NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court ."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-4186-24
JAMES ELDER and SARAH ELDER,
Plaintiffs-Respondents,
v.
CREST UNION, LLC, CREST UNION MANAGEMENT ASSOCIATES, LLC, and MITCHELL HARLEY,
Defendants-Appellants. __________________________
Submitted December 15, 2025 – Decided July 8, 2026
Before Judges Natali and Bergman.
On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-3244-24.
Mark S. Carter, attorney for appellants.
Joel & Joel, LLP, attorneys for respondents (Richard A. Joel, Jr., on the brief).
PER CURIAM Defendants Crest Union, LLC, Crest Union Management Associates,
LLC, and Mitchell Harley appeal from an August 21, 2025 order denying their
motion to dismiss plaintiffs James and Sarah Elder's 1 complaint and to compel
arbitration. Based on our de novo review, we conclude that the arbitration clause
is unenforceable and accordingly affirm.
I.
The parties entered two contracts in May 2022 regarding the renovation
of the plaintiffs' home. The first consisted of three and a half pages with a two-
page rider titled "General Conditions." It was prepared by Crest Union, and
signed on its behalf by Harley as President, and executed by the plaintiffs on
May 6th. The second contract, prepared by plaintiffs "to protect [them] and the
home" was signed on May 16th by plaintiffs and again by Crest Union and
Harley. It consisted of five pages, also with a rider called "General Conditions."
Both contracts included the identical arbitration provision in paragraph eight of
the "General Conditions" section, which addressed mediation and arbitration
procedures for dispute resolution. It provided:
If a dispute arising out of or relates to this Contract, or the breach thereof, and if the dispute cannot be settled through negotiation, the parties agree first to try in good
1 Because plaintiffs share the same surname, we refer to them at times by their first names for clarity, and intend no disrespect in doing so. A-4186-24 2 faith to settle the dispute by mediation administered by the American Arbitration Association under its commercial Mediation Procedures before resorting to arbitration or some other dispute resolution procedure. If they do not reach such solution within 60 days, then, upon notice by either party to the other, all disputes, claims, questions, or differences shall be finally settled by arbitration administered by the American Arbitration Association in accordance with the provisions of its commercial Arbitration Rules.2
Plaintiffs contended defendants' performance under the contracts was
untimely and defective and sued them in June 2024. In the complaint, plaintiffs
asserted claims for breach of contract, negligence, fraud, and violation of the
Consumer Fraud Act. Instead of immediately moving to dismiss the complaint
and compel arbitration, defendants instead filed a timely answer, denied all
material allegations, asserted among other defenses that the matter was subject
to arbitration, and also filed a counterclaim sounding in breach of contract.
Defendants first moved to dismiss the complaint and compel arbitration
in April 2025, approximately ten months later. After considering the parties'
written submissions and oral arguments, the trial court denied the motion by
order dated May 19, 2025 and explained its decision in a written statement of
2 It does not appear either party complied with the requirements of the arbitration clause that obligated them to negotiate first, and then attempt in good faith to resolve any dispute by mediation administered by the American Arbitration Association. A-4186-24 3 reasons in which it concluded that the arbitration clause was unenforceable
under Atalese v. U.S. Legal Services Group, L.P., 219 N.J. 430 (2014), because
it did not clearly inform the plaintiffs they were waiving their right to pursue
their claims in court or to a jury trial.
The court also expressed reservations regarding whether all defendants
could be bound by the arbitration provision, given the identities of the
signatories to the contract. On this point, it noted that Crest Union Management
Associates was not named in the contract and thus it did not have the right to
arbitrate plaintiffs' claims, since it was not a party to the agreement containing
the arbitration clause. The court further observed that the complaint was unclear
as to whether Harley was being sued in his individual capacity or solely as
President of Crest Union. The court explained that to the extent Harley was
being sued individually, he would not be entitled to enforce the arbitration
provision because he seemingly executed the contract only in his corporate
capacity.
Approximately three months later in late July, defendants renewed their
motion to compel by filing a near identical application, except that they relied,
in part, on portions of the deposition testimony of Sarah Elder. According to
defendants, in that deposition, Sarah acknowledged that by proceeding to
A-4186-24 4 arbitration, she understood she was relinquishing her right to appear in court and
have the matter resolved at trial by jury. The court again denied defendants'
application and explained its decision in an August 15, 2025 oral decision.
The court considered defendants' application as a motion for
reconsideration and noted the only new evidence offered was Sarah Elder's
partial deposition testimony.3 The court found Sarah's deposition testimony
irrelevant because under Atalese, the enforceability of an arbitration clause is
determined by the language of the contract itself, not by the parties' subjective
understanding or after-the-fact interpretation. On this point, the court
specifically stated that Atalese required courts to examine and consider the
"relevant contractual language" and to "determine whether mutual assent has
been achieved."
Considering the arbitration provision in that context, the court noted that
it did not mention, even in general terms, that the parties intended to waive their
right to a jury trial or to pursue claims in court, and thus the provision failed to
3 We agree with the court's characterization of the motion. We also note that defendants' notice of appeal does not list the court's May 19th order as an order to which they appeal. Notwithstanding, as discussed supra, we have applied a de novo rather than an abuse of discretion standard of review as the issue presented is a legal one, and reject defendants' arguments under either standard of review. A-4186-24 5 satisfy Atalese's most basic requirement. The court also emphasized that
Atalese hardly imposed a difficult burden on defendants, as all they needed to
do was to simply include a sentence in the contract that stated, "[b]y agreeing to
arbitration, you will waive your right . . . to have this matter resolved in court
and/or by a trial by jury."
The court further explained its reasoning in an August 21, 2025 written
decision in which it reemphasized the points it expressed orally, and further
addressed why it considered defendants' reliance on Sarah Elder's deposition
testimony unpersuasive. The court first noted a number of evidentiary
deficiencies with defendants' application. Specifically, it observed that the only
deposition excerpts defendants provided were from Sarah, and they provided no
transcripts or sworn testimony from James, who was also a named plaintiff and
party to the contract.4
The court reasoned that even if it were to accept defendants' position that
Sarah understood she was consenting to arbitration and waiving her right to a
jury trial, it could not reach a similar result as to James as defendants failed to
provide any sworn testimony from him. The court also rejected defendants'
4 We note that in addition to failing to include any testimony from James, the record contains only select portions of Sarah's deposition testimony. A-4186-24 6 assertion that the court's May 19th order was based on its finding that the
plaintiffs did not sufficiently understand the arbitration provision and
emphasized that its decision was based on the contract language, which it found
"woefully deficient" and not Atalese-compliant.
The court again commented on the lack of clarity in the parties' contracts
as to which parties were bound by the arbitration provision noting Crest Union
Management Associates was not a party to the contract and it was unclear
whether defendant Harley was being sued in his individual capacity or solely as
President of Crest Union, LLC. According to the court, that lack of clarity
further undermined the enforceability of the arbitration clause.
II.
"We review a trial court's order granting or denying a motion to compel
arbitration de novo because the validity of an arbitration agreement presents a
question of law." Santana v. SmileDirectClub, LLC, 475 N.J. Super. 279, 285
(App. Div. 2023) (citing Skuse v. Pfizer, Inc., 244 N.J. 30, 46 (2020)). We
therefore "need not give deference to the [legal] analysis by the trial court."
Ibid. (alteration in original) (quoting Goffe v. Foulke Mgmt. Corp., 238 N.J.
191, 207 (2019)). In our review of an order compelling arbitration, we "construe
A-4186-24 7 the arbitration provision with fresh eyes." Morgan v. Sanford Brown Inst., 225
N.J. 289, 303 (2016).
We do not review a court's reasoning; we review only the trial court's
judgment or order. Bandler v. Melillo, 443 N.J. Super. 203, 210 (App. Div.
2015). In our analysis of plaintiffs' arguments on appeal, we therefore consider
"only the propriety of the [order] entered by the trial court, not the reasoning
underlying the court's decision." Ibid. (citing Do-Wop Corp. v. City of Rahway,
168 N.J. 191, 199 (2001)).
In reviewing orders compelling arbitration, "we are mindful of the strong
preference to enforce arbitration agreements, both at the state and federal level."
Hirsch v. Amper Fin. Servs., LLC, 215 N.J. 174, 186 (2013); see also Flanzman
v. Jenny Craig, Inc., 244 N.J. 119, 133 (2020) (explaining "the affirmative policy
of this State, both legislative and judicial, favors arbitration as a mechanism of
resolving disputes" (quoting Martindale v. Sandvik, Inc., 173 N.J. 76, 92
(2002)). Arbitration, as a favored means for dispute resolution, is not, however,
"without limits." Garfinkel v. Morristown Obstetrics & Gynecology Assocs.,
P.A., 168 N.J. 124, 132 (2001).
"Arbitration's favored status does not mean that every arbitration clause,
however phrased, will be enforceable." Atalese, 219 N.J. at 441. A legally
A-4186-24 8 enforceable arbitration agreement "requires 'a meeting of the minds,'" Id. at 442
(quoting Morton v. 4 Orchard Land Tr., 180 N.J. 118, 120 (2004)), and the
effective waiver of a party's right to a jury trial "requires a party to have full
knowledge of [their] legal rights and intent to surrender those rights." Ibid.
(quoting Knorr v. Smeal, 178 N.J. 169, 177 (2003)). "Moreover, because
arbitration involves a waiver of the right to pursue a case in a judicial forum,
'courts take particular care in assuring the knowing assent of both parties to
arbitrate, and a clear mutual understanding of the ramifications of that assent.'"
Id. at 442-43 (quoting NAACP of Camden Cnty. E. v. Foulke Mgmt. Corp., 421
N.J. Super. 404, 425 (App. Div. 2011)).
"An arbitration agreement must be the result of the parties' mutual assent,
according to customary principles of state contract law." Skuse, 244 N.J. at 48.
The mutual assent necessary for a valid arbitration agreement "requires that the
parties have an understanding of the terms to which they have agreed." Atalese,
219 N.J. at 442. And "under New Jersey law, any contractual 'waiver-of-rights
provision must reflect that [the party] has agreed clearly and unambiguously ' to
its terms." Id. at 443 (alteration in original) (quoting Leodori v. CIGNA Corp.,
175 N.J. 293, 302 (2003)); see also Martindale, 173 N.J. at 96 (enforcing an
arbitration agreement because, among other things, it "was clear and
A-4186-24 9 unambiguous"). The Court held that an arbitration clause, "in some general and
sufficiently broad way, must explain that the plaintiff is giving up her right to
bring her claims in court or have a jury resolve the dispute." Atalese, 219 N.J.
at 447. The Court noted, however, that "[n]o particular form of words is
necessary to accomplish a clear and unambiguous waiver of rights." Id. at 444.
The Atalese Court found the arbitration agreement at issue was
unenforceable because there was no "explanation that plaintiff [was] waiving
her right to seek relief in court for a breach of her statutory rights." 219 N.J. at
446. The Court noted that the clause stated the parties would submit their
disputes to arbitration, but "[t]he provision d[id] not explain what arbitration
[was], nor d[id] it indicate how arbitration is different from a proceeding in a
court of law." Ibid.
The Court again addressed the enforceability of an arbitration clause
in Kernahan v. Home Warranty Administrator of Florida, Inc, 236 N.J. 301
(2019). The clause at issue in that case was set forth in a section of the
agreement entitled "MEDIATION." Kernahan, 236 N.J. at 310. The clause
stated, in part, that "[t]he parties agree to mediate in good faith before resorting
to mandatory arbitration in the State of New Jersey." Ibid. The clause also
stated:
A-4186-24 10 Any and all disputes, claims and causes of action arising out of or connected with this Agreement . . . shall be resolved exclusively by the American Arbitration Association in the state of New Jersey under its Commercial Mediation Rules. Controversies or claims shall be submitted to arbitration regardless of the theory under which they arise . . . .
[Ibid.]
In Kernahan, the Court reaffirmed the standard enunciated in Atalese,
noting that to be enforceable, an arbitration agreement must be "the product of
mutual assent, as determined under customary principles of contract law." Id. at
319 (quoting Atalese, 219 N.J. at 442). With these principles in mind, we
address the parties' arguments.
III.
Before us, defendants largely reprise their arguments that the facts in the
record are distinguishable from Atalese because: 1) plaintiffs themselves
prepared one of the contracts by copying the arbitration clause from the
defendants' original contract, 2) both parties signed contracts containing the
same clause, and 3) Sarah Elder testified she understood that by agreeing to
arbitration she would be waiving her right to a jury trial. Defendants further
contend that New Jersey law strongly favors enforcement of arbitration
A-4186-24 11 agreements and that the trial court erred by focusing solely on the contract
language, rather than the parties' subjective understanding and conduct.
Plaintiffs respond that Atalese requires courts to examine the contract
language itself to determine if the parties reached a clear and unambiguous
waiver of their judicial rights, rather than rely on one party's subjective
understanding, and that the clause is silent on that critical issue and thus
unenforceable. Plaintiffs argue in their merits brief before us, as they argued in
their motion brief before the court below, that defendants' litigation conduct and
delay constitute a waiver of any right to compel arbitration pursuant to Cole v.
Jersey City Med. Ctr., 215 N.J. 265 (2013), and that the renewed motion to
compel arbitration was an improper motion for reconsideration raising no new
evidence or citation to any authority the court overlooked.
We first point out that at no point before the court or us, do defendants
contend the text of arbitration provision is Atalese compliant and specifically
that it satisfies Atalese's requirement for a clear and unambiguous waiver of the
right to a court or jury trial. Rather, they attempt to distinguish Atalese factually
based on the fact plaintiffs prepared one of the contracts and because Sarah Elder
purportedly testified she understood arbitration would waive her right to a trial.
A-4186-24 12 In any event, we are satisfied beyond any doubt that after applying
Atalese's holding the court correctly concluded the arbitration clause is
unenforceable because it failed to include a "clear and unambiguous"
explanation of the rights waived, and specifically, plaintiffs' right to seek
judicial remedies. As the court cogently explained twice, Atalese requires that
an arbitration provision in a consumer contract must, at a minimum, clearly and
unambiguously inform the parties that they are waiving their right to pursue
claims in court or to a jury trial.
