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

NOT FOR PUBLICATION WITHOUT THE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
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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.
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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
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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).
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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
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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
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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
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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]."
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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
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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
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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.
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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.
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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-
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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.
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Affirmed in part, vacated and remanded in part. We do not retain
jurisdiction.
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