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Chakrala v. Bansal

Superior Court of New Jersey, Appellate Division

September 24, 2013

ARUNA CHAKRALA and DR. ARUNA CHAKRALA, M.D., P.C., Plaintiffs-Respondents,
v.
SUDHA BANSAL, Defendant-Appellant

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued January 24, 2013

On appeal from the Superior Court of New Jersey, Law Division, Mercer County, Docket No. L-1594-08.

Jae H. Cho argued the cause for appellant.

Richard F. Collier, Jr. argued the cause for respondents.

Before Judges Nugent and Haas.

OPINION

NUGENT, J.A.D.

This appeal involves a dispute between doctors about their medical practice. The doctors arbitrated their dispute. Dissatisfied with the arbitration awards, defendant, Dr. Sudha Bansal, filed a Law Division action to confirm in part, modify in part, and vacate in part the arbitration awards issued by the American Arbitration Association (AAA). The Law Division dismissed her action and she appealed. We affirm.

These are the facts. Plaintiff, Aruna Chakrala, M.D., and defendant Sudha Bansal, M.D., entered into a partnership agreement (the Agreement) dated May 1, 2006. According to the Agreement, Chakrala[1] was the sole shareholder of Dr. Aruna Chakrala, M.D. P.C., an incorporated medical practice (the Practice). Bansal, who was employed by Capital Health Systems, N.J., agreed to leave her position to accept a fifty percent interest in the Practice. Each party agreed to work "on a [three] months on and [three] months off rotation period, the first such period to commence as of 09.01.2006 or 10.15.2006 with Dr. Sudha Bansal . . . being ON for [three] months." Each party would be compensated by receiving the net profit, less twenty percent retained earnings, for the three months the party worked. When both parties worked during the same period, they would share equally the net profits generated during that time.

The Agreement states that Bansal has the right to require Chakrala to change the structure of the Practice from a corporation to a limited liability company after December 31, 2007. The Agreement also states that New Jersey law governs performance under the Agreement as well as any disputes under the Agreement, and the parties will arbitrate any disputes arising under the Agreement. The arbitration clause provides:

Any disputes under this [A]greement or related to this [A]greement shall be decided outside the N.J. court system and within the guidelines set forth for binding arbitration as is customary in the State of New Jersey.

In May 2008 the parties became embroiled in a dispute that irreparably damaged their working relationship. Bansal attempted to have Chakrala restructure the Practice as a limited liability company, as provided for in the Agreement. Chakrala responded by sending Bansal a letter dated May 7, 2008, purporting to terminate the Agreement, and alleging Bansal had breached the agreement and had "not significantly added to the growth" of the practice. Thereafter, the parties' accusations escalated and Chakrala filed a verified complaint and order to show cause, seeking to compel arbitration.

In paragraphs six, twenty-three, and twenty-four of her verified complaint, Chakrala alleged that the arbitration clause in the Agreement was governed by New Jersey's version of the Uniform Arbitration Act (NJUAA), N.J.S.A. 2A:23B-1 to -32, specifically N.J.S.A. 2A:23B-3(c); that the NJUAA authorized the court, upon application of a party, to appoint an arbitrator; and that the NJUAA authorized a party to commence a summary action to have the court appoint an arbitrator. In response to each of those assertions in the complaint, Bansal responded: "Neither admitted nor denied and [Bansal] leaves [Chakrala and the Practice] to their strict proofs on this issue."

Bansal also filed a counterclaim alleging causes of action for shareholder oppression, breach of fiduciary duty, breach of contract, fraudulent inducement, and bad faith. In the complaint's second count, Bansal acknowledged the arbitration ...


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