Here, the clause in both contracts is silent as to any waiver of judicial
rights, stating only that disputes "shall be finally settled by arbitration
administered by the American Arbitration Association in accordance with the
provisions of its commercial Arbitration Rules." Nowhere does the clause
specifically state that the parties are relinquishing their right to a court or jury
determination. We are further satisfied the provision does not comport with
arbitration provisions our Supreme Court previously validated. See Martindale,
173 N.J. at 96 (stating that "arbitration agreement not only was clear and
unambiguous, it was also sufficiently broad to encompass reasonably plaintiff's
statutory causes of action"); Griffin v. Burlington Volkswagen, Inc., 411 N.J.
Super. 515, 518 (App. Div. 2010) (upholding an arbitration clause which stated
A-4186-24 13 "[b]y agreeing to arbitration, the parties understand and agree that they are
waiving their rights to maintain other available resolution processes, such as a
court action or administrative proceeding, to settle their disputes").
We are unpersuaded with defendants' attempt to distinguish Atalese
because plaintiffs "drafted" the second contract. First, the record is undisputed
that plaintiffs were not represented by counsel and it is clear she simply copied
the language from the earlier contract prepared by defendants. More
importantly, the fact that an uncounseled individual reproduces a defective
arbitration clause in a home renovation project does not serve to cure its legal
insufficiency under Atalese, nor can it establish mutual assent to a waiver of
judicial rights. Stated differently, the requirement of clear notice of that right is
an objective one, and the mere act of copying incomplete arbitration language
does not satisfy the obligation to inform a party of the rights being relinquished
when the clause at issue does not address that point consistent with New Jersey
law.
We find equally unpersuasive defendants' reliance on Sarah Elder's
deposition testimony regarding her purported understanding of the arbitration
clause for at least four independent reasons. First, as noted, we agree with the
court that the primary focus when determining the enforceability of an
A-4186-24 14 arbitration setting between what appears to be two relatively unsophisticated
parties of equal bargaining power is the contract language itself. Atalese does
not require courts to determine whether an individual subjectively understood
that he or she was waiving their right to a trial in court and agreeing to arbitrate.
Instead, Atalese requires courts to examine the relevant contractual language,
and based on that language determine whether mutual assent has been achieved.
Here, simply, as we have noted, the arbitration clause's language is legally
insufficient under Atalese.
Second, even if Sarah's individual subjective understanding was relevant,
we note that the critical deposition testimony which defendants primarily, if not
exclusively, rely does not establish that she understood she was waiving her
right to a jury trial at the time of contracting. Indeed, a close examination of the
limited deposition testimony provided, reveals the following colloquy:
DEFENDANTS' COUNSEL: And did you understand that if you were to proceed through arbitration, you would not be going to civil court and would not have a trial by jurors. Do you understand that?
SARAH ELDER: I do understand that, sir.
DEFENDANTS' COUNSEL: You did understand that?
SARAH ELDER: I do.
A-4186-24 15 [(Emphasis added).]
At best, this exchange, in which Sarah responds in the present tense,
cannot be said to reflect her knowledge or understanding at the time the contract
was executed. Such an interpretation is the only one consistent with the basic
principle that English uses a tense system that distinguishes between past and
present actions, connected to the time a statement was made. See Rodney
Huddleston & Geoffrey K. Pullum, The Cambridge Grammar of the English
Language Chapter 3 § 1.1 (2002). Because "understand" is stative, it necessarily
reflects thought, not action, and thus use of the present tense supports the
conclusion Sarah was referring to her understanding at the time of the
deposition. If, however, she was referring to the time of contract formation,
which defendants' counsel unsuccessfully attempted twice to have her concede,
Sarah would have used the past tense to support the anteriority of her actions.
Thus, even if such testimony were relevant, it would not establish the requisi te
mutual assent at the time of contracting.
Third, the record is devoid of any evidence reflecting the understanding
of James Elder, who is a party to the contract and against whom defendants also
seek to enforce the arbitration agreement. The absence of such evidence further
supports the trial court's finding that there was no mutual assent to arbitrate by
A-4186-24 16 both plaintiffs. Fourth, as the court correctly noted in its May 19th and August
21st decisions, defendant Crest Union Management Associates, LLC was not a
party to the contract, and Harley seemingly was sued in his individual capacity,
having signed the contract in his role as President of Crest Union, LLC.
In light of our decision, we need not address plaintiffs' alternative
argument that defendants' conduct in answering the complaint, filing a
counterclaim, conducting discovery, and any other actions, constituted a waiver
of their arbitration rights under Cole.
Affirmed.
A-4186-24 17