ROBERT KENNY, ESQ v. VALERY BELOV

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

 

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

ROBERT KENNY, ESQ.,

Plaintiff-Appellant/

Cross-Respondent,

v.

VALERY BELOV AND FRANK J.

SHAMY, ESQ.,

Defendants-Respondents/

Cross-Appellants,

and

SUNSTONE S, INC., AND BELOV

TECHNOLOGY CO., INC.,

Defendants-Respondents,

and

HOWARD BELL, FEDERAL INSURANCE CO.,

AND MARK L. ANTIN, ESQ.,

Defendants.

___________________________________

Argued telephonically January 9, 2014 Decided January 17, 2014

Before Judges Simonelli, Fasciale and Haas.

 

On appeal from the Superior Court of New Jersey, Law Division, Mercer County, Docket No. L-454-07.

 

Robert Kenny, Esq., appellant/cross-respondent pro se.

 

Walter R. Bliss, Jr., argued the cause for respondent/cross-appellant Valery Belov.

 

PER CURIAM

In this dispute regarding unpaid counsel fees and allegations of legal malpractice, plaintiff appeals from Law Division orders modifying an arbitration award. Defendant Valery Belov cross-appeals from the same orders, contending for the first time that defendant Frank J. Shamy, Esq., his new counsel, had a conflict.1 We reverse, remand, and direct the judge to determine which arbitration statute applies and to conduct his review of the arbitration award using the standard commensurate with the applicable statute. We also leave to the discretion of the judge whether any further remand to the arbitrator is warranted.

Defendants Sunstone S, Inc. (Sunstone) and Belov Technology Co., Inc. (BT) retained plaintiff to file a complaint against Federal Insurance Company (FIC) for failure to pay a property damage claim (the "underlying case"). Plaintiff learned that Valery Belov, President of BT, and Howard Bell, Vice President of Sunstone, refused to correct alleged prior inconsistent sworn statements. As a result, plaintiff withdrew as counsel in the underlying case, and Shamy entered an appearance as counsel for Sunstone and BT. Plaintiff obtained an order placing a lien on any judgment or settlement that Sunstone or BT received against FIC. The court then discharged the lien. Shamy settled the underlying case and received a fee of $80,000. Plaintiff was not compensated for the legal services that he rendered in the underlying case.

Plaintiff filed this lawsuit against Belov, Sunstone, and BT (hereinafter "defendants"), and Howard Bell, seeking damages and counsel fees incurred in the underlying case. Plaintiff filed an amended complaint naming FIC and Shamy. Shamy filed a legal malpractice counterclaim on behalf of defendants. The court then entered an order sending the matter to arbitration.

The arbitrator awarded a $33,300 fee to plaintiff against defendants. The parties appealed to the judge from the arbitration award and the judge issued an order modifying the award. Plaintiff moved for reconsideration and the judge awarded plaintiff costs and counsel fees.

On appeal, plaintiff argues primarily that (1) the judge erred by finding that Belov was not personally responsible for fees; (2) the judge miscalculated the fees; and (3) the judge used the wrong arbitration statute when reviewing the arbitration award. We focus on plaintiff's third contention because identification of the correct arbitration statute impacts on (1) the trial court's jurisdiction and standard of review of the arbitrator's findings; and (2) the standard that this court must apply when reviewing a trial court's decision to modify, vacate, or confirm the arbitration award.

There are three arbitration statutes: the Uniform Arbitration Act (UAA), N.J.S.A. 2A:23B-1 to -32; the New Jersey Alternative Procedure for Dispute Resolution Act (NJAPDRA), N.J.S.A. 2A:23A-1 to -30; and N.J.S.A. 2A:24-1 to -11, which governs collective bargaining agreements.

The UAA applies broadly to most arbitration agreements:

a. This act governs all agreements to arbitrate made on or after January 1, 2003 with the exception of an arbitration between an employer and a duly elected representative of employees under a collective bargaining agreement or collectively negotiated agreement.

 

b. This act governs an agreement to arbitrate made before January 1, 2003 if all the parties to the agreement or to the arbitration proceeding so agree in a record with the exception of an arbitration between an employer and a duly elected representative of employees under a collective bargaining agreement or collectively negotiated agreement.

 

c. On or after January 1, 2005, this act governs an agreement to arbitrate whenever made with the exception of an arbitration between an employer and a duly elected representative of employees under a collective bargaining agreement or collectively negotiated agreement.

