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L&M Co. v. Unity Dental Health Services

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


March 22, 2010

L&M COMPANY, PLAINTIFF-APPELLANT,
v.
UNITY DENTAL HEALTH SERVICES, P.A., AND UNITY HEALTH SERVICES, INC., DEFENDANTS-RESPONDENTS.

On appeal from Superior Court of New Jersey, Law Division, Civil Part, Passaic County, Docket No. L-2323-07.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued January 27, 2010

Before Judges Graves, Sabatino and J.N. Harris.

Plaintiff L&M Company (L&M), appeals from an order entered on May 15, 2009, confirming an arbitration award and entering judgment in favor of defendant Unity Dental Health Services, P.A. (Unity Dental) in the amount of $35,430.74. Plaintiff claims it was "forced into arbitration" because the court "gave it no other alternative," and further contends the arbitrator's decision was factually and legally incorrect. After reviewing the record and applicable law in light of the arguments advanced on appeal, we affirm.

In 1995, landlord L&M entered into a six-year commercial lease with defendant Unity Health Services, Inc. (Unity Health), an entity owned by Robert Dubman, D.D.S., for the rental of premises located at 1219 Main Avenue in Clifton (the 1995 lease). The parties renewed the lease for an additional period of five years from February 1, 2001, through January 31, 2006. On January 10, 2006, L&M negotiated a new two-year lease (the 2006 lease) with a different entity, defendant Unity Dental Health Services, P.A. (Unity Dental), which was also owned by Dr. Dubman.

During the term of the 2006 lease, Unity Dental informed plaintiff that it wanted to assign the lease to a company that was purchasing its business. As a condition for the assignment, L&M demanded the sum of $19,396.45, for unpaid rent and other charges allegedly owed by Unity Health under the 1995 lease and by Unity Dental under the 2006 lease. To obtain the assignment, Unity Dental paid the sum of $19,396.45 to L&M under protest.

In June 2007, L&M filed a complaint against Unity Dental for unpaid rent and other charges. However, in its second amended complaint L&M asserted claims against both Unity Health and Unity Dental. Both defendants filed a joint answer denying that any monies were owed to plaintiff, and Unity Dental filed a counterclaim seeking to recover the money it had paid to plaintiff under protest for plaintiff's consent to assign the 2006 lease.

On August 29, 2008, the presiding civil judge denied defendants' motion to amend their answer to include the statute of limitations as a separate defense, but the court noted on the order that "[p]laintiff may only seek damages for alleged violations of the 2006 [lease]." L&M filed a motion on short notice for reconsideration and also sought to adjourn the trial, which was scheduled for September 22, 2008. However, the court declined to hear the motion for reconsideration and denied plaintiff's request to adjourn the trial.

On September 22, 2008, the parties appeared in court with their attorneys and agreed to submit their dispute to binding arbitration before retired Superior Court Judge Amos C. Saunders. The parties' agreement was set forth on the record, and the court signed a consent order memorializing the agreement.

The attorneys for the parties also signed an "Agreement for Binding Arbitration" prepared by retired Judge Saunders. Pursuant to that agreement, the arbitrator's decision was final and could not be vacated unless a party established "grounds to vacate the award in accordance with N.J.S.A. 2A:23B-23" or there was "a modification or correction of the award by the court pursuant to N.J.S.A. 2A:23B-24." The agreement also authorized the arbitrator "to enforce the underlying leases in dispute to require one party to indemnify the other party for attorney fees and costs of arbitration."

The arbitration hearings took place on November 11 and November 20, 2008. Following the hearings, both parties submitted written summations with supporting documents to the arbitrator. In a written decision on February 4, 2009, the arbitrator entered an award and judgment in favor of Unity Dental on its counterclaim, together with an award of counsel fees, in the total amount of $34,558.74.

In a letter dated March 19, 2009, plaintiff's attorney asked the arbitrator to reconsider his decision, and the arbitrator subsequently amended the award to properly reflect the allocation of counsel fees. The adjustment increased the original award by $872, resulting in a final judgment in favor of Unity Dental and against plaintiff, L&M, in the total amount of $35,430.74.

In April 2009, Unity Dental filed a motion to confirm the arbitration award. L&M opposed the motion, but it never moved to vacate the award. Following oral argument on May 15, 2009, the trial court confirmed the arbitrator's award and entered an order the same day.

On appeal, plaintiff presents the following arguments:

POINT I

PLAINTIFF DID NOT VOLUNTARILY AGREE TO ARBITRATE THIS CASE, THEREBY VOIDING ARBITRATION AND THE ARBITRATION AWARD.

POINT II

THE ARBITRATOR MADE GROSS ERRORS OF LAW AND FACT IN HIS ARBITRATION AWARD.

POINT III

THE AWARD OF THE ARBITRATOR ON THE COUNTERCLAIM OF UNITY DENTAL HEALTH SERVICES, P.A. IS CONTRARY TO THE SPECIFIC TERMS OF THE LEASE AND IS BASED ON A COMPLETE FAILURE TO APPLY LOGIC, REASON AND LAW BY THE ARBITRATOR AND WAS A MANIFEST INJUSTICE.

POINT IV

THE AWARD FOR COUNSEL FEES DID NOT ACCORD WITH ESTABLISHED NEW JERSEY LAW.

Based on our review of the record, we are convinced that the matter was correctly decided and plaintiff's arguments do not warrant extended discussion in a written decision. R. 2:11-3(e)(1)(E). We therefore affirm with only the following comments.

