Associated Asphalt Partners, LLC v. Asphalt Paving Systems, Inc. ( 2024 )

NOT FOR PUBLICATION WITHOUT THE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-1816-23
ASSOCIATED ASPHALT
PARTNERS, LLC, and
ASSOCIATED ASPHALT
TRANSPORT, LLC,
Plaintiffs-Respondents,
v.
ASPHALT PAVING SYTEMS,
INC.,
Defendant-Appellant.
Argued September 11, 2024 – Decided October 4, 2024
Before Judges Currier and Marczyk.
On appeal from the Superior Court of New Jersey, Law
Division, Atlantic County, Docket No. L-2797-23.
Colin G. Bell argued the cause for appellant (Hankin
Sandman Palladino Weintrob & Bell, attorneys; Colin
G. Bell, on the briefs).
Rudolph C. Westmoreland argued the cause for
respondents (Westmoreland Vesper & Quattrone, PA,
attorneys; Rudolph C. Westmoreland, on the brief).
PER CURIAM
Defendant Asphalt Paving Systems, Inc. appeals from the February 12,
2024 order appointing a substitute arbitrator to determine the issue of damages
in the dispute between the parties. We affirm.
Plaintiffs instituted a breach of contract action against defendant alleging
two of plaintiffs' asphalt trailers disappeared from defendant's jobsite. The
parties resolved the litigation after a mediation before Mark Soifer, Esq. In the
settlement agreement drafted by Soifer, he was designated to serve as the
arbitrator in any dispute that might arise over the implementation of the
settlement agreement. Specifically, the agreement stated, "[T]he parties agree
to binding arbitration of the dispute before Mark Soifer as the sole arbitrator."
(emphasis added).
Following a disagreement over which party breached the settlement
agreement, Soifer found defendant was in breach. Therefore, a second binding
arbitration was necessary to determine the issue of damages—the value of the
replacement trailers. Soifer intended to preside over that hearing. Thereafter,
protracted litigation ensued in this court and the trial court. Ultimately, this
court affirmed the trial court's order denying defendant's motion to vacate the
arbitration award.
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Unfortunately, during the appellate litigation, Soifer passed away. The
parties' attempts to agree upon an arbitrator to adjudicate the damages dispute
were unsuccessful. Therefore, plaintiffs instituted this summary action
presenting an order to show cause and a verified complaint seeking the court
appoint an arbitrator to determine the damages issue.
In response, defendant filed a Notice of Demand for Security and
Automatic Stay of Proceedings pursuant to N.J.S.A. 2A:15-67. Defendant
alleged that plaintiffs, established in Virginia as LLCs, had not posted the
required bond or security prior to filing the notice of appeal and, therefore, the
proceeding was automatically stayed under N.J.S.A. 2A:15-67. Defendant also
opposed the order to show cause and cross-moved to dismiss the verified
complaint.
In a December 19, 2023 order, Judge Dean R. Marcolongo permitted
plaintiffs to deposit funds into the Superior Court Trust Fund in satisfaction of
their statutory obligation. The judge also heard oral argument on the parties'
motions.
On February 12, 2024, Judge Marcolongo granted plaintiffs' application
to appoint a substitute arbitrator. In a well-reasoned written decision, the judge
noted the similar procedures under the Federal Arbitration Act, 9 U.S.C. § 5, and
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N.J.S.A. 2A:23B-11(a) regarding the appointment of a substitute arbitrator.
Essentially, if an appointed arbitrator "is unable to act and a successor has not
been appointed, the court, on application of a party to the arbitration proceeding,
shall appoint the arbitrator. An arbitrator so appointed has all the powers of an
arbitrator designated in the agreement to arbitrate . . . ." N.J.S.A. 2A:23B-11(a).
Judge Marcolongo was guided by the principles established in a federal
district court case, McGuire, Cornwell & Blakey v. Grider, 771 F. Supp. 319 (D.
Colo. 1991). The judge stated:
When deciding whether to appoint a substitute
[arbitrator,] the general rule is "where the arbitrator
named in the arbitration agreement cannot or will not
arbitrate the dispute, a court does not void the
agreement but instead appoints a different arbitrator."
[(citing Astra Footwear Indus. v. Harwyn Int'l, Inc., 442
F. Supp. 907, 910 (S.D.N.Y. 1978))]. However, the
exception to this rule is when "it is clear that the failed
term is not an ancillary logistical concern but rather is
as important a consideration as the agreement to
arbitrate itself, a court will not sever the failed term
from the rest of the agreement and the entire arbitration
provision will fail."
Judge Marcolongo then considered "whether the [parties] naming of Mark
Soifer as arbitrator was merely an ancillary logistical concern or if his service
as an arbitrator was as important as the arbitration agreement itself." The judge
found the parties' intent to arbitrate their disputes was clear as established in the
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arbitration agreement and that Soifer "was not as important to the agreement to
arbitrate as the agreement itself."
The judge further stated:
The parties have not presented any evidence to
indicate that Mr. Soifer was the only person who could
logically arbitrate this dispute. Nothing has been
presented to show he had any special skills, knowledge,
or experience that would make him uniquely suited and
qualified to arbitrate this dispute, such that the parties
would have agreed he was the only person capable of
arbitrating it. Thus, the [c]ourt finds that Mr. Soifer
was not so central to this agreement as to be
irreplaceable.
Judge Marcolongo ordered the parties to submit a list of three names and
the curriculum vitae or resume of each if the arbitrator had "specific experience
with transportation matters and/or trailers. If one name appears on both lists,
that [a]rbitrator shall be selected. If not, the [c]ourt shall appoint an [a]rbitrator
from the list of names."
On appeal, defendant contends the court erred in compelling arbitration
before a substitute arbitrator because the parties only agreed to arbitrate before
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Soifer; plaintiffs did not establish a deadlock requiring court intervention; and
the case should have been automatically stayed under N.J.S.A. 2A:15-67.1
After a careful review of the record in light of the applicable principles of
law, we affirm substantially for the reasons expressed by Judge Marcolongo in
his thoughtful written opinion. We add only the following comments.
As the judge stated, the parties clearly indicated their intent through the
settlement agreement to arbitrate their dispute. Their intent is further solidified
by their participation in the arbitration of the liability issues, leaving the
damages determination for a successive proceeding. They logically selected
Soifer as the arbitrator as he facilitated the settlement agreement during the
mediation.
However, as Judge Marcolongo found, there was no indication by the
parties that Soifer was integral to the arbitration agreement or that he was the
only person who could serve as the arbitrator of the parties' issues. Defendant
did not present the court with any evidence that Soifer had any specialized
1
During oral argument before this court, plaintiffs' counsel represented the
required funds were deposited with the Trust Fund Unit. Defendant maintains
it has never received proof of the deposit. Since the purpose of the security is
to prevent a defendant from being defeated of their right to costs, and plaintiff
has prevailed in the trial court and this court, we decline to further address this
issue. See M.J. Merkin Paint Co. v. Riccardi, 124 N.J. Eq. 597, 598 (Ch. 1939).
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knowledge of the value of replacement asphalt trailers to deem him irreplaceable
as an arbitrator of the damages.
Defendant contends the language in the agreement appointing Soifer "as
the sole arbitrator" reflects the parties' intent that only Soifer could arbitrate the
case and therefore the court erred in granting plaintiffs' application to appoint a
substitute arbitrator. We disagree. As stated, there is no indication that was the
parties' intent. The fair and reasonable reading of the language is that the parties
wanted one arbitrator to adjudicate the dispute, not a panel of two or more.
The essential intent of the parties was to arbitrate their dispute. Therefore,
after applying a de novo review in determining the enforceability of the
arbitration agreement, we see no reason to disturb Judge Marcolongo's
determination to appoint a replacement arbitrator. See Goffe v. Foulke Mgmt.
Corp., 238 N.J. 191, 207 (2019) (citing Hirsch v. Amper Fin. Servs., LLC, 215
N.J. 174, 186 (2013)).
Defendant further contends the parties had not reached a deadlock in their
ability to agree upon an arbitrator, preventing the court from appointing a
substitute. If that were so, there would have been no summary application before
Judge Marcolongo and no appeal before this court. Bottom line—the parties did
not agree upon a replacement arbitrator, but instead sought judicial intervention.
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Any remaining arguments not addressed lack sufficient merit to warrant
discussion in a written opinion. R. 2:11-3(e)(1)(E).
Affirmed.
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