ASPHALT PAVING SYSTEMS, INC. VS. ASSOCIATED ASPHALTPARTNERS, LLC(L-0978-16, ATLANTIC 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NOT FOR PUBLICATION WITHOUT THE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-5487-15T1
ASPHALT PAVING SYSTEMS, INC.,
Plaintiff-Appellant,
v.
ASSOCIATED ASPHALT PARTNERS,
LLC and ASSOCIATED ASPHALT
TRANSPORT, LLC,
Defendants-Respondents.
________________________________________
Argued October 2, 2017 – Decided October 19, 2017
Before Judges O'Connor and Vernoia.
On appeal from Superior Court of New Jersey,
Law Division, Atlantic County, Docket No. L-
0978-16.
Colin G. Bell argued the cause for appellant
(Hankin Sandman Palladino & Weintrob,
attorneys; Mr. Bell, on the brief).
Kathleen F. Beers argued the cause for
respondents (Westmoreland Vesper Quattrone &
Beers, attorneys; Ms. Beers, on the brief).
PER CURIAM
Plaintiff Asphalt Paving Systems, Inc., appeals from an
August 16, 2016 order which, among other things, confirmed an
arbitration award entered against it and in favor of defendants
Associated Asphalt Partners, LLC and Associated Asphalt
Transport, LLC. Having reviewed the parties' arguments in light
of the record and the applicable legal principles, we reverse
and remand for further proceedings.
I
The pertinent facts in the record are as follows. In 2012,
defendants sold plaintiff asphalt emulsion, which they delivered
to plaintiff's property in two tankers. Plaintiff kept the
tankers on its property and used the product as needed. The
tankers were subsequently stolen from plaintiff's property.
Defendants sued plaintiff, contending it was responsible for the
loss of their tankers.
The parties settled shortly after the complaint was filed.
Plaintiff agreed to provide defendants with replacement tankers
of a certain quality. The settlement agreement (agreement)
further provided that if a dispute arose under the agreement,
the matter would be resolved by binding arbitration, with the
prevailing party entitled to counsel fees. The agreement
designated the person who drafted the agreement on behalf of the
parties as the arbitrator of any disputes.
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A dispute subsequently developed under the agreement, the
details of which are not relevant to the issues on appeal, and
the parties submitted their dispute to arbitration. It is not
contested that, at the conclusion of the hearing, the arbitrator
posed the following question to the parties: "What would be the
result if I determined the agreement is too ambiguous to
enforce?"
According to the verified complaint plaintiff filed in this
matter, a witness for defendants (witness) responded to the
arbitrator's question by jumping up, pointing his finger at the
arbitrator, and loudly stating, "I will tell you what happens.
You get sued for malpractice." The complaint further alleges
the witness continued "in a high pitched tone railing about
. . . how the arbitrator would be held accountable," and that
the arbitrator appeared to be visibly affected by the "verbal
assault." Six days later, the arbitrator issued an award
finding plaintiff had violated the terms of the agreement and
that an additional arbitration hearing would be scheduled to
consider the issue of damages.
In its complaint plaintiff alleges the arbitrator ruled in
favor of defendants as a result of the witness's threats and,
therefore, the award was procured by undue means. As relief,
plaintiff seeks vacatur of the arbitration award pursuant to
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N.J.S.A. 2A:23B-7, a stay of further arbitration proceedings
pursuant to N.J.S.A. 2A:23B-7, and attorney fees. The trial
court entered an order to show cause scheduling the matter for a
return date, at which time defendant was to show cause why the
award should not be vacated, the parties should not be ordered
to re-arbitrate their dispute before a different arbitrator, and
defendants should not be preliminarily enjoined from conducting
any further arbitration proceedings until the disposition of the
complaint.
In response to the plaintiff's application, defendants
submitted a certification from their attorney, who disputed the
witness behaved in the manner plaintiff alleged after the
arbitrator asked the subject question. The attorney maintained
the witness did not become angry or confrontational after the
arbitrator posed his question. The attorney claimed the witness
merely stated in a jocular tone "well, you'll get sued." The
attorney claimed the witness was joking when he made this
statement, and the arbitrator even laughed in response.
Following oral argument on the return date of the order to
show cause, the court denied plaintiff all of the relief it
sought in its complaint. Although the court noted there were
material facts in dispute, it determined the arbitrator "has a
lot of experience" and "would not be influenced by any kind of
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gibberish that came up, whether it's from a lawyer, a witness,
or . . . anyone else that stepped into the arbitration
proceeding about any kind of threats." The court also observed
one acting in the capacity as arbitrator is immune from civil
liability, citing N.J.S.A. 2A:23B-14(a), suggesting for that
reason the arbitrator would not be intimidated by the prospect
of being sued for legal malpractice.
Although somewhat unclear, the standard the court appears
to have applied to determine the merits of the request to vacate
the award were the four factors our Supreme Court held in Crowe
v. DeGioia are to be considered when determining whether to
issue a preliminary injunction.1 Id. at 132-34. Finally,
without explicitly stating it was a factor the court relied upon
to deny any of plaintiff's requests for relief, the court
commented plaintiff should have but failed to apply to the
arbitrator for a modification or correction of the award under
N.J.S.A. 2A:23B-20.
1
These four factors are whether the relief requested: (1) is
needed to prevent irreparable harm; (2) rests on settled law;
(3) has a reasonable probability of succeeding on the merits;
and (4) after balancing the relative hardships of the parties,
reveals greater harm would occur if a stay were not granted than
if it were. Crowe v. DeGioia, 90 N.J. 126, 132-34 (1982).
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II
On appeal, plaintiff's principal contention is the court
improperly relied upon its personal knowledge of the arbitrator
to determine the award was not influenced by the alleged threat
made by the witness. Plaintiff argues the trial court was
obligated to hold an evidentiary hearing to determine if the
witness threatened the arbitrator and, if so, whether such
threat influenced the arbitrator's decision. In addition,
plaintiff complains the court utilized the wrong standard when
it evaluated and rejected plaintiff's request to vacate the
arbitration award.
Our Supreme Court has held arbitrators must maintain "high
standards of honesty, fairness and impartiality." Barcon
Assocs., Inc. v. Tri-County Asphalt Corp., 86 N.J. 179, 188
(1981). A court may vacate an arbitration award if, among other
circumstances, "the award was procured by corruption, fraud, or
other undue means." N.J.S.A. 2A:23B-23(a)(1). The party
alleging an arbitrator has violated the duty of honesty,
fairness, and impartiality must prove the alleged violation by a
preponderance of the evidence. Barcon, supra, 86 N.J. at 191.
Our review of a decision on a motion to vacate an arbitration
award is de novo. Manger v. Manger, 417 N.J. Super. 370, 376
(App. Div. 2010).
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Here, plaintiff contends the arbitration award was secured
by undue means; specifically, defendants' witness threatened to
take legal action or at least insinuated he might instigate some
adverse action against the arbitrator. In turn, in order to
protect himself, the arbitrator ruled in favor of defendants.
Plaintiff concedes the arbitrator has immunity if acting in
such capacity, see N.J.S.A. 2A:23B-14(a), but argues that, as
the one who drafted the settlement agreement, the arbitrator was
exposed to liability if the agreement were found to be vague and
defendants were damaged as a result. Therefore, plaintiff
maintains that, in light of the witness's aggressive behavior
toward the arbitrator, he found in favor of defendants to
discourage them from filing any adverse actions against him.
As noted, defendants claim the witness did not exhibit any
hostility toward the arbitrator during the hearing, and that the
arbitrator's decision was not procured by any undue means. In
our view, questions of fact exist that cannot be resolved
without conducting an evidentiary hearing. These questions are
whether the witness made a material threat against the
arbitrator and, if so, whether such threat influenced his
decision. Without question, the trial court was not permitted
to rely upon his personal knowledge of the arbitrator to resolve
these important issues. A judge's personal knowledge of the
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facts in issue cannot be accorded any weight. See Wallington
Home Owners' Ass'n v. Wallington, 130 N.J. Super. 461, 465 (App.
Div. 1974), aff'd o.b. 66 N.J. 30 (1974).
Accordingly, we reverse and remand this matter for an
evidentiary hearing. Further, because the court has expressed
an opinion about the arbitrator's credibility, we conclude it is
appropriate the matter be assigned another judge.
Finally, in its decision the court referenced N.J.S.A.
2A:23B-20, suggesting plaintiff should have sought a
modification of the award from the arbitrator before seeking
relief from the court. Our reading of the statute differs from
that of the trial court. There is no requirement a party first
seek the kind of relief sought here from the arbitrator before
resorting to the court.
Because of our disposition, we need not address any of
plaintiff's remaining arguments.
Reversed and remanded for further proceedings consistent
with this opinion. We do not retain jurisdiction.
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