JAY SHETH v. MORRIS BOULEVARD II, LLC
Annotate this CaseNOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
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SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-3057-20
JAY SHETH and RAHKEE
SHETH,
Plaintiffs-Appellants,
v.
MORRIS BOULEVARD II, LLC,
STONEHYRST COMPANY
TRUST, LORRAINE MOCCO,
PETER MOCCO, GRAND STREET
PROPERTY MANAGEMENT,
LLC, GRAND & JERSEY, LLC,
LIBERTY HARBOR NORTH II
URBAN RENEWAL COMPANY,
LLC, SEAN YOUNG, and
LIBERTY HARBOR NORTH
BROWNSTONE CONDOMINIUM
URBAN RENEWAL, LLC,
Defendants-Respondents.
______________________________
Submitted February 16, 2022 – Decided April 5, 2022
Before Judges Hoffman and Whipple.
On appeal from the Superior Court of New Jersey,
Law Division, Hudson County, Docket No.
L-0474-14.
The Feinsilver Law Group, PC, attorneys for
appellants (David Feinsilver and H. Jonathan
Rubinstein, of counsel and on the briefs).
Scarpone & Vargo, LLC, attorneys for respondent
Liberty Harbor North Brownstone Condominium
Urban Renewal, LLC (James A. Scarpone and Bruce
D. Vargo, on the brief).
Law Offices of Shannon Garrahan, PC, attorneys for
respondents Morris Boulevard II, LLC, Stonehyrst
Company Trust, Lorraine Mocco, Peter Mocco, Grand
Street Property Management, LLC, Grand & Jersey,
LLC, Liberty Harbor North II Urban Renewal
Company, LLC, and Sean Young, join in the brief of
respondent Liberty Harbor North Brownstone
Condominium Urban Renewal, LLC.
PER CURIAM
Plaintiffs Jay Sheth and Rahkee Sheth appeal from a March 15, 2021
order confirming an arbitration award under New Jersey's Alternative
Procedure for Dispute Resolution Act (APDRA), N.J.S.A. 2A:23A-1 to -30,
and a June 4, 2021 order denying motion for reconsideration. Because we
have no jurisdiction to provide a detailed review pursuant to the APDRA, we
dismiss.
A-3057-20
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The facts relating to plaintiffs' underlying claims were detailed in Sheth
v. Morris Blvd., II, LLC, No. A-2328-18 (App. Div. July 23, 2020) and need
not be repeated here except to address arbitration. On July 24, 2012, plaintiffs
entered into a Subscription and Purchase Agreement with Liberty Harbor
North Brownstone Condominium Urban Renewal, LLC (Liberty) to buy a
condominium for $1,085,000. The parties agreed to close on December 1,
2012.
After Superstorm Sandy, the redevelopment project encompassing the
condominium was deemed "a site-wide violation," and Jersey City's
construction codes prohibited issuance of any certificates of occupancy (COs)
until the flood zone issues were resolved. Liberty informed plaintiffs it could
not close on time but arranged a one-year lease between plaintiffs and
defendant Morris Boulevard II, LLC, for a rental unit.
On May 9, 2013, Liberty obtained a temporary sixty-day CO. On May
23, defendant Peter Mocco, an attorney and owner of Liberty, sent plaintiffs a
"time of the essence" letter informing them the closing would take place on
June 11. Because outstanding items were not addressed, plaintiffs refused to
close on that day. On July 26, an attorney for Liberty sent a letter to plaintiffs
terminating the purchase agreement because plaintiffs had not closed on June
A-3057-20
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11. Plaintiffs responded with a demand to close on August 9, 2013, which
Liberty rejected.
Mocco subsequently arranged to transfer the condominium from Liberty
to Stonehyrst Company Trust (the trust) for $750,000. In August 2013, title to
the condominium was transferred to the trust, the deed was recorded, and the
trust listed the condominium for sale at $1,500,000. Plaintiffs filed a
complaint in Superior Court disputing the legality of the condominium's sale to
the trust. The parties eventually agreed to arbitrate their disputes pursuant to
the APDRA. The Superior Court actions were dismissed.
Throughout 2017, the parties participated in arbitration. "[T]he
arbitrator determined Liberty unjustifiably terminated the purchase agreement
and transferred the condominium to the trust. Finding a breach of contract and
fraudulent conveyance, the arbitrator ordered specific performance of the
purchase agreement." Sheth, (slip. op. at 4). Plaintiffs appealed, and we
remanded, concluding:
When parties to an APDRA arbitration file a Law
Division action challenging such awards, they are
entitled to a decision specifically addressing their
claims and applying relevant statutory standards.
Because the trial court's brief written explanation in
this case does not satisfy these requirements, we
exercise our supervisory authority, vacate the orders,
and remand for oral argument and a new decision.
A-3057-20
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The trial court's decision should specifically address
plaintiffs' arguments and apply the statutory standards
to them.
[Id. slip. op. at 1-2.]
On August 21, 2020, plaintiffs served discovery demands in connection
with defendants' post-arbitration efforts to comply with the award. On
September 3, 2020, defendants filed a motion to quash the irrelevant requests.
On September 25, the court heard oral arguments, and found that plaintiffs
were not entitled to the information based on the context of the remand, but
might be if specific performance was confirmed on remand, so the court
reserved decision. On October 6, 2020, the court granted Liberty's motion to
quash plaintiffs' post-arbitration discovery requests. The court stated that
"[t]he actions or inactions of the parties since the arbitration will have no
relevance . . ." because "[w]hether the defendants followed the directives of
the arbitrator [via] post-arbitration actions, likewise is of no probative value
regarding the soundness of the arbitrator's decision."
Plaintiffs filed a notice of appeal and a motion for reconsideration of the
October 6 order quashing post-arbitration discovery, to confirm the scope of
the motion court's undertaking, to address remanding to the arbitrator for
further findings, and to join Liberty as a party defendant.
A-3057-20
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On January 11, 2021, the court heard oral arguments. Plaintiffs argued
that specific performance must be converted given Jersey City construction
official Raymond Meyer's purported change in testimony and alleged changed
circumstances. Defendants reminded the court that the parties agreed to and
performed a thorough and binding arbitration and that plaintiffs co uld always
build to fix the home, then seek those damages. The court concluded that it
did not want to exceed the scope of remand but reserved the decision to write
an opinion.
On March 15, 2021, the court entered an order confirming the dismissal
of New Jersey Consumer Fraud Act (CFA) claims and the award of specific
performance with a price reduction in the amount of $233,192, representing
the loss of residential use of the basement and the diminution of value to the
unit as whole; joining Liberty as a defendant; and denying plaintiffs' motion
for reconsideration of the October 6, 2020 order as to the request to conduct
post-arbitration discovery.
We briefly summarize the court's relevant findings. Liberty delayed
closing then Mocco directed the fraudulent transfer. The specific performance
awarded contemplated defendants would do everything "reasonably necessary
to secure a variation"; the inability to include a basement bedroom; Meyer's
A-3057-20
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testimony that this inability meant specific performance would not give
plaintiffs the benefit of the bargain; the failure to deliver the basement as
residential use was a material breach; and Meyer's changed position was
presented to the arbitrator who did not re-open arbitration because the parties
could not agree to return to arbitration.
As to plaintiffs' specific performance claim the court found that
the arbitrator was certainly within his purview to grant
that relief. It was specifically prayed for in the
[c]omplaint. The fact that the Sheth[]s wanted to
consummate the sale (albeit subject to critical
conditions) is patently obvious. The award of specific
performance encompassed a substantially reduced
purchase price of $750,000. The arbitrator's award
contemplated compliance by Liberty to do that which
would be reasonably necessary to secure a variation to
complete construction of the unit. The testimony of
Meyer established that if the cited violations were
cured, the temporary CO would be either issued anew
or extended. Meyer added that he did not envision
any scenario in which the basement would be
permitted to be used as residential space beyond
possibly a bathroom. That fact alone establishes that
the specific performance remedy, while certainly
supported by the record, would not make the Sheth[]s
whole or give them the benefit of the bargain. The
bedroom and bathroom in the basement was a material
contractual term for the Sheth[]s. The arbitration
record shows that there was no basis upon which
Meyer could ever see a residential use of the
basement. Specific performance as to that material
term can only be described as impossible. That is a
breach at the hands of the seller who constructed the
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unit (and, perhaps the whole development) contrary to
the flood zone requirements. The Sheth[]s are entitled
to compensatory damages for the loss of use of the
basement as a residence and any calculable diminution
of value of the unit as a whole.
