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Fidelity & Deposit Co. of Maryland v. Frawley

Superior Court of New Jersey, Appellate Division

July 21, 2017

Fidelity & Deposit Company of Maryland
v.
Frawley

          Andrew Samson, Esq. Baron Samson, Stephen M. Honan, Esq. Feerick Lynch McCartney & Nugent.

         Dear Counsel:

         This matter comes before the court by way of defendant's contested motion for summary judgment. Oral argument was heard by this court on July 7, 2017.

         BACKGROUND

         The complaint was filed on May 25, 2016 sounding in tort. By way of brief background, this matter arises from defendant's alleged conversion, breach of duty of loyalty, unjust enrichment, and breach of employment contract.

         LEGAL ARGUMENTS

         Defendant's Motion for Summary Judgment

         Defendant asserts in 1980 she was employed by Radio and Telephone Broadcast Engineers Union, Local 1212 International Brother of Electrical Workers (hereinafter "IBEW"), located in New York. On August 1, 2004, she and IBEW entered into a written agreement (hereinafter "the Agreement") prepared and drafted by IBEW. On November 10, 2014, she was terminated. Prior to the termination date, the agreement was never amended, suspended or terminated. Section six (6) of the agreement contains an arbitration provision, providing:

6. Any dispute, complaint, controversy, claim or grievance whatsoever between Frawley and the Union which directly or indirectly arises under, out of or in connection with this Agreement may be submitted to arbitration by either party upon notice to the other party under and pursuant to the labor arbitration rules of the American Arbitration Association. No complaint, controversy, claim or grievance shall be submitted to arbitration unless either party gives notice to the other, which notice must be given not later than thirty (30) days from the date the dispute, complaint or grievance arose. Each party shall bear their costs and expenses of arbitration and the cost of the arbitration shall be divided equally between the parties. [Frawley Certification Ex. E].

         Prior to the termination date, neither party served a Notice of Arbitration upon the other. On November 10, 2014, IBEW filed a claim with its insurer, plaintiff, alleging irregularities and improprieties by its former employee, defendant. Defendant asserts all of IBEW's alleged claims arose out of and are in connection with IBEW and defendant's employer-employee relationship. Plaintiff paid certain amounts in claims to IBEW, after which IBEW assigned its rights, if any, against defendant. For the purposes of this action, plaintiff is IBEW's subrogee.

         Defendant argues the court should apply New York law with respect to the construction, interpretation and enforcement of the August 1, 2004 Agreement. Defendant maintains other than her New Jersey residence, all contacts regarding the Agreement, including negotiation, execution, performance and subject matter, are New York based. Defendant emphasizes New York public policy favors arbitration as an efficient means of resolving disputes, particularly where the arbitration clause is sufficiently broad. As such, defendant argues the Agreement contains a broad arbitration clause mandating adjudication of any claim or dispute via arbitration. Defendant maintains plaintiff's claims are covered by the broad language of the Agreement. Additionally, defendant adds the use of the word "may" in the Agreement refers to a party's choice to bring a claim, not choice of forum. IBEW chose to file its claims against defendant with plaintiff. Thus, defendant argues plaintiff is bound by IBEW's waiver of its claims.

         Defendant argues the court should grant summary judgment dismissing plaintiffs complaint with prejudice pursuant to R. 4:46-2(c). Defendant reiterates she and IBEW entered into a written agreement, whereby the parties agreed "[a]ny dispute, complaint, controversy, claim or grievance whatsoever concerning defendant's employment be resolved via arbitration." See [Frawley Ex. E]. Accordingly, the parties mutually waived their right to bring an action in a court of law. Moreover, plaintiff, as IBEW's subrogee, is bound by the arbitration clause. Because IBEW and plaintiff failed to submit their claims to arbitration within the required time period, plaintiff cannot avail itself of either the judicial or the arbitration forum.

         Additionally, defendant argues plaintiff, as IBEW's subrogee, has no independent right of action against her. Rather, plaintiffs causes of action are derivative of IBEW's rights, if any, against defendant. As such, defendant argues all rights and defenses available to her against IBEW are viable against plaintiff. Accordingly, plaintiff is bound by the Agreement to provide timely notice of its intent to arbitrate, and to timely arbitrate any claims against her. Both IBEW and plaintiff have failed to do so, thus, defendant argues plaintiffs claims must be dismissed.

         Plaintiffs ...


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