NAVIGATORS SPECIALTY INSURANCE COMPANY, ETC. VS. JANGHO CURTAIN WALL AMERICAS CO., LTD. (L-8246-19, BERGEN COUNTY AND STATEWIDE) ( 2020 )

NOT FOR PUBLICATION WITHOUT THE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-4222-19T4
NAVIGATORS SPECIALTY
INSURANCE COMPANY, as
subrogee of AJD
CONSTRUCTION CO., INC.,
Plaintiff-Appellant,
v.
JANGHO CURTAIN WALL
AMERICAS CO., LTD.,
SAFEGATE SAFETY
SOLUTIONS, AIG PROPERTY
CASUALTY, INC., and THE
TRAVELERS COMPANY, INC.,
Defendants,
and
BLADE CONTRACTING, INC.,
Defendant-Respondent,
______________________________
Submitted November 16, 2020 – Decided December 9, 2020
Before Judges Messano and Hoffman.
On appeal from the Superior Court of New Jersey, Law
Division, Bergen County, Docket No. L-8246-19.
Koster, Brady & Nagler, LLP, attorneys for appellant
(Joseph F. Herbert, III, on the briefs).
Langsam Stevens Silver & Hollaender, LLP, attorneys
for respondent (Charles M. Adams, on the brief).
PER CURIAM
Plaintiff Navigators Specialty Insurance Company issued a commercial
general liability insurance policy to AJD Construction Co., Inc. (AJD), the
general contractor for a construction project in Jersey City. AJD hired Jangho
Curtain Wall America Companies, Ltd. (Jangho) as a subcontractor on the
project, and one of Jangho's employees alleged he was injured at the worksite
when he stepped on broken cinder blocks. AJD settled the suit brought by
Jangho's employee, and, as AJD's subrogee, plaintiff filed a complaint naming
as defendants Jangho, its alleged insurers, the OSHA workplace supervisor hired
by AJD, and Blade Contracting Inc. (Blade), the masonry subcontractor AJD
hired for the project.
As to Blade, the complaint: sought contractual indemnification (count
three); alleged Blade breached the subcontract by failing to procure the required
insurance (count five); and, sought declaratory relief for reimbursement of
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defense costs and indemnification resulting from the underlying settlement
(count six).1
After filing an answer, crossclaims and counterclaims, Blade moved to
dismiss these three counts, alleging lack of subject matter jurisdiction. Blade
argued the contract with AJD contained alternate dispute resolution procedures
that required mandatory mediation and arbitration of any claim arising out of
the agreement.
Blade's motion was supported by two copies of the contract, which was a
form agreement that contained the following language:
ARTICLE 6 MEDIATION AND BINDING
DISPUTE RESOLUTION
§ 6.1 MEDIATION
§ 6.1.1 Any claim arising out of or related to this
Subcontract . . . shall be subject to mediation as a
condition precedent to binding dispute resolution.
....
§ 6.2 BINDING DISPUTE RESOLUTION
For any claim subject to, but not resolved by mediation
pursuant to Section 6.1, the method of binding dispute
resolution shall be as follows:
1
Plaintiff also sought contribution under the Joint Tortfeasors Contribution
Law, N.J.S.A. 2A:53A-1 to -5, and the Comparative Negligence Act, N.J.S.A.
2A:15–5.1 to -5.8 (count one); common law indemnification (count two); and
also alleged Blade breached the implied warranty of requisite skill (count four),
and was negligent (count seven).
A-4222-19T4
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(Check the appropriate box. If the Contractor and
Subcontractor do not select a method of binding dispute
resolution below, or do not subsequently agree in
writing to a binding dispute resolution method other
than litigation, claims will be resolved by litigation in
a court of competent jurisdiction.)
[ ] Arbitration pursuant to Section 6.3 of this
Agreement
[ ] Litigation in a court of competent jurisdiction
[ ] Other: (Specify)
§ 6.3 ARBITRATION
§ 6.3.1 If the Contractor and Subcontractor have
selected arbitration as the method of binding dispute
resolution in Section 6.2, any claim subject to, but not
resolved by, mediation shall be subject to arbitration
which, unless the parties mutually agree otherwise,
shall be administered by the American Arbitration
Association in accordance with its Construction
Industry Arbitration Rules in effect on the date of the
Agreement.
....
§ 6.3.6 This agreement to arbitrate and any other
written agreement to arbitrate with an additional
persons or persons referred to herein shall be
specifically enforceable under applicable law in any
court having jurisdiction thereof. The award rendered
by the arbitrator or arbitrators shall be final, and
judgment may be entered upon it in accordance with
applicable law in any court having jurisdiction thereof.
