RD FOODS AMERICAS, INC. v. DYCOTRADE HGH B.V. (L-4059-20, BERGEN COUNTY AND STATEWIDE) ( 2022 )

NOT FOR PUBLICATION WITHOUT THE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-1163-20
RD FOODS AMERICAS,
INC., a New Jersey Corporation,
Plaintiff-Respondent,
v.
DYCOTRADE HGH B.V., a
Foreign Limited Liability
Company,
Defendant-Appellant.
____________________________
Argued November 9, 2021 – Decided August 15, 2022
Before Judges Hoffman, Geiger, and Susswein.
On appeal from the Superior Court of New Jersey, Law
Division, Bergen County, Docket No. L-4059-20.
Gerd W. Stabbert, Jr. argued the cause for appellant
(Bressler, Amery & Ross, PC, attorneys; Gerd W.
Stabbert, Jr., on the briefs).
Bruce H. Snyder argued the cause for respondent
(Lasser Hochman, LLC, attorneys; Bruce H. Snyder, on
the brief).
PER CURIAM
By leave granted, defendant DycoTrade HGH B.V. (defendant or
DycoTrade), a company based in the Netherlands, appeals from the December
11, 2020 Law Division order that denied its motion to compel arbitration and
dismiss the complaint filed by plaintiff RD Foods Americas, Inc. (plaintiff or
RD Foods), a New Jersey corporation. Because there are disputed facts as to
whether plaintiff agreed to arbitrate its claim, and because we reject the
conclusion of the motion judge that the subject arbitration provision is otherwise
unenforceable, we reverse and remand for further proceedings.
I.
We glean these facts from the motion record. Established as a holding
company in 1999, plaintiff supplies and manufactures canned seafood products
and markets high-volume commodity items, such as canned fruits and
vegetables for the retail, food service, and industrial trades. Plaintiff is part of
the RD Group of Companies located in Rotterdam, Netherlands; in addition, it
serves as the European Sales and Distribution office for the RD Corporation
Group's tuna production facilities. On its website, plaintiff lists its warehouse
locations throughout the United States, with its "[m]ain warehouse" in Edison.
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Defendant provides software services for commodity and trade
companies, including modules to manage trading, logistics, risk, and accounting
functions. Defendant maintains its registered office in Aalsmeer, Netherlands.
In June 2019, Dolly Bation, plaintiff's controller, contacted defendant
through Albert W.G. Carabin, a Director of RD Foods Rotterdam, to solicit
defendant to perform software services for plaintiff. On June 28, 2019, Carabin
responded to Bation by email, with a copy sent to defendant, confirming the
solicitation of defendant to provide software services.
Between September 29 and October 4, 2019, Bation visited the
Netherlands and met with representatives from defendant. During this visit, he
received two contracts regarding the provision of software services. On October
10, 2019, Bibergal signed the documents on behalf of plaintiff and Reitsema
signed the documents on behalf of defendant. Pursuant to the contracts,
defendant agreed to provide certain software and services to plaintiff by
supplying, installing, and implementing software programming and licenses for
use by plaintiff in connection with its accounting, manufacturing, warehousing,
invoicing, check-writing, and inventory needs. One of the contracts stated the
ways in which defendant would implement its services, which included "[o]ut
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of the box implementation, based on existing environment of RD Food
Rotterdam [Netherlands]."
In each contract, defendant agreed to supply RD Foods with certain
"goods and/or services and/or to grant licenses in accordance with Dycotrade's
general Terms and Conditions, which Terms and Conditions form an integral
part of this contract for services and which are appended hereto." These general
terms and conditions are contained in a four-page document entitled "Terms and
Conditions of Supply DycoTrade HGH B.V." (the Terms and Conditions
document). The parties strongly dispute whether the Terms and Conditions
document was, in fact, appended to either of the software/services contracts
signed by the parties.
