JERSEY CENTRAL POWER & LIGHT COMPANY v. MELCAR UTILITY COMPANY

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0675-09T2

JERSEY CENTRAL POWER & LIGHT

COMPANY (A FIRST ENERGY COMPANY),

Plaintiff-Appellant,

v.

MELCAR UTILITY COMPANY,

Defendant/Third Party

Plaintiff-Respondent,

and

VERIZON OF NEW JERSEY,

Defendant,

v.

UTILIQUEST,

Third Party Defendant-

Respondent.

________________________________________________________________

December 6, 2010

Submitted November 15, 2010 - Decided

Before Judges Lisa and Alvarez.

On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, Docket No. DC-1743-09.

Daniel F. Sahin, attorney for appellant.

Law Offices of Dennis J. Crawford, attorney for respondent Melcar Utility Company (Robert G. Feldman, on the brief).

Richardson & Galella, LLC, attorneys for respondentUtiliquest (Charles B. Austermuhl, on the brief).

PER CURIAM

Plaintiff, Jersey Central Power & Light Company (JCP&L) appeals from the June 30, 2009 order dismissing its complaint without prejudice for lack of subject matter jurisdiction, and the September 11, 2009 order denying its motion for reconsideration. The basis for the dismissal was a provision in the Underground Facility Protection Act (UFPA), N.J.S.A. 48:2-73 to -91, which requires that disputes such as the one involved in this case "shall be subject to an alternative dispute resolution process" as a prerequisite to seeking to redress in the courts. N.J.S.A. 48:2-80d. JCP&L argues that the trial court erred in dismissing its complaint because (1) the language of the statute does not expressly compel arbitration, (2) arbitration cannot be compelled without the consent of all parties, (3) if the statutory provision does purport to compel arbitration as a precondition to suit, it is unconstitutional, and (4) compulsory arbitration interferes with the orderly, economic and expeditious resolution of claims. We reject these arguments and affirm.

JCP&L instituted this action in the Law Division, Special Civil Part, against Melcar Utility Company (Melcar), and Verizon of New Jersey (Verizon). It alleged that during an excavation in Rockaway between September 24 and 27, 2007, those companies damaged JCP&L's underground facilities and were liable to it for damages under the UFPA. JCP&L alleged damages in the amount of $13,176.65.1 Both defendants answered, and Melcar also filed a third-party complaint against Utiliquest, alleging its failure to properly mark out the utilities at the site, and seeking indemnification and contribution from Utiliquest.

Prior to trial, Utiliquest and Melcar moved for dismissal, contending that the court lacked subject matter jurisdiction because JCP&L had not first submitted the dispute to arbitration. They relied on N.J.S.A. 48:2-80d, which provides in its entirety as follows:

Any underground facilities operator that fails to mark, locate, or otherwise provide the position and number of its underground facilities which may be affected by a planned excavation or demolition, in accordance with the provisions of paragraph (2) of subsection a. of this section, shall be liable for any costs, labor, parts, equipment and personnel downtime, incurred by an excavator damaging a facility owned, operated or controlled by the underground facility operator. An excavator that damages an underground facility in violation of the provisions of the "Underground Facility Protection Act," P.L. 1994, c. 118 (C. 48:2-73 et seq.) shall be liable for any costs, labor, parts, equipment and personnel downtime, incurred by the underground facilities operator that owns or controls the damaged underground facility. Any dispute arising from the provisions of this subsection, where the claim is less than $25,000, shall be subject to an alternative dispute resolution process as established within the Office of Dispute Settlement in the Office of the Public Defender. Nothing in this act shall be construed to discourage parties from pursuing alternative dispute resolution processes for an amount greater than $25,000. The parties may by mutual agreement designate another alternative dispute resolution association for all matters.

[Emphasis added.]

Further, pursuant to that legislative authorization, the Office of Dispute Settlement (ODS) in the Office of the Public Defender established a dispute resolution procedure. For disputes under $25,000, arbitration is required, which is conducted by a member of the ODS staff. Various procedural requirements are prescribed for the arbitration proceeding. When an award is rendered, it is deemed final, binding and enforceable in court, unless an aggrieved party (including one which failed to appear at the arbitration hearing) rejects the award within thirty days, in which case the matter may proceed to court for a de novo proceeding. The party filing for arbitration must pay a $100 fee. Each additional party must pay a $200 fee. A party rejecting the award must pay an additional $200 fee. Application may be made to the ODS to have such fees reduced or waived if a party contends it is unable to pay them.

