FRANK TROBIANO and MANCHESTER ENVIRONMENTAL SERVICES LLC v. DANIEL L. BROWN and MILLENNIUM DISPOSAL, LLC
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APPROVAL OF THE APPELLATE DIVISION
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SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-4523-16T2
FRANK TROBIANO and
MANCHESTER
ENVIRONMENTAL SERVICES,
LLC,
Plaintiffs-Appellants,
v.
DANIEL L. BROWN and
MILLENNIUM DISPOSAL, LLC,
Defendants-Respondents.
_________________________________
Argued May 23, 2018 – Decided September 17, 2018
Before Judges Koblitz and Suter.
On appeal from Superior Court of New Jersey, Law
Division, Bergen County, Docket No. L-2166-17.
Andrew T. Fede argued the cause for appellants (Archer
& Greiner, PC, attorneys; Andrew T. Fede, of counsel
and on the brief).
Respondents have not filed briefs.
The opinion of the court was delivered by
SUTER, J.A.D.
Plaintiffs Frank Trobiano and Manchester Environmental Services, LLC
(Manchester), appeal the May 12, 2017 order that denied their request to modify
the arbitration award to include reimbursement for attorney's fees and costs, and
the arbitrator's fees. We affirm the denial. The May 12, 2017 order also
confirmed a final arbitration award entered in favor of plaintiffs against
defendants Daniel L. Brown and Millennium Disposal, LLC (Millennium).
Plaintiffs do not appeal that portion of the order.
Trobiano, the owner and manager of Manchester, and Brown, the owner
of Millennium, signed a membership interest purchase agreement (MPA) in July
2015, under which Brown agreed to sell his interest in Millennium for an interest
in Manchester. The sale was conditioned on obtaining approvals from the
Department of Environmental Protection (DEP) because Millennium was
engaged in solid waste collection, transportation and disposal.
Plaintiffs claimed that defendants breached the MPA the following year
by presenting them with a "Termination and Mutual Agreement." Plaintiffs filed
an order to show cause and verified complaint to compel arbitration of this
dispute. The trial court entered an order compelling arbitration, which noted
defendants did not oppose arbitration.
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An arbitration was conducted before a retired Superior Court judge, who
heard testimony from the parties' witnesses. The arbitrator issued a written
decision that awarded relief to plaintiffs. He concluded the MPA was a binding
agreement, defendants failed to provide information required for DEP's approval
of the MPA, and defendants breached the MPA. The arbitrator awarded
plaintiffs $91,297 in damages, but excluded from that amount, rental expenses,
attorney's fees, costs and accounting expenses, "as there never was an agreement
that the [d]efendant[s] would share in th[o]se expenses." The arbitrator did not
award plaintiffs attorney's fees for the arbitration. He was "not satisfied that the
[d]efendants' position was not offered in good faith or without a reasonable basis
in law and fact."
Plaintiffs asked the arbitrator to modify the award to include attorney's
fees and costs. They contended that subsection 5.6(c) of the MPA required an
award of attorney's fees. That subsection provided:
(c) If it is determined by the arbitrator that one party
was in default hereof or instituted (or defended) such
arbitration proceeding not in good faith or without a
reasonable basis in law or fact ("Defaulting Party"), the
Defaulting Party shall bear the costs of the arbitration
proceeding and pay to the other party or parties the
reasonable attorney's fees and costs incurred in such
proceeding, which amounts shall be separately
determined by the arbitrator in such proceeding and
become part of the amount of the arbitration award,
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3
payable by the Defaulting Party to the other party or
parties.
Plaintiffs argued that defendants "defaulted" under the MPA when they
breached the agreement and that this triggered the requirement to pay attorney's
fees. The arbitrator declined to modify the award, because he was "without
jurisdictional authority to 'clarify' [his] opinion."
Plaintiffs then filed an order to show cause and verified complaint in the
Superior Court asking to confirm the final arbitration award "in the amount of
$91,297 plus interest at the judgment rate," and to modify it to include attorney's
fees and costs from the arbitration and the arbitrator's fees. Plaintiffs also
requested attorney's fees and costs related to the confirmation action.
On May 12, 2017, the trial court confirmed the final arbitration award of
$91,297 plus interest, but denied plaintiffs' request for attorney's fees and costs.
The court found "no persuasive evidence demonstrating evident partiality,
corruption, fraud, or dishonesty in the '[a]rbitrator's handling of this matter.'"
The court stated that although plaintiffs did not agree with the "[a]rbitrator's
interpretation of the attorney's fees provision . . . that is not a basis on which
this court should modify the [a]ward."
On appeal, plaintiffs contend the trial court erred by not modifying the
arbitration award to include attorney's fees and costs, arguing that payment of
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their attorney's fees is required under the MPA. Plaintiffs assert the MPA's
reference in section 5.6(c) to a party "in default" is a fee-shifting provision that
requires an unsuccessful party to pay the attorney fees of a prevailing party.
Plaintiffs also seek attorney's fees and costs for their application to confirm and
modify the arbitration award.
"'[A]rbitration . . . is a favored means of dispute resolution[,]' . . . [and]
[i]t is well-settled that New Jersey's strong public policy favors settlement of
disputes through arbitration." Curran v. Curran, 453 N.J. Super. 315, 320 (App.
