ASPHALT PAVING SYSTEMS, INC. VS. ASSOCIATED ASPHALTPARTNERS, LLC(L-0978-16, ATLANTIC COUNTY AND STATEWIDE)

• Court: New Jersey Superior Court Appellate Division
• Decided: October 19, 2017
• Docket: A-5487-15T1
• Status: Unpublished

Opinion

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A-5487-15T1

ASPHALT PAVING SYSTEMS, INC.,

Plaintiff-Appellant,

v.

ASSOCIATED ASPHALT PARTNERS, LLC and ASSOCIATED ASPHALT TRANSPORT, LLC,

Defendants-Respondents.

________________________________________

Argued October 2, 2017 – Decided October 19, 2017

Before Judges O'Connor and Vernoia.

On appeal from Superior Court of New Jersey, Law Division, Atlantic County, Docket No. L- 0978-16.

Colin G. Bell argued the cause for appellant (Hankin Sandman Palladino & Weintrob, attorneys; Mr. Bell, on the brief).

Kathleen F. Beers argued the cause for respondents (Westmoreland Vesper Quattrone & Beers, attorneys; Ms. Beers, on the brief).

PER CURIAM Plaintiff Asphalt Paving Systems, Inc., appeals from an

August 16, 2016 order which, among other things, confirmed an

arbitration award entered against it and in favor of defendants

Associated Asphalt Partners, LLC and Associated Asphalt

Transport, LLC. Having reviewed the parties' arguments in light

of the record and the applicable legal principles, we reverse

and remand for further proceedings.

I

The pertinent facts in the record are as follows. In 2012,

defendants sold plaintiff asphalt emulsion, which they delivered

to plaintiff's property in two tankers. Plaintiff kept the

tankers on its property and used the product as needed. The

tankers were subsequently stolen from plaintiff's property.

Defendants sued plaintiff, contending it was responsible for the

loss of their tankers.

The parties settled shortly after the complaint was filed.

Plaintiff agreed to provide defendants with replacement tankers

of a certain quality. The settlement agreement (agreement)

further provided that if a dispute arose under the agreement,

the matter would be resolved by binding arbitration, with the

prevailing party entitled to counsel fees. The agreement

designated the person who drafted the agreement on behalf of the

parties as the arbitrator of any disputes.

2 A-5487-15T1 A dispute subsequently developed under the agreement, the

details of which are not relevant to the issues on appeal, and

the parties submitted their dispute to arbitration. It is not

contested that, at the conclusion of the hearing, the arbitrator

posed the following question to the parties: "What would be the

result if I determined the agreement is too ambiguous to

enforce?"

According to the verified complaint plaintiff filed in this

matter, a witness for defendants (witness) responded to the

arbitrator's question by jumping up, pointing his finger at the

arbitrator, and loudly stating, "I will tell you what happens.

You get sued for malpractice." The complaint further alleges

the witness continued "in a high pitched tone railing about

. . . how the arbitrator would be held accountable," and that

the arbitrator appeared to be visibly affected by the "verbal

assault." Six days later, the arbitrator issued an award

finding plaintiff had violated the terms of the agreement and

that an additional arbitration hearing would be scheduled to

consider the issue of damages.

In its complaint plaintiff alleges the arbitrator ruled in

favor of defendants as a result of the witness's threats and,

therefore, the award was procured by undue means. As relief,

plaintiff seeks vacatur of the arbitration award pursuant to

3 A-5487-15T1 N.J.S.A. 2A:23B-7, a stay of further arbitration proceedings

pursuant to N.J.S.A. 2A:23B-7, and attorney fees. The trial

court entered an order to show cause scheduling the matter for a

return date, at which time defendant was to show cause why the

award should not be vacated, the parties should not be ordered

to re-arbitrate their dispute before a different arbitrator, and

defendants should not be preliminarily enjoined from conducting

any further arbitration proceedings until the disposition of the

complaint.

In response to the plaintiff's application, defendants

submitted a certification from their attorney, who disputed the

witness behaved in the manner plaintiff alleged after the

arbitrator asked the subject question. The attorney maintained

the witness did not become angry or confrontational after the

arbitrator posed his question. The attorney claimed the witness

merely stated in a jocular tone "well, you'll get sued." The

attorney claimed the witness was joking when he made this

statement, and the arbitrator even laughed in response.

