ASPHALT PAVING SYSTEMS, INC. VS. ASSOCIATED ASPHALT PARTNERS, LLC (L-0978-16, ATLANTIC COUNTY AND STATEWIDE) ( 2019 )


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  •                                 NOT FOR PUBLICATION WITHOUT THE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-5730-17T4
    ASPHALT PAVING
    SYSTEMS, INC.,
    Plaintiff-Appellant,
    v.
    ASSOCIATED ASPHALT
    PARTNERS, LLC and
    ASSOCIATED ASPHALT
    TRANSPORT, LLC,
    Defendants-Respondents.
    ___________________________
    Argued July 16, 2019 – Decided August 7, 2019
    Before Judges Vernoia and Mayer.
    On appeal from the 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; Colin G.
    Bell, on the briefs).
    Kathleen F. Beers argued the cause for respondents
    (Westmoreland Vesper Quattrone & Beers, PA,
    attorneys; Kathleen F. Beers, on the brief).
    PER CURIAM
    Plaintiff Asphalt Paving Systems, Inc., appeals from orders entered after
    our remand on its initial appeal affirming an arbitration award entered in favor
    of defendants Associated Asphalt Partners, LLC, and Associated Asphalt
    Transport, LLC (collectively defendants), and an order denying plaintiff's
    motion for reconsideration. We affirm in part, vacate in part and remand for
    further proceedings.
    We described the facts giving rise to the dispute between the parties in our
    initial decision, Asphalt Paving Systems, Inc. v. Associated Asphalt Partners,
    LLC, No. A-5487-15 (App. Div. Oct. 19, 2017) (slip op. at 1-5), and need not
    repeat them in detail here. It is sufficient to note that plaintiff and defendants
    agreed to arbitrate a dispute over the terms of a settlement agreement and further
    agreed that the attorney who drafted the agreement would serve as the arbitrator.
    Following the arbitration proceeding, the arbitrator rendered an opinion in
    defendants' favor.
    Plaintiff filed a verified complaint and order to show cause alleging the
    award should be vacated because it was procured by undue means. More
    particularly, plaintiff claimed that at the conclusion of the arbitration proceeding
    the arbitrator asked, "What would be the result if I determined the agreement is
    A-5730-17T4
    2
    too ambiguous to enforce?" and, in response, defendants' counsel1 raised his
    voice, pointed his finger angrily at the arbitrator, and threatened that the
    arbitrator would be sued for malpractice. In its complaint, plaintiff alleged the
    arbitration award subsequently entered in defendants' favor should be vacated
    because it was procured through undue means—defendants' counsel's threat of
    suit against the arbitrator.
    On the return date of the order to show cause, the judge rejected plaintiff's
    claims without holding an evidentiary hearing. The judge found that, based on
    his personal knowledge of the arbitrator, there was no possibility that the
    putative threat would have affected the arbitrator's ability to be fair and impartial
    in rendering the arbitration award. The judge entered an order affirming the
    arbitration award.
    Plaintiff appealed, and we reversed the court's order. We found the judge
    erred by basing his decision on his personal knowledge of the arbitrator and
    noted there were unresolved factual issues as to "whether the witness made a
    1
    Based on the limited record provided in support of the prior appeal, we
    identified the individual who allegedly made the threat as defendants' "witness."
    See 
    id. at 2-3.
    The record on the pending appeal reveals that the individual was
    defendants' counsel. We therefore refer to the individual as "defendants'
    counsel," and note that the attorney who made the statement to the arbitrator at
    issue in this matter was not defendants' counsel on the initial appeal and is not
    defendants' counsel on the pending appeal.
    A-5730-17T4
    3
    material threat against the arbitrator and, if so, whether such threat influenced
    his decision." 
    Id. at 7.
    We remanded the matter for an evidentiary hearing and
    found it was therefore unnecessary to address plaintiff's remaining arguments
    supporting its challenge to the arbitration award. 
    Ibid. On remand, a
    different judge held an evidentiary hearing during which the
    arbitrator and other individuals present when the alleged threat was made
    testified.   The court issued a written decision summarizing the witnesses '
    testimony and noting that the arbitrator drafted the settlement agreement at issue
    in the arbitration. The court found that at the conclusion of the arbitration
    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?'" The
    court also found that in response to the arbitrator's question, defendants' counsel
    responded, "[W]ell, you'll get sued."
    The court found plaintiff failed to establish the arbitration award was
    procured through undue means. See N.J.S.A. 2A:23B-23(a)(1) (providing that
    "[a] court shall vacate an [arbitration] award . . . if . . . the award was procured
    by corruption, fraud or undue means"). The court noted that the arbitrator
    admitted posing the question and defendants' counsel acknowledged referencing
    "malpractice" in response, but the attorney "described the dialogue between [he
    A-5730-17T4
    4
    and the arbitrator] as being 'banter' and 'witticism'" and that, when the colloquy
    occurred, "[he] was laughing, [and] so was" the arbitrator.
    The court found defendants' counsel's reference to a possible lawsuit
    against the arbitrator "wholly inappropriate" and that the banter between the
    arbitrator and defendants' counsel constituted "unsuitable behavior that calls
    into question the very quality and professionalism of [the] proceedings." In any
    event, the court found that "it is clear from the testimony that [the arbitrator] did
    not view [defendants' counsel's] comments as a threat, but rather something said
    in jest and made in response to his own ill-chosen question." The court further
    found the dialogue was not "of such a nature that it affected [the arbitrator's]
    decision-making process" and, as a result, defendants' counsel's statement "does
    not constitute a 'material threat.'"2
    The court declined to address plaintiff's contention that the arbitration
    award should be vacated because even if the putative threat did not affect the
    arbitrator's decision-making, it created an impermissible appearance of
    2
    Although the court indicated that it was unnecessary to determine if the
    putative threat influenced the arbitrator's decision because "no 'material threat'
    was made," it nonetheless expressly found defendants' counsel's statement to the
    arbitrator did not affect the arbitrator's decision-making. We are bound by the
    court's finding the putative threat did not affect the arbitrator's decision-making
    because it is supported by "adequate, substantial and credible evidence." Rova
    Farms Resort, Inc. v. Inv'rs Ins. Co. of Am., 
    65 N.J. 474
    , 484 (1974).
    A-5730-17T4
    5
    impropriety and lack of impartiality. The court determined the argument was
    not raised on plaintiff's initial appeal or addressed in our initial decision and that
    our remand limited the court's consideration only to whether there was a material
    threat to the arbitrator and, if so, whether it affected the arbitrator's decision-
    making process. The court entered an order affirming the arbitration award.
    Plaintiff moved for reconsideration, arguing the court's decision was
    palpably incorrect because it was based on an incorrect premise: that plaintiff
    had not previously argued before the trial court and this court on the initial
    appeal that the award should be vacated based on an appearance of partiality.
    Plaintiff also argued that arbitration awards must be vacated where there is an
    appearance of impropriety based on evident partiality. See N.J.S.A. 2A:23B-
    23(a)(2). In its written decision, the court acknowledged that it erred by finding
    plaintiff did not raise the appearance of partiality argument during the initial
    trial court proceeding and appeal because the record showed otherwise. The
    court, however, denied the reconsideration motion based on its determination
    that our prior decision limited its consideration to only two discrete issues;
    whether there was a material threat and, if so, did it affect the arbitrator's
    decision-making. The court determined our prior decision did not direct that the
    appearance of partiality issue be considered on remand and therefore it did not
    A-5730-17T4
    6
    err by not addressing the issue. The court entered an order denying plaintiff's
    motion for reconsideration. This appeal followed.
    We review a trial court's decision to affirm or vacate an arbitration award
    de novo. Minkowitz v. Israeli, 
    433 N.J. Super. 111
    , 136 (App. Div. 2013). We
    owe no special deference to "[t]he 'trial court's interpretation of the law and the
    legal consequences that flow from established facts.'" Town of Kearny v.