Relevant to this appeal, article 23.4 of the Terms and Conditions
document states:
Any disputes that may arise between the [p]arties
further to or as a consequence of these [c]onditions and
any quotations and offers of [defendant] and all legal
relationships, including [c]ontracts, with [defendant]
and services provided by [defendant], shall be settled in
accordance with the Rules of Arbitration of the Dutch
Arbitration Institute. The arbitration tribunal shall be
composed of three arbitrators, unless the [p]arties
jointly agree on one arbitrator. The arbitration tribunal
shall decide in accordance with the rules of the law.
The place of arbitration is Amsterdam. The arbitration
proceedings shall be conducted in Dutch.
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In providing services to plaintiff, defendant's workers primarily worked
remotely from the Netherlands; however, they did travel three times to plaintiff's
facility in Ramsey: three of defendant's consultants visited for five days,
beginning on November 3, 2019; the same three consultants returned for six
days, beginning on November 24, 2019; and two of the three consultants
returned for eight days, beginning on January 14, 2020. Defendant regularly
sent plaintiff invoices, including for travel expenses, which plaintiff paid by
wire transfer to defendant's bank in the Netherlands.
Despite defendant's efforts, by May 2020, plaintiff concluded that
defendant's performance warranted termination of the parties' contractual
arrangement. On May 22, 2020, after claiming it made multiple attempts to have
defendant "remedy its defaults and render its programs operational," plaintiff
provided notice to defendant that it was terminating the contracts and requested
a full refund of all expenses and payments it made.
When defendant failed to forward the requested refund, plaintiff filed this
action on July 13, 2020. Plaintiff's complaint alleged that defendant provided
"programs [that] were non-functional and non-operational, and did not provide
[plaintiff] with the services called for under" their contracts. Plaintiff also
included a demand for judgment "[d]eclaring and adjudging that the so -called
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'Terms and Conditions' . . . are not part of any contract or agreement [between
the parties]."
On July 29, 2020, counsel for defendant sent a letter to plaintiff stating
that "[b]ased on article 23.1 of the general terms and conditions [of the
agreement], Dutch law is applicable to the agreement . . . [and] legal proceedings
must be initiated before the Dutch Arbitration Institute." On July 31, 2020,
counsel for plaintiff sent an email to counsel for defendant, claiming that the
provisions of the Terms and Conditions document were not binding because the
document had not been attached to defendant's contracts, and "[u]nder any
circumstances," the arbitration provision was unenforceable.
On October 5, 2020, defendant filed a motion to compel arbitration and
dismiss plaintiff's complaint. In opposition, plaintiff filed certifications of Hillel
Bibergal, plaintiff's managing director, and Bation, who both maintained that
the Terms and Conditions document was not attached to either software/services
contract. Bibergal and Bation both certified that defendant provided only the
two software/services contracts, plus a document titled "Microsoft Cloud
Agreement." According to Bibergal and Bation, they were under the impression
that the "Terms and Conditions" referenced in the contracts was referring to the
Microsoft Cloud Agreement.
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In his certification, Bation stated that although the contracts referred to
the Terms and Conditions, the Terms and Conditions were neither shown to him
nor discussed with him. Bation certified that when defendant emailed him the
fully executed contracts, the attachments to the email were the software/services
contracts and the Microsoft Cloud Agreement, and no other documents.
Defendant then filed a certification of Ouko Reitsema, its managing
director, who disputed critical parts of the certifications of Bibergal and Bation.
Reitsema certified that Bation and Bibergal visited RD Foods Rotterdam in the
Netherlands, where they displayed familiarity with defendant's offers and
services. According to Reitsema, during this visit, Bation "received two
agreements[,] each captioned 'Contract Software/Services," along with a
Microsoft Cloud solution provider agreement and a "Terms and Conditions"
document.
On October 10, 2019, Bibergal signed the two software/services contracts
on behalf of plaintiff. Later the same day, Reitsema signed the contracts on
behalf of defendant. According to Bation, he never saw the "Terms and
Conditions" document until August 6, 2020, after defendant's attorney sent it to
plaintiff's attorney.
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On December 4, 2020, the parties appeared for oral argument on
defendant's motion; one week later, the motion judge issued an order and written
opinion denying defendant's motion to compel arbitration and dismiss plaintiff's
complaint.