A-4222-19T4
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In the contract Blade contended was the final version: 1) the box
indicating the parties selected arbitration was checked; in the other version, no
box was checked; 2) the name and title of Blade's secretary/treasurer was hand-
printed below his signature; no printed name appeared under the signature in the
other version; and 3) the typed-in amount of the subcontract was initialed by
representatives of both parties; only AJD's representative's initials appeared in
the other version. Blade also included an exchange between its counsel and
plaintiff's counsel, in which Blade contended the "metadata" for the two PDF
versions of the contract indicated Blade's version was created earlier than the
one supplied by AJD's counsel.
In opposing the motion, plaintiff supplied a certification from AJD's
project supervisor, Jayanti Patel. Patel stated that AJD's version of the contract
was the "true and accurate version of the agreement." He denied ever checking
the arbitration "box," claimed he was "[un]aware of anyone from Blade checking
this selection[,]" and had not authorized or consented to anyone checking the
arbitration provision for AJD. Patel claimed he was familiar with "this standard
form contract," and it was his "custom and practice" to leave the arbitration box
unchecked. Additionally, plaintiff argued that Blade's version failed to include
addenda that were critical to the agreement.
A-4222-19T4
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The Law Division judge considered oral arguments and granted Blade's
motion, dismissing counts three, five and six of plaintiff's complaint with
prejudice. He ordered plaintiff to submit its claims "to mediation and thereafter,
if necessary, to binding arbitration." In a written statement of reasons, quoting
Kernahan v. Home Warranty Administrator of Florida, Inc., the judge correctly
noted that to be enforceable, an arbitration agreement must be "the product of
mutual assent, as determined under customary principles of contract law." 236
N.J. 301, 319 (2019) (quoting Atalese v. U.S. Legal Servs. Grp., LP, 219 N.J.
430, 442 (2014)). The judge reasoned that only Blade's version of the contract
included the "name and title of [its] representative . . . under the signature
line[.]" He concluded, therefore, that Blade's version "was the final version of
the parties['] agreement."
Citing Atalese, 219 N.J. at 443, the judge further considered "[t]he second
prong of the . . . Court's test for enforcing binding arbitration agreements[,]"
specifically, whether AJD and Blade "clearly and unmistakably waive[d] their
right to adjudicate the[] claim in court." He noted that plaintiff and Blade were
sophisticated commercial parties and observed that portions of the form contract
were "crossed out" to change the terms of the agreement. However, "no part of
the arbitration provision was crossed out" in either version of the contract. The
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judge reasoned this failure to excise the alternative dispute resolution provisions
reflected AJD's agreement to arbitrate disputes.
Plaintiff appealed as of right. See R. 2:2-3(a) (providing that "any order
either compelling arbitration . . . or denying arbitration shall also be deemed a
final judgment of the court for appeal purposes").2 It contends that the judge
erred by finding the parties mutually assented to the arbitration provisions
because genuine material factual disputes existed regarding differences in the
two versions of the contract. It argues that whether either one was the final
version of the agreement requires at least limited discovery. We agree.
"De novo review applies when appellate courts review determinations
about the enforceability of contracts, including arbitration agreemen ts."
Kernahan, 236 N.J. at 316 (citing Hirsch v. Amper Fin. Servs., LLC, 215 N.J.
174, 186 (2013)). "Whether a contractual arbitration provision is enforceable is
a question of law, and we need not defer to the interpretative analysis of the trial
. . . court[] unless we find it persuasive." Ibid. (citing Morgan v. Sanford Brown
Inst., 225 N.J. 289, 302–03 (2016)).
Although "arbitration [i]s a favored method for resolving disputes[] . . .
[t]hat favored status . . . is not without limits." Garfinkel v. Morristown
2
Both parties include arguments in their briefs that treat plaintiff's appeal as
one seeking leave to appeal an interlocutory order pursuant to Rule 2:5-6(a).
We need not address those contentions.
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Obstetrics & Gynecology Assocs., PA, 168 N.J. 124, 131–32 (2001). "A court
must first apply 'state contract-law principles . . . [to determine] whether a valid
agreement to arbitrate exists.'" Hirsch, 215 N.J. at 187 (alteration in original)
(quoting Hojnowski v. Vans Skate Park, 187 N.J. 323, 342 (2006)). "This
preliminary question, commonly referred to as arbitrability, underscores the
fundamental principle that a party must agree to submit to arbitration." Ibid.(citing Garfinkel, 168 N.J. at 132); see also Kernahan, 236 N.J. at 319 ("[A]
court's initial inquiry must be — just as it is for any other contract — whether
the agreement to arbitrate . . . is 'the product of mutual assent, as determined
under customary principles of contract law.'" (quoting Atalese, 219 N.J. at 442)).
"[T]he arbitrability analysis is expressly included in the Arbitration Act."
Hirsch, 215 N.J. at 187–88 (citing N.J.S.A. 2A:23B-6(b)).
