Opinion
DOCKET NO. A-3216-11T2
04-17-2013
CONCORD TECHNOLOGY SERVICES, LLC, Plaintiff-Respondent, v. SECURITIES AMERICA ADVISORS, INC., Defendant-Appellant.
Denis C. Dice (Marshall, Dennehey, Warner, Coleman & Goggin) of the Pennsylvania bar, admitted pro hac vice, argued the cause for appellant (Marshall, Dennehey, Warner, Coleman & Goggin, attorneys; Joel M. Wertman, on the briefs). Joel N. Kreizman argued the cause for respondent (Scarinci & Hollenbeck, LLC, attorneys; Mr. Kreizman, on the brief).
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
Before Judges Messano and Ostrer.
On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-5417-10.
Denis C. Dice (Marshall, Dennehey, Warner, Coleman & Goggin) of the Pennsylvania bar, admitted pro hac vice, argued the cause for appellant (Marshall, Dennehey, Warner, Coleman & Goggin, attorneys; Joel M. Wertman, on the briefs).
Joel N. Kreizman argued the cause for respondent (Scarinci & Hollenbeck, LLC, attorneys; Mr. Kreizman, on the brief). PER CURIAM
This case requires us to interpret an arbitration clause of a contract. Plaintiff Concord Technology Services, LLC (Concord) filed suit in the Law Division, Monmouth County, seeking payment of fees allegedly due and owing by defendant Securities America Advisors, Inc. (SAA). The trial court determined that the suit was permitted under the arbitration clause, which provided that "in addition" to arbitration, Concord "shall be free to pursue . . . collection proceedings in a court of law" "in the specific event of non-payment of amounts due to [Concord] for services rendered[.]" The court denied SAA's motion to dismiss and compel arbitration. We affirm.
I.
Concord and SAA entered into a written contract dated June 2, 2008. Concord, based in Monmouth County, agreed to provide various technology and administrative support services to SAA, a registered investment advisor based in Nebraska. The contract required payment of an annual minimum fee of $25,000, payable in equal monthly installments of $2,083.33. The contract's term was two years, but it automatically renewed for successive two-year terms unless a party terminated it "within sixty (60) days prior to the expiration" of the current two-year term. Alternatively, either party could terminate the agreement for cause on forty-five days' notice.
The contract generally required arbitration of all disputes, but specifically permitted resort to the courts in cases involving non-payment:
Arbitration. To the extent not inconsistent with applicable law, in the event that any
dispute arising under this Agreement cannot be amicably resolved between the parties, both Service Provider [Concord] and Advisor [SAA] agree to submit the dispute to arbitration in accordance with the auspices and rules of the American Arbitration Association ("AAA"), the venue (i.e., location) for which arbitration proceeding shall be such location within Monmouth County, New Jersey as mutually determined by Service Provider and the Advisor. Service Provider and Advisor understand that such arbitration shall be final and binding, and that by agreeing to arbitration, both Service Provider and Advisor are waiving their respective rights to seek remedies in court, including the right to a jury trial. Advisor acknowledges that he/she/it has had a reasonable opportunity to review and consider this arbitration provision prior to the execution of this Agreement. [Advisor] further acknowledges and agrees that in the specific event of non-payment of any amounts due to Service Provider for services rendered pursuant to this Agreement, Service Provider, in addition to the aforementioned arbitration remedy, shall be free to pursue all other legal remedies available to it under law (including collection proceedings in a court of law), and shall be entitled to reimbursement of reasonable attorneys fees and other costs of collection.
[(Emphasis added).]
The omission of the word "Advisor" appears to be an oversight. Neither party asserts the omission is significant.
Concord alleged in its October 2010 complaint that the contract renewed in June 2010 because SAA failed to terminate the contract before the initial two-year term expired. Concord alleged SAA did not pay monthly charges after June 2, 2010. Concord acknowledged that SAA had claimed, albeit "wrongly," that it terminated the agreement as of May 21, 2010. Concord sought damages and other relief under claims of breach of contract, breach of the covenant of good faith and fair dealing, and unjust enrichment and quantum meruit.
In response, SAA filed a motion to compel arbitration and stay the proceedings. In support, SAA provided the court with a certification of counsel, noting that Concord refused to proceed to arbitration, and included a copy of the complaint and the contract. SAA argued that the subject matter of the complaint fell within the scope of the contract's arbitration clause and any ambiguity in the agreement should be resolved in favor of arbitration. Concord opposed the motion, asserting that the contract expressly preserved Concord's right to seek relief in the courts in any action to recover unpaid fees.
The court denied the motion by an order filed April 15, 2011, however it was not received by SAA until it obtained a copy from the clerk in October 2011. By that time, the case had been administratively dismissed. The parties consented to reinstate the complaint, and SAA filed a motion to reconsider in January 2012.
SAA argued the contract only granted Concord the right to seek relief in a court "in addition" to arbitration, not instead of it. Consequently, according to SAA, Concord was required to submit its claim to arbitration and then seek "other legal remedies that may be required in addition to the arbitration remedy[.]" Such remedies included, by example, the right to commence a summary action to confirm the arbitration award, if successful, and convert it to a civil judgment, pursuant to N.J.S.A. 2A:23B-22, -26. SAA further argued that Concord's construction of the contract would effectively nullify the arbitration provision, and asserted Concord's suit was not a "collection proceeding" as contemplated in the contract. Finally, SAA argued that any ambiguity should be resolved against Concord as the drafter, and in favor of arbitration.
Concord responded that the court's initial decision was not "palpably incorrect or irrational" under Cummings v. Bahr, 295 N.J. Super. 374, 384 (App. Div. 1996). Concord argued that SAA's construction rendered the contract's exception to arbitration meaningless, inasmuch as there already exists a statutory right to seek a court's confirmation of an arbitration award.
The court denied the motion in an oral decision on February 21, 2012. The court concluded that defendant had not presented new or additional information that it could not have provided originally, nor did it establish that the court's initial decision was incorrect or irrational. The judge stated:
The arbitration provision provides that in the event of nonpayment of the amount due to plaintiff for services rendered pursuant to the agreement plaintiff would be free to pursue all other legal remedies available to it. Defendant's argument that plaintiff is proceeding on a breach of contract claim is not persuasive. In the complaint the plaintiff specifically seeks recovery for nonpayment of fees due.
Now semantically, "in addition" means "also", "as well", "over and above" and "besides". As plaintiff noted defendant's interpretation does not make sense to require plaintiff to first proceed through arbitration and then confirm its judgment in courts because it really reiterates the standard . . . [in] N.J.S.A. 2[A]:23[B]-18. Applying the rational meanings of the language the provision does not require arbitration when the dispute is over the nonpayment for services provided by the plaintiff. The use of "in addition" provides another remedy "over and above" the arbitration remedy if defendant fails to make payments for services.
This appeal followed. SAA renews the arguments it presented to the trial court in support of its interpretation that the contract required arbitration.
II.
In the absence of a factual dispute, we review de novo a trial court's interpretation of a contract. Kieffer v. Best Buy, 205 N.J. 213, 222-23 (2011) ("The interpretation of a contract is subject to de novo review by an appellate court."). We owe no deference to the "trial court's interpretation of the law and the legal consequences that flow from established facts[.]" Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995). However, we affirm the order denying SAA's motion to compel arbitration substantially for the reasons stated in the court's oral opinion. We add these comments.
In interpreting a contract, we endeavor to give meaning to every provision and are disinclined to interpret a provision that would make it superfluous. See Washington Constr. Co. v. Spinella, 8 N.J. 212, 217 (1951) (stating that all parts of a writing and every word of it will, if possible, be given effect (citation and quotation omitted)); Caruso v. John Hancock Mut. Life Ins. Co., 136 N.J.L. 597, 598 (E. & A. 1948) (stating that interpretation of contract should not leave portion of the writing useless or inexplicable). SAA's proposed construction of the contract would render the arbitration exception a superfluous provision. The right to seek judicial confirmation of an award exists by statute. N.J.S.A. 2A:23B-22. So does the right to obtain entry of judgment on an award. N.J.S.A. 2A:23B-26b. The Court Rules establish the process to execute on a money judgment. R. 4:59-1. There was no need to preserve those rights in the contract. Consequently, we conclude the arbitration exception was not intended simply to entitle Concord to seek judicial confirmation and enforcement after obtaining an arbitration award on a claim of non-payment.
Our decision is not at odds with the general rule that ambiguity in an arbitration provision should be resolved in favor of arbitration. See, e.g., Marchak v. Claridge Commons, Inc. , 134 N.J. 275, 282 (1993). Although we liberally read arbitration clauses in favor of arbitration, "[t]hat favored status . . . is not without limits," and a party's waiver of its right to seek relief in the courts "'must be clearly and unmistakably established, and contractual language alleged to constitute a waiver will not be read expansively'". Garfinkel v. Morristown Obstetrics & Gynecology Assocs., 168 N.J. 124, 132 (2001) (citation omitted).
While the "in addition" language may appear ambiguous in a vacuum, we discern no ambiguity when the provision is viewed reasonably, in light of the statutory right to confirmation we just discussed, and the language as a whole. See M.J. Paquet, Inc. v. N.J. Dep't of Transp., 171 N.J. 378, 396 (2002) (stating that contract is ambiguous "if the terms . . . are susceptible to at least two reasonable alternative interpretations" (emphasis added) (citation and quotation omitted)); Atl. N. Airlines, Inc. v. Schwimmer, 12 N.J. 293, 301 (1953) ("The polestar of construction is the intention of the parties to the contract as revealed by the language used, taken as an entirety[.]"). We consider it meaningful that both arbitration and litigation are considered "remedies" in the contract. The arbitration clause states that both parties "are waiving their respective rights to seek remedies in court[.]" The provision continues, "in the specific event of non-payment" Concord may "in addition to the . . . arbitration remedy," pursue "all other legal remedies available to it under law (including collection proceedings in a court of law)[.]" Use of "remedy" to refer to both arbitration and resort to the courts, indicates that the resort to the courts was an equally available alternative to arbitration, as opposed to an avenue available only after arbitration.
Nor does our interpretation render meaningless the arbitration clause, as SAA asserts. The contract grants Concord the option to choose between arbitration or resort to the courts in an action involving non-payment. The provision is not made meaningless simply because Concord is not restricted to arbitrate in the limited case of non-payment. See Volt Info. Sciences, Inc. v. Bd. of Trustees of the Leland Stanford, Jr. Univ., 489 U.S. 468, 478, 109 S. Ct. 1248, 1255, 103 L. Ed. 2d 488, 499 (1989) (the federal arbitration statute does not "prevent parties who do agree to arbitrate from excluding certain claims from the scope of their arbitration agreement" (citation omitted)); Angrisani v. Fin. Tech. Ventures, L.P., 402 N.J. Super. 138, 148 (App. Div. 2008) (same). Concord would be required to arbitrate, without a court option, other claims not involving payment.
Affirmed.
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APELATE DIVISION