First, the judge held that New Jersey law controls because, based on the
circumstances surrounding the contracts, New Jersey was the venue with the
most significant relationship to the transactions and the parties. The judge then
applied the principles set forth in Alpert, Goldberg, Butler, Norton & Weiss,
P.C. v. Quinn, 410 N.J. Super. 510, 535 (App. Div. 2009), and determined that
the Terms and Conditions were never produced to plaintiff. The judge provided
the following explanation for his decision:
In this case, the signed contract[s] contained no
document dates or identifiable publication number for
the General Terms and Conditions. [Plaintiff] was
neither provided with the General Terms and
Conditions, nor was it advised of their existence.
Furthermore, [plaintiff] was provided with a document
entitled "Microsoft Cloud Agreement" which it mistook
for the said General Terms and Conditions. Under the
circumstances, it is not possible that General Terms and
Conditions were described in such terms that their
identity may be ascertained beyond a reasonable doubt.
It is also not the case that [p]laintiff had knowledge of
and assented to the incorporated terms when it did not
even know of the allegedly incorporated terms until
after the contract was executed. For these reasons, the
[m]otion to [c]ompel [a]rbitration must be denied.
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The judge further held that even if the Terms and Conditions were
incorporated into the contracts, the arbitration clause was unenforceable under
Atalese v. U.S. Legal Servs. Grp., L.P., 219 N.J. 430, 440 (2014). The judge
stated the language of the arbitration clause did not indicate that plaintiff was
waiving its right to seek a determination of disputes in court; other provisions
within the Terms and Conditions document conflicted with the arbitration
clause; and the clause was not a clear and unambiguous notice of such a waiver.
The judge therefore held that these deficiencies additionally rendered the
arbitration clauses in the subject contracts unenforceable.
II.
Our review of an order denying a motion to compel arbitration is de novo.
Knight v. Vivint Solar Dev., LLC, 465 N.J. Super. 416, 425 (App. Div. 2020)
(citing Goffe v. Foulke Mgmt. Corp., 238 N.J. 191, 207 (2009)). When
reviewing a motion to compel arbitration, the court makes a two-prong inquiry:
(1) whether there is a valid and enforceable agreement to arbitrate disputes; and
(2) whether the dispute falls within the scope of the agreement. Martindale v.
Sandvik, Inc., 173 N.J. 76, 86, 92 (2002).
"An agreement to arbitrate, like any other contract, 'must be the product
of mutual assent, as determined under customary principles of contract law.'"
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Atalese, 219 N.J. at 442 (quoting NAACP of Camden Cnty. v. Foulke Mgmt.
Corp., 421 N.J. Super. 404, 424, (App. Div. 2011)). "Simply put, without an
agreement to arbitrate, there can be no arbitration." MZM Constr. Co. v. N.J.
Bldg. Laborers Statewide Benefit Funds, 974 F.3d 386, 397 (3d Cir. 2020)
(citing Sandvik AB v. Advent Int'l Corp., 220 F.3d 99, 104 (3d Cir. 2000)).
Orders compelling or denying arbitration are treated as final orders for
purposes of appeal. R. 2:2-3(3); GMAC v. Pittella, 205 N.J. 572, 575 (2011).
Arbitration is a matter of contract, Bruno v. Mark MaGrann Assocs., 388 N.J.
Super. 539, 546 (App Div. 2006), and, as such, is a question of law, Antonucci
v. Curvature Newco, Inc., 470 N.J. Super. 553, 560 (App. Div. 2022).
When a complaint and supporting documents are unclear, or a party
presents facts that place an agreement to arbitrate in issue, the court should
require limited discovery concerning the formation of the agreement and
whether the parties agreed to arbitrate. See Rippon v. Smigel, 449 N.J. Super.
344 (App. Div. 2017) (permitting limited jurisdictional discovery); Knight v.
Vivint Solar Developer, LLC, 465 N.J. Super. 416, 419 (App. Div. 2020)
(reversing order compelling arbitration and remanding for a plenary hearing).