 

d. This act shall not apply to agreements to arbitrate made before July 4, 1923.

 

[N.J.S.A. 2A:23B-3.]

 

The UAA provides default procedures for arbitration that apply "unless varied or waived by contract." Fawzy v. Fawzy, 199 N.J. 456, 469 (2009). Furthermore, the UAA acts as a default if parties do not make an agreement as to the terms of arbitration. Kimm v. Blisset, LLC, 388 N.J. Super. 14, 26 (App. Div. 2006) (stating that "the rights of the parties following issuance of an award, in the absence of an agreement to the contrary, are entirely governed by statute"), certif. denied, 189 N.J. 428 (2007).

Under the UAA, a court may vacate an arbitrator's award if, in pertinent part, the arbitrator exceeded the scope of his or her powers. N.J.S.A. 2A:23B-23a(4). The UAA only permits modification of an arbitrator's award to correct evident mistakes and miscalculations and other errors that do not affect the merits of the arbitrator's decision. N.J.S.A. 2A:23B-24a. Courts may not review arbitration awards for errors in interpreting the law, except under limited circumstances for public policy reasons. Tretina Printing, Inc. v. Fitzpatrick & Assocs., Inc., 135 N.J. 349, 357-58, 364 (1994). The UAA permits appeals from a trial court's order confirming, modifying, or vacating an arbitration award. N.J.S.A. 2A:23B-28. We review such orders de novo, applying the same standard as the trial court. See Wein v. Morris, 194 N.J. 364, 385 (2008) (holding that "the arbitrator was without authority to amend [a prior arbitration] award").

Unlike the UAA, the NJAPDRA only applies if the parties refer to the NJAPDRA when agreeing to arbitrate. N.J.S.A. 2A:23A-2. Under the NJAPDRA, "[i]n considering an application for vacation, modification or correction, a decision of the umpire on the facts shall be final if there is substantial evidence to support that decision." N.J.S.A. 2A:23A-13b. But vacation and modification are required if the arbitrator committed prejudicial error by "erroneously applying law to the issues and facts presented for alternative resolution." N.J.S.A. 2A:23A-13c(5), -13e(4). The court then has authority to "appropriately set forth applicable law and arrive at an appropriate determination under the applicable facts determined by the umpire." N.J.S.A. 2A:23A-13f.

The NJAPDRA forecloses appellate review of a trial court's decision to confirm, modify, or vacate an arbitration award: "Upon the granting of an order confirming, modifying or correcting an award, a judgment or decree shall be entered by the court in conformity therewith and be enforced as any other judgment or decree. There shall be no further appeal or review of the judgment or decree." N.J.S.A. 2A:23A-18b. This court is only permitted to review the trial court's decision to determine whether the court acted within the confines of N.J.S.A. 2A:23A-13 and vacated or modified the award based on the statutory bases. Fort Lee Surgery Ctr., Inc. v. Proformance Ins. Co., 412 N.J. Super. 99, 103 (App. Div. 2010). If the judge did so and gave a rational explanation of the arbitrator's prejudicial error, we must dismiss the appeal "regardless of whether we may think the trial judge exercised that jurisdiction imperfectly." Id. at 103-04. Exceptions to this rule exist in "rare circumstances" based on public policy and when related to the Appellate Division's supervisory function over the courts, for example when the court is biased. Mt. Hope Dev. Assocs. v. Mt. Hope Waterpower Project, L.P., 154 N.J. 141, 152 (1998).

The record does not indicate that, prior to arbitration, the parties agreed to arbitrate under the NJAPDRA. The case management order providing for arbitration stated that the parties would arbitrate pursuant to N.J.S.A. 2A:24-2, which "shall only apply to an arbitration or dispute arising from a collective bargaining agreement or a collectively negotiated agreement." N.J.S.A. 2A:24-1.1 (emphasis added). The trial judge reviewed the arbitration award under the NJAPDRA, but made insufficient findings regarding whether the parties agreed to arbitrate under that statute.

We therefore reverse and remand for the judge to determine under which arbitration statute the parties arbitrated, and direct the judge to conduct a review of the arbitration award using the correct standard commensurate with the applicable statute. We leave to the judge's discretion whether a remand to the arbitrator of any aspect of the parties' dispute is warranted, and if so, to establish the parameters of such further remand. We do not retain jurisdiction.

1 Defendant Shamy has not filed a brief.