Opinion
DOCKET NO. A-2771-12T3
09-11-2014
DEVILS ARENA ENTERTAINMENT, LLC, Plaintiff-Respondent, v. VOLUME SERVICES, INC., d/b/a CENTERPLATE, Defendant-Appellant.
Jared K. Levy argued the cause for appellant (White and Williams, LLP, attorneys; Christopher P. Leise, of counsel and on the briefs; Mr. Levy, on the briefs). Laura Leacy Kyler argued the cause for respondent (McCarter & English, LLP, attorneys; Ms. Kyler, of counsel and on the brief; Wilson D. Antoine, on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Grall, Nugent and Accurso. On appeal from Superior Court of New Jersey, Law Division, Essex County, Docket No. L-2319-12. Jared K. Levy argued the cause for appellant (White and Williams, LLP, attorneys; Christopher P. Leise, of counsel and on the briefs; Mr. Levy, on the briefs). Laura Leacy Kyler argued the cause for respondent (McCarter & English, LLP, attorneys; Ms. Kyler, of counsel and on the brief; Wilson D. Antoine, on the brief). PER CURIAM
This is an appeal from a summary action to confirm an arbitration award. Defendant Volume Services, Inc., d/b/a Centerplate, is the concessionaire at the Prudential Center. Pursuant to its Concession Agreement with plaintiff Devils Arena Entertainment, LLC (DAE), the operator of the Prudential Center, Centerplate provides concession services to customers of the arena for which it pays DAE a commission on sales. Centerplate is also obligated to provide concession services directly to DAE for which DAE pays Centerplate's costs plus fifteen percent.
In 2011, DAE disputed certain invoices from Centerplate and claimed it was due additional commissions on concessions. In accordance with section 5.15 of the Concession Agreement, DAE and Centerplate engaged KPMG, LLP to arbitrate their dispute. KPMG returned its arbitration award in February 2012 in favor of DAE in the sum of $1,197,214.08. The parties agree that after considering other credits and debits, the net award to DAE was $88,436.54.
Section 5.15 of the Concession Agreement provides:
Accounting Disputes. In the event that DAE disputes any accounting statement, report, document, record or other information contained in the books and records of Centerplate, or any payment required or imposed upon Centerplate pursuant to this Section 5, and if the Arena Director and Centerplate's representatives are unable to resolve such dispute (the "Dispute") within thirty (30) days following the delivery of a Dispute notice from DAE to Centerplate, the parties shall, at the end of the calendar quarter immediately thereafter ending submit the Dispute for resolution to an independent nationally recognized public accounting firm, the selection of which shall be reasonably agreed to by the parties (the "Accounting Firm"). If the parties cannot agree on the selection of the Accounting Firm, each party shall nominate an independent nationally recognized public accounting firm who together shall select the Accounting Firm. The determination of the issues subject of the Dispute shall be made after a full and complete inspection of Centerplate's books and records, and shall be final and binding, and non-appealable by, upon the parties. If the Accounting Firm determines the Dispute in favor of DAE, then Centerplate shall promptly correct the accounting and remit any payment due and any Late Fee due thereon to DAE as is necessary to reflect the Accounting Firm's determination. If the Accounting Firm determines that the aggregate amount due to DAE is understated by Ten Thousand Dollars ($10,000.00) or more then, in addition to the payment of the deficiency and any Late Fee due thereon, Centerplate shall pay the entire cost of the Accounting Firm's engagement. If the Accounting Firm determines the Dispute in favor of Centerplate, then DAE shall promptly remit any refund payment due to Centerplate as is necessary to reflect the Accounting Firm's determination. If the Accounting Firm determines that the aggregate amount refund due to Centerplate is Ten Thousand Dollars $10,000.00 or more then, in addition to the payment of the refund, DAE shall pay the entire cost of the Accounting Firm's engagement. In all other events, the cost of the Accounting Firm's engagement shall be evenly divided by the parties.
Not satisfied that KPMG had explained "the basis for determining the amounts awarded" as required in the engagement letter the parties had executed, Centerplate sought "clarification and confirmation" of certain items of the award. DAE opposed any further consideration by KPMG and filed a summary action to confirm the award. DAE also sought late fees of $114,083.27 and arbitration costs of $163,168 as allegedly allowed by the Concession Agreement. Centerplate contended that DAE had waived any claim for late fees and the costs of the arbitration by failing to include those claims in its demand for arbitration. Centerplate also argued that DAE's application was premature as N.J.S.A. 2A:23B-24 allowed Centerplate up to 120 days to ask the court for clarification, modification or correction of the award.