If a case involves "questions of fact concerning the mutuality of assent to
the arbitration provision," we may remand the matter for the trial court to resolve
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those issues. Knight, 465 N.J. Super. at 427-28. In Knight, where the plaintiff
asserted she never saw or signed the purported arbitration agreement and
claimed the agreement presented in court contained "a forged signature," we
vacated an order compelling arbitration and remanded "for a plenary hearing,"
given the parties' conflicting accounts. Id. at 419, 423. We acknowledged that
formation of an arbitration agreement is an issue "to be decided by the trial
court" and "conclude[d] there exist[ed] questions of fact concerning the
mutuality of assent to the arbitration provision, which [was] necessary to bind
both parties to arbitration." Id. at 426-27.
On appeal, defendant argues that the motion judge committed multiple
errors, including ruling on the motion, without ordering limited discovery, given
the conflicting certifications before the court. In addition, defendant argues that
the judge erred when he made his alternative finding that the arbitration clause
was unenforceable under Atalese. Both arguments have merit.
Because the record reflects a genuine issue of material fact – whether
defendant provided plaintiff the Terms and Conditions document at or before
the time the parties executed the subject contracts on October 10, 2019 – we
agree that the motion judge erred by not ordering limited discovery before
deciding this critical issue. As in Knight, the record here clearly reflects
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"questions of fact concerning the mutuality of assent to the arbitration
provision." Knight, 465 N.J. Super. at 426-27.
We also agree the motion judge erred when he concluded the arbitration
clause in the Terms and Conditions document was unenforceable under Atalese,
even if the document was provided to plaintiff before the parties signed the
subject contracts.
In Atalese, our Supreme Court invalidated an arbitration provision of a
consumer contract of adhesion because it: (1) did not include an explanation
that the plaintiff was waiving her right to seek relief in court; (2) did not explain
what arbitration is or how it differs from seeking judicial relief; and (3) lacked
the plain language necessary to convey to the average consumer that he or she
is waiving the right to sue in court. 219 N.J. at 446. The Court noted that "an
average member of the public may not know – without some explanatory
comment – that arbitration is a substitute for the right to have one's claim
adjudicated in a court of law." Id. at 442. Thus, an arbitration clause "in some
general and sufficiently broad way, must explain that the plaintiff is giving up
her right to bring her claims in court or have a jury resolve the dispute." Id. at
447. "No particular form of words is necessary to accomplish a clear and
unambiguous waiver of rights." Id. at 444.
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The Court later recognized that its holding in Atalese was primarily driven
by the fact that it was examining a consumer contract. The Court explained:
We were guided essentially by twin concerns. First, the
Court was mindful that a consumer is not necessarily
versed in the meaning of law imbued terminology about
procedures tucked into form contracts. The decision
repeatedly notes that it is addressing a form consumer
contract, not a contract individually negotiated in any
way; accordingly, basic statutory consumer contract
requirements about plain language implicitly provided
the backdrop to the contract under review. And,
second, the Court was mindful that plain language
explanations of consequences had been required in
contract cases in numerous other settings where a
person would not be presumed to understand that what
was being agreed to constituted a waiver of a
constitutional or statutory right.
....
The consumer context of the contract mattered.
[Kernahan v. Home Warranty Adm'r of Fla., Inc.,
236 N.J. 301, 319-20 (2019).]
Based upon the clarification provided by the Court in Kernahan, we are
satisfied that Atalese does not apply to this type of commercial contract between
commercial entities. Thus far, Atalese has only been applied to consumer and
employment contracts. See e.g., Wollen v. Gulf Stream Restoration and
Cleaning, LLC, 468 N.J. Super. 483 (App. Div. 2021); Morgan v. Raymours
Furniture Co., Inc., 443 N.J. Super. 338 (App. Div. 2016).
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Here, the parties are sophisticated commercial entities. The arbitration
clause unambiguously states that any dispute that arises between the parties
"shall be settled in accordance with the Rules of Arbitration of the Dutch
Arbitration Institute," with the arbitration to take place in Amsterdam and
conducted in Dutch.
To the extent we have not addressed a particular argument, it is because
our disposition makes it unnecessary or the argument lacks sufficient merit to
warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).
The December 11, 2020 order is reversed and the matter is remanded to
the Law Division for further proceedings.
Reversed and remanded. We do not retain jurisdiction.
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