Following an automobile accident, if payment for medical treatment is denied, an interested party (e.g., a patient or the patient’s assignee, a treating doctor) may filed a petition for a PIP arbitration, see N.J.S.A. 39:6A-5.1, seeking payment for medical treatment.

If the arbitrator denies the PIP petition, or a motion for reconsideration, the agrieved party may file a summary action in the Law Division pursuant to N.J.S.A. 2A:23A-13, arguing that the arbitrator improperly denied the request for reimbursement and misapplied the law to the facts.

It is error for the arbitrator to ignore medical evidence that supports the medical necessity of treatment.

The applicable regulation, N.J.A.C. 11:3-4.2, defines “[m]edically necessary” as follows:

[T]he medical treatment or diagnostic test is consistent with the clinically supported symptoms, diagnosis or indications of the injured person, and:
(1) The treatment is the most appropriate level of service that is in accordance with the standards of good practice and standard professional treatment protocols including the Care Paths in the Appendix . . . [applicable to spinal injuries];
(2) The treatment of the injury is not primarily for the convenience of the injured person or provider; and
(3) Does not include unnecessary testing or treatment.

If appropriate, the Law Division judge may hold that, in accordance with N.J.S.A. 2A:23A-13(f), “the umpire committed prejudicial error in applying [the] applicable law to the issues and facts presented for alternative resolution[.]”

The decision by the Law Division judge may constitute a “vacating” of “the erroneous determination of the umpire[.]” N.J.S.A. 2A:23A-13(f).

The standards governing PIP arbitration proceedings are set forth in N.J.A.C. 11:3-5.6(f), which states:

The final determination of the dispute resolution professional shall be binding upon the parties, but subject to vacation, modification or correction by the Superior Court in an action filed pursuant to N.J.S.A. 2A:23A-13 for review of the award.

N.J.S.A. 2A:23A-13, which is part of the Alternative Procedure For Dispute Resolution Act (APDRA), N.J.S.A. 2A:23A-1 to -30, permits a trial judge to modify the award rendered by the PIP arbitrator, but only in limited circumstances. Among those circumstances is subsection (f) which provides:

Whenever it appears to the court to which application is made, pursuant to this section, either to vacate or modify the award because the umpire committed prejudicial error in applying applicable law to the issues and facts presented for alternative resolution, the court shall, after vacating or modifying the erroneous determination of the umpire, appropriately set forth the applicable law and arrive at an appropriate determination under the applicable facts determined by the umpire. The court shall then confirm the award as modified.

[N.J.S.A. 2A:23A-13(f).]

After the Law Division has performed the function described in N.J.S.A. 2A:23A-13(f), the APDRA prohibits further appeals. N.J.S.A. 2A:23A-18(b). In Fort Lee Surgery Center, Inc. v. Proformance Insurance Co., 412 N.J. Super. 99, 102-03 (App. Div. 2010), the appellate court reviewed the narrow exceptions to APDRA’s elimination of appellate review. The court noted that in Mt. Hope Development Associates v. Mt. Hope Waterpower Project, 154 N.J. 141, 151-52 (1998), the Supreme Court held that APDRA’s limitation on appellate review “does not apply to child support issues[.]” Fort Lee, supra, 412 N.J. Super. at 102. The court also noted that in Morel v. State Farm Insurance Co., 396 N.J. Super. 472, 475 (App. Div. 2007), appellate review was permitted where the trial judge “applied the wrong standard of review and ‘did not rule at all on plaintiff’s specific claims.’” Fort Lee, supra, 412 N.J. Super. at 103.

The appellate court concluded in Fort Lee that “our role is to determine whether the trial judge acted within APDRA’s bounds. If so, then the appellate court is bound by N.J.S.A. 2A:23A-18(b) to dismiss the appeal.” Ibid.

As the court observed in Fort Lee, id. at 104, that “not every instance in which a judge utters the phrase ‘prejudicial error’ will preclude appellate review” because “[t]he exercise of our supervisory function cannot be talismanically eliminated by the mere invocation of the words of the statute.” Ibid. But where the unique circumstances described in Mt. Hope, supra, 154 N.J. at 151-52, or Morel, supra, 396 N.J. Super. at 475, are glaringly absent, appellate intervention is prohibited.

