FRANK BLAICHMAN VS. JACK POMERANCÂ (C-118-15, BERGEN COUNTY AND STATEWIDE) ( 2017 )

NOT FOR PUBLICATION WITHOUT THE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-1839-15T2
FRANK BLAICHMAN,
Plaintiff-Respondent,
v.
JACK POMERANC,
Defendant-Appellant.
________________________________________________________________
Argued March 21, 2017 – Decided July 12, 2017
Before Judges Rothstadt and Sumners.
On appeal from the Superior Court of New
Jersey, Chancery Division, Bergen County,
Docket No. C-118-15.
Charles X. Gormally argued the cause for
appellant (Brach Eichler, LLC, attorneys; Mr.
Gormally and Thomas Kamvosoulis, of counsel
and on the briefs).
Laurence B. Orloff argued the cause for
respondent (Orloff, Lowenbach, Stifelman &
Siegel, P.A., attorneys; Mr. Orloff of
counsel; Xiao Sun, on the brief).
PER CURIAM
Defendant Jack Pomeranc appeals from the Chancery Division's
denial of his motion for an order awarding counsel fees. He filed
the motion after the court dismissed his brother-in-law plaintiff
Frank Blaichman's complaint to vacate an arbitrator's
interlocutory awards and to terminate the arbitration of the
parties' dispute over the management and control of their real
estate entities. Judge Menelaos W. Toskos denied the motion after
he found the parties did not enter into any agreement that allowed
for an award of fees in the litigation, despite defendant's
contention that an earlier order entered in the arbitration
satisfied that requirement. On appeal, defendant argues that he
was entitled to fees under the "New Jersey Arbitration Act [(Act),
N.J.S.A. 2A:23B-1 to -32] and controlling case law," and,
therefore, the judge's denial of his fee application was contrary
to public policy and an abuse of discretion. According to
defendant, a case management order entered in the arbitration
provided the legal basis for an award of fees. We disagree and
affirm substantially for the reasons stated by Judge Toskos in his
comprehensive written decision.
The material facts as stated in the motion record were not
in dispute and are summarized as follows. The parties were
partners in several limited partnerships that owned, developed,
and managed residential real estate. After they operated their
entities for years without any issues, a dispute developed between
the two partners. With an eye toward resolving the dispute, the
parties entered into an agreement regarding the management and
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operation of their limited partnerships. The agreement, denoted
a settlement agreement, was signed by the two in 2007. The
negotiated "peace" between the parties lasted for a few years, but
eventually dissolved leading to litigation that began in
approximately 2012.
Upon the filing of the 2012 litigation by plaintiff, each
party sought the entry of restraints to keep the other from being
involved in the operation of their entities. After the court
denied their applications, the parties entered into an agreement
on December 19, 2012 to arbitrate their dispute. Their arbitration
agreement named an attorney – Paul A. Rowe – as the arbitrator and
identified the scope of the anticipated arbitration. The agreement
made no provision for any type of fee shifting or award of
attorneys fees to either party.
During the course of the lengthy arbitration, the arbitrator
entered a case management order (Management Order) that addressed
counsel fees. He entered the order after giving both parties the
ability to comment on a proposed draft. The Management Order
specifically provided that if the arbitrator had to decide a motion
to enforce the terms of the order, "the non-prevailing party shall
be responsible to pay . . . the reasonable counsel fees and costs
incurred by the prevailing party as determined by the
[a]rbitrator."
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A year later, the arbitrator was confronted with a dispute
about plaintiff's compliance with the Management Order. After he
conducted a lengthy hearing, the arbitrator issued a decision in
October 2014 finding that plaintiff violated the order, and in a
subsequent order, he awarded $137,042.97 in fees and costs to
defendant.
In April 2015, plaintiff filed this action in the Chancery
Division, challenging two of the arbitrator's awards and seeking
to terminate the arbitration. In response, defendant moved to
confirm the arbitrator's decisions. On August 28, 2015, Judge
Toskos denied any relief to plaintiff, dismissed the complaint,
and also confirmed the arbitrator's awards. Defendant filed a
subsequent application seeking an award of counsel fees and costs
in which he relied upon the fee-shifting provision of the
Management Order and the Act, N.J.S.A. 2A:23B-25(c). Plaintiff
opposed the motion, and after considering oral argument on October
23, 2015, Judge Toskos denied the motion on November 18, 2015,
setting forth his reasons in a written decision.
In his decision, Judge Toskos summarized the history of the
parties' dispute, the arbitration, and the dismissal of the
plaintiff's action. He explained each party's contentions
regarding defendant's claim for fees and explained the applicable
law. Relying upon our decision in Rock Work Inc. v. Pulaski
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Construction Co., Inc., 396 N.J. Super. 344 (App. Div. 2007),
certif. denied, 194 N.J. 272 (2008), the judge concluded that the
fee-shifting provision in the Management Order did not constitute
an express agreement between the parties that would support an
award of fees to the prevailing party in the litigation. He found
that the Management Order limited an award of fees to enforcement
proceedings only within the arbitration. The judge concluded by
stating:
Here, there was no such express fee-shifting
agreement. To find such an agreement the
[c]ourt would need to read into the Management
Order additional language demonstrating the
parties agreed to the award of counsel fees
in the event of an appeal or other judgment
confirmation of the Arbitration. Stated
differently, to grant [d]efendant attorney's
fees in connection with the judicial
proceeding, the [c]ourt would need to infer
that the Management Order language expressly
reflects an agreement between the parties
whereby the parties contemplated and agreed
that attorney's fees be awarded to the
prevailing party during this court proceeding.
Defendant has not demonstrated that such an
agreement exists. Had the parties intended
for the fee-shifting arrangement to extend to
[the] entirety of the litigation, the parties
could have fashioned such an agreement.
Absent such an agreement, the [c]ourt may not
award [d]efendant's attorney's fees in
connection with this proceeding.
We begin our review by observing that the decision to award
attorney's fees is discretionary, and we therefore apply an abuse-
of-discretion standard of review. Packard-Bamberger & Co. v.
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Collier, 167 N.J. 427, 444 (2001). "We will disturb a trial
court's determination on counsel fees only on the 'rarest
occasion,' and then only because of a clear abuse of discretion."
Barr v. Barr, 418 N.J. Super. 18, 46 (App. Div. 2011). A court
has abused its discretion "if the discretionary act was not
premised upon consideration of all relevant factors, was based
upon consideration of irrelevant or inappropriate factors, or
amounts to a clear error in judgment." Masone v. Levine, 382 N.J.
Super. 181, 193 (App. Div. 2005). We discern no abuse of
discretion here.
N.J.S.A. 2A:23B-21(b) allows an arbitrator to award counsel
fees authorized by statute or the parties' agreement. N.J.S.A.
2A:23B-25(c) authorizes a court to award reasonable attorney's
fees and other reasonable expenses of litigation to the prevailing
party when judgment is entered confirming an arbitration award.
The same principles that guide a court's determination of
attorney's fees as to the arbitration proceedings applies to post-
judgment award of fees. Absent an express agreement between the
parties for the award of attorney's fees or statutory
justification, the "American Rule will prevail," prohibiting the
shifting of fees. Rock Work, supra, 396 N.J. Super. at 357. For
that reason, we have interpreted N.J.S.A. 2A:23B-25(c) as
authorizing an award of attorney's fees to the prevailing party
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only in those instances where the parties' underlying contract or
agreement specified that the party who prevailed in the arbitration
would be entitled to an award of attorney's fees in the ensuing
litigation. Id. at 355-57 (concluding that even though "the
Arbitration Act does not use the term 'expressly,' . . . it would
appear that the [] Act requires an express contract").
Here, the arbitration agreement did not provide for fee-
shifting and the Management Order was not an agreement. Even if
it was, the agreement only extended to motions to enforce the
terms of that order within the arbitration. There was no express
agreement for fee-shifting relative to any ensuing litigation.
Defendant's contentions to the contrary in which he relies upon
an alleged collaborative effort in forming the Management Order
as establishing an express agreement is without merit.1
Judge Toskos properly exercised his discretion when he
declined to award attorney's fees to defendant in this action.
Affirmed.
1
We note that by the time defendant made his application to the
court for fees, the Management Order had been superseded by a
different order that did not contain a prevailing party's automatic
entitlement to fees. Instead, the new order reserved to the
arbitrator the ability to award fees "in his sole discretion
. . . for any motion made to enforce this Order."
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