GLAMOROUS INC., ETC. VS. ANGEL TIPS, INC. (C-235-16, BERGEN COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE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-0985-16T1
GLAMOROUS INC., d/b/a
ANGEL TIPS,
Plaintiff-Appellant,
v.
ANGEL TIPS, INC., BKG CORP.,
HAK SUN CORPORATION, and BYUNG
K. PARK, a/k/a BRUCE PARK,
Defendants-Respondents,
and
MUNICO ASSOCIATES and HEKEMIAN &
CO., INC., f/k/a S. HEKEMIAN &
CO., INC.,
Defendants.
_______________________________________________________
Submitted June 6, 2017 – Decided June 23, 2017
Before Judges Fisher and Ostrer.
On appeal from the Superior Court of New
Jersey, Chancery Division, Bergen County,
Docket No. C-235-16.
Peter Y. Lee, attorney for appellant.
Choi Law Firm, attorneys for respondents (E.
Sandra Choi, on the brief).
PER CURIAM
Defendant Angel Tips, Inc., is a franchisor of nail salons.
In 2002, it entered into an agreement with plaintiff Glamorous,
Inc., for the latter's operation of an Angel Tips franchise in
Wyckoff. Their agreement called for the arbitration of disputes
in New York of "all controversies disputes or claims between them";
the arbitration clause contained "exceptions," including an
exception for claims made by defendant against plaintiff for money
"owe[d]." Finding defendant's claim that plaintiff was
contractually obligated to renovate the Wyckoff premises did not
fall within an exception – because it was not a claim for money
owed – the trial judge enforced this provision and compelled New
York arbitration of the parties' disputes.
Plaintiff challenges the judge's ruling, arguing the order
either (1) violated "New Jersey public policy," (2) constituted
an erroneous application of New York law, or (3) represented an
erroneous judicial rewriting of the arbitration clause. We find
insufficient merit in these arguments to warrant discussion in a
written opinion, R. 2:11-3(e)(1)(E), and affirm. We add only the
following brief comments.
The record reveals that when the franchise agreement was
renewed in 2014, the parties discussed the need for a redesign of
plaintiff's Wyckoff premises. In 2015, defendant made such a demand
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on plaintiff. The record also suggests that plaintiff engaged in
this process by hiring an architectural and design group and by
making a few partial payments toward the development of renovation
plans. Apparently because of the cost – approximated at $100,000
– plaintiff changed course and commenced this action.
Plaintiff asserted in the trial court that the dispute
identified in its complaint about defendant's demand for the
renovation of plaintiff's premises was really a claim by defendant
for money owed and, thus, not arbitrable. Defendant, on the other
hand, asserted it had made no demand for money from plaintiff;
defendant demanded only enforcement of plaintiff's alleged
contractual promise to renovate the premises. In agreeing with
defendant's characterization of the dispute as a demand for
renovations – that would require plaintiff's expenditure of money
to be paid to contractors – and not as a demand by defendant for
money, Judge Menelaos W. Toskos denied plaintiff's application for
temporary restraints, granted defendant's motion to compel
arbitration in New York, and dismissed the complaint without
prejudice.
Plaintiff's first argument – that the judge's determination
is contrary to New Jersey public policy because, in plaintiff's
view, the determination deprives it of rights and privileges
provided by the Franchise Protection Act, N.J.S.A. 56:10-1 to -31
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– has no merit. The enforceability of the arbitration agreement
is governed by the Federal Arbitration Act, 9 U.S.C.A. § 1 to §
16, which has repeatedly been interpreted by the Supreme Court of
the United States to highly favor enforcement of arbitration
agreements without regard for state law. See, e.g., Kindred Nursing
Ctrs. v. Clark, 581 U.S. __, __, 137 S. Ct. 1421, __, 197 L. Ed.
2d 806, 812 (2017) (recognizing the FAA "displaces" state law that
"prohibit[s]" or "covertly . . . disfavor[s]" arbitration
agreements). To the extent New Jersey's "strong policy in favor
of protecting its franchisees," Instructional Sys., Inc. v.
Computer Curriculum Corp., 130 N.J. 324, 345 (1982), might arguably
suggest otherwise, the supremacy of federal law renders that state
policy irrelevant. Absent "grounds as exist at law or in equity
for the revocation of any contract," 9 U.S.C.A. § 2, or absent
"'generally applicable contract defenses' like fraud or
unconscionability," Kindred Nursing, supra, 581 U.S. at __, 137
S. Ct. at __, 197 L. Ed. 2d at 812 (quoting AT&T Mobility LLC v.
Concepcion, 563 U.S. 333, 339, 131 S. Ct. 1740, 1746, 179 L. Ed.
2d 742, 751 (2011)), to which state law may provide grounds for
avoiding arbitration, see Atalese v. U.S. Legal Services Grp.,
L.P., 219 N.J. 430, 446 (2014) – an argument plaintiff has not
uttered – state law and policies pose no impediments to
arbitration.
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In its second argument, plaintiff contends that, to the extent
applicable, New York law requires a determination that the
franchise agreement is void, citing N.Y. Gen. Bus. Law §683(1),
which declares that an offer or sale of a franchise must follow
an "offering prospectus" or "disclosure document" registered with
the appropriate governmental body. This argument was raised for
the first time on appeal and, consequently, does not require our
consideration. See Nieder v. Royal Indem. Ins. Co., 62 N.J. 229,
234 (1973). Moreover, New York law has not been shown to be a bar
to arbitration. Even if it was, as we noted above state law and
policies may not stand in the way of the strong federal policy in
favor of arbitration. To the extent New York law may have
relevance, it would only go to the merits of the claim and not
whether the claim is arbitrable. We offer no view of the impact
of New York law on these arbitrable claims; we leave such questions
for the arbitrator.
Lastly, plaintiff contends the judge erroneously "rewrote"
the parties' arbitration agreement. Again, we disagree. The
parties' agreement calls for the arbitration of all their disputes
with exceptions not applicable here. The only exception relied
upon by plaintiff is that which exempts claims by defendant for
money owed to it by plaintiff. In interpreting this exception, the
judge didn't rewrite the contract; he merely recognized – and
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correctly – that defendant had not demanded money from plaintiff.
Defendant contends only that plaintiff is contractually obligated
to renovate the premises – an obligation that likely will require
plaintiff's payment of money to others, i.e., contractors
performing the work, not defendant. So viewed, this is not a
dispute falling within the exception upon which plaintiff relies.
Affirmed.
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