As in Fort Lee, where the trial judge was “able to provide a rational explanation for how the arbitrator committed prejudicial error, N.J.S.A. 2A:23A-18(b) requires a dismissal of [the] appeal . . . regardless of whether the appellate court may think the trial judge exercised that jurisdiction imperfectly.” Supra, 412 N.J. Super. at 104. “Any broader view of appellate jurisdiction would conflict with the Legislature’s expressed desire in enacting APDRA to eliminate appellate review in these matters.” Ibid.

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An arbitration agreement is construed and enforced under the same legal principles applicable to contracts in general. McKeeby v. Arthur, 7 N.J. 174, 181 (1951). As such, “a waiver will preclude the enforcement of a contractual provision to arbitrate.” Spaeth v. Srinivasan, 403 N.J. Super. 508, 514 (App. Div. 2008).

Under Rule 4:5-4, a responsive pleading must “set forth specifically and separately” the affirmative defense of arbitration. Although not expressly stated in Rule 4:5-4, ordinarily, an affirmative defense that is not pleaded or raised on a timely basis is deemed have been waived. See Aikens v. Schmidt, 329 N.J. Super. 335, 339-40 (App. Div. 2000). However, “[t]here is a presumption against waiver of an arbitration agreement, which can only be overcome by clear and convincing evidence that the party asserting it chose to seek relief in a different forum.” Spaeth, supra, 403 N.J. Super. at 514.

In Spaeth, the court recognized that there is no single test to determine the type of conduct that may result in a waiver of the right to enforce an arbitration provision. Ibid. The key to determining waiver is the absence or presence of prejudice to the party objecting to the arbitration. Id. at 515.

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N.J.S.A. 2A:23A-18(b) prohibits appellate review of a judgment of the Law Division confirming, correcting or modifying an arbitration award under the Alternative Procedure for Dispute Resolution Act (APDRA), N.J.S.A. 2A:23-1 to -30:

Upon the granting of an order confirming, modifying or correcting an award, a judgment or decree shall be entered by the court in conformity therewith and be enforced as any other judgment or decree. There shall be no further appeal or review of the judgment or decree.

In Mount Hope Development Associates v. Mount Hope Waterpower Project, L.P., 154 N.J. 141, 147-53 (1998), the Court upheld the constitutionality of this prohibition upon appellate review of a judgment confirming, correcting or modifying arbitration awards under the APDRA. However, in upholding the constitutionality of this prohibition, the Court noted that there may be “‘rare circumstances’ grounded in public policy that might compel this Court to grant limited appellate review.” Id. at 152. The Court pointed to a case involving the “enforceability of an award affecting child support” that could “affect[] the substantial best interest of [a] child” as one example of a case implicating a “public policy” that could compel a right of limited appellate review. Ibid. The Court pointed to “an award that is confirmed, modified, or vacated by a biased court” as another example of such an award, because such a decision would implicate “the Court’s supervisory function over the courts.” Ibid.

In Allstate Insurance Co. v. Sabato, 380 N.J. Super. 463, 473-74 (App. Div. 2005), the court concluded that an award of counsel fees by an arbitrator also implicated the Court’s exclusive supervisory powers over the practice of law requiring the opportunity for limited appellate review. In reaching this conclusion, we stated that “[t]he award of attorney’s fees, whether encompassing bookkeeping records, reasonableness, or the type of fee agreed to, is governed by our Court rules, specifically the Rules of Professional Conduct, RPC 1.5, and Rules of General Application, R. 1:21-6 and R. 1:21-7.” Id. at 473.