Here, the motion judge decided Blade's version of the contract was the
"true and accurate" version because it bore the handwritten name of Blade's
secretary/treasurer. However, the judge never addressed the fact that the same
individual's signature appears on the version produced by AJD, albeit, without
his handprinted name under the signature line. Nor did the judge address the
facts contained in Patel's certification, particularly important because Blade
offered no certification from its representative in support of the motion, relying
only on the two versions of the contract and the email from its counsel.
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The judge found further evidence of the parties' intention to arbitrate
because although some portions of the agreement were crossed out, the
arbitration provisions were not. This ignores, however, the plain language of
§6.2 of the agreement, which provided that unless the arbitration box was
checked, the parties, by default, agreed to litigate any disputes "by litigation in
a court of competent jurisdiction."
To be sure, Blade's claim that its version of the contract was the true final
version relied, in part, on assertions obvious from the document itself. Most
notably, on Blade's version, the inserted price of the contract was initialed by
both parties' representatives; AJD's version only included its representative's
initials. Logically, one would assume that the final version of a nearly $2
million contract would include the initials of both parties' representatives next
to the amount inserted in the form agreement.
In discussing the issue of arbitrability in Hirsch, the Court cited with
approval the Third Circuit's opinion in Guidotti v. Legal Helpers Debt
Resolution, LLC, 716 F.3d 764 (3d Cir. 2013). 215 N.J. at 187. In Guidotti, the
court extensively considered the standard courts should employ when evaluating
motions brought to compel arbitration under the Federal Arbitration Act, 9
U.S.C.A. §§ 1 to 16 (the FAA). Guidotti, 716 F.3d at 771–74. "[W]here the
affirmative defense of arbitrability of claims is apparent on the face of a
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complaint (or . . . documents relied upon in the complaint), the FAA would favor
resolving a motion to compel arbitration under a motion to dismiss standard
without the inherent delay of discovery[.]" Id. at 773–74 (alteration in original)
(quoting Somerset Consulting, LLC v. United Cap. Lenders, LLC, 832 F. Supp.
2d 474, 481–82 (E.D. Pa. 2011)).
In other instances, "a more deliberate pace is required[.]" Id. at 774. The
Court held that the standard applicable to a motion to dismiss under Federal Rule
of Civil Procedure 12(b)(6) was
inappropriate when either "the motion to compel
arbitration does not have as its predicate a complaint
with the requisite clarity" to establish on its face that
the parties agreed to arbitrate, or the opposing party has
come forth with reliable evidence that is more than a
"naked assertion . . . that it did not intend to be bound"
by the arbitration agreement, even though on the face
of the pleadings it appears that it did.
[Ibid. (quoting first Somerset, 832 F. Supp. 2d at 482,
then Par-Knit Mills, Inc. v. Stockbridge Fabrics Co.,
636 F.2d 51, 55 (3d Cir. 1980), superseded by statute
on other grounds, see Stedor Enters. Ltd. v. Armtex,
Inc., 947 F.2d 727, 729–30 n.1–2 (4th Cir. 1991)).]
The court concluded that "if the plaintiff has responded to a motion to compel
arbitration with additional facts sufficient to place the agreement to arbitrate in
issue," then the judge should deny the motion and permit "discovery on the
question of arbitrability[.]" Id. at 776. "After limited discovery, the court may
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entertain a renewed motion to compel arbitration, this time judging the motion
under a summary judgment standard." Ibid.In Goffe v. Foulke Management Corp., the Court recognized a limited
"place for Guidotti in our arbitration jurisprudence[,]" consonant "with federal
case law that allows a court to decide matters that relate directly to the formation
of the arbitration agreement." 238 N.J. 191, 216 (2019). The Court noted that
"Guidotti['s] summary judgment standard does not apply" when the plaintiff, as
did the plaintiff in Goffe, challenges the "contract as a whole rather than the
arbitration agreement itself[.]" Ibid.Here, plaintiff specifically challenges §6.2 of the contract — its
arbitration provision — and whether AJD and Blade mutually assented to its
terms. Based on the motion record, the issue of mutual assent was incapable of
resolution as a matter of law given the genuine, material factual disputes. R.
4:46-2(c). Accordingly, the judge should have denied without prejudice Blade's
motion to dismiss, permitted limited discovery on the issue of arbitrability, and
entertained a renewed motion to dismiss if appropriately made by Blade at a
future date.
We note, and plaintiff seemingly concedes in its brief, that the contract
required the parties to mediate their dispute prior to either party invoking §6.2
of the contract, including the default litigation proviso. Therefore, the judge
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may require the parties to mediate their dispute prior to engaging in any
discovery.
Reversed. The matter is remanded to the Law Division for further
proceedings consistent with this opinion. We do not retain jurisdiction .
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