The trial court concluded that the statute provided a mandatory arbitration proceeding, and unless a party first availed itself of that proceeding and rejected the arbitration award, the court lacked jurisdiction to entertain the suit. The court rejected JCP&L's arguments to the contrary, which are essentially the same arguments it advances on appeal. Because the issues raised on appeal are legal issues, our review is de novo. Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995). Based upon our de novo review, we agree with the trial court's conclusion.

JCP&L first argues that the language "shall be subject to," in N.J.S.A. 48:2-80d, does not necessarily mandate an alternate dispute resolution procedure. It argues that had the Legislature intended such a mandatory provision it would have used language such as "shall be submitted to." JCP&L's reliance on the legislative history is unpersuasive. The various statements by legislative committees and the sponsor of the bill do not illuminate the meaning of the terms in the statute, but merely use the identical terms. JCP&L argues that because the phrase "shall be subject to" could be interpreted either as permissive or mandatory, an ambiguity exists, and the phrase must be read in the context of the overall statute and the legislative scheme in order to ascertain the intent of the legislature. We agree with the general principles of law expressed by JCP&L in this regard. If legislation is clear and unambiguous on its face and admits to only one interpretation, courts must enforce the law as written. DiProspero v. Penn, 183 N.J. 477, 492 (2005). However, if more than one interpretation could reasonably be made, further analysis is required to ascertain the probable intent of the legislature. Id. at 492-93.

We do not necessarily perceive any ambiguity here when the disputed phrase is read in connection with the next sentence in the statute, which provides that "[n]othing in this act shall be construed to discourage parties from pursuing alternative dispute resolution processes for an amount greater than $25,000." N.J.S.A. 48:2-80d. The Legislature thus determined to treat the two categories of disputes differently, depending upon the amount involved. It is clear that for disputes involving greater amounts, the Legislature encouraged parties to voluntarily submit their disputes to alternate dispute resolution processes. Thus, it is clear that for the disputes involving smaller amounts, in order for the statutory treatment to be different, alternate dispute resolution is mandatory.

Even if we were to find an ambiguity, the result would be the same. In addition to the reason we have just set forth, there is another reason why we reject JCP&L's suggestion that "shall be subject to" should be interpreted to mean that parties would subject their disputes to alternate dispute resolution processes only if all parties agreed. If the language meant that, it would mean nothing at all. Parties to any dispute can always mutually agree to submit their disputes to an alternate dispute resolution process. We will not attribute to the Legislature a purpose to insert "'inoperative, superfluous or meaningless'" provisions in its enactments. In re Sussex County Mun. Utilities Auth., 198 N.J. Super. 214, 217 (App. Div.) (quoting Hackensack Bd. of Ed. v. City of Hackensack, 63 N.J. Super. 560, 569 (App. Div. 1960)), certif. denied, 101 N.J. 267 (1985). This analysis also disposes of JCP&L's second argument, namely that arbitration cannot be compelled without the consent of all parties.

We also find unpersuasive JCP&L's third argument, that compelling arbitration as a precondition to litigation is unconstitutional. Courts of this State have upheld the constitutionality of legislation compelling arbitration. See, e.g., Div. 540 v. Mercer Co. Improvement Auth., 76 N.J. 245, 250 (1978). JCP&L offers no authority to the contrary. Alternative dispute resolution procedures, such as arbitration, are favored by the courts. Indeed, the procedures established by the ODS are strikingly similar to those promulgated by our Supreme Court in the mandatory arbitration proceedings required in certain civil actions. See R. 4:21A-1.

JCP&L's final argument is that mandatory arbitration in cases such as this, as implemented by the ODS procedures, should be prohibited because it interferes with the orderly, economic and expeditious resolution of claims. The Legislature has made a contrary policy decision. The Legislature has obviously determined that claims under the UFPA can be more efficiently and expeditiously resolved through alternative dispute resolution procedures. It has mandated such an effort for claims under $25,000, and encouraged it for claims over $25,000. We have no occasion to interfere with that legislative determination. JCP&L's argument on this point would be more appropriately be directed to the Legislature.

1 The complaint contained a separate count alleging a similar claim arising out of an excavation in a different municipality on a different date, resulting in damages of $1960.55. However, the parties apparently settled that dispute, resulting in the voluntary dismissal of that count.