STATEWIDE COMMERCIAL CLEANING, LLC VS. FIRST ASSEMBY OF GOD VS. MERCER INSURANCE COMPANY OF NEW JERSEY, INC. (L-5570-13, ATLANTIC COUNTY AND STATEWIDE)

• Court: New Jersey Superior Court Appellate Division
• Decided: March 21, 2019
• Docket: A-3792-17T1
• Status: Unpublished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NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court ."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-3792-17T1

STATEWIDE COMMERCIAL CLEANING, LLC,

Plaintiff-Appellant,

v.

FIRST ASSEMBLY OF GOD,

Defendant/Third-Party Plaintiff,

MERCER INSURANCE COMPANY OF NEW JERSEY, INC.,

Third-Party Defendant- Respondent,

and

STEVE BAGLIVO,

Third-Party Defendant. _______________________________

Argued March 5, 2019 – Decided March 21, 2019

Before Judges Fisher and Geiger. On appeal from Superior Court of New Jersey, Law Division, Atlantic County, Docket No. L-5570-13.

Scott E. Becker argued the cause for appellant.

J. Elliot Stolz argued the cause for respondent (Stolz & Associates LLC, attorneys; J. Elliot Stolz, on the brief).

PER CURIAM

Plaintiff Statewide Commercial Cleaning, LLC (Statewide) appeals from

a Law Division order: (1) denying Statewide's motion to vacate the umpire's

award and remand the matter to the umpire for consideration of Statewide's

appraisal; (2) granting third-party defendant Mercer Insurance Company of New

Jersey Inc.'s 1 (Mercer) cross-motion to declare the umpire's award valid,

enforceable and final; (3) requiring Statewide to pay Mercer $78,052.90 as

specified in the umpire's award; (4) entering judgment against Statewide in the

amount of $78,052.90 to be docketed if payment was not made within fifteen

days; and (6) dismissing the action with prejudice as provided for in the

mediation agreement. Statewide also appeals from an order denying

reconsideration. We affirm.

1 Mercer was improperly pled as Mercer Insurance Company of New Jersey/Mercer Insurance Company Member of the Mercer United Fire Group/Mercer Insurance Company of Pennington, NJ. A-3792-17T1 2 In August 2011, the church building owned by defendant/third-party

plaintiff First Assembly of God (First Assembly) was damaged in a fire.

Statewide was hired to perform the initial cleanup and secure the premises

against further damage by the elements, and eventually, to handle the restoration

and reconstruction. Statewide asserts the City of Millville mandated the process

included bringing the structure up to current building code requirements. Two

years later, Statewide filed suit against First Assembly seeking $1,855,412.11

in unpaid construction costs. In response, First Assembly filed an answer; a

counterclaim for fraud; a third-party complaint for indemnification against

Mercer; and a third-party complaint for fraud against third-party defendant

Steve Baglivo, a principal of Statewide. First Assembly was subsequently

granted leave to amend the first count of the third party complaint to include a

claim for bad faith.

Following several discovery extensions, Mercer moved for summary

judgment, and alternatively for partial summary judgment to strike the first

count of First Assembly's complaint, and other relief not pertinent to this appeal.

The trial court denied Mercer's motion. The trial court also denied Mercer's

motion for reconsideration of the denial of partial summary judgment as to the

first count of First Assembly's complaint and other non-pertinent relief. We

A-3792-17T1 3 denied Mercer's motion for leave to appeal those orders. Due to the discovery

extensions, the trial date was adjourned several times.

The parties subsequently agreed to submit the matter to mediation and

entered into a Mediation Settlement Agreement (the Agreement). Under its

terms, the parties agreed to the following: (1) in exchange for $50,000, which

represented First Assembly's attorney's fees and costs, First Assembly dismissed

all claims against Statewide and assigned its rights under its insurance policy

with Mercer (the Policy) to Statewide; (2) Mercer agreed to pay Statewide

$550,000 "for a total undisputed payment" of $1,050,000; (3) the appraisal

process set forth in the Policy would control and be followed; (4) if the two

appraisers were unable to agree on an umpire, the mediator was empowered to

select the umpire; (5) the appraisal process was to begin immediately and be

completed in full by December 31, 2016; (6) First Assembly agreed to dismiss

all non-contractual claims with prejudice; (7) all parties agreed to dismiss all

claims except the contract claims under the Policy without prejudice; (8) the

parties agreed to dismiss the contractual claims with prejudice upon co mpletion

of the appraisal process; (9) all claims for fraud asserted by Mercer against

Statewide and Baglivo were to be dismissed; (10) all claims against Baglivo

personally were to be dismissed; (11) First Assembly assigned all its rights

A-3792-17T1 4 under the Policy to Statewide for purposes of proceeding with the appraisal

process; (12) First Assembly and Statewide agreed any monies awarded to

Statewide as a result of the appraisal process would be solely for the benefit of

Statewide; and (13) Mercer agreed to pay the mediator's fee in full.

The purpose of the appraisals was to evaluate the loss suffered by First

Assembly. Section E (3) of the Policy sets forth the appraisal process:

The appraisers are to set the amount of the loss or value. If the appraisers fail to agree within a reasonable time, they are to submit their differences to the umpire. Written agreement set by any two of these three persons sets the amount of loss or value.

Statewide hired Todd Arsenault to be its appraiser, Mercer hired Jerry

Provencher to be its appraiser, and the parties agreed on Timothy Woods as the

appraisal umpire. Although the Agreement stated the appraisal process was to

begin immediately and be completed by December 31, 2016, neither party

submitted an appraisal to the umpire by that date. In spite of that deadline, the

parties were unable to begin the appraisal process until March 24, 2017, because

of delays in the dismissal of First Assembly's unassigned claims.

On June 7, 2017, Arsenault promised to submit his appraisal to the umpire

shortly. One week later, the umpire emailed Arsenault, advising him: "I have

not received your loss value. Please expedite delivery. I am in receipt of

A-3792-17T1 5 [Provencher's] loss value and supporting brief." On June 20, 2017, Arsenault

promised to submit his appraisal no later than June 30, 2017. Arsenault failed

to do so.

Due to Arsenault's failure to submit his appraisal as promised, Provencher

sent an email to the umpire on July 5, 2017, requesting the umpire render "a

decision based on the material submitted to date." An almost identical email

was sent to the umpire on July 21, 2017. The umpire replied that he would

contact Arsenault to set a deadline for submission. 2 On the same day, the umpire

emailed Arsenault, advising him:

This panel awaits your loss value . . . . Deadlines . . . have come and gone without receipt of your position paper/brief or loss value. . . .

In the event your loss value is not received by end business on July 28th, this panel reserves the right to take all necessary actions needed to arrive at a fair loss value. Please note, an award signed by any TWO of the three party panel is a binding award. I hope you elect to participate in this panel[']s effort to find a reasonable value.

Despite several additional emails, Arsenault did not submit an appraisal

on behalf of Statewide. On August 9, 2017, the umpire emailed Baglivo,

advising that despite giving Arsenault multiple opportunities to submit his

2 Arsenault was copied on each of these emails. A-3792-17T1 6 appraisal, he had not done so. The umpire warned Baglivo he would make his

decision without an appraisal on behalf of Statewide. During the following

week, the umpire spoke with both Baglivo and Statewide's counsel by telephone

regarding submission of the missing appraisal. This led to an August 15, 2017

email to Arsenault and Provencher, which stated:

Due to [Arsenault's] inability to provide his loss value on established dates and . . . subsequent silence, I have reached out to representatives of [Statewide] to advise them that their interests were not being represented during this appraisal.

I [spoke] with [Statewide's counsel] . . . [and he] stated that he spoke with [Arsenault] and asked that this panel provide additional time to allow submission of his loss value.

As you are both aware, we have extended this courtesy before, however, in the interest of making sure both parties are represented, I have agreed to extend loss value and position submission to [the end of business on September 8, 2017].

Please be advised-this date will NOT be extended and an award will be provided shortly thereafter with or without a loss value from [Statewide's] appraiser.

Despite this further extension and warning, Arsenault did not submit an

appraisal.

On September 11, 2017, the umpire issued a loss valuation award totaling

$971,947.15, based on Provencher's unopposed appraisal. Since Mercer had

A-3792-17T1 7 previously paid Statewide $1,050,000, the practical effect of the award was to

require Statewide to reimburse Mercer $78,052.90 for the overpayment.