    Brandt, 
    214 N.J. 76
    , 92 (2013) (quoting Manalapan Realty, LP v. Twp. Comm.
    of Manalapan, 
    140 N.J. 366
    , 378 (1995)).
    "[T]he scope of review of an arbitration award is narrow. Otherwise, the
    purpose of the arbitration contract, which is to provide an effective, expedient,
    and fair resolution of disputes, would be severely undermined." 
    Minkowitz, 433 N.J. Super. at 136
    (alteration in original) (quoting Fawzy v. Fawzy, 
    199 N.J. 456
    , 470 (2009)). There is a "strong judicial presumption in favor of the validity
    of an arbitral award, [and] the party seeking to vacate it bears a heavy burden."
    Del Piano v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 
    372 N.J. Super. 503
    ,
    510 (App. Div. 2004). "[T]he party opposing confirmation ha[s] the burden of
    establishing that the award should be vacated . . . ." Township of Wyckoff v.
    PBA Local 261, 
    409 N.J. Super. 344
    , 354 (App. Div. 2009) (second alteration
    A-5730-17T4
    7
    in original) (quoting Jersey City Educ. Ass'n v. Bd. of Educ. of City of Jersey
    City, 
    218 N.J. Super. 177
    , 187 (App. Div. 1987)).
    Plaintiff first challenges the trial court's rejection of its contention that
    defendants' counsel's statement to the arbitrator resulted in an arbitration award
    procured through undue means.       See N.J.S.A. 2A:23B-23(a)(1).       "'[U]ndue
    means' ordinarily encompasses a situation in which the arbitrator has made an
    acknowledged mistake of fact or law or a mistake that is apparent on the face of
    the record . . . ." Borough of E. Rutherford v. E. Rutherford PBA Local 275,
    
    213 N.J. 190
    , 203 (2013) (first alteration in original) (quoting Office of Emp.
    Relations v. Commc'ns Workers of Am., 
    154 N.J. 98
    , 111 (1998)). Here,
    plaintiff claims the arbitration award was procured through undue means
    because defendants' counsel threatened the arbitrator and the threat affected the
    arbitrator's decision.
    We reject plaintiff's contention because it lacks support in the court's
    factual findings to which we defer because they are supported by substantial
    credible evidence. Zaman v. Felton, 
    219 N.J. 199
    , 215 (2014). The court
    determined, as a matter of fact, that defendants' counsel's statement was never
    perceived by the arbitrator as a threat, did not constitute a threat and did not
    affect the arbitrator's decision-making.     Those findings, which are amply
    A-5730-17T4
    8
    supported by the record, 3 do not permit or support a conclusion that the
    arbitration award was procured through undue means; the arbitration award
    could not have been procured by a statement that, as a matter of fact, did not
    affect the arbitrator's decision-making.
    Plaintiff also argues the court erred by denying its request to question
    defendant Associated Asphalt Partners, LLC's general counsel, who was present
    during the arbitration, about two aspects of his testimony at the arbitration
    proceeding. More particularly, plaintiff sought to question the general counsel
    about two limited portions of his arbitration testimony: one related to the age of
    the trailers and the other concerning whether defendants ever considered letting
    plaintiff fix the trailers.
    Plaintiff argued in the remand court that the evidence before the arbitrator
    showed the general counsel's testimony on these two issues during the
    arbitration conflicted with emails he had sent and which were presented at the
    3
    As summarized by the court, as reflected in the remand record, the arbitrator
    testified that when he asked, "What if the agreement is too ambiguous to
    enforce," that he "was kidding," and that defendants' counsel "joked back at
    [him]." The arbitrator explained, "I made this silly comment, which I shouldn't
    have made, and then [defendants' counsel] responded in kind and people
    laughed." The arbitrator further testified that he had no recall of the dialogue
    when he rendered his opinion and, as noted, defendants' counsel characterized
    the dialogue as "banter" and "witticism," and explained that "[he] was laughing,
    [and] so was [the arbitrator]."
