Prior to entering into a business deal, a rental lease, or a divorce proceeding, many members of our community enter into agreements which set forth the terms of their transactions and contain arbitration clauses that in case of a dispute a Bais Din will decide the dispute.
Such arbitration provisions are now commonplace in consumer contracts at large, but especially in the frum community.
While there is no set, express language required to uphold an arbitration agreement, in order for these provisions to be enforceable in court, a 2014 New Jersey Supreme Court case decision known as Atalese v. Legal Services Group specifically requires the agreement to expressly waive the right to sue in court.
A recent case ruling by the New Jersey Appellate Division reinforces that it is imperative for parties to commercial contracts or to divorce proceedings to closely review precise terms of arbitration clauses with experienced Toanim and Lawyers to ensure; a) that there are no confusions as to what is being agreed to; and; b) that the agreement will be enforceable in court if necessary.
This case ruling specifically highlights the importance of clarifying with experienced Toanim and Lawyers whether or not the arbitration provision is enforceable as to all disputes or only certain ones.
Peter and Nita Rose hired Shore Custom Homes Corp. (a wholly owned subsidiary of Dream Homes and Development Corporation) to raise, renovate, and build an addition on their property located in Bayville for a total cost of $314,800.
The contract contains a provision entitled "Contact and Warranty Disputes" that provides:
In the event any dispute arises between the parties... the parties agree to submit resolution of the dispute(s) to binding arbitration as administered by the American Arbitration Association, and to be bound by the Rules and Regulations as promulgated by the American Arbitration Association. The parties specifically agree that any disputes shall be determined by arbitration and shall not be otherwise litigated in a court of law... Cost of arbitration will be paid for by the party who institutes arbitration. The parties further agree that no claims will be made under the Consumer Fraud Act (CFA) unless there is a specific material breach by [Shore Homes] involving a default under this contract or failure to complete the scope of work.
The contract contains a provision entitled "Legal Representation" that provides, in relevant part: "The parties acknowledge that they have the right... to hire any lawyer to represent their interest[s] in this transaction." The Contract also contains a provision entitled "Attorney Review" that provides, in relevant part: "From the date of signing of this Agreement, the buyer may cancel this contract by midnight of the third day after receiving a copy of this contract, by registered or certified mail."
After disputes arose regarding Shore Custom's work, the Rose's filed suit in New Jersey Superior Court in Ocean County.
Shore Custom filed a motion to enforce the arbitration provision.
The trial court judge granted the motion, saying, "there is an arbitration clause that binds the parties to arbitration. These disputes were between two competent knowing parties who had the opportunity . . . to have the contract reviewed by an attorney."
The Rose's moved for reconsideration, arguing that their CFA claims are not subject to arbitration because the Contract does not expressly provide for arbitration of statutory claims. The court denied this motion.
The Rose's appealed, arguing: (1) the arbitration provision is defective because it does not clearly and unambiguously convey the rights being waived; (2) the arbitration provision is defective because it is unconscionable, goes against public policy, and contains multiple violations of the TCCWNA; and (3) there is no delegation clause that would arguably give the arbitrator authority to resolve issues of arbitrability.
Appellate Division Judges DeAlmeida and Vinci were unfazed and just released a written ruling affirming the lower court's decision.
Arbitration agreements are subject to customary contract law principles. Atalese v. U.S. Legal Servs. Grp., L.P. (2014). A valid and enforceable agreement requires: (1) consideration; (2) a meeting of the minds based on a common understanding of the contract terms; and (3) unambiguous assent. Consequently, to be enforceable, the terms of an arbitration agreement must be clear, and any legal rights being waived must be identified. Id. at 442-43.
Plaintiffs' contention that the arbitration provision is defective because it fails to convey a waiver of the right to bring suit in court is not persuasive. "No particular form of words is necessary to accomplish a clear and unambiguous waiver of rights." Atalese. If, "at least in some general and sufficiently broad way," the language of the clause conveys that arbitration is a waiver of the right to bring suit in a judicial forum, the clause will be enforced. Id. at 447.
Here, the contract provides, "in the event any dispute arises between the parties . . . [plaintiffs] agree to submit resolution of the dispute(s) to binding arbitration as administered by the American Arbitration Association" and "be bound by the Rules and Regulations as promulgated by the American Arbitration Association." The Contract further provides, "[plaintiffs] specifically agree that any disputes shall be determined by arbitration and shall not be otherwise litigated in a court of law." We agree with the trial court that this arbitration provision meets the standards of Atalese and its progeny. The provision clearly and unambiguously evidences a waiver of plaintiffs' right to pursue any claims against defendants in a judicial forum and obligates plaintiffs to resolve their claims through arbitration.
Plaintiffs' contention that the arbitration provision does not encompass their CFA claims is likewise unconvincing. "[I]t is well-established that CFA claims may be the subject of arbitration and need not be exclusively presented in a judicial forum." Curtis v. Cellco P'ship (App. Div. 2010). "Arbitration of statutory claims is enforceable when the contract provisions . . . contain language reflecting a general understanding of the type of claims included in the waiver." Id. at 35-36. An arbitration clause need not "identify the specific constitutional or statutory right . . . that is waived by agreeing to arbitration." Atalese. The arbitration provision in Curtis provided that the parties agreed to submit "any controversy or claim arising out of or related to [the parties] agreement," and defined the subject claims to include any "statutory right for reimbursement of attorney's fees." Curtis, 413 N.J. Super. at 37. We concluded that contractual language was sufficient to encompass CFA claims because it "reflected a willingness to arbitrate all claims, contractual, as well as statutory . . . ." Id. at 39.
Here, the arbitration provision extends to "any disputes" between the parties. Moreover, the provision specifically references the CFA, providing, "no claims will be made under the [CFA] unless there is a specific material breach . . . involving a default under this contract or failure to complete the scope of work." Given the broad language of the arbitration agreement and the specific reference to claims asserted under the CFA, we are satisfied the court correctly determined the arbitration agreement reflects a willingness to arbitrate all claims, including CFA claims.
The winning attorney is Vito C. DeMaio Esq.
To join the FAA News WhatsApp Status, click here.
No comments:
Post a Comment