Statewide moved to vacate the umpire's award and remand the matter to

the umpire for consideration of an appraisal that Statewide had still not

submitted. Mercer cross-moved to enforce the umpire's award and compel

Statewide to reimburse Mercer for the $78,052.90 overpayment in accordance

with the umpire's award. The trial court framed the issue as the enforcement of

a contract:

So, there was a contract that said that the parties were going to agree to the appraisal process, they went into the appraisal process. For whatever reason, Mr. Arsenault did not submit . . . an appraisal or any other report to the umpire. The umpire asked him repeatedly for months. [There were] almost daily emails that were going out to Mr. Arsenault saying, "When are you going to submit your paperwork here so that I could render a decision," and he postponed it three times, four times, whatever. He kept postponing his decision to allow Mr. Arsenault to submit whatever reports he was going to submit with regard to the appraisal.

The judge rejected Statewide's request to reopen the appraisal process,

noting the process had already taken much longer than anticipated by the

Agreement. The judge entered an order: (1) denying Statewide's motion to

vacate and remand the umpire's award; (2) granting Mercer's cross-motion to

enforce the umpire's award and compel reimbursement; (3) declaring the

A-3792-17T1 8 umpire's award "valid, enforceable, and final;" (4) ordering Statewide to pay

Mercer $78,052.90; (5) entering judgment in favor of Mercer and against

Statewide in the amount of $78,052.90 to be docketed if payment was not made

within fifteen days; and (6) dismissing the action with prejudice as provided for

in the Agreement.

Statewide moved for reconsideration. The trial court: (1) denied

reconsideration; (2) denied a stay of enforcement of the judgment; and (3)

denied as moot Mercer's cross-motion to require Statewide to post a bond and

answer an information subpoena. In its written memorandum of decision, the

trial court engaged in the following analysis:

[Statewide] [does] not allege that the [c]ourt has expressed its decision based upon a palpably incorrect or irrational basis, or that it is obvious that the [c]ourt either did not consider, or failed to appreciate the significance of probative, competent evidence in enforcing the appraisal award and requiring the reimbursement to Mercer of $78,052.90. Rather, [Statewide] argues that the [c]ourt can intervene in the appraisal award because the [umpire] rejected the costs for the fire suppression system and other code upgrades. The time to make that argument was during the appraisal process.

The trial court found Mercer's appraiser submitted his report in early June

2017, but Statewide's "appraiser failed to submit an appraisal report despite

A-3792-17T1 9 numerous attempts by the umpire and Mercer's appraiser and Mercer's counsel

to secure a report from him." The trial court explained:

The report was originally due in early June 2017. Despite several adjournments of the deadline to serve the report, Mr. Arsenault never provided a report and on September 11, 2017 the appraisal panel issued their award in accordance [with] Section E of the insurance policy and the Mediation Settlement Agreement.

It is on those facts that the [c]ourt found the award of the appraisal panel dated September 11, 2017 is valid, enforceable and final because the parties agreed . . . to abide by the appraisal process set forth in the insurance policy issued to [First Assembly] by [Mercer].

The trial court concluded its prior decision was not "based upon a palpably

incorrect or irrational basis" and that it had not failed to consider or appreciate

the "significance of probative, competent evidence." This appeal followed.

At issue is the trial court's enforcement of the appraisal process. Statewide

does not dispute it is contractually bound by the terms of the appraisal process.

Rather, Statewide asserts the umpire "refused to allow charges that were

mandated by a governmental unit" and "such determinations amounted to legal

error" that require reversal of the award. Statewide also contends the umpire's

alleged refusal to acknowledge the code upgrades required by law amounted to

A-3792-17T1 10 a violation of public policy, thus providing a separate ground for vacation of the

award. We disagree.

"The interpretation and construction of a contract is a matter of law for

the trial court, subject to de novo review on appeal." Cumberland Farms, Inc.

v. N.J. Dep't of Envtl. Prot., 447 N.J. Super. 423, 438 (App. Div. 2016) (citing

Fastenberg v. Prudential Ins. Co. of Am., 309 N.J. Super. 415, 420 (App. Div.

1998)). "A settlement agreement between parties to a lawsuit is a contract."

Ibid. (quoting Nolan v. Lee Ho, 120 N.J. 465, 472 (1990)). Thus, we review

enforcement of a settlement agreement de novo. Kaur v. Assured Lending

Corp., 405 N.J. Super. 468, 474-75 (App. Div. 2009).