Div. 2018) (quoting Minkowitz v. Israeli, 433 N.J. Super. 111, 131 (App. Div.
2013) (alterations in original) (other citations omitted)). The scope of judicial
review of an arbitration award is limited. Tretina Printing, Inc. v. Fitzpatrick &
Assocs., 135 N.J. 349, 358 (1994). An arbitrator's award "is entitled to a
presumption of validity." Twp. of Wyckoff v. PBA Local 261, 409 N.J. Super.
344, 354 (App. Div. 2009).
An arbitrator may award reasonable attorney's fees and reasonable
expenses of arbitration "if such an award is authorized . . . by the agreement of
the parties to the arbitration proceeding." N.J.S.A. 2A:23B-21(b). The scope
of an arbitrator's authority is "limited by the agreement of the parties." Block v.
Plosia, 390 N.J. Super. 543, 555 (App. Div. 2007). The American Rule applies
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where the contract does not expressly require fee-shifting. Rock Work, Inc. v.
Pulaski Const. Co. Inc., 396 N.J. Super. 344, 350-51 (App. Div. 2007).
Under the New Jersey Arbitration Act (Arbitration Act), N.J.S.A.
2A:23B–1 to –32, an arbitration award can be modified or corrected by a court
in limited instances as follows:
a. Upon filing a summary action within 120 days after
the party receives notice of the award pursuant to
section 19 of this act or within 120 days after the party
receives notice of a modified or corrected award
pursuant to section 20 of this act, the court shall modify
or correct the award if:
(1) there was an evident mathematical miscalculation
or an evident mistake in the description of a person,
thing, or property referred to in the award;
(2) the arbitrator made an award on a claim not
submitted to the arbitrator and the award may be
corrected without affecting the merits of the decision
upon the claims submitted; or
(3) the award is imperfect in a matter of form not
affecting the merits of the decision on the claims
submitted.
b. If an application made pursuant to subsection a. of
this section is granted, the court shall modify or correct
and confirm the award as modified or corrected.
Otherwise, unless an application to vacate is pending,
the court shall confirm the award.
c. An application to modify or correct an award
pursuant to this section may be joined with an
application to vacate the award.
A-4523-16T2
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[N.J.S.A. 2A:23B-24.]
"Notwithstanding the apparently broad scope of the court's powers to alter an
arbitrator's award as described in the statutory language, our courts have not
traditionally interpreted the statutory language broadly." Kimm v. Blisset LLC,
388 N.J. Super 14, 29 (App. Div. 2006) (citations omitted).
We agree with the trial court that plaintiffs were not entitled to a
modification of the arbitration award. N.J.S.A. 2A:23B-24(a)(1) did not apply
because plaintiffs did not contend the arbitrator made an "evident mathematical
miscalculation or mistake in the description of a person, thing, or property
referred to in the award." Ibid. N.J.S.A. 2A:23B-24(a)(2) did not apply because
the issue of attorney's fees was submitted to the arbitrator. Plaintiffs' damages
claim included a request for pre-arbitration legal fees. They also acknowledged
the arbitrator could decide the amount of their requested fees , but not whether
they were entitled to fees. N.J.S.A. 2A:23B-24(a)(3) did not apply because
plaintiffs did not contend the award was "imperfect in a matter of form." Ibid.
Because part of the award by the arbitrator was the denial of plaintiffs' request
for fees, if the award were modified, as requested by plaintiffs, it would have
"affected the merits of the decision upon the claims submitted." Ibid. The trial
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court did not err, therefore, by denying plaintiffs request to modify the
arbitration award because none of the statutory grounds applied.
Plaintiffs contend the arbitrator exceeded his authority by denying the
requested fees. The arbitrator's construction is not without support within the
MPA. The MPA did not expressly provide that the party who "prevailed" in the
arbitration was entitled to fees. The MPA used the term "defaulting party,"
which plaintiffs have construed to mean the party that lost in the arbitration. If
that were so, however, there would be no need to define "defaulting party" as
one who lacks "good faith" or whose position lacks a "reasonable basis in law
or fact"; presumably such parties would not be successful in the arbitration,
making those portions of the paragraph redundant. Another subsection of the
MPA (Section 5.6 (g)) uses the term "unsuccessful party"; it does not use the
term "defaulting party." If a "defaulting party" is an "unsuccessful party," the
MPA could have simply used that term; use of "unsuccessful" raises doubt about
whether a defaulting party means an unsuccessful one.
Plaintiffs argue the trial court should have awarded attorney's fees and
costs incurred in the summary action when it entered its order confirming the
arbitration award. N.J.S.A. 2A:23B-25(b) provides that "[a] court may allow
reasonable costs of the summary action and subsequent judicial proceedings."
An award of attorney's fees under N.J.S.A. 2A:23B-25(b) is discretionary rather
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than mandatory. We discern no abuse of discretion in the court's order not to
award attorney's fees.
We are satisfied that the trial court did not err in denying plaintiffs' request
to modify the arbitration award to allow for payment of plaintiffs attorney's fees
or costs.
Affirmed.
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