LINDSEY SENGEBUSH VS. HOUSE VALUES REAL ESTATE SCHOOL, LLC (L-2463-19, MORRIS COUNTY AND STATEWIDE) ( 2021 )

NOT FOR PUBLICATION WITHOUT THE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-3094-19T4
LINDSEY SENGEBUSH,
Plaintiff-Appellant,
v.
HOUSE VALUES REAL
ESTATE SCHOOL, LLC
d/b/a RE/MAX HOUSE
VALUES, RALPH FUCCI
and MICHAEL A. LUZZI,
Defendants-Respondents.
___________________________
Argued December 15, 2020 – Decided February 2, 2021
Before Judges Gilson and Gummer.
On appeal from the Superior Court of New Jersey, Law
Division, Morris County, L-2463-19.
Michael A. Spizzuco argued the cause for appellant
(Brach Eichler, LLC, attorneys; Anthony M. Rainone,
of counsel and on the briefs; Michael A. Spizzuco, on
the briefs).
Aaron C. Schlesinger argued the cause for respondents
(Peckar & Abramson, PC, attorneys; Aaron C.
Schlesinger, on the brief).
PER CURIAM
Plaintiff Lindsey Sengebush appeals from an April 2, 2020 amended order
that dismissed her complaint without prejudice and effectively compelled
arbitration. In entering that order, the trial court also dismissed plaintiff's claims
under the New Jersey Law Against Discrimination (LAD), N.J.S.A. 10:5-1 to
49, holding that plaintiff was an independent contractor and not an employee.
We hold that plaintiff was required to arbitrate the claims in her complaint.
Nevertheless, we vacate the April 2, 2020 order and remand with direction that
a new order be entered. The new order shall compel mediation and arbitration
and stay the civil action pending the conclusion of those proceedings. Finally,
we vacate the ruling that plaintiff was an independent contractor because that
issue should be determined by the arbitrator.
I.
The facts relevant to compelling mediation and arbitration are established
by the record. Plaintiff was licensed in New Jersey as a real estate salesperson.
Defendant House Values Real Estate School, LLC d/b/a Re/Max House Values
(Re/Max HV) is a real estate brokerage company located in Mt. Arlington, New
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Jersey. Re/Max HV is a franchise of Re/Max New Jersey, with the right to use
the "Re/Max" trademarks. Defendants Ralph Fucci and Michael Luzzi own
Re/Max HV.
In March 2016, plaintiff entered into an agreement to act as an exclusive
real estate sales associate for Re/Max HV (the Agreement). The Agreement
stated that Re/Max HV was retaining plaintiff as an "independent contractor"
and plaintiff was not an employee of Re/Max HV.
The Agreement's ninth paragraph contains an arbitration provision that
requires the parties to mediate and, if not resolved by mediation, to arbitrate all
disputes, including disputes concerning the Agreement and plaintiff's
relationship with Re/Max HV. Specifically, the Agreement states in relevant
part:
B. Agreement to Mediate and Arbitrate Disputes.
Except as provided in Paragraph 9.D. below, [plaintiff]
hereby agrees to cooperate with [Re/Max HV] by
supporting and fully participating in all efforts to
resolve disputes, complaints and other problems
(hereafter collectively called "Dispute(s)") that arise:
(i) out of this Agreement; (ii) out of [plaintiff's]
conduct, activities or services as a real estate licensee;
(iii) out of any transaction in which [plaintiff] is
involved, or (iv) out of [plaintiff's] relationship with the
RE/MAX Network or any RE/MAX affiliate
(including, without limitation, [Re/Max HV] or any
other RE/MAX office, Regional or any other RE/MAX
region, International, any other RE/MAX Sales
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Associate or any officers, shareholders, directors,
employees, agents or affiliates of any of the foregoing).
[Plaintiff] agrees to cooperate in the resolution of such
Disputes through mediation and, if not successfully
resolved, then through binding arbitration in
accordance with the provisions of Subparagraph 9.C.
below. [Plaintiff] makes the foregoing commitment
with full knowledge that by agreeing to submit Disputes
to binding arbitration, [plaintiff] is agreeing not to
resort to the courts or the judicial system and waiving
[plaintiff's] rights to do so. If any other necessary party
to any Dispute refuses to arbitrate and is not bound by
agreement to do so or cannot be compelled to do so on
other grounds, or if [Re/Max HV] and [plaintiff]
working in cooperation cannot persuade other
necessary parties to agree on a mediation and
arbitration system, then the foregoing commitment by
[plaintiff] to mediate and/or arbitrate that particular
Dispute shall be of no force or effect.
C. Dispute Resolution Procedure. The Dispute shall
be submitted to an alternative mediation and arbitration
system mutually acceptable to the parties to the
Dispute. If the parties cannot agree on an alternative
mediation and arbitration system, then the Dispute shall
be submitted to the American Arbitration Association
("AAA") for mediation and, if unsuccessful, for
binding arbitration, in accordance with AAA's
Commercial Medication [sic] Rules or Commercial
Arbitration Rules, as applicable.
Under the exception in paragraph 9.D of the Agreement, the parties agreed that
they would not be required to mediate or arbitrate disputes concerning the
Re/Max trademarks, copyrights, trade secrets or "other proprietary rights"
owned by Re/Max International, Inc. or Re/Max of New Jersey.
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Plaintiff worked as a real estate sales associate for Re/Max HV from April
2016 until July 30, 2019, when she was terminated. To effectuate her
termination, Re/Max HV sent plaintiff a written notice on May 31, 2019, that
her relationship with Re/Max HV was being terminated sixty days after she
received the notice.
In November 2019, plaintiff sued Re/Max HV, Fucci, and Luzzi
(collectively, defendants). She asserted that she had been terminated in
retaliation for complaining about sexual harassment and sexual assaults by
Fucci. Her complaint asserted seven causes of action: (1) a hostile work
environment in violation of LAD; (2) gender discrimination in violation of LAD;
(3) aiding and abetting discrimination in violation of LAD; (4) retaliation in
violation of LAD; (5) intentional infliction of emotional distress; (6) civil
conspiracy; and (7) common law assault and battery.
Defendants moved to dismiss the complaint under Rule 4:6-2(a), alleging
that the court "lacked jurisdiction of the subject matter based on an agreement
to arbitrate[.]" In the alternative, defendants moved to dismiss the complaint
under Rule 4:6-2(e), contending that it failed to state claims upon which relief
could be granted.
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After hearing oral arguments, the trial court issued a written opinion and
order on March 9, 2020, dismissing plaintiff's complaint without prejudice
"pursuant to [Rule] 4:6-2[.]" On April 2, 2020, the court amended and
superseded the March 9, 2020 order. The April 2, 2020 order iterated the
paragraph dismissing the complaint without prejudice and added a paragraph
stating that if any necessary party to the dispute who is not bound by the
Agreement refuses to arbitrate, then plaintiff "may move to reinstate her
complaint by formal motion. Effectively then, the proceedings in this case are
stayed pending mediation/arbitration." 1
In its written opinion, the trial court reasoned that the arbitration provision
in the Agreement covered all of plaintiff's claims against defendants. In that
regard, the trial court held that the language "not to resort to the courts or the
judicial system" was a broad waiver and waived the right to a jury trial and the
right to pursue statutory claims, including LAD claims, in a court. The trial
court also went on to hold that plaintiff was an independent contractor and,
therefore, she could not assert claims under LAD.
1
This new provision apparently was added to address the last sentence in
paragraph 9.D of the Agreement. We note that there is no contention that there
is a necessary party not bound by the Agreement and, thus, this language does
not appear to be relevant to this appeal.
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II.
On appeal, plaintiff makes three arguments: (1) the arbitration provision
in the Agreement did not waive her right to a jury trial or to pursue statutory
claims in a court; (2) the trial court erred in ruling that she was an independent
contractor; and (3) the trial court should not have considered the Agreement
without treating the motion as a motion for summary judgment.
We hold that the parties' arbitration agreement was broad enough to waive
plaintiff's right to a jury trial or to pursue statutory claims in a court. We,
however, vacate the April 2, 2020 order because the trial court should have
entered an order staying the action and compelling mediation and arbitration
under the Agreement. Consequently, we remand for the entry of a new order.
We also agree that the trial court erred in holding that plaintiff was an
independent contractor. Under the parties' arbitration agreement, that is an issue
to be determined by the arbitrator.
A.
Defendants' motion should have been treated as a motion to compel
arbitration. See N.J.S.A. 2A:23B-7; 9 U.S.C. § 3; see also R. 4:5-4 (stating that
arbitration is an affirmative defense). We treat orders compelling or denying
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arbitration as final orders for purposes of appeal. R. 2:2-3(3); GMAC v. Pittella,
205 N.J. 572, 582 n.6 (2011).
The validity of an arbitration agreement is a question of law. Atalese v.