As a matter of public policy, our courts strongly favor the settlement of

litigation. Brundage v. Estate of Carambio, 195 N.J. 575, 601 (2008). "In

furtherance of this policy, our courts 'strain to give effect to the terms of a

settlement wherever possible.'" Ibid. (quoting Dep't of Pub. Advocate v. N.J.

Bd. of Pub. Util., 206 N.J. Super. 523, 528 (App.Div.1985)).

The purpose of the appraisal process was to have the value of loss assessed

by disinterested third-parties. The umpire's role was to resolve those items

where the appraisers disagree. Here, the umpire could not have awarded

Statewide the cost of any of the building code upgrades because it did not have

A-3792-17T1 11 a value for the work set by Arsenault and Mercer's appraiser had not included

those costs in his appraisal. We further note that Mercer disputed several

significant cost items because those items did not relate to the fire damage. In

particular, Mercer denied responsibility for the cost of replacing windows and

doors that had not been damaged by the fire. Additionally, Mercer contended

Statewide overbilled certain work.

Statewide acknowledges it was obligated to engage the services of its

appraiser. Nevertheless, it argues the umpire was obligated to keep Statewide

and its counsel "advised as to issues that had arisen during the course of the

proceedings." The record demonstrates Statewide or its attorney were notified

of Arsenault's failure to submit an appraisal and the deadline imposed by the

umpire.

Statewide bore responsibility for ensuring Arsenault complied with the

appraisal submission deadline because of its duty to diligently pursue its claims.

See, e.g., Freeman v. State, 347 N.J. Super. 11, 31-32 (App. Div. 2002)

("Equitable tolling . . . does not excuse claimants from exercising the reasonable

insight and diligence required to pursue their claims."). Statewide cannot excuse

its failure to exercise reasonable diligence in pursuing its claims by blaming the

umpire. Statewide was given ample opportunity to submit its appraisal. Indeed,

A-3792-17T1 12 Statewide had still not produced an appraisal when oral argument took pl ace

before the trial court, more than four months after the umpire issued his award.

Courts will not "make a better or more sensible contract" for the parties

"than the one they made for themselves." Kotkin v. Aronson, 175 N.J. 453, 455

(2003) (citing Kampf v. Franklin Life Ins. Co., 33 N.J. 36, 43 (1960)). Statewide

agreed to be bound by the appraisal process set forth in the Policy. The appraisal

process provided the loss value was to be "set by agreement of any two of the

three persons" comprised of the two appraisers and the umpire. Because

Statewide failed to submit an appraisal, Mercer's appraisal was unopposed.

Statewide should have diligently pursued its claim by overseeing or

replacing its appraiser to ensure its interests were represented. Despite adequate

notice and opportunity, it did not do so. As a result of that failure, Mercer's

appraisal was uncontested. Determining the value of the loss based on the

uncontested appraisal was appropriate under the terms of the Agreement.

Consequently, the trial court correctly denied Statewide's motion to vacate the

award. It also properly declared the umpire's award valid, enforceable and final;

required Statewide to pay Mercer $78,052.90; entered judgment against

Statewide in that amount to be docketed if not paid within fifteen days; and

dismissed the action with prejudice as provided for in the mediation agreement.

A-3792-17T1 13 Statewide also argues the trial court erred by denying reconsideration. We

disagree. A trial court's order on a motion for reconsideration will not be set

aside unless shown to be an abuse of discretion. Granata v. Broderick, 446 N.J.

Super. 449, 468 (App. Div. 2016) (citing Fusco v. Bd. of Educ., 349 N.J. Super.

455, 462 (App. Div. 2002)). Reconsideration should only be granted in those

cases in which the court based its decision "upon a palpably incorrect or

irrational basis," or did not "consider, or failed to appreciate the significance of

probative, competent evidence." Ibid. (quoting Fusco, 349 N.J. Super. at 468).

For the reasons we have stated, the trial court properly enforced the umpire's

award. Therefore, the denial of reconsideration was not an abuse of discretion.

Statewide's remaining arguments are without sufficient merit to warrant

discussion in a written opinion. R. 2:11-3(e)(1)(E).

Affirmed.

A-3792-17T1 14