July 8, 2013
ACCENTIA HEALTHCARE SERVICE, INC., and INSTAKARE ACCENTIA HEALTHCARE SYSTEM, INC., Plaintiffs-Respondents,
ANIL ABRAHAM and INTERNATIONAL RESOURCES AND ACQUISITION MANAGEMENT, INC., Defendants-Appellants.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued April 16, 2013
On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-4860-12.
Richard C. Yeskoo argued the cause for appellants (Yeskoo Hogan & Tamlyn, LLP, attorneys; Mr. Yeskoo, on the brief).
Kenneth B. Falk argued the cause for respondents (Falk & Associates, LLC, attorneys; Mr. Falk, on the brief).
Before Judges Ostrer and Mantineo.
Defendants, Anil Abraham and International Resources and Acquisition Management, Inc. (International Resources), appeal the September 20, 2012 order of the Law Division, compelling arbitration. We reject defendants' contentions and affirm.
We discern the following facts and procedural history from the record on appeal.
The dispute arises out of a business organization agreement (Agreement) entered on December 21, 2010 between plaintiffs Accentia Healthcare Service, Inc. (Accentia), a Florida corporation, Instakare Accentia Healthcare Solutions, Inc. (IAHS), a New Jersey corporation and defendants. The Agreement dealt with the marketing, certification, development, and sale of a medical billing and record keeping software named Instakare.
While agreeing that their business relations are to be governed by the Agreement, the parties have differing views on the interpretation of paragraph seven, titled "Disputes and Arbitration, " which states:
In case of any disputes arising out of this Business Agreement, or the management or operations of IAHS, both Parties may try and resolve it through mutual discussions. If the same has not resulted in a mutually acceptable outcome, both parties may resort to arbitration. Such arbitration shall be conducted in the State of New Jersey in the United States.
In the underlying dispute, plaintiffs claimed defendants breached the terms of the Agreement in not completing the development of Instakare within the designated time frame and for the cost established within the Agreement. Plaintiffs sought to resolve the dispute by way of arbitration. Defendants rejected plaintiffs' call for arbitration and, in response, plaintiffs filed a complaint, on July 2, 2012, seeking to compel arbitration.
The trial court found that the arbitration clause, construed as a whole, displays the intent of the parties to utilize arbitration as the forum for dispute resolution, stating,
This Court finds that while the language contained within Paragraph 7 does make reference to "may, " the last sentence says, "Such arbitration shall be conducted in the State of New Jersey in the United States." This Court finds that that sentence . . . in pari materia with the first two sentences of that disputes an arbitration clause, which the Court finds wouldn't be in the contract if it wasn't the intent of the parties that arbitration be . . . the forum for dispute resolution.
. . . .
[T]his Court finds that based on the language contained within this business organization agreement that the proper forum is arbitration.
Accordingly, an order compelling arbitration was entered. This appeal follows.
Defendant raises the following arguments on appeal:
THE TRIAL COURT ERRED IN FINDING THE ARBITRATION CLAUSE MANDATORY RATHER THAN PERMISSIVE
A. Standard of Appellate Review.
B. Construction of Arbitration Clauses.
C. The Arbitration Clause was Permissive Rather than Mandatory.
D. The Trial Court's Decision was Erroneous.
"[O]rders compelling or denying arbitration are deemed final and appealable as of right as of the date entered." GMAC v. Pittella, 205 N.J. 572, 587 (2011). We review the judge's decision to compel arbitration de novo. Frumer v. Nat'l Home Ins. Co., 420 N.J.Super. 7, 13 (App. Div. 2011).
Our jurisprudence and public policy favor alternative dispute resolution and are consistent with our view that "[l]itigation ought to be a last resort, not a first one." Billig v. Buckingham Towers Condo. Ass'n, 287 N.J.Super. 551, 564 (App. Div. 1996). In this regard, courts adhere to the principle that "arbitration is . . . 'favored . . . as a means of resolving disputes[.]'" Angrisani v. Fin. Tech. Ventures, L.P., 402 N.J.Super. 138, 148 (App. Div. 2008) (quoting Martindale v. Sandvik, Inc., 173 N.J. 76, 84 (2002)). The Legislature, in adopting the Arbitration Act, N.J.S.A. 2A:23B-1 to -32, has endorsed a similar policy.