U.S. Legal Servs. Grp., L.P., 219 N.J. 430, 446 (2014) (citing Hirsch v. Amper
Fin. Servs., LLC, 215 N.J. 174, 186 (2013)). Accordingly, we use a de novo
standard of review when determining the enforceability of arbitration
agreements. Goffe v. Foulke Mgmt. Corp., 238 N.J. 191, 207 (2019) (citing
Hirsch, 215 N.J. at 186).
B.
The Agreement does not state what law governs the contract. The
relationship between plaintiff and Re/Max HV involved real estate transactions
in New Jersey. Accordingly, the New Jersey Arbitration Act (NJAA), N.J.S.A.
2A:23B-1 to -36, governs. Arafa v. Health Express Corp., 243 N.J. 147, 166
(2020). "The NJAA governs 'all agreements to arbitrate made on or after
January 1, 2003,' and exempts from its provisions only 'an arbitration between
an employer and a duly elected representative of employees under a collective
bargaining agreement or collectively negotiated agreement." Id. at 167 (quoting
N.J.S.A. 2A:23B-3(a)). By contrast, the Federal Arbitration Act (FAA) controls
transactions affecting interstate commerce. See 9 U.S.C. § 2. We also note that
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if the FAA did apply, the result would be the same: arbitration would be
compelled.
Under New Jersey law, arbitration is a creature of contract. N.J.S.A.
2A:23B-6; Hirsch, 215 N.J. at 187. "An agreement to arbitrate, like any other
contract, 'must be the product of mutual assent, as determined under customary
principles of contract law.'" Atalese, 219 N.J. at 442 (quoting NAACP of
Camden Cnty. E. v. Foulke Mgmt. Corp., 421 N.J. Super. 404, 424 (App. Div.
2011)).
"Mutual assent requires that the parties have an understanding of the terms
to which they have agreed. 'An effective waiver requires a party to have full
knowledge of his [or her] legal rights and intent to surrender those rights.'" Ibid.(quoting Knorr v. Smeal, 178 N.J. 169, 177 (2003)). "No particular form of
words is necessary to accomplish a clear and unambiguous waiver of rights."
Id. at 444. If the language in the arbitration clause is plain and understandable
to a reasonable person, the clause will be enforced. Ibid. Accordingly, both our
Supreme Court and we have upheld arbitration clauses phrased in various ways
so long as the clauses explained that arbitration is a waiver of the right to bring
suit in a judicial forum. See, e.g., Martindale v. Sandvik, Inc., 173 N.J. 76, 92
(2002); Curtis v. Cellco P'ship, 413 N.J. Super. 26, 33 (App. Div. 2010).
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The arbitration provision in the Agreement is broadly worded. It requires
all disputes arising out of the Agreement, plaintiff's conduct, activities or service
as a real estate licensee, and plaintiff's relationship with Re/Max HV or any
Re/Max affiliate to first go to mediation and then binding arbitration. The
Agreement expressly states that plaintiff "is agreeing not to resort to the courts
or the judicial system and [is] waiving [her] rights to do so." We hold that that
broad language is a clear and unambiguous waiver of plaintiff's right to a jury
trial and her right to pursue statutory claims in a court of law.
Plaintiff contends that because the arbitration provisions in the Agreement
did not expressly state that she was waiving her right to a jury trial or her right
to pursue statutory claims, the arbitration clause does not constitute an
enforceable waiver of her statutory rights under LAD. In support of that
position, plaintiff cites to our Supreme Court's decision in Garfinkel v.
Morristown Obstetrics and Gynecology Associates, 168 N.J. 124 (2001).
In Garfinkel, the Court sustained the plaintiff's right to file a civil action
alleging employment discrimination because the arbitration clause provided tha t
"any controversy or claim arising out of, or relating to, this Agreement or the
breach thereof, shall be settled by arbitration[.]" Id. at 128. The Court held that
that language was ambiguous as it related to a waiver of statutory rights under
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LAD. Id. at 127. The Court also held, however, that there was no bar to an
employee waiving the right to a jury trial under LAD in favor of arbitration, so
long as the waiver was voluntary, clear, and unambiguous. Id. at 135.
One year later, in Martindale, the Court refined its holding in Garfinkel.
In Martindale, the Court held that an arbitration agreement was broad enough to
cover the waiver of LAD claims even when LAD was not expressly identified.