    A-5730-17T4
    9
    arbitration. Plaintiff claimed the arbitrator ignored the conflict and erroneously
    accepted the general counsel's testimony over what the emails showed, and the
    arbitrator's erroneous acceptance of the testimony had a tendency to prove the
    arbitrator's alleged state of mind—that he was affected by the alleged threat
    made by defendants' counsel. Plaintiff argues that the remand court's refusal to
    consider the proffered evidence about the conflict between the general counsel's
    testimony and the emails requires a reversal of the court's finding the alleged
    threat did not affect the arbitrator's decision-making. We disagree.
    "[A] trial court's evidentiary rulings are entitled to deference absent a
    showing of an abuse of discretion, i.e., there has been a clear error of judgment."
    State v. Nantambu, 
    221 N.J. 390
    , 402 (2015) (alteration in original) (quoting
    State v. Harris, 
    209 N.J. 431
    , 439 (2012)). Under this standard, the trial court's
    decision barring the admission of putative evidence should not be overturned
    "unless it can be shown that the trial court palpably abused its discretion, that
    is, that its finding was so wide [of] the mark that a manifest denial of justice
    resulted." State v. Lykes, 
    192 N.J. 519
    , 534 (2007) (alteration in original)
    (quoting Verdicchio v. Ricca, 
    179 N.J. 1
    , 34 (2004)). Where a court errs in
    barring the admission of evidence, we consider whether the error was clearly
    capable of producing an unjust result. R. 2:10-2.
    A-5730-17T4
    10
    We discern no abuse of discretion in the court's decision barring plaintiff
    from introducing evidence concerning the alleged conflicting evidence from the
    general counsel at the arbitration concerning two limited issues. We review
    decisions on the admission of evidence under the appropriate legal standard de
    novo, State v. Reddish, 
    181 N.J. 553
    , 609 (2004), and are convinced the
    proffered evidence was properly barred because it was cumulative and
    unnecessary, N.J.R.E. 403(b).
    The arbitrator's opinion details the conflicting testimony and evidence
    presented during the arbitration and reflects that the arbitrator made numerous
    determinations concerning the credibility of the evidence. It is apparent on the
    face of the arbitration award that the arbitrator considered and weighed all of
    the evidence and made credibility determinations adverse to plaintiff. Thus, the
    limited proffered evidence—two purported examples of the arbitrator's decision
    to accept contested evidence favorable to defendants—is unnecessary and
    cumulative because the arbitrator's award shows the arbitrator rejected plaintiff's
    evidence.
    Moreover, the proffered evidence alone simply could not establish either
    that the arbitrator erred by accepting the general counsel's testimony or that the
    arbitrator's decision-making was affected by defendants' counsel's purported
    A-5730-17T4
    11
    threat. Any assessment of whether the arbitrator's acceptance constituted a
    reasoned consideration of the evidence or an unsupportable determination
    demonstrating a state of mind to rule in defendants' favor based on the alleged
    threat would have necessarily required an assessment of all of the evidence
    presented at the arbitration and not just the limited fragments of the record
    included in plaintiff's proffer.4
    The court did not abuse its discretion by refusing to consider the proffered
    evidence.    In addition, the record does not show, and plaintiff's fails to
    demonstrate that even if the court erred by sustaining the objection to the
    proffered evidence, the error was clearly capable of producing an unjust result.
    R. 2:10-2. Indeed, the court found as a matter of fact that defendants' counsel's
    statement did not constitute a threat in the first instance.
    Plaintiff also claims the proffered evidence concerning the general
    counsel's testimony and the emails was admissible to directly establish the award
    was procured by undue means, N.J.S.A. 2A:23B-23(a)(1). Relying on our
    decision in McHugh, Inc. v. Soldo Construction Company, Inc., plaintiff argues
    that undue means is established "where there is no evidence in the record to
    4
    We do not suggest or conclude that a court's review of the entire arbitration
    record, if proffered, would have been proper or required. We address only the
    limited evidence that was proffered by plaintiff before the remand court.
