June 15, 2010
RAJAT P. DHALL, PLAINTIFF-APPELLANT,
700 GROVE STREET URBAN RENEWAL, L.L.C., DEFENDANT-RESPONDENT.
On appeal from the Superior Court of New Jersey, Law Division, Hudson County, L-6171-08.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued May 17, 2010
Before Judges Reisner and Yannotti.
Plaintiff Rajat P. Dhall (Dhall or plaintiff) appeals from a March 20, 2009 order compelling arbitration of his claims against defendant 700 Grove Street Urban Renewal, L.L.C., and dismissing his complaint. He also appeals from a May 26, 2009 order denying reconsideration. We affirm.
These are the most pertinent facts. On July 16, 2005, Dhall signed a nine-page Subscription and Purchase Agreement (agreement) to buy a condominium, unit 2J, from defendant. The agreement included the following arbitration clause, which Dhall initialed in addition to signing the agreement:
ARBITRATION: Buyer, on behalf of Buyer and all permanent residents of the Unit, including minor children, hereby agrees that any and all disputes with Seller, Seller's parent company or their subsidiaries or affiliates whether statutory, contractual, or otherwise, including, but not limited to personal injuries and/or illness ("Claims"), shall be resolved by binding arbitration in accordance with the Supplementary Rules for Residential Construction or the Commercial Arbitration Rules and Mediation Procedures, as applicable, of the American Arbitration Association . . . . The provisions of this Section 13 shall be governed by the provisions of the Federal Arbitration Act, 9 U.S.C. §§ 1, et seq. and shall survive settlement.
EXCEPT AS MAY OTHERWISE BE PROVIDED IN AAA'S CONSUMER DUE PROCESS PROTOCOL THAT ALLOWS CONSUMERS TO FILE CERTAIN CLAIMS IN SMALL CLAIMS COURT, THE BUYER UNDERSTANDS THAT BY INITIALING THIS ARBITRATION PARAGRAPH, HE OR SHE IS GIVING UP HIS OR HER RIGHT TO A TRIAL IN COURT EITHER WITH OR WITHOUT A JURY. [Emphasis added.]
There was a considerable delay in preparing unit 2J for occupancy, and on March 14, 2008, the parties entered into a one-page "Endorsement to Subscription and Purchase Agreement" (endorsement) in which Dhall agreed to buy a different unit. The endorsement included the following clause incorporating the endorsement into the original purchase agreement:
THIS ENDORSEMENT Is Intended to be Incorporated into and made a part of the Agreement and all other terms and conditions contained in the Agreement, unless expressly modified herein, remain in full force and effect.
On December 5, 2008, Dhall filed suit seeking to void the purchase agreement and the endorsement and obtain the return of his security deposit. In his complaint, Dhall asserted that execution of the endorsement invalidated the original purchase agreement. In count one, he also alleged that the endorsement was deficient because it did not include a seven day cancellation notice as required by N.J.S.A. 45:22A-26 and N.J.A.C. 5:26-6.2, nor did it contain certain language mandated to be included in a contract for the sale of real estate. See N.J. State Bar Ass'n v. N.J. Ass'n of Realtors Bds., 93 N.J. 470, modified, 94 N.J. 449 (1983).*fn1 In count two, he contended that even if the endorsement was simply an amendment to the purchase agreement, "then it is still a material modification of the terms of the purchase agreement," and was deficient in the same respect as outlined in count one. He asserted that the endorsement was voidable because it was "an unconscionable adhesion contract." He further claimed that because the contract was void, he was entitled to a refund of his deposit monies.
According to an affidavit of service, defendant was served with the complaint on January 5, 2009. In lieu of filing an answer, defendant filed a motion on February 23, 2009, seeking to dismiss the complaint and compel arbitration. Thereafter, on March 9, 2009, plaintiff filed an application to enter default, while defendant's dismissal motion was pending. The clerk's office declined to enter default in light of defendant's pending motion.*fn2 In opposing the arbitration motion, plaintiff did not request that the case be stayed in lieu of dismissal if the court granted the motion.
In an oral opinion placed on the record on March 26, 2009, Judge Barbara Curran indicated that she would dismiss Dhall's complaint and compel arbitration. The judge reasoned that pursuant to Garfinkel v. Morristown Obstretrics & Gynecology Assocs., 168 N.J. 124 (2001), and Martindale v. Sandvik, Inc., 173 N.J. 76 (2002), the arbitration clause was unambiguous and sufficiently broad to cover the disputed claims. She found no evidence to suggest that the endorsement affected the validity of the terms of the arbitration provision. The judge likewise found no public policy basis to set aside the arbitration provision. She held that under Green Tree Fin. Corp. of Alabama v. Randolph, 531 U.S. 79, 121 S.Ct. 513, 148 L.Ed. 2d 373 (2000), a litigant may vindicate a statutory cause of action in an arbitration proceeding.
The judge also declined to enter default against defendant for failing to file a timely response to Dhall's complaint because comment two to Rule 4:43-1 indicates in pertinent part that "timeliness and remediation of an untimely filed answer remains the attorney's obligation" and that [plaintiff's attorney's] failure to enter default prior to the filing of the defendant's motion in lieu of an answer compels this [c]court to find that [plaintiff's attorney's] arguments are not persuasive.
However, the court declined to impose sanctions against Dhall or his counsel, concluding that they legitimately believed that their arguments were meritorious. The court entered a March 20, 2009 order nunc pro tunc granting defendant's motion to dismiss the complaint and compelling arbitration.
By order dated May 26, 2009, Judge Curran denied Dhall's motion for reconsideration. A written statement of reasons noted on the order incorporated the reasons set forth in her March 26, 2009 decision. The court also noted that "[p]er N.J.S.A. 2A:23B-7 [the] [c]court is authorized to order arbitration where the clear language of the agreement requires mandatory arbitration on the issues in dispute here."
On this appeal, plaintiff raises the following points for our consideration:
THE TRIAL COURT ERRED WHEN IT INCORPORATED BY REFERENCE THE ARBITRATION CLAUSE FROM THE JULY 2005 CONTRACT INTO THE MARCH 2008 AGREEMENT.
THE TRIAL COURT ERRED WHEN IT DID NOT DISMISS THE DEFENDANT'S MOTION TO COMPEL ARBITRATION, BECAUSE THE DEFENDANT WAS IN DEFAULT.
A. The Defendant Failed To Answer To Move Under Rule 4:6-2.
B. The Trial Court's Reliance On Rule 4:43-1 Was Misplaced.
C. The Trial Court's Reliance On N.J.S.A. 2A:23b-7 Was Misplaced.
D. The Appellate Division Needs To Publish An Opinion Putting An End To This Abusive Practice.
E. The Defendant's Motion Was Untimely.
ASSUMING ARGUENDO THAT THERE WAS AN ARBITRATION CLAUSE, THEN IT WAS NOT ENFORCEABLE.
A. Consumer Protection Provisions
B. Fraud, Misrepresentation Or Dereliction Of Duty
ASSUMING ARGUENDO THAT THERE WAS AN ENFORCEABLE ARBITRATION CLAUSE, THEN THE ARBITRATION CLAUSE DID NOT INCLUDE WITHIN ITS SCOPE THE CLAIMS THAT THE PLAINTIFF ASSERTED.
THE TRIAL COURT ERRED BECAUSE AN ARBITRATION CLAUSE CANNOT REACH A CLAIM UNDER THE PLANNED REAL ESTATE DEVELOPMENT FULL DISCLOSURE ACT.
THE TRIAL COURT ERRED BY DISMISSING THE INSTANT ACTION, INSTEAD OF STAYING THE ACTION.
