PETER v. PIROZZI GENERAL CONTRACTING, LLC VS. COUNTY OF CUMBERLAND (C-000012-18, CUMBERLAND 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NOT FOR PUBLICATION WITHOUT THE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-5089-17T2
PETER V. PIROZZI GENERAL
CONTRACTING, LLC and UNITED
STATES SURETY COMPANY,
Plaintiffs-Appellants,
v.
COUNTY OF CUMBERLAND,
Defendant-Respondent.
_________________________________
Submitted May 7, 2019 – Decided May 21, 2019
Before Judges Fisher and Enright.
On appeal from Superior Court of New Jersey,
Chancery Division, Cumberland County, Docket No.
C-000012-18.
Devlieger Hilser, PC, attorneys for appellants (Robert
M. Dunn, on the brief).
Theodore E. Baker, Cumberland County Counsel,
attorney for respondent (Melissa D. Strickland, Deputy
County Counsel, on the brief).
PER CURIAM
In this appeal, we consider a trial court's decision to remove an appointed
arbitrator based on a finding of "evident partiality." We affirm this decision.
Plaintiff, Peter V. Pirozzi General Contracting, LLC (PVPGC), entered
into an agreement in 2015 with defendant, Cumberland County (County), to
complete a window replacement project at the county library. A dispute arose
regarding the project so, consistent with the terms of the parties' contract,
PVPGC filed a demand for arbitration with the American Arbitration
Association (AAA). County then joined United States Surety Company in the
litigation. Before selecting the arbitrator, County confirmed that any arbitrator
had to be an attorney with "no prior experience with regard to the representation
of any of the parties." In March 2017, the parties agreed to appoint a New Jersey
attorney as their arbitrator. During the selection process, the arbitrator had
denied suing "either party or its representative."
Although arbitration commenced on January 23, 2018, during the second
day of hearings, the County Administrator came in to observe the proceedings
and recognized the arbitrator as an attorney who had sued the County's Board of
Chosen Freeholders. This revelation caused County to become concerned about
his neutrality. It promptly initiated an offsite records search that confirmed the
arbitrator's firm had represented a union group against the Freeholder Board in
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September 2012. That suit had concluded in January 2013. Based on this new
information, County immediately notified all parties of its objection to the
arbitrator's continuing involvement in arbitration.
While the arbitrator did not deny his firm had sued the Freeholder Board,
he maintained this suit would not affect his impartiality in arbitration. He also
contended County and the Freeholder Board were different entities. AAA then
reaffirmed him as the arbitrator and notified the parties of its decision.
In response to AAA's decision, County declined to participate in any
additional arbitration proceedings, claiming the arbitrator lacked impartiality.
Still, arbitration continued without County. Therefore, County filed a complaint
and an order to show cause, requesting that the arbitrator, AAA, PVPGC and
United States Surety Company be restrained from proceeding with arbitration.
County's application was denied and its complaint was dismissed. On March 5,
2018, after arbitration concluded, the arbitrator awarded PVPGC $71,526.22.
He also denied County's claims against United States Surety Company.
County promptly sought to vacate this arbitration award, pointing to the
arbitrator's failure to disclose his prior suit against the Freeholder Board and his
misrepresentation that County and the Freeholder Board were different entities.
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On June 15, 2018, the trial court granted County's motion to vacate the award
and denied plaintiffs' request to confirm the award. The instant appeal followed.
PVPGC and United States Surety Company argue the trial court's vacatur
was improper because no statutory grounds existed to vacate the arbitration
award. County disagrees, reiterating that once the selection for an arbitrator
began, it plainly indicated the appointee had to be an attorney who had no
previous experience regarding representation of any of the parties. Additionally,
it claims the arbitrator was obliged to, but did not reveal his past adversarial
relationship with County and when it was brought to his attention, he improperly
asserted County and its governing body (the Freeholder Board) were not the
same entity. County cites to N.J.S.A. 40:20-1 to confirm County and the
Freeholder Board, in fact, are the same legal entity, and the Freeholder Board
has exclusive jurisdiction over all matters pertaining to county affairs.
Ultimately, County insists the arbitrator's prior representation against the
Freeholder Board caused him to be impermissibly biased.
Our review of the trial court's decision is 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 the established facts…."' Town of Kearny v. Brandt, 214 N.J. 76, 92
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(2013) (quoting Manalapan Realty, LP v. Twp. Comm. of Manalapan, 140 N.J.
366, 378 (1995)). That being said, public policy in this state favors resolution
of disputes through arbitration, especially in matters involving the public sector.
For that reason, 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 pursuant to N.J.S.A. 2A:24 -8."
Twp. of Wyckoff v. PBA Local 261, 409 N.J. Super. 344, 354 (App. Div. 2009)
(second alteration 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)).
N.J.S.A. 2A:24-8 provides four circumstances that authorize the vacation
of an arbitration award. Of relevance here is only N.J.S.A. 2A:24-8(b), which
permits vacatur "[w]here there was either evident partiality or corruption in the
arbitrators, or any thereof."
We are satisfied the trial court properly considered the arbitrator's
involvement in the 2012 suit, his initial failure to disclose his par ticipation in
this suit and his response to County's timely objection to his decision to remain
in the role of arbitrator. The trial court not only ruled that County and the
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Freeholder Board are one and the same entity, but surmised that if the arbitrator
had not made that mistake of law, he would have conflicted himself out of this
particular arbitration. The trial court explained:
[i]t appears from the record that the past representation
was probably not-he was not aware of it at the time that
he signed the oath form, however, that oath form
requires you to do a conflicts check. And the fact that
he made an error of law in thinking that a suit against
the Board of Chosen Freeholders of Cumberland
County was somehow different than a suit against the
County of Cumberland caused him to make that error.
With these findings, the trial court determined the arbitrator's prior
adversarial relationship with the Freeholder Board constituted evident partiality
and that County had "been clear since the time it realized who [the arbitrator
was] that it would not have agreed to his appointment as arbitrator or to the
appointment of any lawyer who had sued the County."
It is undisputed the arbitrator's suit against the Freeholder Board
concluded a little more than four years after he was named arbitrator in this case.
We are not satisfied this 2012 suit, which lasted into 2013, was too remote to
affect the arbitrator's neutrality as an arbitrator. Moreover, if the arbitrator's
participation in the 2012 suit against the Freeholder Board did not surface during
his conflict checks, it is readily apparent his conflict checks were deficient.
Furthermore, AAA's rules compel arbitrators to disclose any circumstance likely
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to give rise to justifiable doubt as to the arbitrator's impartiality or independence
so we find the arbitrator was bound to disclose his involvement in the 2012 suit
under AAA's rules.
County only needed to prove evident partiality by a preponderance of
evidence to prevail on its motion to vacate. Del Piano v. Merrill Lynch, Pierce,
Fenner & Smith, Inc., 372 N.J. Super. at 509-10. We are satisfied the trial court
properly found County met that low burden.
Affirmed.
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