Opinion
DOCKET NO. A-1839-15T2
07-12-2017
FRANK BLAICHMAN, Plaintiff-Respondent, v. JACK POMERANC, Defendant-Appellant.
Charles X. Gormally argued the cause for appellant (Brach Eichler, LLC, attorneys; Mr. Gormally and Thomas Kamvosoulis, of counsel and on the briefs). Laurence B. Orloff argued the cause for respondent (Orloff, Lowenbach, Stifelman & Siegel, P.A., attorneys; Mr. Orloff of counsel; Xiao Sun, on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R.1:36-3. Before Judges Rothstadt and Sumners. On appeal from the Superior Court of New Jersey, Chancery Division, Bergen County, Docket No. C-118-15. Charles X. Gormally argued the cause for appellant (Brach Eichler, LLC, attorneys; Mr. Gormally and Thomas Kamvosoulis, of counsel and on the briefs). Laurence B. Orloff argued the cause for respondent (Orloff, Lowenbach, Stifelman & Siegel, P.A., attorneys; Mr. Orloff of counsel; Xiao Sun, on the brief). PER CURIAM
Defendant Jack Pomeranc appeals from the Chancery Division's denial of his motion for an order awarding counsel fees. He filed the motion after the court dismissed his brother-in-law plaintiff Frank Blaichman's complaint to vacate an arbitrator's interlocutory awards and to terminate the arbitration of the parties' dispute over the management and control of their real estate entities. Judge Menelaos W. Toskos denied the motion after he found the parties did not enter into any agreement that allowed for an award of fees in the litigation, despite defendant's contention that an earlier order entered in the arbitration satisfied that requirement. On appeal, defendant argues that he was entitled to fees under the "New Jersey Arbitration Act [(Act), N.J.S.A. 2A:23B-1 to -32] and controlling case law," and, therefore, the judge's denial of his fee application was contrary to public policy and an abuse of discretion. According to defendant, a case management order entered in the arbitration provided the legal basis for an award of fees. We disagree and affirm substantially for the reasons stated by Judge Toskos in his comprehensive written decision.
The material facts as stated in the motion record were not in dispute and are summarized as follows. The parties were partners in several limited partnerships that owned, developed, and managed residential real estate. After they operated their entities for years without any issues, a dispute developed between the two partners. With an eye toward resolving the dispute, the parties entered into an agreement regarding the management and operation of their limited partnerships. The agreement, denoted a settlement agreement, was signed by the two in 2007. The negotiated "peace" between the parties lasted for a few years, but eventually dissolved leading to litigation that began in approximately 2012.
Upon the filing of the 2012 litigation by plaintiff, each party sought the entry of restraints to keep the other from being involved in the operation of their entities. After the court denied their applications, the parties entered into an agreement on December 19, 2012 to arbitrate their dispute. Their arbitration agreement named an attorney — Paul A. Rowe — as the arbitrator and identified the scope of the anticipated arbitration. The agreement made no provision for any type of fee shifting or award of attorneys fees to either party.
During the course of the lengthy arbitration, the arbitrator entered a case management order (Management Order) that addressed counsel fees. He entered the order after giving both parties the ability to comment on a proposed draft. The Management Order specifically provided that if the arbitrator had to decide a motion to enforce the terms of the order, "the non-prevailing party shall be responsible to pay . . . the reasonable counsel fees and costs incurred by the prevailing party as determined by the [a]rbitrator."
A year later, the arbitrator was confronted with a dispute about plaintiff's compliance with the Management Order. After he conducted a lengthy hearing, the arbitrator issued a decision in October 2014 finding that plaintiff violated the order, and in a subsequent order, he awarded $137,042.97 in fees and costs to defendant.
In April 2015, plaintiff filed this action in the Chancery Division, challenging two of the arbitrator's awards and seeking to terminate the arbitration. In response, defendant moved to confirm the arbitrator's decisions. On August 28, 2015, Judge Toskos denied any relief to plaintiff, dismissed the complaint, and also confirmed the arbitrator's awards. Defendant filed a subsequent application seeking an award of counsel fees and costs in which he relied upon the fee-shifting provision of the Management Order and the Act, N.J.S.A. 2A:23B-25(c). Plaintiff opposed the motion, and after considering oral argument on October 23, 2015, Judge Toskos denied the motion on November 18, 2015, setting forth his reasons in a written decision.