The strong public policy favoring arbitration as a means of dispute resolution requires that "'[a]n agreement to arbitrate should be read liberally in favor of arbitration[.]'" Angrisani, supra, 402 N.J.Super. at 148 (quoting Marchak v. Claridge Commons, Inc., 134 N.J. 275, 282 (1993)). Further, "doubts concerning the scope of arbitrable issues must be resolved in favor of arbitration, over litigation." Alfano v. BDO Seidman, LLP, 393 N.J.Super. 560, 576 (App. Div. 2007).
"Although arbitration is traditionally described as a favored remedy, it is, at its heart, a creature of contract." Kimm v. Blisset, LLC, 388 N.J.Super. 14, 25 (App. Div. 2006) (citations omitted), certif. denied, 189 N.J. 428 (2007). In construing an arbitration clause, courts must honor the intentions of the parties as set forth in the language. Quigley v. KPMG Peat Marwick, LLP, 330 N.J.Super. 252, 270 (App. Div.), certif. denied, 165 N.J. 527 (2000). "[T]he duty to arbitrate . . . [is] dependent solely on the parties' agreement." Cohen v. Allstate Ins. Co., 231 N.J.Super. 97, 101 (App. Div.), certif. denied, 117 N.J. 87 (1989). The determination as to whether such a duty exists "rests solely on the parties' intentions as set forth in the writing." Martindale, supra, 173 N.J. at 92. Accordingly, "[t]he court shall decide whether an agreement to arbitrate exists or [whether] a controversy is subject to an agreement to arbitrate." N.J.S.A. 2A:23B-6(b). See also Muhammad v. Cnty. Bank of Rehoboth Beach, Del., 189 N.J. 1, 12-13 (2006), cert. denied, 549 U.S. 1338, 127 S.Ct. 2032, 167 L.Ed.2d 763 (2007). In so doing, "a 'court may not rewrite a contract to broaden the scope of arbitration[.]'" Garfinkel v. Morristown Obstetrics & Gynecology Assocs., 168 N.J. 124, 132 (2001) (quoting Yale Materials Handling Corp. v. White Storage & Retrieval Sys., Inc., 240 N.J.Super. 370, 374 (App. Div. 1990)).
In determining whether a particular dispute is encompassed by a contractual arbitration provision, as in construing any other contractual provision, a court's "goal is to discover the intention of the parties[, ]" which requires consideration of the "contractual terms, the surrounding circumstances, and the purpose of the contract." Marchak, supra, 134 N.J. at 282; see also Lederman v. Prudential Life Ins. Co. of Am., Inc., 385 N.J.Super. 324, 337-38 (App. Div.), certif. denied, 188 N.J. 353 (2006). In making this determination, ordinary contract principles apply. Singer v. Commodities Corp., 292 N.J.Super. 391, 402 (App. Div. 1996). "[W]hen the terms of a contract are clear and unambiguous, there is no room for construction and the court must enforce those terms as written." Watson v. City of E. Orange, 175 N.J. 442, 447 (2003).
Defendants' argue that the wording of the clause -- "both parties may resort to arbitration" -- required both parties to agree to arbitrate before it could be ordered. We disagree.
If we were to accept defendants' interpretation, then the parties may jointly choose to arbitrate only in New Jersey, but either party unitlaterally may bring litigation anywhere. Defendants' assertion is undermined by the parties' location and the mandatory New Jersey choice of law provision found in the Agreement. Thus, reading the clause, as a whole, it is clear the parties designed the use of word "both" to signify that either party could make the request to arbitrate.
Moreover, while we recognize that plaintiffs' legal department drafted the provision and, therefore, any ambiguity should be resolved against them, we are not convinced the provision mandates both parties must agree to arbitrate. The conspicuous, plain language used in the agreement obviates any suggestion by defendants that they were disadvantaged because plaintiffs drafted the document. See E. Brunswick Sewerage Auth. v. E. Mill Assoc's., Inc., 365 N.J.Super. 120, 125 (App. Div. 2004) (holding that when the terms of a contract are clear, the court must enforce the terms as written). We discern no ambiguity or confusion in the direct, concise language which contains an arbitration requirement that is "'clear and unambiguous' in [its] intent and purpose to inform the reader that all disputes must be presented in an arbitral forum, not a court." Curtis, supra, 413 N.J.Super. at 38.
We find further support that the parties intended to arbitrate by the absence of a forum selection clause for litigation in the Agreement. The absence of a forum selection clause leads us to believe the parties did not contemplate litigation at all and intended to resolve disputes vis-à-vis mutual discussions and arbitration.
Like the motion judge, we agree that the word "both" read in the context of the entire paragraph of the Agreement denotes arbitration as the intended forum.