DR Horton, Inc. v. JJ DeLUCA CO.

982 A.2d 52, 410 N.J. Super. 357, 2008 N.J. Super. LEXIS 295
CourtNew Jersey Superior Court Appellate Division
DecidedOctober 6, 2008
DocketDOCKET NO. A-5501-06T2
StatusPublished
Cited by1 cases

This text of 982 A.2d 52 (DR Horton, Inc. v. JJ DeLUCA CO.) is published on Counsel Stack Legal Research, covering New Jersey Superior Court Appellate Division primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
DR Horton, Inc. v. JJ DeLUCA CO., 982 A.2d 52, 410 N.J. Super. 357, 2008 N.J. Super. LEXIS 295 (N.J. Ct. App. 2008).

Opinion

982 A.2d 52 (2009)
410 N.J. Super. 357

D.R. HORTON INC., NEW JERSEY, Plaintiff,
v.
JJ. DeLUCA COMPANY, INC., Defendants.

DOCKET NO. A-5501-06T2

Superior Court of New Jersey, Chancery Division, Burlington County.

Decided October 6, 2008.

*53 Michael S. Simon, Trenton, for the plaintiff (Flaster Greenberg, P.C., attorneys).

Frederick J. Gerngross, Philadelphia, PA, for the defendants (Black & Gerngross, P.C., attorneys).

*54 HOGAN, P.J.Ch.

The resolution of this matter requires a discussion of the applicability of N.J.S.A. 2A:23B-10, "Consolidation of separate arbitration proceedings."

The plaintiff, D.R. Horton, Inc., New Jersey ("Horton"), is the owner of a condominium community in Cherry Hill, New Jersey. The plaintiff's office is located in Mount Laurel, New Jersey.

The defendant, J.J. DeLuca, ("DeLuca"), is in the business of general contracting and construction management.

HISTORY

A brief history of this matter is appropriate. DeLuca and Horton are parties to a contract wherein DeLuca would perform construction work for Horton. The contract was entered into June 9, 2005. As a result of a dispute between the parties, Horton terminated the contract with DeLuca on June 20, 2006. DeLuca initiated a claim with the American Arbitration Association ("AAA"), and Horton filed a counterclaim. During the arbitration, the issue arose as to whether to consolidate the proceeding with a separate arbitration proceeding between DeLuca and one of DeLuca's subcontractors on the project. Horton objected to the AAA making that determination and filed the present verified complaint and order to show cause seeking injunctive relief, in principle part enjoining DeLuca from pursuing consolidation under the AAA Rules of Construction, arguing that the New Jersey Arbitration Act, specifically N.J.S.A. 2A:23B-10, required such application for consolidation to be submitted only to the Superior Court.

The contract between the parties provided for arbitration in the event of a dispute, in lieu of a lawsuit. As part of the Horton project, DeLuca had subcontracted a part of its contract work. The record reflects that on May 22, 2007, in Case Management Order No. 3, the AAA arbitrator required that DeLuca file any additional demands for arbitration against its subcontractors and make any required application for consolidation of those demands for arbitration with the AAA by July 9, 2007.

One year later, on May 31, 2008, DeLuca initiated arbitration against three of its subcontractors for contribution and indemnity arising from Horton's counterclaim in the first arbitration.[1] On August 8, 2008, a Rule 7 arbitrator was appointed by the AAA.[2] The Rule 7 arbitrator gave the parties until August 29, 2008, to provide their arguments for or against consolidation of the two arbitrations. On August 28, 2008, the plaintiff filed this action alleging that DeLuca's motion for consolidation before the AAA cannot proceed because DeLuca failed to comply with N.J.S.A. 2A:2310, which provides:

a. Except as otherwise provided in subsection (c.) of this section, upon application of a party to an agreement to arbitrate or to an arbitration proceeding, the Court may order consolidation of separate arbitration proceedings as to all or some of the claims if:
*55 (1) there are separate agreements to arbitrate or separate arbitration proceedings between the same persons or one of them is a party to a separate agreement to arbitrate or a separate arbitration proceeding with a third person;
(2) the claims subject to the agreements to arbitrate arise in substantial part from the same transaction or series of related transactions;
(3) the existence of a commor issue of law or fact creates the possibility of conflicting decisions in the separate arbitration proceedings; and
(4) prejudice resulting from a failure to consolidate is not outweighed by the risk of undue delay or prejudice to the rights of or hardship to parties opposing consolidation.
b. The Court may order consolidation of separate arbitration proceedings as to some claims and allow other claims to be resolved in separate arbitration proceedings.
c. The Court may not order consolidation of the claims of a party to an agreement to arbitrate if the agreement prohibits consolidation.
[(emphasis added).]

The plaintiff seeks a permanent injunction enjoining the defendant from seeking consolidation of its arbitration proceedings between both the plaintiff and defendant and between the defendant and its subcontractors.

CONSOLIDATING ARBITRAL PROCEEDINGS

Essentially, the court is being called upon to determine whether or not it has the exclusive statutory authority to determine whether two arbitrations may or may not be consolidated. As evidenced by N.J.S.A. 2A:23B-10, under certain statutory conditions, the court has such authority, though whether its authority is exclusive has yet to be determined. There are no reported cases that address this query.[3]

Such examination requires a discussion of the statutory setting and its specific language, as well as the circumstances of the parties and the terms of the contract(s) between them. N.J.S.A. 2A:23B-10 finds itself within the New Jersey Arbitration Act, N.J.S.A. 2A:23B-1 to-32.

N.J.S.A. 2A:23B-6, "Validity of agreement to arbitrate," is also relevant to the discussion as codifying a strong preference for arbitration where the parties are in agreement:

a. An agreement contained in a record to submit to arbitration any existing or subsequent controversy arising between the parties to the agreement is valid, enforceable, and irrevocable except upon a ground that exists at law or in equity for the revocation of a contract.
b. The Court shall decide whether an agreement to arbitrate exists or a controversy is subject to an agreement to arbitrate.
c. An arbitrator shall decide whether a condition precedent to arbitrability has *56 been fulfilled and whether a contract containing a valid agreement to arbitrate is enforceable.
d. If a party to a judicial proceeding challenges the existence of, or claims that a controversy is not subject to, an agreement to arbitrate, the arbitration proceeding may continue pending final resolution of the issue by the Court, unless the Court otherwise orders.

While there is no dispute that arbitration in this case has been provided for contractually, there is a dispute as to the authority of the AAA to consider the issue of consolidation in light of the provisions of the New Jersey Arbitration Act.

The AAA Construction Industry Arbitration Rules provide a mechanism for the AAA to determine consolidation issues as part of arbitrations:

R-7. Consolidation or Joinder
If the parties' agreement or the law provides for consolidation or joinder of related arbitrations, all involved parties will endeavor to agree on a process to effectuate the consolidation or joinder.

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Related

DR Horton, Inc. v. JJ DeLUCA COMPANY, INC.
981 A.2d 126 (New Jersey Superior Court App Division, 2009)

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Bluebook (online)
982 A.2d 52, 410 N.J. Super. 357, 2008 N.J. Super. LEXIS 295, Counsel Stack Legal Research, https://law.counselstack.com/opinion/dr-horton-inc-v-jj-deluca-co-njsuperctappdiv-2008.