September 17, 2013
ASSOCIATED FINANCIAL WEB PRINTING, LLC, Plaintiff-Appellant,
CHRISTOPHER KUPCHIK; MICHAEL MCFADDEN; LAWLER TERRACE COMPANY d/b/a LAWLER DIRECT, Defendants-Respondents.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued September 10, 2013
On appeal from the Superior Court of New Jersey, Law Division, Camden County, Docket No. L-2929-12.
Thomas J. Hagner argued the cause for appellant (Hagner & Zohlman, LLC, attorneys; Andrew T. McGuire, on the brief).
Roman T. Galas argued the cause for respondents (Ansa Assuncao, LLP, attorneys; Mr. Galas, on the brief).
Before Judges Reisner and Alvarez.
Plaintiff Associated Financial Web Printing, LLC, appeals from trial court orders dated September 25, 2012, and November 27, 2012, requiring plaintiff to submit its claims to arbitration, and denying reconsideration. We affirm.
We glean the following facts from the record presented to us. Three individuals — William Miller, Michael McFadden and Christopher Kupchik — formed Associated Financial Web Printing, LLC (Associated) through an operating agreement dated November 29, 2006. Section 11.12 of the operating agreement contained a comprehensive arbitration clause. The clause required that "[a]ny dispute whatsoever relating to . . . the performance of this Agreement" or "any other dispute arising in any way out of this Agreement" must be submitted to arbitration. The section further provided that "[t]he parties intend to make the submission to arbitration of any dispute or controversy arising out of this Agreement an exclusive remedy" and "the parties agree to waive the right to any legal or equitable action or proceeding of any nature whatsoever (other than enforcement of an arbitration award)." All three individuals signed the Agreement.
In October 2010, Miller sued Associated, Kupchik, McFadden, a business (Lawler Terrace Company) owned by McFadden, and several other defendants. The complaint alleged that Miller was involved in a very serious auto accident in 2009, and that while he was recovering, McFadden and Kupchik embezzled Associated's assets. The complaint alleged, among other things, that McFadden and Kupchik improperly transferred company assets, failed to pay Miller for debts due him, and breached their fiduciary duties, all leading to Associated's financial demise. The defendants, including Lawler and Associated, filed a motion to enforce the arbitration clause, alleging that the complaint concerned a dispute arising from the Agreement. For reasons set forth in a comprehensive written opinion issued on March 7, 2011, Judge Michael J. Hogan granted the motion, and dismissed the complaint in favor of arbitration.
Judge Hogan also denied Miller's motion to amend his complaint to add Associated as a plaintiff instead of a defendant. The judge noted that
changing the role of [Associated] from a defendant to a plaintiff in this case would not change the facts of the underlying dispute in this matter: this is an internal dispute amongst signatories to the Operating Agreement, and thus it is governed by Section 11.12 of the Operating Agreement which requires arbitration for this dispute.
Despite Judge Hogan's earlier rulings, in July 2012 Miller caused a complaint with similar allegations to be filed in the Law Division in Camden County; this complaint named Associated as plaintiff, and Kupchik, McFadden and Lawler as defendants. Defendants' counsel promptly sent plaintiff's counsel a letter reminding him of Judge Hogan's decisions in the first lawsuit and demanding that the complaint be withdrawn and the dispute be submitted to arbitration. When plaintiff did not withdraw the complaint, defendants filed a motion to dismiss, asserting that Associated, having previously successfully asserted that the dispute must be submitted to arbitration, was judicially estopped from taking a different position in the current litigation.
In an oral opinion issued on September 14, 2012, Judge Robert G. Millenky concluded that the arbitration clause was broad enough to encompass the dispute in this case. Like Judge Hogan, Judge Millenky reasoned that, no matter how the claims were characterized in the complaint, the lawsuit was really a dispute between Associated's owners over the company's operation. He found that Miller instigated the lawsuit in the company's name to obtain redress against his fellow shareholders, and in that context Associated was bound by the arbitration clause in its operating agreement. For reasons he set forth on the record on November 16, 2012, Judge Millenky denied plaintiff's motion for reconsideration.
In this appeal, plaintiff argues that count four of its complaint was not subject to the arbitration clause, because it was "merely" a collections action against Lawler for an unpaid debt due to Associated. Plaintiff contends that Lawler was not a party to the Agreement and therefore could not enforce the arbitration clause against Associated. Plaintiff also argues that its "common law tort claims" against Kupchik, McFadden and Lawler for fraud, conversion and misappropriation of assets, did not arise out of the Agreement. Plaintiff further argues that Associated is not a party to its own operating agreement and therefore is not bound by the arbitration clause. Having reviewed the record, we conclude that all of these contentions are without sufficient merit to warrant discussion here, R. 2:11-3(e)(1)(E), and we affirm substantially for the reasons stated by Judge Millenky in his cogent opinions of September 14 and November 16, 2012. We add the following brief comments.
We agree with Judge Millenky that in substance this entire case is a dispute between Associated's shareholders over alleged mismanagement of the company and it falls within the ambit of the Agreement's comprehensive arbitration clause Although Judge Millenky did not address the issue we also conclude that the doctrines of judicial estoppel and collateral estoppel bar Associated from re-litigating the issue of arbitrability See McCurrie ex rel Town of Kearny v. Town of Kearny 174 N.J. 523 533-34 (2002); First Union Nat'l Bank v. Penn Salem Marina Inc 190 N.J. 342 352 (2007) That issue was litigated and decided in Associated's favor by Judge Hogan in the Burlington County lawsuit In that case Associated successfully argued as a defendant that it was obligated to engage in arbitration of essentially the same dispute with the same parties later named in the Camden lawsuit In re-filing the action in Camden County albeit in Associated's name Miller engaged in blatant forum-shopping and wasteful repetitive litigation an effort Judge Millenky properly rejected