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Pagan v. Smith

Superior Court of New Jersey, Appellate Division

June 7, 2013

JANE Q. PAGAN, Plaintiff-Respondent,
ALETHIA SMITH, Defendant-Appellant.


Submitted April 16, 2013

On appeal from the Superior Court of New Jersey, Law Division, Camden County, Docket No. L-0078-07.

Ma'isha L. Aziz, attorney for appellant.

Stephen W. Guice, attorney for respondent.

Before Lihotz and Mantineo, Judges.


Defendant Alethia Smith appeals from a Law Division order denying her request to schedule a trial de novo of the parties' dispute, untimely filed after an arbitration award was issued. Further, the order vacated a previously entered order of dismissal for inaction of plaintiff Jane Q. Pagan's complaint, and confirmed the arbitration award. Defendant also appeals from the subsequent denial of her motion for reconsideration of this order. We affirm the order, however, remand to correct the calculation of prejudgment interest.

Plaintiff and defendant entered into three separate "Vacation Club Membership Agreements" (Memberships) with Ocean Reef Yacht Club (Ocean Reef). The terms of the agreements provided they would repay $5850, $7200, and $7680, respectively, for the joint use of a timeshare property. The parties had agreed between themselves to "split the costs of the Memberships equally." Later, the parties also agreed to sell the Memberships and split the advertisement costs equally.

When defendant failed to pay her share of the Memberships and advertising costs, plaintiff filed a complaint seeking a judgment not only for defendant's share of these expenses, but also for alleged additional collection fees and late charges incurred because of defendant's non-payment. Plaintiff sought total damages of $12, 624.50.

Several procedural irregularities occurred, but ultimately the entry of default[1] and a wage execution against defendant were vacated; plaintiff's complaint, previously dismissed for failure to prosecute, was reinstated; and the matter was scheduled to proceed through the court's commercial arbitration program. An arbitration award of $7, 575.87 was entered in favor of plaintiff and against defendant. The arbitration report and award specified, "[p]arties desiring to reject this award and obtain a trial de novo must file . . . a trial de novo request . . . within thirty (30) days of [August 1, 2011]."

Following arbitration, neither party took action. Defendant failed to move for a trial de novo within the thirty days prescribed by Rule 4:21A-6(b)(1), and plaintiff failed to move to confirm the arbitration award within the fifty days prescribed by Rule 4:21A-6(b)(3). Consequently, plaintiff's complaint was dismissed without prejudice, as required by Rule 4:21A-6(b).[2]

On October 18, 2011, plaintiff moved to vacate the dismissal of her complaint and confirm the arbitration award. Defendant opposed the motion, and cross-moved for an order scheduling a trial de novo. During this same time period, defendant submitted receipts from Ocean Reef, purportedly demonstrating she had paid approximately $1500 of the cost of the time share.

The judge considered the parties' respective arguments and noted:

[T]he arbitration was August 1, 2011. The defendant did not file for a trial de novo within 30 days. The plaintiff, also, did not file for a confirmation of that arbitration award within 50 days. So we have a situation where both parties are coming to the table not having conformed with the Court Rules.

The judge rejected defendant's argument suggesting strict application of the Rule 4:21A-6 thirty-day limitations period to request a trial de novo applied solely to personal injury cases. The judge concluded "the 30 day time period should be more strictly enforced than the 50 day time period for motions to vacate." The judge vacated dismissal of the complaint, confirmed the arbitration award, added prejudgment interest, and denied defendant's request for a trial de novo. Defendant's subsequent motion for reconsideration was denied, and this appeal ensued.

"Mandatory arbitration" is required in "applicable cases[, ]" which include "all . . . contract and commercial actions that have been screened and identified as appropriate for arbitration[.]" R. 4:21A-1(a)(3). See also R. 4:21A-1(b) (permitting voluntary arbitration "on written stipulation of all parties"). Such court-sponsored alternative dispute resolution programs are designed to offer efficient disposition and expeditious resolution of designated matters. The rules outline procedures governing court-sponsored arbitration, including the manner in which arbitration must be conducted, R. 4:21A-4, and, once an award is delivered, the parties' rights to accept entry of judgment or reject the award in favor of trial de novo, R. 4:21A-6.

Specifically, Rule 4:21A-6(b)(1) allows a party thirty days to file and serve a notice of rejection of an arbitration award, provide payment of the requisite fee, and demand a trial. The rule is patterned after the legislative mandate set forth in N.J.S.A. 2A:23A-26, which provides thirty days to move for a trial de novo under the New Jersey Alternative Procedure for Dispute Resolution Act, N.J.S.A. 2A:23A-1 to -30.

While courts possess authority to enlarge this thirty-day period, that "power should be exercised only in extraordinary circumstances." Mazakas v. Wray, 205 N.J.Super. 367, 371-72 (App. Div. 1985). "[O]nce the thirty-day period allowed by Rule 4:21A-6(b)(1) and N.J.S.A. 2A:23A-26 for demanding a trial de novo or moving for modification or vacation of the arbitration award has expired, the award is no longer subject to challenge by the losing party except upon a showing of extraordinary circumstances." Allen v. Heritage Court Assocs., 325 N.J.Super. 112, 118 (App. Div. 1999).

Rule 4:21A-6(b)(3) also delineates the requirements to request confirmation of an arbitration award. The rule establishes a fifty-day period, following issuance of an arbitration award, to accept the terms of the arbitration award and seek entry of judgment. R. 4:21A-6(b)(3). Stated differently, the rule provides: "An order shall be entered dismissing the action following the filing of the arbitrator's award unless . . . within 50 days after the filing of the arbitration award, any party moves for confirmation of the arbitration award and entry of judgment thereon." Ibid.

We have discussed the purposes served by the respective time limitations to confirm or reject an arbitration award, stating:

[W]hile strict enforcement of the thirty-day limit on a demand for a trial de novo furthers the stated aims of the compulsory arbitration program, which is to bring about inexpensive, speedy adjudication of disputes and to ease the caseload of state courts, a relaxation of the time period for filing a motion to confirm an arbitration award does not thwart[] the effectiveness of a valid arbitration. In fact, a plaintiff who obtains an award in arbitration proceedings under Rule 4:21A commonly receives payment from the defendant without filing a motion to confirm. Thus, the only apparent reason for entry of an order of dismissal . . . is to clear the court calendar of a case which has been finally resolved by arbitration.

[ Allen, supra , 325 N.J.Super. at 116-17 (internal quotation marks and citations omitted).]

In light of this, a plaintiff's application to confirm an arbitration award, filed following the procedural dismissal of a complaint pursuant to Rule 4:21A-6(b)(c), is viewed indulgently and "with great liberality"; such applications should be approached in a manner similar to consideration of a request to vacate a default judgment. Allen, supra, 325 N.J.Super. at 117 (citing Hous. Auth. of Morristown v. Little, 135 N.J. 274, 283 (1994)). See also Marder v. Realty Constr. Co., 84 N.J.Super. 313, 319 (App. Div.) (recognizing an application to vacate a default judgment is "viewed with great liberality, and every reasonable ground for indulgence is tolerated to the end that a just result is reached"), aff'd, 43 N.J. 508 (1964). This results because "[t]he equitable considerations supporting relief from a procedural dismissal for failure to file a timely motion for confirmation of an arbitration award . . . are even more compelling[]" to the extent the plaintiff "has already expended the time and money required to present evidence at an arbitration hearing, and the arbitrator or arbitrators who heard the evidence have determined that plaintiff is entitled to a recovery." Allen, supra, 325 N.J.Super. at 118. See also Policeman's Benevolent Ass'n, Local 292 v. Borough of N. Haledon, 158 N.J. 392, 402 (1999) (noting "legislative schemes" in other jurisdictions "treat the losing party less favorably than the prevailing party" and often impose no time limit upon the filing of a motion to confirm an arbitration award); Heffner v. Jacobson, 100 N.J. 550, 555 (1985) (explaining "in most cases only the rights of the dilatory prevailing party will be affected by his delay in applying to the court for confirmation" (internal quotation marks and citations omitted)).

Guided by these principles, we consider defendant's arguments. Defendant maintains the arbitration award must be vacated or, alternatively, modified because: (1) she detrimentally relied on the dismissal by obligating her money for her child's "educational expenses, and other living expenses"; (2) plaintiff was unjustly enriched by payments defendant made to Ocean Reef; and (3) plaintiff's "cavalier attitude" toward the Court Rules warrants relaxation of the limitations period within which to seek a trial de novo. We find these arguments lack merit. R. 2:11-3(e)(1)(E). We add these brief comments.

Defendant's bald assertion of redirecting her funds following arbitration fails to show she materially "changed her position" during the twenty-six day period between the procedural dismissal and plaintiff's motion to vacate that order. See Green v. State Health Benefits Comm'n, 373 N.J.Super. 408, 420 n.5 (App. Div. 2004). See also Villanueva v. Amica Mut. Ins. Co., 374 N.J.Super. 283, 290 (App. Div. 2005) (stating failure to allege "specific prejudice" does not support detrimental reliance). See also Sprowl v. Kitselman, 267 N.J.Super. 602, 605-10 (App. Div. 1993) (confirming arbitration award because there was no detrimental reliance upon the respondents' failure to confirm the award in a timely manner). Further, contrary to defendant's assertions, the judge fully considered and rejected this assertion.

Similarly unpersuasive is defendant's claim that plaintiff committed a fraud on the court and was unjustly enriched because defendant had already paid approximately $1500 to Ocean Reef. The arbitration proceeding permitted each party to present applicable proofs and, as the judge observed, no evidence suggested "there was anything untoward about the arbitration award." Nor does any evidence show plaintiff withheld this information. Finally, the documents offered by defendant after arbitration are neither clear nor explained. Given the insufficiency of this evidence, defendant's argument for vacation or modification fails. See Teamsters Local Union #11 v. Abad, 144 N.J.Super. 239, 242 (App. Div. 1976) (reversing vacation where there was no evidence the defendants knowingly withheld documents).

Defendant also argues plaintiff "adopted and maintained a cavalier attitude towards the Court Rules, " thus providing sufficient grounds to vacate the arbitration award. Alternatively, she requests "the award be reduced by . . . the prejudgment interest calculated from 2006-2010[.]" In support of this contention, she cites our comment in Allen, supra , suggesting that in exceptional circumstances, noncompliance with Rule 4:21A-6(b)(3) requires "some sanction" to discourage litigants "from adopting a cavalier attitude towards the requirement that a motion to confirm must be filed within fifty days." 325 N.J.Super. at 121. As a consequence of the delay in compliance with the requirements of Rule 4:21A-6(b)(3) in Allen, we instructed the trial court to suspend prejudgment interest "for the period between the expiration of the fifty days allowed for a motion to confirm and the filing date of this opinion." Ibid . See R. 4:42-11(b) (allowing for suspension of prejudgment interest in "exceptional cases").

The facts here demonstrate the type of exceptional circumstances we found in Allen, supra, 325 N.J.Super. at 121, justifying suspension of prejudgment interest. During argument, plaintiff conceded her failure to adhere to the provisions of Rule 4:21A-6(b)(3), eliminated her entitlement to "prejudgment interest for [the] 26 days . . . between the 50 day expiration and the time [plaintiff] filed [her] motion." However, under Allen, supra , the appropriate period for suspension starts from the last day an application to confirm the arbitration award could have been made until the date of entry of the order reinstating the complaint and confirming the arbitration award. 325 N.J.Super. at 121. Consequently, we must remand to allow the trial judge to recalculate the period and amount of prejudgment interest.

Following our review, we find no error in the trial judge's order denying defendant's request for a trial de novo and granting plaintiff's request to reinstate her action and confirm the arbitration award. We again observe, as we did in Allen, supra , "an order vacating a dismissal under Rule 4:21A-6(b) to enable a plaintiff to obtain confirmation of an arbitration award does not conflict with any mandate of the statute under which the arbitration was conducted[, ]" and "[m]ost importantly, . . . an order granting additional time for confirmation of a valid arbitration award promotes the judicial policy of finality of arbitration awards." 325 N.J.Super. at 121 (citations omitted). We remand for the sole purpose of recalculation of the amount of prejudgment interest as discussed in this opinion.

Affirmed in part and remanded in part. We do not retain jurisdiction.

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