MICHAEL SAMMARCO et al. v. UH-HUH BEVERAGE CORP.

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-5869-04T15869-04T1

MICHAEL SAMMARCO and

UH-HUH BEVERAGE CORP.,

Plaintiffs-Appellants,

v.

PEPSI-COLA BOTTLING COMPANY

OF NEW YORK, INC.,

Defendant-Respondent,

and

PEPSI COLA BOTTLING GROUP and

PEPSI-COLA METROPOLITAN BOTTLING

CO., INC.,

Defendants.

___________________________________

 
 
Argued Telephonically September 28, 2006 - Decided October 25, 2006

Before Judges S.L. Reisner and Seltzer.

On appeal from the Superior Court of New

Jersey, Law Division, Middlesex County,

L-8169-04.

David Lustbader argued the cause for appellants (Lustbader and Lustbader, attorneys; Mr. Lustbader on the brief).

Drew Wixted argued the cause for respondent

(Wolf, Block, Schorr and Solis-Cohen, attorneys; James Greenberg, of counsel; Mr. Wixted, on the brief).

PER CURIAM

Plaintiffs appeal from an April 15, 2005, order dismissing their amended complaint and from a May 27, 2005, order denying reconsideration. We affirm.

The dispute between the litigants arises from an agreement pursuant to which plaintiffs distributed beverages produced or bottled by defendant to retail stores in a designated portion of downtown New York City. Plaintiffs had purchased the rights, and assumed the obligations, of a distributor previously servicing that designated area. The agreement that had governed the prior relationship was incorporated into plaintiffs' agreement with defendant. The agreement contained an arbitration clause which provided:

Any and all disputes or disagreements between the Company and the Distributor concerning the interpretation of [sic] application of the provisions of this Agreement, shall be determined in arbitration before Mr. William J. Glinsman, and judgment upon the award rendered by the said Arbitrator may be entered in any Court having jurisdiction. In the event of the failure of Mr. Glinsman to act as Arbitrator for whatever reason, the person then acting as Arbitrator under the then collective bargaining agreement between the Company and the Soft Drink Workers Union, Local 812 I.B.T., shall act as his replacement until such time as the parties hereto shall designate in writing a substitute Arbitrator for Mr. Glinsman. In no event shall the Arbitrator have the power to alter or amend the terms of this Agreement.

The agreement provided for termination by defendant in which event defendant "shall be under no obligation to the [plaintiff] and the [plaintiff] shall have no right or interest in respect of the Territory or in any other respect whatsoever, except as herein expressly provided."

The record provided to us is incomplete, but it appears uncontested that defendant terminated the contract "in or around 2000" by virtue of what defendant asserted was plaintiffs' fraudulent conduct. The parties arbitrated the issues of defendant's right to terminate the contract and the amount of damages defendant sustained as a result of plaintiffs' actions. The arbitrator entered an award on January 24, 2003, which defendant's brief characterizes as "upholding [defendant's] right to terminate the Agreement as a result of plaintiffs' fraud and awarding [defendant] damages in the amount of $285,866.09." We are unable to determine the accuracy of these findings because the arbitrator's decision is not included in the record before us. Plaintiffs, however, do not contest this characterization of the award. The award was reduced to judgment in the State of New York in the amount of $294,665.68 and domesticated in New Jersey. See N.J.S.A. 2A:49A-25 to -33.

Thereafter, another arbitration proceeding occurred that defendant advises regarded "the amount of damages Plaintiffs owed [defendant] for additional fraudulent acts (involving other customers)." This award is also not included in the record before us; however, plaintiff does not suggest defendant misrepresented what occurred. The second award, dated July 8, 2003, was entered in favor of defendant in the amount of $77,677.83. That award was also reduced to judgment in New York in the amount of $80,685.24 and domesticated in New Jersey.

Defendant proceeded to levy on real estate owned by plaintiff Sammarco. On November 5, 2004, plaintiffs filed a complaint, amended on December 2, 2004, in Middlesex County. The amended complaint alleged that after termination of the agreement, defendant assumed operation of plaintiffs' route; that defendant failed to account to plaintiffs for the monies received from operating the route; that defendant ultimately sold the route to a third party after refusing to allow plaintiffs to sell the route and, in fact, obtained less for the rights conferred by the terminated contract than plaintiffs might have otherwise obtained; that defendant "acted in bad faith and breached [its] implied and expressed contractual terms with plaintiffs;" that defendant's actions were violative of the Consumer Fraud Act, N.J.S.A. 56:8-1 to -135; that the actions were willful, wanton, and malicious; and that defendant did not credit the monies owed to plaintiffs, as described in the complaint, against the judgments.

Plaintiffs sought a stay of the collection of the judgments, damages, punitive damages, costs, and fees. After the complaint was served, defendant filed a motion to dismiss the complaint. On March 9, 2005, a Law Division judge entered two orders denying the motion to dismiss; staying the enforcement of the judgments against plaintiff Sammarco until June 9, 2005; and requiring an accounting of the operation of the route and the sale proceeds within forty-five days. The reasons of the motion judge are not included in the record.

Defendant's motion for reconsideration was heard by another judge, Judge Ciccone. She granted the motion to dismiss on the grounds that the arbitration clause was enforceable and encompassed the allegations of the complaint. She held that since the parties had agreed on an alternate forum for the resolution of their disputes, the court was without "subject matter jurisdiction." The decision was memorialized in an order dated April 15, 2005. Plaintiffs moved to reconsider the order and sought limited discovery on the question of personal jurisdiction. That motion was denied by order dated May 27, 2005, and plaintiffs filed a Notice of Appeal on July 11, 2005. On October 7, 2005, Judge Ciccone stayed "any levy, execution or sale of any assets of Michael Sammarco . . . until this litigation is resolved and until further order of this

court[.]" That order was not appealed. Thus, by its terms, any application to dissolve the stay must, perforce, await the resolution of the dispute in arbitration.

On appeal, plaintiffs argue that they are entitled to discovery on the question of personal jurisdiction and that the arbitration clause is unenforceable because it is violative of the principles announced in Garfinkel v. Morristown Obstetrics & Gynecology Assocs., P.A., 168 N.J. 124 (2001). We are satisfied that neither argument has sufficient merit to justify discussion in a written opinion. R. 2:11-3(e)(1)(E).

We add, however, these brief comments. Plaintiff is entitled to discovery on the issue of personal jurisdiction only if that jurisdiction is relevant to the decision. Since the dismissal of the complaint was based, not on a failure of personal jurisdiction, but on an acceptance of the argument that the parties had chosen an alternative forum for the resolution of their disputes, the issue of personal jurisdiction is moot.

We are also satisfied that plaintiffs' claim to a judicial forum is meritless. New Jersey has a strong policy in favor of arbitration and, accordingly, arbitration clauses are to be read in favor of arbitration. See Lederman v. Prudential Life Ins. Co. of Am., Inc., 385 N.J. Super. 307, 321 (App. Div. 2006) ("public policy favors arbitration") (citing Martindale v. Sandvik, Inc., 173 N.J. 76, 92, (2002)); Caruso v. Ravenswood Developers, Inc., 337 N.J. Super. 499, 504 (App. Div. 2001) ("this State has a strong public policy 'favoring arbitration as a means of dispute resolution and requiring a liberal construction of contracts in favor of arbitration.'") (quoting Alamo Rent A Car, Inc. v. Galarza, 306 N.J. Super. 384, 389 (App. Div. 1997)).

The clause contained in the agreement between these parties was sufficiently broad to encompass the plaintiffs' common law and contractual claim to a credit resulting from defendant's assumption of the route after termination, and from the sale of that route by defendant. A resolution of that claim to credit requires an "interpretation" or "application" of the contract clause providing that, in the event of termination, defendant "shall be under no obligation to the [plaintiff] and the [plaintiff] shall have no right or interest in respect of the Territory or in any other respect whatsoever, except as herein expressly provided." Moreover, the parties had arbitrated defendant's right to damages resulting from plaintiffs' conduct. The issues implicated by plaintiffs' complaint are simply credits against those damages.

Plaintiffs' reliance on Garfinkel, supra, for the proposition that the arbitration clause fails to express sufficiently the intention of the parties to forego a judicial forum is unavailing. That case dealt with the sufficiency of a clause requiring arbitration of rights created by statute. It did not deal with common law or contract rights. Although plaintiffs pled a Consumer Fraud cause of action, they conceded at argument that the cause was not viable.

In short, we are in accord with Judge Ciccone's determination that the arbitration clause was enforceable and that the dispute must be submitted to arbitration in accordance with that clause. We affirm substantially for the reasons expressed by the judge in her oral opinions of April 15, 2005, and May 27, 2005.

 
Affirmed.
 

Only defendant Pepsi-Cola Bottling Company of New York, Inc., has appeared in this action. Plaintiffs' complaint does not distinguish among the defendants and, accordingly, we refer to defendant in the singular.

We reject plaintiffs' argument, made in passing, that the law of the case doctrine precluded the second judge from granting the motion to dismiss for several reasons. First, the original denial was without prejudice so that a second application was anticipated. Second, the doctrine is "a discretionary rule of practice and not one of law." State v. Hale, 127 N.J. Super. 407, 411 (App. Div. 1974) (citing United States v. U.S. Smelting Refin. & M. Co., 339 U.S. 186, 199, 70 S. Ct. 537, 544, 94 L. Ed. 750, 761 (1950)). We perceive no abuse of discretion in considering an anticipated motion for reconsideration.

The parties have assumed that New Jersey law should govern the question of whether plaintiffs' complaint should be resolved in arbitration. Since the laws of New York, where all relevant acts seem to have occurred, and New Jersey do not appear in conflict, we need not resolve that question. See Fu v. Fu, 160 N.J. 108, 118 (1999); Port Auth. of N.Y. & N.J. v. Arcadian Corp, 189 F.3d 305, 311 (3d Cir. 1999).

(continued)

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9

A-5869-04T1

October 25, 2006