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Pablo Bianchi v. Trevin Panaia and Richard Clifford

April 16, 2012


On appeal from Superior Court of New Jersey, Law Division, Burlington County, Docket No. L-3898-09.

Per curiam.


Argued March 12, 2012

Before Judges Ashrafi and Fasciale.

Plaintiff Pablo Bianchi appeals from an August 30, 2010 order dismissing his complaint with prejudice. We reverse and remand so that the trial court may clarify its order and consider whether the parties reached a settlement while the appeal was pending.

According to Bianchi's complaint, he and defendants Trevin Panaia and Richard Clifford were employed at the Marlton office of Principal Financial Group, Panaia as the office manager. Bianchi and Clifford entered into a Business Succession Agreement to terminate a partnership between them. Bianchi agreed to pay Clifford a specified sum for the transfer of twenty-six client accounts to Bianchi. The agreement contained an arbitration clause for the resolution of potential disputes.

In October 2009, Clifford filed a demand for arbitration with the American Arbitration Association because of Bianchi's alleged failure to pay an outstanding balance due under the agreement. Bianchi countered by filing his Law Division complaint against Clifford and Panaia. Bianchi alleged fraud, unjust enrichment, and breach of the covenant of good faith and fair dealing as grounds that the Business Succession Agreement was unenforceable. He also alleged that Panaia had conspired with Clifford to mislead him into entering the agreement.

In January 2010, defendants moved to dismiss Bianchi's complaint for failure to state a claim, R. 4:6-2(e), and for lack of jurisdiction in the Law Division because of the contractual arbitration clause. The Law Division issued a "tentative disposition" based on the parties' motion papers, essentially holding that the arbitration clause was enforceable and that Panaia, who was not a party to the agreement, could also invoke the arbitration clause to dismiss Bianchi's complaint against him. See Alfano v. BDO Seidman, LLP, 393 N.J. Super. 560, 575 (App. Div. 2007).

At oral argument before the Law Division on March 19, 2010, the court declined to hear defendants' argument that the complaint should be dismissed for failure to state a claim. Bianchi presented his argument against the enforceability of the arbitration agreement, and the court reserved decision pending its review of case law. The court's order of August 30, 2010, was issued five months later. The order granted defendants' motion to dismiss the complaint "with prejudice for lack of subject matter jurisdiction" and also "in its entirety for failure to state a claim upon which relief can be granted."

Bianchi filed a notice of appeal on October 15, 2010, and he also moved in the Law Division to stay the arbitration pending his appeal. On December 17, 2010, the Law Division issued an order addressing Bianchi's motion, together with a supporting letter explaining its reasons. The new order vacated the August 30, 2010 order, stated that Bianchi's complaint was dismissed "without prejudice, and the parties are referred to arbitration," and denied Bianchi's request for a stay of the arbitration pending appeal. In its explanatory letter, the court stated that the August 30, 2010 order contained inadvertent errors, that the court intended to dismiss the complaint only because of the arbitration clause of the agreement, and that defendant Panaia could not refuse to participate in arbitration because he had asked that the complaint be dismissed and the matter be referred to arbitration.

In January and February 2011, Bianchi and Panaia filed motions for reconsideration of the December 17, 2010 order. The Law Division then entered two more orders while this appeal remained pending. Its March 9, 2011 order stayed arbitration "until further written notice from the court." Its November 16, 2011 order denied the pending motions for reconsideration.

On appeal before us, Bianchi argues that the August 30, 2010 order should be reversed because it erroneously dismissed his complaint with prejudice for failure to state a claim. He argues alternatively that the matter should be remanded to the Law Division so that it can confirm the orders it entered after the notice of appeal was filed. Defendants contend that the appeal should be dismissed because the parties reached a settlement while the appeal was pending. Bianchi replies that the settlement has not been completed because Panaia refuses to pay part of the arbitration fees the parties incurred.

Once the notice of appeal was filed on October 15, 2010, the Law Division was deprived of jurisdiction to enter its subsequent orders. See Manalapan Realty, L.P. v. Manalapan Twp. Comm., 140 N.J. 366, 376 (1995) ("The ordinary effect of the filing of a notice of appeal is to deprive the trial court of jurisdiction to act further in the matter unless directed to do so by an appellate court, or jurisdiction is otherwise reserved by statute or court rule."); R. 2:9-1(a) ("[T]he supervision and control of the proceedings on appeal or certification shall be in the appellate court from the time the appeal is taken or the notice of petition for certification filed.").

A trial court has jurisdiction while an appeal is pending to correct clerical errors, R. 1:13-1; mathematical errors, Kiernan v. Kiernan, 355 N.J. Super. 89, 92 (App. Div. 2002) (citing R. 1:13-1); or an obvious error of fact conceded by all parties, McNair v. McNair, 332 N.J. Super. 195, 199 (App. Div. 2000). We decline to apply in these circumstances the holding of Ledezma v. A & L Drywall, 254 N.J. Super. 613, 619 (App. Div. 1992), that the trial court had jurisdiction under Rule 1:13-1 to correct "the articulated basis of one portion of [its] original decision" after the notice of appeal was filed. ...

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