An arbitration award is presumed valid. Del Piano v. Merrill Lynch, 372 N.J. Super. 503, 510 (App. Div. 2004), certif. granted, 183 N.J. 218, certif. dismissed as improvidently granted, 195 N.J. 512 (2005). Moreover, "the scope of review of an arbitration award is narrow. Otherwise, the purpose of the arbitration contract, which is to provide an effective, expedient, and fair resolution of disputes, would be severely undermined." Fawzy v. Fawzy, 199 N.J. 456, 470 (2009) (citing Barcon Assocs., Inc. v. Tri-County Asphalt Corp., 86 N.J. 179, 187 (1981)).

In this case, the parties agreed to arbitrate pursuant to New Jersey's Arbitration Act (Act), N.J.S.A. 2A:23B-1 to -32, which amended and superseded the former arbitration statute, N.J.S.A. 2A:24-1 to -11. Agreements to arbitrate made on or after January 1, 2003, are governed by the Act. N.J.S.A. 2A:23B-3(a). N.J.S.A. 2A:23B-23(a) lists six factors that permit a court to vacate an arbitration award upon the filing of a summary action with the court by a party:

(1) the award was procured by corruption, fraud, or other undue means;

(2) the court finds evident partiality by an arbitrator; corruption by an arbitrator; or misconduct by an arbitrator prejudicing the rights of a party to the arbitration proceeding;

(3) an arbitrator refused to postpone the hearing upon showing of sufficient cause for postponement, refused to consider evidence material to the controversy, or otherwise conducted the hearing contrary to section 15 [N.J.S. 2A:23B-15] of this act, so as to substantially prejudice the rights of a party to the arbitration proceeding;

(4) an arbitrator exceeded the arbitrator's powers;

(5) there was no agreement to arbitrate, unless the person participated in the arbitration proceeding without raising the objection pursuant to subsection c. of section 15 of this act not later than the beginning of the arbitration hearing; or

(6) the arbitration was conducted without proper notice of the initiation of an arbitration as required in section 9 [N.J.S. 2A:23B-9] of this act so as to substantially prejudice the rights of a party to the arbitration proceeding.

Plaintiff's initial claim, that it did not voluntarily agree to arbitrate, is not supported by the testimonial and written evidence in the record. At the hearing on September 22, 2008, plaintiff's counsel noted he had "a problem with the procedure in this case." Nevertheless, he advised the court that the case "should go to binding arbitration." Further, he informed the court that "Judge Saunders . . . will be the stipulated arbitrator. We will reach out to him within ten days to try to have an arbitration date within the next 30 to 45 days at the latest." Moreover, it is clear that plaintiff's counsel signed the consent order entered on October 10, 2008, which confirmed the parties' agreement to submit their dispute to binding arbitration, and signed the binding arbitration agreement that was prepared by the arbitrator. Under these circumstances, plaintiff has failed to demonstrate it was coerced into arbitration "to avoid the complications" resulting from the order dated August 29, 2008.

Next, we consider plaintiff's arguments challenging the arbitrator's findings and the arbitration award. Plaintiff contends the arbitrator made gross errors of law and fact. Although no transcript of the arbitration proceedings was available for review, the trial court confirmed the award because the arbitrator set forth his findings in a comprehensive written opinion, concluding that plaintiff failed to establish any monies were due and owing from either of the defendants. In addition, the arbitrator found that plaintiff's claims against Unity Health were barred for equitable reasons because plaintiff failed "to pass on tax bills to its tenant and make demand for payment" pursuant to paragraph twenty-five of the 1995 lease. The arbitrator also found Unity Health was prejudiced by plaintiff's failure to comply with the terms of the lease because Unity Health lost the right to challenge the tax bills and the opportunity to adjust fees to offset "the additional expenses for increased taxes." Thus, the arbitrator appropriately applied the doctrine of laches because plaintiff failed "to assert any claim until more than a year after the [1995] lease expired." See Knorr v. Smeal, 178 N.J. 169, 181 (2003) ("The core equitable concern in applying laches is whether a party has been harmed by the delay.").

As to plaintiff's third argument, we do not agree that the award in favor of Unity Dental on its counterclaim was a "manifest injustice." The arbitrator observed:

Plaintiff claims the full amount of $19,396.45 as unpaid rent under the 2006 Lease, but there is no evidence in this case that a claim or notice was ever provided to [Unity Dental] prior to February 2007. The lease is very clear. The monies would be due and owing only after notice of the same has been provided to the tenant; therefore the plaintiff is not entitled to any increased additional rent for sums claimed prior to the date of notice. [(emphasis added).]

After reviewing the arbitrator's decision, the trial court concluded there was no statutory ground for invalidating or modifying the arbitration award, and we agree with the trial court's determination.

Likewise, plaintiff's final point that the arbitrator erred in awarding Unity Dental sixty percent of its counsel fees lacks merit. The proper standard of review for an arbitrator's award of counsel fees is abuse of discretion. Packard-Bamberger & Co. v. Collier, 167 N.J. 427, 443-44 (2001).

In this case, the arbitration agreement permitted the arbitrator to enforce the underlying leases to require a party to indemnify the other party for attorney's fees and costs of arbitration, and the 2006 lease contained the following fee-shifting provision:

The Tenant will hold harmless and indemnify the Landlord from and for any and all payments, expenses, costs incurred in enforcing Landlord's rights under this Lease . . . or for any cause or reason whatsoever arising out of or by reason of the occupancy of the Premises by the Tenant or business of the Tenant. This shall include the reasonable counsel fees of Landlord. Tenant shall have the reciprocal right against Landlord.

Consequently, we reject plaintiff's argument that the arbitrator's award of counsel fees to Unity Dental "did not accord with established New Jersey law."

Affirmed.

20100322

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