Based on our review of the record, we find that plaintiff's appellate contentions are without sufficient merit to warrant discussion in a written opinion, R. 2:11-3(e)(1)(E), and we affirm substantially for the reasons stated by Judge Curran in her March 26, 2009 opinion. We add the following comments.
Plaintiff contends that the trial court should not have construed the endorsement as incorporating by reference the terms of the original agreement. However, that argument mischaracterizes the endorsement as well as the trial court's decision. The endorsement modified the original agreement in several specific respects but otherwise left that agreement in effect. The one-page document was designated "Endorsement to Subscription and Purchase Agreement," and it unambiguously provided that the endorsement was to become part of the original agreement. Furthermore, it provided that "all other terms and conditions contained in the Agreement, unless expressly modified herein, remain in full force and effect." See County of Morris v. Fauver, 153 N.J. 80, 99 (1998); Alpert, Goldberg, Butler, Norton & Weiss, P.C. v. Quinn, 410 N.J. Super. 510, 533 (App. Div. 2009). Plaintiff knew what was in the original agreement, because he initialed every page of it and specifically initialed the arbitration clause.
Plaintiff does not claim that he was coerced into signing the original agreement that included the arbitration clause, and there is no dispute that plaintiff had an opportunity to have an attorney review the agreement. Rather, he contends that he did not have sufficient time to review the endorsement, and that his attorney did not review it. However, only a claim of fraud or duress relating to the arbitration clause itself will defeat a requirement that the matter go to arbitration. "[A]bsent a claim of fraud directed to the arbitration clause itself, a claim of fraud in the inducement of the contract is a matter for the arbitrators." Quigley v. KPMG Peat Marwick, LLP, 330 N.J. Super. 252, 263 n.3 (App. Div.), certif. denied, 165 N.J. 527 (2000). See Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 400-04, 87 S.Ct. 1801, 1803-05, 18 L.Ed. 2d 1270, 1275-77 (1967); Van Syoc v. Walter, 259 N.J. Super. 337, 339 (App. Div. 1992), certif. denied, 133 N.J. 430 (1993).
We also find no merit in plaintiff's claim that the arbitration clause does not encompass his statutory causes of action. Plaintiff's reliance on Grasser v. United Healthcare Corp., 343 N.J. Super. 241, 247 (App. Div. 2001), is misplaced. Grasser is not on point, because there the employee signed a vague and general arbitration agreement that did not refer to arbitration of statutory claims. The more specific arbitration language, referencing the statutory claims on which the employer sought arbitration, was buried in an employee handbook. In that context, we held that the clause was not enforceable. By contrast, in this case, plaintiff signed an arbitration clause that specifically encompassed statutory claims. The clause is sufficient to encompass arbitration of plaintiff's statutory claims. See Garfinkel, supra, 168 N.J. at 135 (A party need not "refer specifically to the [Law Against Discrimination] or list every imaginable statute by name to effectuate a knowing and voluntary waiver of rights.").
Plaintiff asserts more generally that his claims are not within the scope of the arbitration clause. We disagree. A claim for return of the deposit, based on statute or breach of contract, falls squarely within the scope of the arbitration clause. Plaintiff contends that he should not be bound by the arbitration clause because the endorsement is void. Specifically, he seeks to litigate the following claims: there was fraud in failing to send the endorsement to his attorney for review; the terms are unconscionable; and the agreement denies him his rights under the Planned Real Estate Development Full Disclosure Act, N.J.S.A. 45:22A-21. However, as we indicated earlier, all of those claims should be presented to the arbitrator, who can provide plaintiff with complete relief if the claims are found valid. See Van Syoc, supra, 259 N.J. Super. at 339.
Finally, plaintiff contends that the trial court should have stayed rather than dismissed the action. Plaintiff did not raise that issue in his opposition to defendant's motion, and the judge was not obligated to address, on a reconsideration motion, a request for relief that could have been, but was not, presented on the initial motion application. See R. 4:49-2. We will not address on appeal an issue that defendant did not properly raise in the trial court. See Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 234 (1973).*fn3