In his decision, Judge Toskos summarized the history of the parties' dispute, the arbitration, and the dismissal of the plaintiff's action. He explained each party's contentions regarding defendant's claim for fees and explained the applicable law. Relying upon our decision in Rock Work Inc. v. Pulaski Construction Co., Inc., 396 N.J. Super. 344 (App. Div. 2007), certif. denied, 194 N.J. 272 (2008), the judge concluded that the fee-shifting provision in the Management Order did not constitute an express agreement between the parties that would support an award of fees to the prevailing party in the litigation. He found that the Management Order limited an award of fees to enforcement proceedings only within the arbitration. The judge concluded by stating:
Here, there was no such express fee-shifting agreement. To find such an agreement the [c]ourt would need to read into the Management Order additional language demonstrating the parties agreed to the award of counsel fees in the event of an appeal or other judgment confirmation of the Arbitration. Stated differently, to grant [d]efendant attorney's fees in connection with the judicial proceeding, the [c]ourt would need to infer that the Management Order language expressly reflects an agreement between the parties whereby the parties contemplated and agreed that attorney's fees be awarded to the prevailing party during this court proceeding. Defendant has not demonstrated that such an agreement exists. Had the parties intended for the fee-shifting arrangement to extend to [the] entirety of the litigation, the parties could have fashioned such an agreement. Absent such an agreement, the [c]ourt may not award [d]efendant's attorney's fees in connection with this proceeding.
We begin our review by observing that the decision to award attorney's fees is discretionary, and we therefore apply an abuse-of-discretion standard of review. Packard-Bamberger & Co. v. Collier, 167 N.J. 427, 444 (2001). "We will disturb a trial court's determination on counsel fees only on the 'rarest occasion,' and then only because of a clear abuse of discretion." Barr v. Barr, 418 N.J. Super. 18, 46 (App. Div. 2011). A court has abused its discretion "if the discretionary act was not premised upon consideration of all relevant factors, was based upon consideration of irrelevant or inappropriate factors, or amounts to a clear error in judgment." Masone v. Levine, 382 N.J. Super. 181, 193 (App. Div. 2005). We discern no abuse of discretion here.
N.J.S.A. 2A:23B-21(b) allows an arbitrator to award counsel fees authorized by statute or the parties' agreement. N.J.S.A. 2A:23B-25(c) authorizes a court to award reasonable attorney's fees and other reasonable expenses of litigation to the prevailing party when judgment is entered confirming an arbitration award. The same principles that guide a court's determination of attorney's fees as to the arbitration proceedings applies to post-judgment award of fees. Absent an express agreement between the parties for the award of attorney's fees or statutory justification, the "American Rule will prevail," prohibiting the shifting of fees. Rock Work, supra, 396 N.J. Super. at 357. For that reason, we have interpreted N.J.S.A. 2A:23B-25(c) as authorizing an award of attorney's fees to the prevailing party only in those instances where the parties' underlying contract or agreement specified that the party who prevailed in the arbitration would be entitled to an award of attorney's fees in the ensuing litigation. Id. at 355-57 (concluding that even though "the Arbitration Act does not use the term 'expressly,' . . . it would appear that the [] Act requires an express contract").
Here, the arbitration agreement did not provide for fee-shifting and the Management Order was not an agreement. Even if it was, the agreement only extended to motions to enforce the terms of that order within the arbitration. There was no express agreement for fee-shifting relative to any ensuing litigation. Defendant's contentions to the contrary in which he relies upon an alleged collaborative effort in forming the Management Order as establishing an express agreement is without merit.
We note that by the time defendant made his application to the court for fees, the Management Order had been superseded by a different order that did not contain a prevailing party's automatic entitlement to fees. Instead, the new order reserved to the arbitrator the ability to award fees "in his sole discretion . . . for any motion made to enforce this Order." --------
Judge Toskos properly exercised his discretion when he declined to award attorney's fees to defendant in this action.
Affirmed.
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION