NOT FOR PUBLICATION WITHOUT THE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.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-1266-16T4
BRUCE STEVENS, individually and
on behalf of TERRAFORM, LLC,
Plaintiffs-Appellants,
v.
JOSEPH CAPPADORA, C.P.A. and
BERKSHIRE VALLEY ASSOCIATES, LLC,
Defendants-Respondents.
___________________________________
Argued March 6, 2018 – Decided July 17, 2018
Before Judges Yannotti and DeAlmeida.
On appeal from Superior Court of New Jersey,
Law Division, Passaic County, Docket No.
L-2957-15.
Kenneth S. Thyne argued the cause for
appellants (Roper & Thyne, LLC, attorneys;
Kenneth S. Thyne, on the brief).
Elie B. Gold argued the cause for respondents
(Gold Law, PC, attorneys; Elie B. Gold, on the
brief).
PER CURIAM
Plaintiffs Bruce Stevens and Terraform, LLC appeal an order
dismissing their complaint with prejudice and compelling them to
submit their claims to arbitration. We vacate the order and remand
for entry of a statement of reasons by the trial court.
I.
On August 27, 2015, plaintiffs filed a complaint in the Law
Division, alleging breach of contract and related claims against
defendants Joseph Cappadora, C.P.A., and Berkshire Valley
Associates, LLC. Plaintiffs' claims arise from a Joint Venture
Agreement (JVA), which contains a clause in which the parties
agreed that "any dispute, claim, or controversy concerning" the
agreement "shall be settled by binding arbitration . . . ."
On or about September 24, 2015, defendants filed an answer,
which set forth no affirmative defenses referencing arbitration.
In addition, the answer demanded that "all issues" be tried by a
jury and contained a certification from defendants' attorney that
"no other . . . [a]rbitration [p]roceeding is contemplated."
On February 3, 2016, plaintiffs moved pursuant to Rule 4:23-
5(a)(1) to suppress defendants' answer and affirmative defenses
without prejudice for failing to respond to plaintiffs' discovery
demands. The trial court granted plaintiffs' motion on February
19, 2016.
On or about April 22, 2016, plaintiffs moved pursuant to Rule
4:23-5(a)(2) to suppress defendants' answer and affirmative
defenses with prejudice for failing to respond to plaintiffs'
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discovery demands. On June 8, 2016, plaintiffs received
defendants' discovery responses and, as a result, withdrew the
motion.
On June 13, 2016, the parties filed a consent order vacating
the February 19, 2016 order suppressing defendants' answer and
affirmative defenses without prejudice. The parties also agreed
to extend the discovery end date from August 2, 2016 to October
2, 2016. Trial was scheduled for October 24, 2016.
On September 15, 2016, defendants filed two motions. One
motion sought to dismiss the complaint on the merits, or, in the
alternative, to grant defendants leave to file an amended answer.
The amended answer submitted with the motion included an
affirmative defense raising the JVA's arbitration clause for the
first time. The other motion sought to compel arbitration.
On September 22, 2016, defendants served discovery demands
and deposition notices on plaintiffs.
On October 19, 2016, the trial court denied defendants' motion
to dismiss the complaint and denied defendants leave to file an
amended answer.
On October 20, 2016, the trial court entered an order
dismissing the complaint with prejudice and compelling the parties
to submit all claims to arbitration. The court's findings of fact
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and conclusions of law consisted of the following handwritten
paragraph on the October 20, 2016 order:
Application granted. The court was unaware
this motion was pending when it decided the
other motions as this decision renders those
decisions moot. This court finds that the
arb[itration] provision which was negotiated
between the parties and a component of the
consideration exchanged or promised to be
exchanged was not waived.
This appeal followed.
II.
"[A]rbitration . . . is a favored means of dispute
resolution." Hojnowski v. Vans Skate Park, 187 N.J. 323, 342
(2006); see, e.g., Martindale v. Sandvik, Inc., 173 N.J. 76, 84-
85 (2002); Garfinkel v. Morristown Obstetrics & Gynecology
Assocs., 168 N.J. 124, 131 (2001). The Uniform Arbitration Act,
N.J.S.A. 2A:23B-1 to -32, provides that agreements to arbitrate
are valid unless there are grounds that "exist at law or in equity
for the revocation of a contract." N.J.S.A. 2A:23B-6. "An
arbitration agreement is a contract and is subject, in general,
to the legal rules governing the construction of contracts."
McKeeby v. Arthur, 7 N.J. 174, 181 (1951). The Supreme Court has
recognized that the parties may waive an arbitration agreement.
Cole v. Jersey City Med. Ctr., 215 N.J. 265, 276 (2013). Waiver
of an agreement to arbitrate a dispute may be demonstrated by
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"clear and convincing evidence that the party asserting it chose
to seek relief in a different forum." Spaeth v. Srinivasan, 403
N.J. Super. 508, 514 (App. Div. 2008).
"Waiver is the voluntary and intentional relinquishment of a
known right." Knorr v. Smeal, 178 N.J. 169, 177 (2003). A waiver
need not be express and can be found if "the circumstances clearly
show that the party knew of the right and then abandoned it, either
by design or indifference." Ibid. A party may waive an
arbitration agreement by participating "in prolonged litigation,
without a demand for arbitration or an assertion of a right to
arbitrate." Hudik-Ross, Inc. v. 1530 Palisade Ave. Corp., 131
N.J. Super. 159, 167 (App. Div. 1974).
In Cole, the Court instructed a trial court considering
whether a party has waived an arbitration provision to engage in
a fact-sensitive analysis focused on the party's litigation
conduct:
[a]mong other factors, courts should evaluate:
(1) the delay in making the arbitration
request; (2) the filing of any motions,
particularly dispositive motions, and their
outcomes; (3) whether the delay in seeking
arbitration was part of the party's litigation
strategy; (4) the extent of discovery
conducted; (5) whether the party raised the
arbitration issue in its pleadings,
particularly as an affirmative defense, or
provided other notification of its intent to
seek arbitration; (6) the proximity of the
date on which the party sought arbitration to
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the date of trial; and (7) the resulting
prejudice suffered by the other party, if any.
[Id. at 280-81].
Whether a party waived its right to arbitration is a legal
determination subject to de novo review. See Manalapan Realty
L.P. v. Twp. Comm., 140 N.J. 366, 378 (1995). The factual findings
of the waiver determination are entitled to deference and are
subject to review for clear error. See Rova Farms Resort, Inc.
v. Investors Ins. Co. of Am., 65 N.J. 474, 483-84 (1974).
Plaintiffs argue that the trial court failed to make findings
of fact with respect to the factors set forth in Cole and, had the
court done so, would necessarily have concluded that defendants
waived their right to arbitration. In particular, plaintiffs
argue that defendants, who did not raise the arbitration clause
as an affirmative defense in their answer, waited over a year from
the filing of the complaint to move to compel arbitration. In the
interim, defendants produced discovery, moved for substantive
relief, secured a discovery extension, and served discovery
demands on plaintiffs. In addition, during that time, plaintiffs
filed two discovery-related motions. At the time that defendants
moved to compel arbitration the trial date was approximately a
month away. Defendants, on the other hand, argue that they played
a passive role while the matter was pending in the trial court,
6 A-1266-16T4
taking no steps expressly constituting a waiver of arbitration
under the standards set forth in Cole. They, in effect, argue
that the trial court adopted the arguments they made against wavier
in support of their motion to compel arbitration.
Because the trial court did not enter a written or oral
statement of reasons explaining its decision to dismiss the
complaint we are unable to determine if the court applied the Cole
factors when deciding defendants' motion. A trial judge has an
obligation to render "an opinion or memorandum decision, either
written or oral, [with] find[ings of] fact[] and . . . conclusions
of law thereon . . . on every motion decided by a written order
that is appealable as of right . . . ." R. 1:7-4(a). "When a
trial court issues reasons for its decision, it 'must state clearly
[its] factual findings and correlate them with relevant legal
conclusions, so that parties and the appellate courts [are]
informed of the rationale underling th[ose] conclusion[s]."
Avelino-Catabran v. Catabran, 445 N.J. Super. 574, 594-95 (App.
Div. 2016) (alterations in original) (quoting Monte v. Monte, 212
N.J. Super. 557, 565 (App. Div. 1986)). "[A]n articulation of
reasons is essential to the fair resolution of a case." O'Brien
v. O'Brien, 259 N.J. Super. 402, 407 (App. Div. 1992).
"While the failure to provide reasons necessitates a remand,
we are left with the option of remanding for a statement of reasons
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or reversing and remanding for consideration of the motion . . .
anew." Allstate Ins. Co. v. Fisher, 408 N.J. Super. 289, 303
(App. Div. 2009). We determine that the latter option is
appropriate here.
The order under review is vacated. The matter is remanded
and the court is directed to consider the motion anew and enter a
new order with a written or oral statement of reasons in conformity
with Rule 1:7-4(a). We do not retain jurisdiction.
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