Because the court concluded that the arbitrator erred in finding plaintiffs
did not suffer an ascertainable loss, it set a diminution of value damages at
$233,192 for the loss of residential use of the basement and reduced the award
by that amount. Thus, plaintiffs would pay $750,000 less $42,900 in rent
credits for the Morris Boulevard lease, less the $233,192 basement loss,
totaling $473,908.
As to CFA, N.J.S.A. 56:8-1 to -2.13, findings, even though the court
acknowledged that "[t]he award of specific performance is not an exclusive
remedy and does not rule out the finding of either an ascertainable loss under
the CFA or consequential damages from the breach. D'Agostino v.
Maldonado, 216 N.J. 168 (2013)," the court did not find that plaintiffs met the
CFA elements. This was because "Liberty had the right to reasonably rely
upon these entities when offering this unit and others like it for residential use
. . . [and as] noted by the arbitrator, it was not until well after the [public
offering statement] was issued that the storm occurred," which revealed the
threat of flooding damage. Thus, "it [could not] be said that Liberty falsely
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promised, misrepresented or knowingly concealed what turned out to be a
material fact in this transaction - the restricted use of the basement." The court
continued that:
[it] agree[d] with the arbitrator that the CFA claim
fails but for a different reason. The CFA claim fails
not because there is no ascertainable loss but because
the Sheth[]s did not prove a deceptive practice as
defined by the statute in the sale or marketing of the
condominium. []
The breach occurred when the defective time of
the essence demand was made followed by the
unwarranted cancellation of the contract and the
illegal transfer from Liberty to Stonehyrst. The
damage to the Sheth[]s flowing from that breach
consists of loss of the benefit of the bargain, i.e., title,
use of the property and diminution of value of the
unit. The arbitrator restored the title with the award of
specific performance and addressed the monetary
damages by crediting the Sheth[]s with their deposit
on account and the amounts of rent paid awaiting
closing while they were out of possession.
The court applied this discussion to the claims under the Planned Real
Estate Development Full Disclosure Act (PREDFDA), N.J.S.A. 45:22A-21 to -
56, finding no support for the required elements, and agreeing with the
arbitrator that the claim is subsumed into the CFA claim because a successful
PREDFDA claim would double proven damages.
Turning to the benefit of the bargain claim, the court found that:
A-3057-20
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[t]he Sheth[]s were denied the full benefit of their
bargain in that they will not have the residential use
and enjoyment of the basement as was their
expectation at the time they entered into the contract.
That deprivation (loss of use and diminution of value)
has been quantified by their proffered expert at
$233,192. It does not appear from the record that this
claim was addressed by the arbitrator below inasmuch
as Paragraph [five] of the Award and Order of
Arbitration does not mention it. This amount is yet
another item of damages related to the breach for
which the Sheth[]s should be compensated. To the
extent it was not addressed by the arbitrator the award
will be modified to reflect that loss.
As to not enforcing the award, the court reminded the parties that
"Liberty's non-compliance with the Award and Order of the Arbitrator is
beyond the scope of this decision and may require a separate action against
Liberty to enforce the award. It would be during such litigation that the
sought[-]after post-arbitration discovery would be appropriate."
Liberty filed a motion for partial reconsideration regarding the further
reduction of the purchase price in the March 15, 2021 order. Plaintiffs
opposed Liberty's motion and filed a cross-motion for reconsideration, re-
asserting claims it felt the court failed to address on remand instructions.
Liberty filed a motion to strike the cross-motion and for sanctions. On June 4,
2021, the court denied all the motions, reminding the plaintiffs of each of the
arguments it already considered. This appeal followed.
A-3057-20
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Plaintiffs now argue the court failed to: make adequate findings of fact
and conclusions of law on the claims; address three claims; enforce the
specific performance award that it confirmed; address post-award change in
circumstances; and grant plaintiffs' request to remand non-addressed claims to
the arbitrator. Plaintiffs contend the court erred by finding plaintiffs must file
another lawsuit for enforcement against defendants instead of enforcing the
arbitrator's specific performance award, thus allegedly violating the appellate
court's instructions, APDRA, the entire controversy doctrine, and public
policy. Plaintiffs also allege the court should have considered "post-arbitration
events and changes of circumstances that make specific performance
impossible" to "convert the award of specific performance to one for money
damages . . . ." Plaintiffs assert that the findings that Mocco committed fraud
and defendants' repeated failures to follow the requirements and award means
plaintiffs deserve a conversion to monetary damages under a theory of changed
circumstances, and that plaintiffs also deserve CFA and PREDFDA damages
for defendants' performance of the contract. Plaintiffs maintain that
defendants have been able to retain the $42,900 in rents from the plaintiffs and
that plaintiffs have not received a final CO.
A-3057-20
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Because the court provided a detailed analysis in conformance with the
APDRA, we dismiss plaintiffs' appeal. The APDRA provides:
b. In 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; provided, however, that when
the application to the court is to vacate the award
pursuant to paragraph (1), (2), (3), or (4) of subsection
c., the court shall make an independent determination
of any facts relevant thereto de novo, upon such
record as may exist or as it may determine in a
summary expedited proceeding as provided for by
rules adopted by the Supreme Court for the purpose of
acting on such applications.
c. The award shall be vacated on the application of a
party who either participated in the alternative
resolution proceeding or was served with a notice of
intention to have alternative resolution if the court
finds that the rights of that party were prejudiced by:
(1) Corruption, fraud or misconduct in procuring
the award;
(2) Partiality of an umpire appointed as a
neutral;
(3) In making the award, the umpire's exceeding
their power or so imperfectly executing that
power that a final and definite award was not
made;
(4) Failure to follow the procedures set forth in
this act, unless the party applying to vacate the
award continued with the proceeding with notice
of the defect and without objection; or
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(5) The umpire's committing prejudicial error by
erroneously applying law to the issues and facts
presented for alternative resolution.
[N.J.S.A. 2A:23A-13(b)-(c).]
A party to arbitration under the APDRA may seek to vacate, modify, or
correct an award by initiating a summary application with the Superior Court.
N.J. Mfrs. Ins. Co. v. Specialty Surgical Ctr. of N. Brunswick, 458 N.J. Super.
63, 67 (App. Div. 2019) (citing N.J.S.A. 2A:23A-13). Generally, once the
Superior Court makes its decision on a summary action challenging the
APDRA award, "[t]here shall be no further appeal or review of the judgment
or decree." N.J.S.A. 2A:23A-18(b).
Only in rare circumstances will public policy require appellate review,
which would require us "to carry out [our] 'supervisory function over the
courts'" to review a court's findings on the arbitration findings and award. See
Specialty Surgical, 458 N.J. Super. at 68 (quoting Mt. Hope Dev. Assocs. v.
Mt. Hope Waterpower Project, LP, 154 N.J. 141, 152 (1998)).
A party challenging an APDRA decision is "entitled to a ruling applying
the relevant statutory standards" and specifically considering its claims. Morel
v. State Farm Ins. Co., 396 N.J. Super. 472, 476 (App. Div. 2007); cf. R. 1:7-
4(a). Thus, we may exercise our "supervisory jurisdiction to ensure that trial
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courts utilize the standards contained in N.J.S.A. 2A:23A-13 when examining
an [APDRA] award, and that trial courts articulate an analysis of how those
standards apply to the facts and circumstances of a given case." Liberty Mut.
Ins. Co. v. Garden State Surgical Ctr., LLC, 413 N.J. Super. 513, 526 (App.
Div. 2010). Where the trial court has failed to provide a decision, written or
oral, demonstrating its application of the relevant standard or how it reached
its determination, "[i]n such a circumstance, we are entitled--indeed, obligated-
-to exercise our supervisory function and remand for further proceedings
consistent with APDRA." Ibid. If a trial court acted within the bounds of the
APDRA and provided an adequate explanation, then there is no jurisdiction for
appeal, and we are bound to dismiss the appeal. See Fort Lee Surgery Ctr.,
Inc. v. Proformance Ins. Co., 412 N.J. Super. 99, 103 (App. Div. 2010).
Here, the court's memorandum provided a detailed analysis in
conformance with the APDRA. The court made ample findings, specifically
addressed plaintiffs' claims, properly confirmed the arbitrator's award of
specific performance, and properly modified the award to reflect the price
reduction. Because the court's decision was consistent with APDRA's
parameters, we have no appellate jurisdiction to review its decision. Ibid.
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In addition, because plaintiffs do not brief their appeal of the June 4,
2021 denial of their motion for reconsideration, we deem their appeal waived
as to that order. See Sklodowsky v. Lushis, 417 N.J. Super. 648, 657 (App.
Div. 2011).
Dismissed.
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