The Law Division confirmed the arbitrator's award and entered judgment for DAE in the net amount of $88,436.54 and the additional sum of $163,168 representing DAE's costs of the arbitration. The judge also determined that DAE had not waived its claim for late fees and ordered the parties to submit that issue to KPMG for resolution.
KPMG subsequently entered an award to DAE of $17,904.04 on the late fee claim. Another judge confirmed the award on DAE's application and also entered judgment in the sum of $11,280 representing DAE's costs of the second arbitration.
Centerplate appeals, contending that the Law Division erred in confirming the net award of $88,436.54 and determining that DAE had not waived its claim for late fees and arbitration costs by not including them in its demand for arbitration. Centerplate also claims the court erred in awarding DAE its arbitration costs for the second, court-ordered arbitration. We affirm confirmation of the net award of $88,436.54 and the judgment to DAE of $163,168 for the costs of the first arbitration. We reverse the award of late fees and the costs of the second arbitration.
The scope of review of an arbitration award is necessarily narrow in order that the benefits of arbitration as an effective, expedient, and fair means of dispute resolution be preserved. Fawzy v. Fawzy, 199 N.J. 456, 470 (2009). Because the decision to affirm or vacate an arbitration award is a decision of law, our review is de novo. Minkowitz v. Israeli, 433 N.J. Super. 111, 136 (App. Div. 2013). Likewise, the construction of contract language is generally a question of law unless its meaning is unclear and turns on conflicting testimony. Bosshard v. Hackensack Univ. Med. Ctr., 345 N.J. Super. 78, 92 (App. Div. 2001). Because the issue of whether the Concession Agreement compelled submission of the claims for late fees and arbitration costs to the arbitrator is solely one of contractual construction and does not depend on the trial court's assessment of the credibility of any witness, we owe no special deference to the court's construction of that agreement. Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995).
Centerplate argues that the Law Division's confirmation of the arbitrator's initial award was "premature" both because it had a request for clarification pending before the arbitrator and because confirmation cut short its period to file its own summary action to clarify, correct or modify the award under N.J.S.A. 2A:23B-24. We disagree.
Centerplate characterizes its post-arbitration request to KPMG as one for clarification. A review of its request, however, makes plain that the "clarification" it sought was the factual basis of the award and "adjustment" of certain aspects with which Centerplate disagreed. While the Uniform Arbitration Act (UAA), N.J.S.A. 2A:23B-1 to -32, which the parties agree governs, allows an arbitrator to clarify an award, N.J.S.A. 2A:23B-20, "nothing in the statute bespeaks an intention to authorize the arbitrator to change his or her mind or to reconsider his or her decision in the guise of clarification." Kimm v. Blisset, L.L.C., 38 8 N.J. Super. 14, 31 (App. Div. 2006), certif. denied, 189 N.J. 428 (2007). In addition, KPMG had advised Centerplate, prior to the Law Division's confirmation of the award, that the terms of its engagement prohibited it from acting on Centerplate's unilateral request. Accordingly, Centerplate's argument that the court erred in confirming the award while its request for clarification was pending is without legal or factual support.
The latter reveals, as Centerplate argues, that it also sought to understand what KPMG viewed as adequate backup for invoicing in order to conform its bookkeeping and thus avoid future disputes between the parties.
DAE contends that because the parties agreed both in the Concession Agreement and in their engagement letter with KPMG that the arbitrator's decision would be "final and binding, and non-appealable," Centerplate has waived its right to appeal the arbitrator's initial award. See Van Duren v. Rzasa-Orems, 394 N.J. Super. 254, 257, 265 (App. Div. 2007), aff'd o.b., 195 N.J. 230 (2008) (decided under the predecessor Act, N.J.S.A. 2A:24-1 to -11). Our disposition of the appeal makes resolution of this point unnecessary.
We also reject Centerplate's argument that confirmation cut short its period for seeking modification or correction of the award from the court. See N.J.S.A. 2A:23B-24 (allowing a party 120 days following receipt of notice of an award to file a summary action to modify or correct the award). N.J.S.A. 2A:23B-22 provides:
After a party to an arbitration proceeding receives notice of an award, the party may file a summary action with the court for an order confirming the award, at which time the court shall issue a confirming order unless the award is modified or corrected pursuant to section 20 or 24 of this act or is vacated pursuant to section 23 of this act.Reading these provisions together makes clear that a court is to confirm an arbitration award upon a party's application unless that application has been opposed by another party seeking its modification or correction. Nothing in the statute or the cases interpreting it suggests that a court must delay confirmation for 120 days after notice of the award to assure that no other party may move for its modification, or that the award could be corrected or modified following its confirmation in a judgment by the court. As Centerplate has advanced no argument either here or in the trial court that would have allowed the court to modify or correct the award, we affirm its confirmation.
Turning to the issue of late fees, we conclude that the Concession Agreement required submission of the dispute over that issue to the arbitrator along with the invoices and commission payments DAE contested. Section 5 of the Concession Agreement, entitled "Accounting, Payment, Books and Records," provides in subsection 5.7, "Payment Deficiency":
If there is any deficiency in the accounting and/or payment of Commissions or other payments due to DAE for any Accounting Period, Centerplate shall immediately upon discovery pay DAE the sum of the deficiency. If the amount of such deficiency is in excess of One Percent (1%) of the Commission or payment due to DAE, Centerplate shall, in addition, pay a Late Fee on the deficient amount as provided in Section 5.8 for the period from the date such Commission or payment was originally due to the date such deficient amount is actually paid. Any disagreement between the parties with respect to any such deficiency shall be resolved in accordance with Section 5.15. [Emphasis added.]Section 5.15 of the Concession Agreement contains the arbitration clause.
The Law Division determined that the issue of late fees did not require submission to the arbitrator because section 5.15 requires that "[i]f the [arbitrator] determines the Dispute in favor of DAE, then Centerplate shall promptly correct the accounting and remit any payment due and any Late Fee due thereon to DAE as is necessary to reflect the Accounting Firm's determination." Reasoning that the late fees, like the assessment of the costs of the arbitration, could only be computed after entry of the arbitrator's award, the Law Division determined that the Concession Agreement did not require submission of either claim to arbitration.
We agree that section 5.15 does not require the submission of the claim for arbitration costs to arbitration. That clause directs very specifically that the costs of the arbitration shall be evenly divided between the parties unless the amount of the payment or refund due is ten thousand dollars or more. The assessment of costs is thus a function of the operation of the Concession Agreement applied to the face of the award; it requires no calculation.
Not so the assessment of late fees. Pursuant to sections 5.7 "Payment Deficiency" and 5.8 "Late Fee" of the Concession Agreement, late fees of daily interest on amounts underpaid by more than one percent of the payment due are calculated based "at an annual rate compounded daily equal to five percent (5%) over the Prime Rate" from the date the payment "was originally due to the date such deficient amount is actually paid." Unlike the straightforward assessment of costs based on the face of the award, the late fee calculation is entirely bound up in the arbitrator's assessment of the disputed invoice and commission claims. Nothing illustrates the point better than that DAE claimed before the Law Division that it was owed $114,083.27 in late fees, of which KPMG awarded only $17,904.04.
There is no question but that DAE's claim for late fees is within the Concession Agreement's definition of "dispute." As DAE failed to include a request for late fees on the disputed commissions and invoices, it waived arbitration of the claim, and the Law Division was without authority to refer the claim back to the arbitrator in an action to confirm the award. See Kimm, supra, 388 N.J. Super. at 26 (noting an arbitrator is without authority to supplement an award after its entry).
The Concession Agreement defines a dispute as occurring when "DAE disputes any accounting statement, report, document, record or other information contained in the books and records of Centerplate, or any payment required or imposed upon Centerplate pursuant to this Section 5." (Emphasis added).
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We reject DAE's argument that Centerplate's appeal of this issue is out of time under GMAC v. Pittella, 205 N.J. 572, 585 (2011), and Rule 2:2-3(a), treating orders permitting or denying arbitration as final judgments for purposes of appeal. Centerplate has never argued that the late fee claim was not arbitrable. Its position in the trial court was that the claim was only arbitrable and that DAE had waived it by not presenting it to KPMG for resolution. Under these circumstances, we cannot find its appeal of this issue untimely. Accordingly, we reverse the judgment for late fees and the costs of the second arbitration proceeding which generated that award.
We affirm confirmation of the net award of $88,436.54 and the judgment to DAE of $163,168 for the costs of the first arbitration. We reverse the award of late fees and the costs of the second arbitration.
Affirmed in part, and reversed in part. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION