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Philip Barretti v. Solucorp Industries Ltd.

January 12, 2011

PHILIP BARRETTI, PLAINTIFF-RESPONDENT,
v.
SOLUCORP INDUSTRIES LTD., LONDON VENTURE CAPITAL CORP. AND
JOSEPH KEMPROWSKI, DEFENDANTS-APPELLANTS.



On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-7956-08.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted: December 8, 2010

Before Judges Cuff and Fasciale.

Defendants Solucorp Industries Ltd. (Solucorp), London Venture Capital Corp. (London), and Joseph Kemprowski appeal from an order confirming an arbitration award and entering default judgment against them. The order also implicitly denied defendants' motion to restore the matter to the arbitration list. We affirm.

On October 17, 2008, plaintiff Philip Barretti filed a complaint against defendants Solucorp and London. An amended complaint adding Kemprowski as a defendant was filed on July 17, 2009. In his complaint and amended complaint, plaintiff alleged Solucorp executed and delivered a promissory note in the amount of $330,000 on September 27, 2006. The note was payable by February 15, 2007. Solucorp also promised to deliver to plaintiff 100,000 shares of Solucorp 144 stock.

Plaintiff also alleged that Solucorp assigned responsibility for the balance due on the note, $230,000 plus interest, to London on August 4, 2008. In return, London promised to deliver 200,000 shares of restricted Solucorp common stock to plaintiff. Plaintiff further alleged that London and Kemprowski, a founder of Solucorp, failed to pay the balance due or to deliver the 200,000 shares of restricted common stock, and Solucorp and Kemprowski failed to deliver the 100,000 shares of Solucorp 144 stock. Plaintiff sought compensatory damages, transfer of the promised shares, attorneys' fees and costs.

Defendant Kemprowski did not file an answer and the court entered a default. The court scheduled an arbitration pursuant to Rule 4:21A-1(a)(3) for November 10, 2009. On the morning of November 10, 2009, defendants' attorney contacted plaintiff's attorney to advise him that he would not be able to attend the scheduled arbitration due to a medical emergency of a staff member. Although defendants assert in their brief that their attorney called court arbitration staff to inform them of his inability to attend and to request an adjournment, the letter sent by defendants' attorney simply informs the court that "Mr. Condon, attorney for Defendant, Solucorp Industries, Ltd., will not be appearing at Arbitration."

The arbitration proceeded, an award was entered in the amount of $245,687 "plus 100,000 shares of Solucorp Rule 144 common stock & 200,000 shares of Rule 144 restricted Solucorp common stock." Plaintiff moved to confirm the award and to enter default judgment against Kemprowski on December 22, 2009.

Defendants responded and filed a cross-motion to restore the matter to the arbitration list. As to Kemprowski, defendants' attorney asserted he did not receive the motion for leave to file the amended complaint until July 30, 2009, and never received a copy of the order granting the motion. Defendants' attorney also asserted he received the motion to confirm the arbitration award in early January 2010.

Defendants' attorney attributes the delays to plaintiff's use of an old address.

In a statement of reasons appended to his February 11, 2010 order, Judge Joseph Conte correctly noted that Rule 4:21A-4(f) requires an appearance on behalf of each party at an arbitration hearing. Furthermore, the pleadings of a party who does not appear must be stricken, the hearing will proceed, and the non-appearing party waives the right to demand a trial de novo. Ibid.

Judge Conte found that defendants Solucorp and London were aware of the November 10 arbitration hearing. He also noted that defendants' motion to restore the matter to the arbitration calendar was premised on a scheduling conflict due to a medical emergency and calls to counsel and the court to inform them of defendants' attorney's non-appearance.

Judge Conte held that any relief from any order entered pursuant to Rule 4:21A may be granted only on motion showing good cause and may be conditioned on appropriate terms fashioned by the court. R. 4:21A-4(f). Judge Conte also held that defendants must advance a meritorious defense. He construed defendants' motion as a motion to vacate the waiver of the ability to request a trial de novo. As such, the extraordinary circumstances standard applied because defendants filed a cross- motion only in response to plaintiff's December 22, 2009 motion to confirm the arbitration award. Measured by this heightened standard, the judge held defendants simply ...


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