Opinion
DOCKET NO. A-4312-14T1
03-24-2016
NICHOLAS MATAHEN, MAHER AL BADRI, MAHMOUD ABU ROMI, AND MOBIN A. SHEIKH, Plaintiffs-Respondents, v. MAZOOZ SEHWAIL, NABIL ABASSI, MOHAMED QATANANI, FOUAD RASHED, SAMIR OBEDALLAH, OMAR AWED, NASIR SALIM, ABDUL KADER, MAHMOUD KARKIS, AND THE ISLAMIC CENTER OF PASSAIC COUNTY, INC., Defendants-Appellants.
Murphy Orlando, L.L.C. and The Aboushi Law Firm, P.L.L.C, attorneys for appellants (W. Michael Murphy, Jr. and Aymen A. Aboushi, of counsel; John W. Bartlett and James A. Boyd, Jr., on the brief). De Marco & De Marco, attorneys for respondents (Michael P. De Marco, of counsel and on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Accurso, O'Connor, and Suter. On appeal from Superior Court of New Jersey, Chancery Division, Passaic County, Docket No. C-7-15. Murphy Orlando, L.L.C. and The Aboushi Law Firm, P.L.L.C, attorneys for appellants (W. Michael Murphy, Jr. and Aymen A. Aboushi, of counsel; John W. Bartlett and James A. Boyd, Jr., on the brief). De Marco & De Marco, attorneys for respondents (Michael P. De Marco, of counsel and on the brief). PER CURIAM
Defendants appeal from the April 6, 2015 order of the Chancery court denying their motion to dismiss counts one through four of plaintiffs' verified complaint. Defendants had contended an arbitration clause in the bylaws of defendant Islamic Center of Passaic County (mosque) precluded plaintiffs from seeking relief in a judicial forum and, thus, these counts had to be dismissed. After reviewing the record and the applicable legal principles, we reverse.
I
In 1989, the mosque was incorporated under the New Jersey Nonprofit Corporation Act, N.J.S.A. 15A:1-1 to 16-2. The mosque is a nonprofit charitable, religious, and educational organization. Its certificate of incorporation asserts its purpose is, among other things, to serve members of the Islamic faith by providing a house of worship, and its bylaws provide the different types of membership one may have in the mosque.
One type is to be a member of the general assembly. The general assembly is composed of all "active members," defined as those who attend prayers regularly, participate "actively" in mosque "activities," abide by the bylaws, pay dues, and practice Islam daily. The general assembly is the highest authority in the mosque, although the Board of Trustees (board), which represents the general assembly, is the highest policy-making authority.
All of the plaintiffs and the individual defendants were members of the general assembly at the time of the incidents alleged in the complaint; as they were members of the general assembly, they were also active members. In addition, plaintiffs Nicholas Matahen, Maher Al Badri, and Mahmoud Abu Romi were also members of the board.
We discern from the record that plaintiff Nicholas Matahen is also known as Nidal Matahen.
In counts one through four of their complaint, plaintiffs allege defendant Mazooz Sehwail used the mosque's credit cards to pay for some of his personal expenses and the legal expenses of defendant Mohamed Qatanani, the mosque's Imam. Plaintiffs also claim defendant Nabil Abassi conspired with Sehwail to maintain Abassi as an insured on the mosque's health insurance plan after Abassi ceased working for the mosque, and that Abassi arranged to have the mosque pay for his children's school tuition.
Only the first four counts of plaintiffs' six count complaint are the subject of this appeal.
Before filing a responsive pleading, defendants moved to dismiss the complaint on the ground an arbitration clause in the bylaws compelled the claims in the complaint be submitted to arbitration. This arbitration clause provides as follows:
The board shall create an Islamic Arbitration Committee of 3-5 members in case of disagreement among board members or general assembly members of matters related to the center, such committee shall consist of a Lawyer, an Imam, and Community Leaders. All disputes arising hereunder shall be resolved by arbitration by the aforementioned committee pursuant to policies and procedures established by such committee from time-to-time. All parties involved shall approve of the members of the Arbitration Committee. Decisions of the committee shall be binding on all parties and may be entered in a court of competent jurisdiction.
The trial court declined to dismiss the first four counts of the complaint, finding the allegations in these counts are "cognizable claims in a court. They deal with misuse of a corporate fund. They . . . address those types of concerns that are standard in a corporation [shareholder] type dispute with regard to the conduct of the board. And those are things that clearly belong in a court to be adjudicated."
On appeal, defendants' principal argument is that the arbitration clause requires the subject claims be submitted to arbitration and thus counts one through four should have been dismissed.
II
We review the denial of a motion to compel arbitration de novo. Frumer v. Nat'l Home Ins. Co., 420 N.J. Super. 7, 13 (App. Div. 2011). Further, we conduct our review with the understanding that "'arbitration [is] a favored method of resolving disputes.'" Hirsch v. Amper Fin. Servs., 215 N.J. 174, 186 (quoting Garfinkel v. Morristown Obstetrics & Gynecology Assocs., P.A., 168 N.J. 124, 131 (2001)). The New Jersey Arbitration Act, N.J.S.A. 2A:23B-1 to -32, provides, in part, that "'[a]n agreement contained in a record to submit to arbitration any existing or subsequent controversy arising between the parties to the agreement is valid, enforceable, and irrevocable except upon a ground that exists at law or in equity for the revocation of a contract.'" Hirsch, supra, 215 N.J. at 187 (alteration in original) (quoting N.J.S.A. 2A:23B-6(a)).
Because of their favored status, arbitration agreements "should . . . be read liberally to find arbitrability if reasonably possible." Jansen v. Salomon Smith Barney, Inc., 342 N.J. Super. 254, 257 (App. Div.) (citations omitted), certif. denied, 170 N.J. 205 (2001). If there is a valid and enforceable agreement to arbitrate disputes and the particular dispute between the parties falls within the scope of the agreement, the agreement must be enforced. Martindale v. Sandvik, Inc., 173 N.J. 76, 86, 92 (2002).
"Non-profit corporate associations . . . are given the utmost latitude in their regulation and management of intracorporate affairs." Loigman v. Trombadore, 228 N.J. Super. 437, 450 (App. Div. 1988) (citing Leon v. Chrysler Motor Corp., 358 F. Supp. 877, 885 (D.N.J.) aff'd o.b. 474 F.2d 1340 (3d Cir. 1973)). "[A] voluntary association may, without direction or interference by the courts, draw up for its government and adopt rules, regulations and by-laws which will be controlling as to all questions of . . . doctrine or internal policy." Loigman, supra, 228 N.J. Super. at 450 (citation omitted). A non-profit organization's "private law generally is binding on those who wish to remain members." Higgins v. Am. Soc'y of Clinical Pathologists, 51 N.J. 191, 202 (1968). Typically, a court will not intervene in the affairs of a non-profit association unless "the complaining parties have suffered an invasion of their civil rights, of person or of property." Leeds v. Harrison, 9 N.J. 202, 215 (1952). As we noted in Loigman,
[o]nly the most abusive and obnoxious by-law provision could properly invite a court's intrusion into what is essentially a business thicket. Ordinarily, the contracting parties, not the courts, must weigh and evaluate the wisdom of their corporate agreements and regulations. Having voluntarily submitted to the rule of the
corporate majority, all members are thereby bound and are barred from seeking judicial redress unless the corporate rule or action complained of contravenes the certificate of incorporation, New York law or a strong public policy of that state.
[Loigman, supra, 228 N.J. Super. at 450 (quoting Leon, supra, 358 F. Supp. at 822) (applying New York Law)].
Here, plaintiffs argue the arbitration provision is not contained in a contract but merely in the mosque's bylaws to which, they contend, they are not parties and thus not bound. However, as a matter of law, "by-laws of a voluntary association become a part of the contract entered into by a member who joins the association." Loigman, supra, 228 N.J. Super. at 449-50 (citing Leeds v. Harrison, 7 N.J. Super. 558, 570 (Ch. Div. 1950), rev'd on other grounds 9 N.J. 202 (1952)); accord Delmarmo Assocs. v. N.J. Eng'g & Supply Co., 177 N.J. Super. 15, 17 (App. Div. 1980). Thus, the mosque's bylaws constitute a contract between it and plaintiffs.
We note plaintiffs did not appeal those provisions of the April 6, 2015 order that denied defendants' motion to refer to arbitration the fifth and sixth counts of the complaint. The fifth count alleged that, in violation of the bylaws, some of the defendants wrongfully revoked plaintiff Abu Romi's membership in the general assembly. In the sixth count, plaintiffs sought to invoke that provision in the bylaws authorizing the removal of a board member who engages in a dishonest act involving the mosque's assets or income, or who materially damages the reputation or integrity of the mosque.
Plaintiffs also claim the arbitration clause bound only members of the general assembly or board and, further, pertained only to "disagreements" concerning matters relating to the mosque. First, the record reveals plaintiffs were members of the general assembly and three were even members of the board at the time of the alleged mishandling of mosque funds.
Second, it is axiomatic that contract provisions are to be "read as a whole, without artificial emphasis on one section, with a consequent disregard for others." Borough of Princeton v. Bd. of Chosen Freeholders of Mercer, 333 N.J. Super. 310, 325 (App. Div. 2000), aff'd, 169 N.J. 135 (2001). "Literalism must give way to context." Ibid. Reading the clause as a whole, it is clear to us the board and general assembly intended all disputes among them pertaining to the mosque be handled by an arbitration committee as defined by its bylaws and, in particular, that an Imam be involved in that process. This general design of the clause must be "kept in view in ascertaining the sense of particular terms." Krosnowski v. Krosnowski, 22 N.J. 376, 387 (1956). Certainly there is no question the claims here concerned mosque affairs, and the fact the allegations are also justiciable is beside the point.
Plaintiffs maintain that because the arbitration clause fails to advise those subject to the clause they have waived their right to maintain an action in court, see Garfinkel, supra, 168 N.J. at 132, the clause is unenforceable. While we agree the arbitration clause fails to reference such a waiver, under the particular factual circumstances here, the absence of this waiver does not invalidate or render the clause unenforceable.
As previously mentioned, the general assembly is the highest authority in the mosque and the Board of Trustees, which represents the general assembly, is the highest policy-making authority in this organization. Further, a corporation "define[s] its powers and duties through its bylaws." Vergopia v. Shaker, 191 N.J. 217, 237 (2007) (Rivera-Soto, J., dissenting) (citing Gow v. Consol. Coppermines Corp., 165 A. 136, 140 (Del. Ch. 1933)). Consistent with this principle and the decision-making roles of the board and the general assembly, which exclusively share the authority to amend the bylaws, it is noteworthy the board and general assembly members have not seen fit to amend the arbitration clause to include any waivers. In our view, as members of the board or the general assembly at the time of the alleged incidents in the complaint, it is incongruous for plaintiffs to complain the arbitration clause is defective and unenforceable when they were a part of the two intra-corporate bodies responsible for its contents.
The initial bylaws were passed by the Board of Trustees. Thereafter, the power to amend the bylaws requires the approval of two-thirds of the board and two-thirds of the general assembly. --------
Plaintiffs' position is far different from parties to the typical contract, where generally each party seeks to advance its own interests and not those of the other. There was no "adverse" party here who sought to induce plaintiffs to enter into a contract containing an arbitration clause that failed to contain the subject waiver, hoping to gain an advantage. Plaintiffs merely find themselves facing a bylaw they either composed or ratified by failing to amend its contents.
In addition, the nature of the organization here stands apart from other organizations in which judicial involvement is necessary to protect the public welfare. See Falcone v. Middlesex Cnty. Med. Soc'y, 34 N.J. 582, 591-92 (1961). Nor is this a case in which judicial intervention is required because there has been a violation of civil rights or other public policy. See Leeds, supra, 9 N.J. at 215. Further, because plaintiffs chose to be members of this organization, they are bound by the "private law" of the mosque. Certainly they have failed to cite any authority in support of their argument the arbitration clause cannot be enforced under the unique facts of this case.
After carefully considering the record and the briefs, we conclude plaintiffs' remaining arguments are without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E). We reverse the order denying defendants' motion to dismiss the first four counts of the complaint. The claims set forth in those counts shall be referred to arbitration in accordance with the bylaws.
Reversed. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION