active in BCANJ as officers and trustees; that Joseph Natoli was a member of the IAP committee that had the responsibility of approving [Inglis's] salary as a part of its budgetary process; and that Paul Natoli headed BCANJ's education committee which had hired [Inglis] as a consultant.
Therefore, Watchung contended that Joseph and Paul Natoli were in a position to influence Inglis's employment and compensation, or at a minimum, a reasonable person could perceive that they were in such a position.
Judge Accurso granted Natoli's, Vollers's and Star Lo's motions to confirm arbitration and denied Watchung's motion to vacate arbitration. The judge found that Watchung did not make a "preliminary or prima facie showing that [Inglis] failed to disclose the nature or extent of his relationship with Natoli[.]" The judge also found that the record indicated that Watchung was privy to the information it was seeking regarding Joseph and Paul Natoli, the BCANJ and Inglis for several years.
Watchung's appeal followed. On appeal, Watchung asserts that the judge erred in her interpretation of the law, specifically the Supreme Court's decision in Barcon Assoc. v . Tri-County Asphalt Co., 86 N.J. 179 (1981); the judge erred in determining that Inglis's disclosures were sufficient and Watchung waived its right to object; and the judge erred in denying Watchung discovery as to Inglis's partiality. We now address the issues.
In determining the various motions to confirm as well as the motion to vacate the arbitration award, Judge Accurso found that Barcon applied. The judge stated that although the Court in Barcon established the obligation of every arbitrator to make the proper disclosures before the arbitration proceedings commence, the Court also held in Barcon, supra, 86 N.J. at 197, that it "would be unjust to permit a party to sit upon its objections until after the award is rendered." The judge noted that the Court in Barcon, supra, 86 N.J. at 197, expressly stated that although it does not "'condone arbitration awards made by a panel whose members are not impartial, we see a greater evil in permitting parties that are aware of grounds for objection to put the other party and the panel through the time and expense of arbitration proceedings before challenging the proceedings.'" The judge also pointed out that the Court in Barcon, supra, 86 N.J. at 195, found that if a party fails to raise an objection at the time an arbitrator makes a disclosure, that party has waived any right to later object to that arbitrator based on the disclosure.
Watchung argues that Barcon established a bright-line rule that all arbitrators must make a full and complete disclosure of all relationships or transactions with the parties or their representatives, including any facts that "might only suggest disqualifying relationships . . . ."*fn4 Watchung suggests that the appearance of fairness is just as important as actual fairness in an arbitration proceeding, claiming that Judge Accurso misconstrued the central theme of Barcon. It maintains that the judge took the Barcon quote regarding objection waiver out of context, and, therefore, ignored the fact that Barcon requires disclosure be both full and prior to the arbitration proceedings' commencement. Watchung submits that when a fact is not disclosed by an arbitrator, prior to the proceedings, a court can later vacate an arbitration award if it concludes that the fact would have led a reasonable person to object to the appointment of that arbitrator.
Vollers counters that Watchung is not looking at the entire Barcon decision, but only those portions that support its position. Vollers claims that Watchung ignores an explanatory footnote in Barcon, where the Court stated that the AAA system of sending a letter to all the parties satisfied the "full disclosure" requirement. It contends that Barcon does not establish a bright-line rule that all disclosures made after arbitration begins require that the award be vacated, submits that Barcon allows the disclosure of information that arises during the proceedings and asserts that trial courts must use discretion when reviewing a motion to vacate based on an allegedly incomplete disclosure. Vollers concludes that the question is whether the party challenging the award allowed the proceedings to continue, without objection, after being placed on notice of a potential conflict.
Natoli argues that despite Watchung's contentions, Barcon does not establish a bright-line rule and in fact contemplates arbitrators making disclosures during the proceedings. Natoli submits that Watchung's standard is "unworkable" and calls the finality of any arbitration into question. Finally, Natoli further argues that Watchung's standard does not require a party to raise any objections to disclosures made during the proceedings, which contradicts Barcon.
We agree with Judge Accurso's reading of Barcon and reject Watchung's too narrow view of its holding. Watchung is correct in stating that the Court in Barcon adopted "the requirement that every arbitrator, neutral or party-designated, make full disclosure of possible conflicts of interest to the parties, prior to commencement of arbitration proceedings." Barcon, supra, 86 N.J. at 192. But as implicitly recognized, an extended proceeding such as the arbitration here, is dynamic with new facts and information emerging that may prompt an arbitrator to recognize that there are additional disclosures to be made. As the Court observed, an arbitrator must "inform the parties of any pertinent facts that arise once proceedings have begun." Id. at 195. Additionally,
[w]hen a relevant fact is not disclosed at the outset of the proceedings and the award is later challenged, the reviewing court may vacate the award if it concludes that the undisclosed fact would have been such as to lead a reasonable person to object to the designation of the arbitrator in question. [Ibid.]
"However, should an arbitrator make full disclosure and the other party fail to object at that time, that party will be held to have waived any right later to object to the designation of the arbitrator on the grounds so revealed." Ibid. The Court described this waiver rule as "simply a procedural rule of litigation necessary to avoid unfairness to the other party and waste of adjudicatory resources." Id. at 197. The Court explained:
Courts can only rule on the apparent partiality of an arbitrator if one of the parties objects and brings the matter before the courts. It would be inequitable and wasteful to allow a party to withhold its objections until after the panel has rendered an unfavorable decision. While we do not condone arbitration awards made by a panel whose members are not impartial, we see a greater evil in permitting parties that are aware of grounds for objection to put the other party and the panel through the time and expense of arbitration proceedings before challenging the proceedings. [Ibid.]
Watchung's contention that Barcon created a bright-line rule is incorrect. If the Supreme Court wanted to articulate a bright-line rule that any disclosure of a potential conflict made after the commencement of arbitration allows for the award to be vacated, it would have. But it recognized that such a rule would be impractical and unworkable.
The evil recognized in Barcon was not additional disclosures, but the withholding of information that would bear on the issue of partiality or bias. The record demonstrates here that as new facts emerged in the arbitration or as Inglis became aware of issues arising in his relationship with the BCANJ, he was forthcoming and open in revealing this information to the parties.
Critically important as well is that in each instance that information was forthcoming from Inglis, the parties were notified and given an opportunity to object. In each instance, Watchung did not ask for further information or raise any objection to the matter, proceeding with Inglis as an arbitrator.
Watchung claims that Inglis never fully disclosed the nature and extent of his relationship with Joseph and Paul Natoli and the BCANJ, and, therefore, Watchung could not have waived its right to object to Inglis based on these relationships. The judge rejected this argument, as do we.
The judge found that Inglis disclosed the nature of his and Natoli's relationship at the outset of arbitration, as well as throughout the proceedings. The judge stated that Watchung had sufficient notice of the contacts Inglis and Natoli had through the BCANJ, beginning with Inglis's pre-arbitration disclosure. Judge Accurso opined that Watchung continued to be placed on notice throughout the arbitration proceedings by Inglis's repeated disclosures. She rejected Watchung's contention that it would have objected to Inglis's appointment if it had known of the compensation he received from 1997 to 2003, because Watchung did not object when it learned of his compensation in 2004. The judge held that Watchung did not make a timely objection to these disclosures, and thus waived the right to challenge the arbitration award on these grounds.
Watchung argues that Inglis's statement in his pre-arbitration disclosure that Joseph and Paul Natoli were "known" to him through the BCANJ was insufficient to place Watchung on notice as to the extent of their relationship. Watchung states that this pre-arbitration disclosure must be full in order to shift the burden of proving Inglis's impartiality to Watchung. It alleges that the November 10, 2004 disclosure was incomplete and too late, and even if the timing of this disclosure was proper, it was excused from not raising an objection because the manner in which the disclosure took place led Watchung's principal, Salvatore Davino (Davino), "to believe that Joseph Natoli's right to vote on the IAP budget was a one-time event." Watchung continues that had Inglis fully disclosed the extent of Joseph Natoli's "influence over Inglis's retention and compensation," it would have raised an objection. Watchung submits that none of the disclosures Inglis made throughout the proceedings were sufficient to shift the burden of challenging Inglis's impartiality to Watchung, and concludes that had Inglis made a full disclosure before arbitration began, a reasonable person would have objected to his appointment. It urges that the award be vacated.
Vollers counters that Watchung's failure to object was not due to excusable neglect, but was an intentional waiver of the right to object. Vollers argues that Watchung had the responsibility to inquire further into the disclosures made during the arbitration, and that Watchung's contention that it was Inglis's responsibility is contrary to the applicable Arbitration Act, N.J.S.A. 2A:24-1 to 11. Plaintiff continues that even under the new Arbitration Act, the duty of an arbitrator to investigate only requires that the arbitrator perform conflict checks that are consistent with the industry standards, and that an arbitrator must fail to disclose a direct financial interest to justify the vacating of an award. Vollers states that this did not happen in this case. Vollers contends that Watchung has not provided the facts or allegations necessary to vacate the arbitration award under the applicable case law and maintains that, by definition, there can be no evident partiality if an arbitrator was unaware of the contact or connection, because there was no way for the arbitrator to be influenced. Further, it submits that when a party is placed on notice of a potential conflict, if the party does not make a timely objection, then it waives the right to later challenge the arbitration award on that ground.
Natoli counters that Inglis's pre-arbitration disclosures were sufficient enough to give Watchung notice of his and Joseph and Paul Natoli's involvement in the BCANJ, as well as the fact that he knew Joseph and Paul Natoli. It claims that Inglis's pre-arbitration disclosure contained all the information known to him at that time and that his later disclosures were the result of information that arose during the proceedings. Natoli contends that since Inglis was not aware of this information prior to arbitration commencing, he did not have to disclose it at that time. Natoli maintains that once a disclosure is made, the burden is on the parties "to determine their course of action," and if a party has knowledge of a potential bias and remains silent, then it has waived its right to object on those grounds. Natoli continues that a party is charged with knowledge of all facts that are disclosed as well as all facts that a reasonable investigation would yield; therefore, the parties are responsible for the inquiry. It submits that the post-arbitration events of this case show why there is a waiver rule and that the cases upon which Watchung relies dictate a finding that Watchung waived its right to object. Natoli concludes that Watchung's reasons for not objecting to Inglis's disclosures are irrelevant, and, therefore, we should find that Watchung is not absolved from the duty to object.
The Supreme Court stated in Barcon that an arbitrator's pre-arbitration disclosure "should reveal any relationship or transaction that he has had with the parties or their representatives as well as any other fact which would suggest to a reasonable person that the arbitrator is interested in the outcome of the arbitration or which might reasonably support an inference of partiality." Barcon, supra, 86 N.J. at 192. The Court continued that such "[d]isclosure will leave to the parties themselves the initial decision as to whether to object to an arbitrator . . . and, if necessary, to seek judicial determination of whether that arbitrator appears to be too partial to be permitted to participate in the arbitration." Id. at 194. "This procedure . . . recognizes that the parties, as active participants in their respective industries, are well situated to decide when to object because contacts between an arbitrator and [a] party . . . create too great a likelihood of bias." Ibid. However, the Court stressed that the disclosure must include all relevant information, because then and only then can a party "make a sound judgment as to an arbitrator's possible partiality . . . ." Id. at 195.
Here, Inglis's initial disclosure may have been cursory, but it was sufficient to generate inquiry by Watchung. This was an arbitration involving claims exceeding fifteen-million dollars. Watchung was advised at the onset that Inglis knew the party Natoli; its principal, Joseph Natoli, and one of its officers, Paul Natoli, through the BCANJ. The additional disclosures all emanating from the associational relationship rather than any personal dealings or affiliation. Watchung knew of the underpinnings of the relationship before the arbitration started, and nothing that was revealed thereafter changed the basic nature of Inglis's and Natoli's relationship with each other. Critically, as each disclosure was forthcoming, Watchung took no action nor made any further inquiry other than to withhold any objection.
Judge Accurso was correct in ruling that Watchung waived its right to object to Inglis on the grounds of his evident partiality. The record shows that Inglis was not familiar with the IAP in November 2004. Inglis stated that he only dealt with the BCANJ's staff and did not know that Joseph Natoli had anything to do with the IAP. This information arose during the course of the arbitration proceedings, and was properly disclosed by Inglis. Inglis fully disclosed his involvement with the BCANJ and his resulting compensation; Watchung could have inquired further as to Joseph Natoli's involvement with the IAP and Inglis's compensation. Watchung's stated reason for not objecting - Davino's assumption that this was a one-time vote -is irrelevant. Additionally, the claim that Watchung was taken by surprise by this disclosure because it was not a part of the off-the-record discussion is without merit. Even if Watchung was surprised by this disclosure on November 10, 2004, the AAA sent a follow up letter on December 2, 2004, giving Watchung ample time to overcome any surprise. Barcon eschews a party sitting on its rights. As Natoli asserted at oral argument, Watchung's attorneys were not "potted plants." Arbitration counsel*fn5 were well-skilled litigators who surely understood the stakes involved and more importantly, the relevance, or lack thereof, of Inglis's disclosure.
Ultimately, the award prompted the objection, and we properly view with some skepticism a post-arbitration challenge of bias when the facts were known. Although the award was substantial, it still represents only a portion of the claimed monies owed. The suggestion that the size of the award prompted the inquiry is a refutation of the standard established in Barcon. If a "reasonable person" would have cause to object to an arbitrator's remaining in a case, that standard must be applied at the time of the disclosure not after the award. The process of arbitration (and litigation as well) cannot tolerate a "wait and see" posture as to whether to object to an arbitrator (or judge's) continued service in a matter.
Finally, we agree with Judge Accurso's finding that Watchung is not entitled to post-arbitration discovery. She restated that the issue on Watchung's motion for reconsideration was whether the disclosure Inglis did make was sufficient to allow Watchung to determine any possible partiality and whether Watchung should be allowed to stay the arbitration award so as to take discovery to support its claim of evident partiality. We agree with the judge that Watchung "must make a preliminary or prima facie showing of undisclosed bias sufficient to support a finding of evident partiality before being entitled to discovery." See Korshalla v. Liberty Mutual Ins. Co., 154 N.J. Super. 235 (Law. Div. 1977). The judge found that the information that Watchung "discovered" after the award was in its possession for years. The judge explained that Inglis's resume, along with his pre-arbitration disclosures, and the disclosures he made during the arbitration all indicated the nature and extent of his relationship with Joseph and Paul Natoli, but Watchung never inquired further into any of these.
Although there is limited case law on the subject, it does appear that post-arbitration discovery is an option. Creter v. Davies, 30 N.J. Super. 60, 64 (Ch. Div.) (stating that a motion to confirm an arbitration award could be stayed if the purpose of deposing the arbitrators "was to establish any of the statutory grounds for setting the award aside"), aff'd, 31 N.J. Super. 402 (App. Div. 1954). Similarly, it has been stated that "[s]ome discovery might be permissible to inquire into a fairly raised issue of corruption, fraud, 'undue means,' evident partiality, prejudicial procedural misconduct, or an exceeding of power or imperfect execution of powers not determining the matter submitted." Korshalla, supra, 154 N.J. Super. at 239 (quoting N.J.S.A. 2A:24-8). Judge Accurso interpreted this to mean that so long as a party can make out a prima facie case in favor of vacating the award, the court will allow post-arbitration discovery. We concur in the judge's view. Absent a prima facie showing of the need for discovery, arbitrations will devolve into just another litigated matter, a posture sought to be avoided by the use of arbitration in the first instance.
Watchung failed to establish a prima facie case in favor of vacating this award. The judge noted that the burden on the party seeking this discovery is less than the burden to overturn the award. Watchung had five years to obtain the very same information it hopes to obtain through this discovery. All Watchung had to do was make an inquiry following Inglis's pre-arbitration disclosure or following the numerous disclosures that occurred during the proceedings. At any time Watchung could have objected and requested more information pertaining to these disclosures, but it chose not to do so.
We conclude that Judge Accurso did not abuse her discretion in denying discovery, and we affirm for the reasons set forth in her thorough and thoughtful written opinion of February 11, 2008.