Following oral argument on the return date of the order to

show cause, the court denied plaintiff all of the relief it

sought in its complaint. Although the court noted there were

material facts in dispute, it determined the arbitrator "has a

lot of experience" and "would not be influenced by any kind of

4 A-5487-15T1 gibberish that came up, whether it's from a lawyer, a witness,

or . . . anyone else that stepped into the arbitration

proceeding about any kind of threats." The court also observed

one acting in the capacity as arbitrator is immune from civil

liability, citing N.J.S.A. 2A:23B-14(a), suggesting for that

reason the arbitrator would not be intimidated by the prospect

of being sued for legal malpractice.

Although somewhat unclear, the standard the court appears

to have applied to determine the merits of the request to vacate

the award were the four factors our Supreme Court held in Crowe

v. DeGioia are to be considered when determining whether to

issue a preliminary injunction.1 Id. at 132-34. Finally,

without explicitly stating it was a factor the court relied upon

to deny any of plaintiff's requests for relief, the court

commented plaintiff should have but failed to apply to the

arbitrator for a modification or correction of the award under

N.J.S.A. 2A:23B-20.

1 These four factors are whether the relief requested: (1) is needed to prevent irreparable harm; (2) rests on settled law; (3) has a reasonable probability of succeeding on the merits; and (4) after balancing the relative hardships of the parties, reveals greater harm would occur if a stay were not granted than if it were. Crowe v. DeGioia, 90 N.J. 126, 132-34 (1982).

5 A-5487-15T1 II

On appeal, plaintiff's principal contention is the court

improperly relied upon its personal knowledge of the arbitrator

to determine the award was not influenced by the alleged threat

made by the witness. Plaintiff argues the trial court was

obligated to hold an evidentiary hearing to determine if the

witness threatened the arbitrator and, if so, whether such

threat influenced the arbitrator's decision. In addition,

plaintiff complains the court utilized the wrong standard when

it evaluated and rejected plaintiff's request to vacate the

arbitration award.

Our Supreme Court has held arbitrators must maintain "high

standards of honesty, fairness and impartiality." Barcon

Assocs., Inc. v. Tri-County Asphalt Corp., 86 N.J. 179, 188

(1981). A court may vacate an arbitration award if, among other

circumstances, "the award was procured by corruption, fraud, or

other undue means." N.J.S.A. 2A:23B-23(a)(1). The party

alleging an arbitrator has violated the duty of honesty,

fairness, and impartiality must prove the alleged violation by a

preponderance of the evidence. Barcon, supra, 86 N.J. at 191.

Our review of a decision on a motion to vacate an arbitration

award is de novo. Manger v. Manger, 417 N.J. Super. 370, 376

(App. Div. 2010).

6 A-5487-15T1 Here, plaintiff contends the arbitration award was secured

by undue means; specifically, defendants' witness threatened to

take legal action or at least insinuated he might instigate some

adverse action against the arbitrator. In turn, in order to

protect himself, the arbitrator ruled in favor of defendants.

Plaintiff concedes the arbitrator has immunity if acting in

such capacity, see N.J.S.A. 2A:23B-14(a), but argues that, as

the one who drafted the settlement agreement, the arbitrator was

exposed to liability if the agreement were found to be vague and

defendants were damaged as a result. Therefore, plaintiff

maintains that, in light of the witness's aggressive behavior

toward the arbitrator, he found in favor of defendants to

discourage them from filing any adverse actions against him.

As noted, defendants claim the witness did not exhibit any

hostility toward the arbitrator during the hearing, and that the

arbitrator's decision was not procured by any undue means. In

our view, questions of fact exist that cannot be resolved

without conducting an evidentiary hearing. These questions are

whether the witness made a material threat against the

arbitrator and, if so, whether such threat influenced his

decision. Without question, the trial court was not permitted

to rely upon his personal knowledge of the arbitrator to resolve

these important issues. A judge's personal knowledge of the

7 A-5487-15T1 facts in issue cannot be accorded any weight. See Wallington

Home Owners' Ass'n v. Wallington, 130 N.J. Super. 461, 465 (App.

Div. 1974), aff'd o.b. 66 N.J. 30 (1974).

Accordingly, we reverse and remand this matter for an

evidentiary hearing. Further, because the court has expressed

an opinion about the arbitrator's credibility, we conclude it is

appropriate the matter be assigned another judge.

Finally, in its decision the court referenced N.J.S.A.

2A:23B-20, suggesting plaintiff should have sought a

modification of the award from the arbitrator before seeking

relief from the court. Our reading of the statute differs from

that of the trial court. There is no requirement a party first

seek the kind of relief sought here from the arbitrator before

resorting to the court.

Because of our disposition, we need not address any of

plaintiff's remaining arguments.

Reversed and remanded for further proceedings consistent

with this opinion. We do not retain jurisdiction.

8 A-5487-15T1