SYLVIA FISCH v. THE MORIAH SCHOOL OF ENGLEWOOD

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

SYLVIA FISCH,

Plaintiff-Appellant,

v.

THE MORIAH SCHOOL OF ENGLEWOOD,

and ELLIOT PRAGER,

Defendants-Respondents.

___________________________________

November 19, 2013

Argued October 17, 2013 Decided

Before Judges Waugh, Nugent, and Accurso.

On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-7577-11.

Allan R. Freedman argued the cause for appellant.

M. Elizabeth Duffy argued the cause for respondents (Daly, Lamastra & Cunningham, attorneys; Ms. Duffy, on the brief).

PER CURIAM

Plaintiff Sylvia Fisch appeals the Law Division's March 11, 2013 order denying her motion for relief from an earlier order dismissing her complaint and compelling arbitration. We reverse and remand.

I.

We discern the following facts and procedural history from the record on appeal.

Fisch was employed by defendant Moriah School of Englewood from August 2005 until February 2011. The terms of her employment for the 2010-2011 academic year were governed by an employment agreement signed in June 2010.

Fisch alleges that she was wrongly terminated by the School. In September 2011, she filed a complaint against the School and its principal, defendant Elliot Prager. Fisch alleged that the defendants violated the New Jersey Wage and Hour Law, N.J.S.A. 34:11-56(a) to -56(a)(30), the New Jersey Law Against Discrimination, N.J.S.A. 10:5-1 to -49, and the New Jersey Conscientious Employee Protection Act, N.J.S.A. 34:19-1 to -8.

Fisch's employment agreement contained the following arbitration provision:

9. DISPUTE RESOLUTION. Any dispute arising from this Agreement, or from the termination of Employee's employment for any reason shall be resolved through binding arbitration, which shall be held at the option of the School either before the Rabbinical Council of America's Bet Din of America,[1] in accordance with its rules and procedures, or before a labor tribunal of the American Arbitration Association [(AAA)], in accordance with its voluntary labor arbitration rules. Arbitration shall be held in the City of New York unless otherwise mutually agreed. Notwithstanding any rule or regulation to the contrary, Employee and [the] School shall equally share in all fees, costs and expenses associated with any arbitration process.

In February 2012, the School and Prager filed a motion seeking dismissal of the complaint and an order compelling arbitration.2 Although the defendants' motion did not seek to compel arbitration in a specific forum, the accompanying form of the order provided as follows: "ORDERED that Plaintiff pursue any and all claims related to her employment . . . via AAA arbitration."3

Fisch opposed the motion, arguing that there was no certification from a person with personal knowledge identifying the employment agreement, that the School had not chosen to exercise its right to demand arbitration in a timely manner, that the language of the arbitration provision was ambiguous, that her statutory claims were not subject to arbitration, and that Prager was not a party to the employment contract.

The motion was argued on March 2, 2012. There was no discussion during the oral argument concerning the specific forum for arbitration. The judge granted the motion and placed his reasons on the record. When he signed the order, the judge amended it by hand to read: "ORDERED that pursuant to paragraph 9 of the employment agreement[,] Plaintiff pursue any and all claims related to her employment . . . via the arbitration identified in paragraph 9." The reasons for the change are not disclosed in the record and are unknown to counsel.

Although the order was final, Fisch did not file an appeal. In a March 15 letter to plaintiff's counsel, defense counsel advised him that her client "has elected AAA" and that if Fisch intended to initiate arbitration, "she must do so at the AAA in New York." Plaintiff's counsel filed a demand for arbitration with the AAA on December 5, 2012. He enclosed a check for Fisch's share of the filing fee.

On December 11, the AAA informed defense counsel that the arbitration would be administered as a dispute "aris[ing] from an employer promulgated plan" and requested the remainder of the $1100 filing fee. On the same day, defense counsel wrote to plaintiff's counsel, referred to the AAA's letter, and advised him that the School had "elected" to arbitrate before the Bet Din. However, she acknowledged that she had told him in March that the School was inclined to elect the AAA. Defense counsel also offered to reimburse Fisch for the fee already paid to the AAA.

In subsequent correspondence to the AAA, defense counsel explained that the School decided against using the AAA after it was notified that the AAA would treat the case as a matter related to an employer promulgated plan. She noted that, as a consequence of the AAA's classification of the matter, the costs would have to be paid by the School as opposed to being shared, as required by the employment agreement.

In February 2013, Fisch filed her motion seeking relief from the order dismissing the claim and restoration of the case to the active trial calendar. In responding to the School's opposition, plaintiff's counsel suggested that the School's original motion may have mentioned only the AAA to avoid having the court determine whether the Bet Din was an appropriate forum.

Whether the real reason they originally did not seek to have the Court order an arbitration before the Bet Din that they now say they prefer was motivated by their desire to avoid having the Court consider whether the Bet Din is a proper arbitration forum under the New Jersey Arbitration statute, given the lack of credence given by the Jewish Law to testimony by a woman, or the propensity of arbitrators in the Bet Din to refuse to require an oath by those who testify (which I have seen there) or some other reason is not clear.

Plaintiff's counsel also noted that the School had not included Prager as a participant in the proposed arbitration statement, suggesting that it was seeking to avoid including him in the arbitration.

Another judge denied the motion on March 11. In a statement of reasons attached to the order, the judge rejected Fisch's contention that the first judge would have reached a different decision had he known that the School would not participate in arbitration before the AAA. She relied on the fact that the prior judge had specifically amended the proposed order to delete reference to the AAA and to require only that the arbitration be in accordance with the provisions of the agreement. She also observed that Fisch had not objected to the form of the order after it was signed. This appeal followed.

II.

On appeal, Fisch argues that she should have been granted relief from the March 2, 2012 order because (1) the School should not have been permitted to make a second election of the arbitration forum after having chosen the AAA, (2) the proposed arbitration agreement with the Bet Din did not include Prager despite the School's representation that he would participate in arbitration, and (3) the agreement also provided that "the arbitrators may resolve th[e] dispute in accordance with Jewish law ('din')."

Rule 4:50-1 provides, in pertinent part, as follows:

On motion, with briefs, and upon such terms as are just, the court may relieve a party or the party's legal representative from a final judgment or order for the following reasons: (a) mistake, inadvertence, surprise, or excusable neglect; . . . or (f) any other reason justifying relief from the operation of the judgment or order.

"A motion under Rule 4:50-1 is addressed to the sound discretion of the trial court, which should be guided by equitable principles in determining whether relief should be granted or denied." Hous. Auth. of Morristown v. Little, 135 N.J. 274, 283 (1994).

"Public policy favors arbitration." Coast Auto. Grp., Ltd. v. Withum Smith & Brown, 413 N.J. Super. 363, 369 (App. Div. 2010) (citing Barcon Assocs. v. Tri-County Asphalt Corp., 86 N.J. 179, 186 (1981)). "Accordingly, arbitration clauses should be construed 'liberally to find arbitrability if reasonably possible.'" Ibid. (quoting J. Baranello & Sons, Inc. v. Davidson & Howard Plumbing & Heating, Inc., 168 N.J. Super. 502, 507 (App. Div.), certif. denied, 81 N.J. 340 (1979)); see also Marchak v. Claridge Commons, Inc., 134 N.J. 275, 282 (1993); Young v. Prudential Ins. Co. of Am., 297 N.J. Super. 605, 617 (App. Div.), certif. denied, 149 N.J. 408 (1997).

Nonetheless, "'a court may not rewrite a contract to broaden the scope of arbitration[.]'" Fawzy v. Fawzy, 199 N.J. 456, 469 (2009) (quoting Garfinkel v. Morristown Obstetrics & Gynecology Assocs., P.A., 168 N.J. 124, 132 (2001)). In construing an arbitration clause, courts must honor the intentions of the parties as set forth in the language. Quigley v. KPMG Peat Marwick, LLP, 330 N.J. Super. 252, 270 (App. Div.), certif. denied, 165 N.J. 527 (2000). The scope of arbitration is dependent on the parties' agreement. Id. at 270-71.

There is no doubt that the parties agreed to arbitrate their disputes, and that the School had the right to chose between the Bet Din and the AAA. The problem in this case arose when the School moved to compel arbitration in general terms, but submitted a form of the order specifically calling for arbitration before the AAA, which counsel for the School has conceded was its stated intention at the time. As a consequence, Fisch had no compelling reason to focus her opposition on the possibility of the Bet Din as a potential forum.

During oral argument before the first judge, the School's attorney represented that Prager would participate in, and be bound by, the arbitration, and also argued that Fisch was not being deprived of any of her statutory rights because the arbitration would be decided in accordance with those laws. Her basic argument was that the arbitration clause concerned the forum for dispute resolution, rather than a waiver of statutory claims. There was no discussion of the Bet Din as a potential forum, nor was there any suggestion that the Bet Din would apply religious rather than statutory law.

On March 15, 2012, approximately two weeks after the School's arbitration motion was granted, defense counsel notified Fisch's counsel that her client had "elected AAA" as the arbitration forum. Between the date of that letter and December 5, when Fisch started the arbitration proceeding at the AAA, the School never notified plaintiff's counsel that it had changed its mind about the forum. Indeed, it did not do so until the AAA informed the School that the dispute was being treated as one in which the employer is required to pay all of the fees. In that regard, we note that the employment agreement specifically provides that the costs of arbitration would be shared equally, "[n]otwithstanding any rule or regulation to the contrary." Consequently, it gave the School the right to require Fisch to reimburse it for half of the expenses.

The School's decision to change its selection of the forum created several problems. First, despite the representations made during oral argument, the arbitration agreement with the Bet Din prepared by defense counsel did not include Prager as a party. Second, the proposed agreement provided for the application of Jewish law, despite the fact that counsel for the School had represented that the arbitration provision did not deprive Fisch of the benefit of the New Jersey statutes on which she based her claims.4 The employment agreement does not provide for a waiver of statutory rights, nor does it call for the application of religious law instead of New Jersey law. It merely states that, with respect to the Bet Din, the arbitration would be "in accordance with its rules and procedures."

Based upon all of the circumstances of this case, we conclude that the application of equitable principles requires us to reverse the order on appeal. We remand to the trial court for a prompt hearing at which the School and Prager shall elect whether to (1) proceed before the AAA with the understanding that the resulting costs will be shared by the parties as required by the employment agreement or, (2) waive arbitration and litigate the dispute in the Superior Court. The School is not prejudiced by proceeding in the forum that it had originally chosen, while Fisch would be prejudiced by further litigation concerning the suitability of the Bet Din as a forum in light of the provision in the arbitration agreement for the application of religious law.5 The complaint in this case was filed over two years ago. It is time to resolve the underlying dispute.

1 A Bet Din is a Jewish ecclesiastical court. See Burns v. Burns, 223 N.J. Super. 219, 226 (Ch. Div. 1987).

2 The motion sought, in the alternative, a more definite statement pursuant to R. 4:6-4.

3 We were informed during oral argument that the order was so worded because, at the time the motion was made, that was the forum the School intended to select.

4 Defense counsel argued before the first judge that "a party does not forego the substantive rights afforded by the statute. It only submits their resolution in an arbitrable rather than a judicial forum."

5 We neither reach nor determine the issue of whether the Bet Din is an appropriate forum. We hold only that, having previously elected the AAA, it was too late for the School to change the election, especially because the proposed Bet Din agreement raised issues as to the applicable law and the participation of Prager, which had been resolved at the oral argument on the initial motion.