On certification to the Superior Court, Appellate Division.
The opinion of the court was delivered by: Judge Stern
(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).
GMAC v. Rosanna Pittella v. Pine Belt Enterprises, Inc.
Argued January 31, 2011 Decided March 23, 2011
STERN, J. (temporarily assigned), writing for a unanimous Court.
In this appeal, the Court considers whether an order that compels arbitration as to one or more, but not all, claims and parties is final for purposes of appeal.
Rosanna Pittella (Pittella)entered into a "retail installment sale contract" with Pine Belt Enterprises, Inc. (Pine Belt) to finance the purchase of a car she bought at Pine Belt. She also signed an agreement that if a dispute of any sort arose from the financing or acquisition of the vehicle, Pittella or Pine Belt could choose to have the dispute resolved by binding arbitration. Pursuant to that agreement, election of binding arbitration by any party would eliminate the right to litigate a claim in court, to have a jury trial, or to participate in a class action regarding any of the claims subject to arbitration.
Pine Belt assigned the contract to General Motors Acceptance Corporation (GMAC). GMAC subsequently repossessed the vehicle for non-payment and sued Pittella for a deficiency balance. When Pittella filed an answer to the complaint, she also filed a counterclaim and a third-party complaint against Pine Belt. The third-party complaint alleged violations of the New Jersey Consumer Fraud Act and the Uniform Commercial Code arising from what Pittella asserted was an excessive price for the extended warranty. Pittella also asserted "class-action allegations" against Pine Belt on behalf of a proposed class of individuals who had purchased similar extended warranty plans from Pine Belt during the previous six years. Pine Belt moved for summary judgment to compel arbitration and to dismiss the putative class action.
The trial court granted Pine Belt's motion, by an initial order compelling "binding arbitration" of Pittella's individual claims against Pine Belt, and later by order dismissing Pittella's class-action claim with prejudice. The court did not stay GMAC's claims against Pittella pending the arbitration, however. Pittella did not seek appellate review of those orders at that time, but after she and GMAC settled their dispute and executed a stipulation of dismissal with prejudice approximately seven months later, Pittella filed with the Appellate Division of Superior Court a notice of appeal from the two orders that granted summary judgment to Pine Belt.
Pine Belt moved to dismiss the appeal as untimely, arguing that Pittella was required to have filed her appeal within forty-five days after the summary judgment orders were filed. Pittella responded that the orders appealed from were not final judgments appealable as of right because the orders did not dispose of all issues as to all parties. The Appellate Division denied Pine Belt's motion to dismiss the appeal as untimely, and later, in the opinion filed on the plenary appeal, rejected the timeliness claim because Pine Belt had not made any substantive argument regarding why the court should not consider itself bound in deciding the issue by the prior order denying the motion to dismiss the appeal, as the law of the case. The Appellate Division reversed the orders compelling arbitration, and because the trial court decision to dismiss the class action had been predicated on arbitration of the individual claims and the Appellate Division had determined those claims are not subject to arbitration, the court also reversed the dismissal of the putative class action.
The Supreme Court granted Pine Belt's petition for certification, which presented only the issue of whether orders that compel arbitration as to some, but not all parties, in a litigation are an exception to the holding in Wein v. Morris, 194 N.J. 364 (2008) that all orders that compel arbitration are deemed final and immediately appealable as of right. GMAC v. Pittella, 203 N.J. 606 (2010).
Any order that compels or denies arbitration shall be considered final for purposes of appeal, but the trial court retains jurisdiction to address other issues pending the appeal.
1. In Wein, the order of the trial court that compelled arbitration and dismissed the complaint, all counterclaims, and cross-claims disposed of all issues as to all parties. The Supreme Court ruled that an order compelling arbitration should be deemed a final judgment appealable as of right regardless whether the lower court dismisses the action as part of a final order or stays the matter pending arbitration. The Court acknowledged in Wein that other jurisdictions are split on whether such orders are final and that the United States Supreme Court has noted a distinction between orders of the federal courts compelling arbitration that stay, rather than dismiss, actions pending arbitration. In deciding Wein, however, the Court concluded that it is desirable to take a uniform approach by which orders compelling arbitration regardless of whether the action in court is dismissed or stayed, are deemed final for purposes of appeal. The Court exercised its constitutional rulemaking authority to amend Rule 2:2-3 (a) to add orders compelling arbitration to the list of interlocutory orders deemed final judgments for purposes of appeal. (pp. 8-14)
2. Unlike the order at issue in Wein, the order that compelled arbitration between Pittella and Pine Belt did not dispose of all issues as to all parties: the trial court still had to decide GMAC's deficiency claim against Pittella on the financing. Because of the date on which the agreements between the parties were executed, the Uniform Arbitration Act applies to this case. N.J.S.A. 2A:23B-3. In view of the Act's purpose to promote expeditious arbitration and its express provision permitting appeals when arbitration is denied or stayed, the Court concludes that all orders denying and granting arbitration should be treated as final for purposes of appeal. Rule 2:2-3(a) shall be further amended to permit appeals as of right from all orders permitting or denying arbitration. (pp.14-18)
3. In addition to amending Rule 2:2-3 (a), other rules of appellate and administrative practice need be amended to require expeditious processing of appeals from such orders, similar to the expeditious processing required for interlocutory appellate matters. Rule 2:9-1(a) is also amended to permit the trial court to retain jurisdiction to address issues relating to the claims and parties that remain in that court, such as other motions to compel arbitration, to stay proceedings, or to sever claims and parties. Parties are encouraged to time the filing of motions that relate to an application to compel arbitration in a manner that will permit all related proceedings to be reviewed on appeal, but the Court leaves a residuum of jurisdiction in the trial court when other claims and parties remain. The Court refers the matter to the Civil Practice Committee to address Rule 2:2-3 (a) and consider amendments to Rule 2:9-1 and other rules to implement this decision. (pp.18-19)
4. Because the order compelling arbitration of Pittella's claims against Pine Belt did not address all issues as to all parties, it was not clear at the time that the order was final under Rule 2:2-3 (a) and Wein. Because of the prior lack of clarity, the Court affirms the portion of the Appellate Division decision denying the motion to dismiss the appeal from the final judgment. From today forward, however, all orders compelling or denying arbitration shall be deemed final for purposes of appeal, regardless of whether the order disposes of all issues and all parties. The time for appeal from the order starts from the date of entry of the order. (pp. 20-21)
The judgment of the Appellate Division is AFFIRMED as MODIFIED.
CHIEF JUSTICE RABNER and JUSTICES LONG, LaVECCHIA, ALBIN, RIVERA-SOTO and HOENS join ...