    A-5730-17T4
    12
    support an arbitration award." 
    238 N.J. Super. 141
    , 147 (App. Div. 1990).
    McHugh provides no support for plaintiff's claim, however, because its holding
    applies only where there is "no evidence" supporting the arbitrator's decision.
    
    Ibid. As we noted
    in McHugh, our Supreme Court explained in Local No. 153,
    Office & Professional Employees International Union, AFL-CIO v. Trust
    Company of New Jersey, 
    105 N.J. 442
    , 450 n.1 (1987), that undue means is not
    established in "situations . . . where the arbitrator bases his [or her] decision on
    one[]party's version of the facts, finding that version to be credible." 238 N.J.
    Super. at 145. That is the precise situation here.
    Plaintiff claims only that the proffered evidence would have showed the
    arbitrator erred in his credibility determination as to the conflict between the
    general counsel's testimony and the emails.          Thus, the arbitrator made a
    credibility determination that does not support a finding of undue means. Local
    No. 
    153, 105 N.J. at 450
    n.1. We are therefore satisfied that the court did not
    err by refusing to consider evidence which, based on plaintiff's proffer, would
    have established only that the arbitrator made a credibility determination
    adverse to plaintiff because that determination does not support a finding that
    the arbitration award was procured through undue means. 
    Ibid. A-5730-17T4 13 We
    affirm that portion of the court's order rejecting plaintiff's claim that
    the arbitration award should be vacated because it was procured by undue
    means, N.J.S.A. 2A:23B-23(a)(1), based on defendants' counsel's statement to
    the arbitrator. We also affirm the court's finding the statement was made in jest,
    did not constitute a threat and did not affect the arbitrator's decision-making on
    the matters at issue at the arbitration. The court addressed those issues in
    accordance with our remand directions, see Asphalt Paving Systems, Inc., slip.
    op. at 6-7, and, as noted, its findings are supported by substantial credible record
    evidence.
    We are, however, compelled to remand the matter for further proceedings
    on plaintiff's separate challenge to the validity of the arbitration award. Plaintiff
    argued before the first judge, on the initial appeal and before the remand court
    that even if defendants' counsel's statement did not actually affect the arbitrator's
    decision-making process, the statement and the circumstances surrounding it
    created an appearance of impropriety that requires that vacation of the
    arbitration award. That issue, however, was not decided in our opinion on the
    initial appeal because it was not addressed by the first judge, and the initial
    appeal focused on the first judge's erroneous reliance on his personal knowledge
    in finding defendants' counsel's statement did not affect the judge's decision-
    A-5730-17T4
    14
    making. Our focus on the first judge's decision was the product of what occurred
    before the first judge and the arguments raised in the initial appeal. Although
    we remanded for the court to address whether a threat had been made and
    whether it affected the arbitrator's decision-making, our initial decision was not
    intended to preclude plaintiff from pursuing its consistently asserted claim that
    the arbitration award should be vacated based on an alleged appearance of
    impropriety. Indeed, plaintiff has never had the benefit of a trial court decisi on
    on the claim.
    We therefore remand to allow the trial court to consider and decide
    plaintiff's claim in the first instance. The court shall hear argument, conduct
    whatever proceedings it deems appropriate to do so and decide the issue based
    on the applicable law based on the record presented. We remand to allow
    plaintiff and defendants the opportunity to properly litigate plaintiff's
    longstanding claim before the trial court so that our review of any decision, if
    necessary in the future, is based on a complete motion record. Our remand does
    not constitute an opinion on the merits, if any, of the claim and is not intended
    to define or limit the procedure the court shall employ for the resolution of the
    claim.     Our determination and remand render it unnecessary to consider
    plaintiff's claim the court erred by denying its motion for reconsideration.
    A-5730-17T4
    15
    Affirmed in part, vacated and remanded in part.   We do not retain
    jurisdiction.
    A-5730-17T4
    16