173 N.J. at 96. Accordingly, the Court explained
we [do] not require a party to "refer specifically to the
LAD or list every imaginable statute by name to
effectuate a knowing and voluntary waiver of rights."
Instead, we instructed that "a waiver-of-rights
provision should at least provide that the employee
agrees to arbitrate all statutory claims arising out of the
employment relationship or its termination."
[Id. at 95 (quoting Garfinkel, 168 N.J. at 135).]
Following its decision in Martindale, our Supreme Court has also
emphasized that arbitration provisions are to be construed consistent with their
plain language and it is not always necessary to expressly waive a jury trial or
statutory claims. See Arafa, 243 N.J. at 171-72; accord Delaney v. Dickey, __
N.J. __ (2020) (slip op. at 16). Moreover, the Court has repeatedly emphasized
that the thrust of the NJAA, consistent with the Federal Arbitration Act, is to
favor arbitration by placing "arbitration agreements on an equal footing with
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other contacts[,]" and enforce the agreements according to their terms. Atalese,
219 N.J. at 439. 2
Comparing the arbitration provisions in this case to those considered in
Garfinkel and Martindale, we conclude that the language here effectuated a
waiver of plaintiff's statutory right to a judicial forum to pursue the LAD claims.
While the arbitration language does not expressly refer to waiving statutory
rights, it uses broad and unambiguous language to include "all" "disputes,
complaints and other problems . . . that arise . . . out of this Agreement . . . or
. . . out of [plaintiff's] relationship with the Re/Max Network or any Re/Max
affiliate []including, without limitation, [Re/Max HV][.]" Moreover, there is no
ambiguity when plaintiff agreed "not to resort to the courts or the judici al
system" and waived her rights to do so.
C.
We reverse and vacate the trial court's holding that plaintiff was an
independent contractor. Under the clear and unambiguous language of the
arbitration provisions, that dispute relates both to the Agreement and plaintiff's
2
LAD was amended effective March 18, 2019, to prohibit the waiver of any
substantive or procedural rights or remedies related to a claim of discrimination.
That amendment, however, does not apply to the Agreement because the
Agreement was executed in 2016 and the amendment to LAD applies
prospectively. N.J.S.A. 10:5-12.7.
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relationship with Re/Max HV. Accordingly, that issue is a question for the
arbitrator to decide. See Goffe, 238 N.J. at 211.
Furthermore, plaintiff disputes her status as an independent contractor and
contends that there are disputed issues of material fact concerning that issue.
Our Supreme Court has held that a Re/Max licensed real estate agent should be
considered the employee of a brokerage company, rather than an independent
contractor, at least for purposes of computing workers' compensation insurance
premiums. Re/Max of N.J., Inc. v. Wausau Ins. Cos., 162 N.J. 282, 286 (2000).
Accordingly, to the extent that the issue cannot be resolved through mediation,
it will be for the arbitrator to determine whether the Court's holding in Re/Max
of New Jersey applies to plaintiff.
D.
We reject plaintiff's argument that the trial court erred in considering the
Agreement. While the motion was presented as a motion to dismiss under Rule
4:6-2, we have already explained that the motion should have been considered
as a motion to compel arbitration. Accordingly, it was appropriate and necessary
to consider the Agreement and its arbitration provisions in determining that
motion. Moreover, to the extent that the motion was evaluated as a motion to
dismiss under Rule 4:6-2, documents integral to the complaint, such as the
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Agreement, may be considered without converting the motion into one for
summary judgment. See E. Dickerson & Son, Inc. v. Ernst & Young, LLP, 361
N.J. Super. 362, 365 n.1 (App. Div. 2003) (adopting the holding of In re
Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997)).
E.
In summary, we affirm the order to the extent that it compelled mediation
and arbitration of all the claims in plaintiff's complaint. We vacate the ruling
that plaintiff was an independent contractor. Furthermore, we remand for the
entry of a new order and direct that the order compel mediation and arbitration
and stay the civil action pending those proceedings. See N.J.S.A. 2A:23B-7(g)
(stating that "[i]f the court orders arbitration, the court on just terms shall stay
any judicial proceeding that involves a claim subject to the arbitration."); see
also 9 U.S.C. § 3 (stating that a court action should be stayed if that action
involves "any issue referable to arbitration").
Affirmed in part, vacated in part, and remanded. We do not retain
jurisdiction.
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