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The New Jersey Arbitration Act (Act), N.J.S.A. 2A:23B-1 to -32, as revised in 2003, L. 2003, c. 95, grants arbitrators extremely broad powers, N.J.S.A. 2A:23B-15, and “extends judicial support to the arbitration process subject only to limited review.” Barcon Assoc. v. TriCounty Asphalt Corp., 86 N.J. 179, 187 (1981) (interpreting predecessor Act, N.J.S.A. 2A:24-1 to -11). Generally, an arbitration award is presumed valid. Del Piano v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 372 N.J. Super. 503, 510 (App. Div. 2004), certif. granted, 183 N.J. 218, appeal dismissed by 195 N.J. 512 (2005).

“The scope of review of an arbitration award is narrow[,]” lest “the purpose of the arbitration contract, which is to provide an effective, expedient, and fair resolution of disputes . . . be severely undermined.” Fawzy v. Fawzy, 199 N.J. 456, 470 (2009). “Because arbitration is so highly favored by the law, the presumed validity of the arbitration award is entitled to every indulgence, and the party opposing confirmation has the burden of establishing statutory grounds for vacation.” Pressler & Verniero, Current N.J. Court Rules, comment 3.3.3 on R. 4:5-4 (2012); see also Twp. of Wyckoff v. PBA Local 261, 409 N.J. Super. 344 (App. Div. 2009). Further, the Court in Trentina Printing, Inc. v. Fitzpatrick & Assoc., Inc., 135 N.J. 349 (1994),

imposed a strict standard of review of private contract arbitration, limited by a narrow construction of the statutory grounds stated by . . . [N.J.S.A. 2A: 23B-23] for judicial review. Trentina overruled Perini Corp. v. Greate Bay Hotel & Casino, Inc., 129 N.J. 479 (1992), which had permitted judicial intervention for gross errors of law by the arbitrators.

[Pressler, supra, comment 3.3.3 on R. 4:5-4.]

Consequently, arbitration awards may be vacated only if:

(1) the award was procured by corruption, fraud, or other undue means;
(2) the court finds evident partiality by an arbitrator; corruption by an arbitrator; or misconduct by an arbitrator prejudicing the rights of a party to the arbitration proceeding;
(3) an arbitrator refused to postpone the hearing upon showing of sufficient cause for postponement, refused to consider evidence material to the controversy, or otherwise conducted the hearing contrary to section 15 of this act, so as to substantially prejudice the rights of a party to the arbitration proceeding;
(4) an arbitrator exceeded the arbitrator’s powers;
(5) there was no agreement to arbitrate, unless the person participated in the arbitration proceeding without raising the objection pursuant to subsection c. of section 15 of this act not later than the beginning of the arbitration hearing; or
(6) the arbitration was conducted without proper notice of the initiation of an arbitration as required in section 9 of this act so as to substantially prejudice the rights of a party to the arbitration proceeding.

[N.J.S.A. 2A:23B-23(a).]

With specific reference to subsection (a)(3), proscribing a hearing contrary to Section 15 of the Act, N.J.S.A. 2A:23B-15 provides:

c. If an arbitrator orders a hearing, the arbitrator shall set a time and place and give notice of the hearing not less than five days before the hearing begins. Unless a party to the arbitration proceeding makes an objection due to lack or insufficiency of notice not later than the beginning of the hearing, the party’s appearance at the hearing waives the objection. Upon request of a party to the arbitration proceeding and for good cause shown, or upon the arbitrator’s own initiative, the arbitrator may adjourn the hearing from time to time as necessary but may not postpone the hearing to a time later than that fixed by the agreement to arbitrate for making the award unless the parties to the arbitration proceeding consent to a later date. The arbitrator may hear and decide the controversy upon the evidence produced although a party who was duly notified of the arbitration proceeding did not appear. The court, on request, may direct the arbitrator to conduct the hearing promptly and render a timely decision.
d. At a hearing pursuant to subsection c. of this section, a party to the arbitration proceeding has a right to be heard, to present evidence material to the controversy, and to cross-examine witnesses appearing at the hearing.

[N.J.S.A. 2A:23B-15(c), (d).]

Courts have interpreted “undue means” as a “clearly mistaken view of fact or law.” Local Union 560, I.B.T. v. Eazor Express, Inc., 95 N.J. Super. 219, 227-28 (App. Div. 1967). This “does not include situations, . . . where the arbitrator bases his decision on one party’s version of the facts, finding that version to be credible.” Local No. 153, Office & Prof’l Employees Int’l Union v. Trust Co. of N.J., 105 N.J. 442, 450 n.1 (1987). Rather, the mistake of fact must appear on the face of the award or by the statement of the arbitrator, Office of Employee Relations v. Commc’ns Workers of Am., 154 N.J. 98, 111 (1998); PBA Local 160 v. Twp. of N. Brunswick, 272 N.J. Super. 467, 474 (App. Div.), certif. denied, 138 N.J. 262 (1994), and be so gross as to suggest fraud or corruption. Trentina, supra, 135 N.J. at 358; Held v. Comfort Bus Line, 136 N.J.L. 640, 642 (Sup. Ct. 1948).

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Pursuant to N.J.S.A. 39:6A-31 and Rule 4:21A-6(b)(1), following a mandatory, non-binding arbitration, parties have thirty days to file and serve a demand for a trial de novo.

The arbitration program is designed to be an expeditious process for resolving certain categories of pending civil actions. That policy is undermined if program deadlines are not, in general, stringently observed and enforced. In particular, with respect to the thirty-day deadline for a party dissatisfied with the arbitration award to file a demand for a trial de novo, “‘[t]he Legislature intended [that rule] . . . to be strictly enforced.’” Hartsfield, supra, 149 N.J. at 616 (quoting Hart v. Prop. Mgmt. Sys., 280 N.J. Super. 145, 147 (App. Div.), certif. denied, 141 N.J. 99 (1995)).

That said, our courts retain the authority, in the interest of justice, to relax the thirty-day deadline ⎯ albeit sparingly ⎯ in limited circumstances where there is sufficient justification to do so. In particular, the filing deadline may be relaxed in situations where the movant has shown “extraordinary circumstances” that equitably warrant such relaxation. See, e.g., Hartsfield, supra, 149 N.J. at 616-20 (adopting such an “extraordinary circumstances” test, but finding that the test was not satisfied by “the departure of two attorneys from [the movant's] four-attorney office” and his “failure to review his diary and to ensure that his secretary followed his instructions”); Wallace v. JFK Hartwyck at Oak Tree, Inc. 149 N.J. 605, 610 (1997) (holding that an attorney’s mailing of a de novo demand six days out of time was not excused by extraordinary circumstances where the attorney had carelessly placed a filing reminder in his calendar on the wrong date); Martinelli v. Farm Rite, Inc., 345 N.J. Super. 306, 312-13 (App. Div. 2001), certif. denied, 171 N.J. 338 (2002) (holding that an attorney’s computer malfunction was not an extraordinary circumstance warranting relief).

In Corcoran v. St. Peter’s Med. Ctr., 339 N.J. Super. 337, 342-43 (App. Div. 2001), the court observed that the equitable doctrine of “substantial compliance” applies to an assessment of whether the thirty-day filing requirement should be relaxed. See also Gerzsenyi v. Richardson, 211 N.J. Super. 213, 217 (App. Div. 1986). Under that doctrine, a party seeking relief from the requirements of a statute or court rule must show (1) a lack of prejudice to the opposing party; (2) a series of steps taken to attempt to comply with the requirements; (3) general compliance with the overall purposes of the requirements; (4) reasonable notice of the party’s claim; and (5) a reasonable explanation of why there was not strict compliance with the provision. See Corcoran, supra, 339 N.J. Super. at 343 (citing Alan J. Cornblatt, P.A. v. Barow, 153 N.J. 218, 239 (1998)).

In applying these principles, the judicial determination of whether a matter represents a rare instance warranting the relaxation of the thirty-day deadline is “fact sensitive and should be made on a case-by-case basis.” Flagg v. Twp. of Hazlet, 321 N.J. Super. 256, 258 (App. Div. 1999).

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“Although an arbitrator in the private sector has broad discretion when authorized by the parties in determining legal issues and, when so authorized may even decide issues irrespective of the law, he cannot disregard the terms and conditions of the agreement.” PBA Local 160 v. Twp. of North Brunswick, 272 N.J. Super. 467, 476 n.5 (App. Div.), certif. denied, 138 N.J. 262 (1994). “Whether in the public or private sector, it is the agreement between the parties that essentially empowers the arbitrator and his function is to comply with the authority given him by the parties.” Ibid. In other words, because an arbitrator’s powers are derived from the express terms of an agreement to arbitrate, he exceeds those powers by disregarding the terms of that agreement. Office of Emp. Relations v. Commc’ns Workers of Am., 154 N.J. 98, 112 (1998); PBA Local 160, supra, 272 N.J. Super. at 476 n.5. Thus, while “‘arbitration is traditionally described as a favored remedy, it is, at its heart, a creature of contract.’” Fawzy, supra, 199 N.J. at 469 (quoting Kimm v. Blisset, LLC, 388 N.J. Super. 14, 25 (App. Div. 2006), certif. denied, 189 N.J. 428 (2007)).

Parties should not confuse the arbitrator’s authority to render an award with the basis for that award. Resolution of the dispute must be within the four corners of the parties’ agreement, which solely defines the scope of the arbitrator’s authority, irrespective of the legal basis for his decision. PBA Local 160, supra, 272 N.J. Super. at 476 n.5. As such, absent fraud, undue means, or arbitrator partiality, corruption or misconduct prejudicing the rights of a party to the arbitration proceeding, the arbitrator’s decision is binding and not reviewable for any error of law. Ibid.

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The Condominium Act (Act), N.J.S.A. 46:8B-1 to -38, requires condominium associations to establish a “fair and efficient procedure for the resolution of housing-related disputes” between individual unit owners and the association, or between unit owners, “as an alternative to litigation.” See N.J.S.A. 46:8B-14(k).

Because the long-established public policy of this State favors alternative dispute resolution, and because the Legislature chose expansive and unconditional language when it required the arbitration of “housing-related disputes” when requested by a party, the court construes the term broadly. The term “housing-related disputes” refers to any dispute arising directly from the condominium relationship.

In New Jersey, there is a strong public policy favoring arbitration as a mechanism for resolving disputes. As Judge Pressler observed in Billig v. Buckingham Towers Condominium Association I, Inc., 287 N.J. Super. 551, 564 (App. Div. 1996):

Litigation ought to be a last resort, not a first one. It is expensive, it is burdensome, and when it involves a claim against a unit owner, it may well be counter-productive to the harmony and commonality required for successful community living.

The court observed in Angrisani v. Financial Technology Ventures, L.P., 402 N.J. Super. 138, 148 (App. Div. 2008), that “arbitration is . . . favored . . . as a means of resolving disputes[.]”

The Act, which provides for the regulation of condominiums in New Jersey, makes it clear that “condominium ownership is distinct from other forms of property ownership because, when an individual purchases a condominium unit, he or she simultaneously acquires a proportionate undivided interest in the community’s common elements.” Fox v. Kings Grant Maintenance Ass’n, 167 N.J. 208, 218 (2001) (citing N.J.S.A. 46:8B-6). The Act provides for the creation of an association, which has responsibility for the administration and management of the condominium and its property, “including but not limited to the conduct of all activities of common interest to the unit owners.” N.J.S.A. 46:8B-12.

The association is charged with the duty to maintain the common elements and to assess and collect funds for common expenses. N.J.S.A. 46:8B-13. The association is administered by a governing board and, when at least seventy-five percent of the units have been sold, only the unit owners may elect members to the association’s board. N.J.S.A. 46:8B-12.1(a).

Under the Act, the association “‘is a representative body that acts on behalf of the unit owners.’” Fox, supra, 167 N.J. at 220 (quoting Thanasoulis v. Winston Towers 200 Ass’n, 110 N.J. 650, 656 (1988)). Through the condominium association, the unit owners exercise their “ultimate responsibility” for the management of a condominium’s common elements. Ibid. The association must “act on behalf of its unit owners” and it has “primary responsibility” to protect the unit owners’ interests in the common elements. Id. at 220-21.

The Act provides:

An association shall provide a fair and efficient procedure for the resolution of housing-related disputes between individual unit owners and the association, and between unit owners, which shall be readily available as an alternative to litigation.

[N.J.S.A. 46:8B-14(k).]

Construing that statute, the court held in Finderne Heights Condominium Association, Inc. v. Rabinowitz, 390 N.J. Super. 154, 163 (App. Div. 2007), that because a condominium association is required to provide a procedure for the resolution of “housingrelated disputes” as an “alternative to litigation,” N.J.S.A. 46:8B-14(k), qualifying disputes must be sent to arbitration if, after suit is filed, either party chooses to invoke the alternative dispute remedy that must be made available under the Act.

The term “housing-related disputes” is a broad one. In light of the autonomy that unit owners surrender by choosing to live in a condominium, we cannot agree with the Association that its management of the condominium’s common elements, and its imposition of special assessments, should be carved out as an exception to the broad right of unit owners to demand arbitration to resolve “housing-related disputes.” The term is not ambiguous. The term “housing-related disputes” signifiesthat only disputes that arise from the parties’ condominium relationship are subject to the arbitration provisions of N.J.S.A. 46:8B-14(k). Any other dispute would be resolved either in the Law Division or in the municipal courts. Examples of disputes that are not “housing-related disputes” within the meaning of N.J.S.A. 46:8B-14(k) might include, without limitation, an auto accident in the condominium parking lot, a commercial dispute arising from a failed business venture between two unit owners, a palimony claim asserted by one unit owner against another, a legal or medical malpractice claim against another unit owner, a crime or disorderly persons offense committed by one owner against another, or any other dispute that does not arise directly from the parties’ condominium relationship.

In light of the Court’s opinion in GMAC v. Pittella, 205 N.J. 572, 585-86 (2011), which construed Rule 2:2-3(a), an order denying arbitration is final for purposes of appellate review, even though the Law Division retained jurisdiction over a counterclaim.

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This State has a strong public policy favoring arbitration as a means of dispute resolution and, to that end, liberally construes agreements to arbitrate. Marchak v. Claridge Commons, Inc., 134 N.J. 275, 281-82 (1993). Consequently, our courts have compelled arbitration of a variety of statutory claims, including claims based on: the Law Against Discrimination, N.J.S.A. 10:5-1 to -49, see Garfinkel v. Morristown Obstetrics & Gynecology Assocs., P.A., 168 N.J. 124, 135-36 (2001); the Consumer Fraud Act, N.J.S.A. 56:8-1 to -106, see Gras v. Assocs. First Capital Corp., 346 N.J. Super. 42, 52 (App. Div. 2001), certif. denied, 171 N.J. 445 (2002); the Racketeer Influenced and Corrupt Organizations Act, N.J.S.A. 2C:41-1 to -6.2, see Caruso v. Ravenswood Developers, Inc., 337 N.J. Super. 499, 505 (App. Div. 2001); and the Antitrust Act, N.J.S.A. 56:9-1 to -19, see EPIX Holdings Corp. v. Marsh & McLennan Companies, Inc., 410 N.J. Super. 453, 478-79 (App. Div. 2009). Our courts have enforced arbitration agreements notwithstanding that causes of action authorized by statute, like N.J.S.A. 14A:12-7, refer to “the court” as the forum empowered to grant relief. See, e.g., N.J.S.A. 56:8-19 (stating that, in a consumer fraud action, “the court shall, in addition to any other appropriate legal or equitable relief, award threefold the damages sustained by any person in interest”); N.J.S.A. 56:9-10a (stating that, in an antitrust action, “[t]he [s]uperior [c]ourt shall have jurisdiction to prevent and restrain violations”).

Thus, the rights provided by N.J.S.A. 14A:12-7 are not dampened by arbitration. “By agreeing to arbitrate a statutory claim, a party does not forgo the substantive rights afforded by the statute; it only submits to their resolution in an arbitral, rather than a judicial, forum.” Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628, 105 S. Ct. 3346, 3354, 87 L. Ed. 2d 444, 456 (1985). See also Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 26, 111 S. Ct. 1647, 1652, 114 L. Ed. 2d 26, 37 (1991); Gras, supra, 346 N.J. Super. at 49. Indeed, the Arbitration Act has installed the Superior Court as an available forum for the issuance of provisional remedies, such as appointment of a custodian or provisional director, prior to arbitration, N.J.S.A. 2A:23B-8a, or, ultimately, for the confirmation, modification or vacation of any award or remedy imposed by the arbitrator upon the grounds provided by the Legislature, N.J.S.A. 2A:23B-22 to -24.

There is no hostility to the possibility of multiple proceedings when an arbitration agreement does not blanket all related claims, leaving some to be adjudicated elsewhere. See, e.g., Konieczny v. Micciche, 305 N.J. Super. 375, 388 (App. Div. 1997); Jersey City Police Officers Benevolent Assoc. v. City of Jersey City, 257 N.J. Super. 6, 14-15 (App. Div. 1992).

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“[A]rbitration is a favored form of relief.” Marchak v. Claridge Commons, Inc., 134 N.J. 275, 281 (1993). Indeed, “the Legislature has authorized persons to enter binding agreements to arbitrate and to accept the arbitrator’s award.” Ibid. (citing N.J.S.A. 2A:24-2). Generally, courts should enforce the agreements made by the parties, including arbitration agreements. Ibid. (citing Vasquez v. Glassboro Serv. Ass’n, 83 N.J. 86, 101 (1980)). Moreover, “[a]n agreement to arbitrate should be read liberally in favor of arbitration.” Id. at 282 (citing J. Baranello & Sons, Inc. v. Davidson & Howard Plumbing & Heating, Inc., 168 N.J. Super. 502, 507 (App. Div.), certif. denied, 81 N.J. 340 (1979)).

However, a contractual provision in which a consumer agrees that arbitration is the exclusive remedy must “be read in light of its effect on the consumer’s right to sue.” Ibid. The clause must “clearly state its purpose.” Ibid. The parties must “know that in electing arbitration as the exclusive remedy, they are waiving their time-honored right to sue.” Ibid.

“There is no inherent conflict between arbitration and the underlying purposes of the CFA.” Gras v. Assocs. First Capital Corp., 346 N.J. Super. 42, 49, 52 (App. Div. 2001). Indeed, claims brought under the CFA may be resolved through arbitration. Id. at 52 (citing Cybul v. Atrium Palace Syndicate, 272 N.J. Super. 330, 335 (App. Div.), certif. denied, 137 N.J. 311 (1994)).

While the courts will enforce an agreement to arbitrate claims under the CFA, such an agreement must be expressed in unambiguous terms. Rockel v. Cherry Hill Dodge, 368 N.J. Super. 577, 583 (App. Div.), certif. denied, 181 N.J. 545 (2004)).

NOTE from Paul G. Kostro, Esq.: If you are interested in Conflict Management Services; Collaborative Law; Mediation; Arbitration; or have Other Legal Matters that need attention, please call me to schedule an appointment — I can be reached by telephone at (908)486-2200; or by Email.

My Law Office is located at 726 West Saint Georges [W. St. Georges] Avenue (Route 27), Linden, Union County, NJ 07036. [MAP]

A settlement is essentially a contract which is to be enforced, as written, absent a demonstration of fraud or other compelling circumstances. Honeywell v. Bubb, 130 N.J. Super. 130, 136 (App. Div. 1974). The favor in which the law holds the settlement of litigation is well-established. See Herrera v. Twp. of S. Orange Vill., 270 N.J. Super. 417, 424 (App. Div. 1993), certif. denied, 136 N.J. 28 (1994); Pascarella v. Bruck, 190 N.J. Super. 118, 125 (App. Div.), certif. denied, 94 N.J. 600 (1983); Warren v. Employers’ Fire Ins. Co., 100 N.J. Super. 464, 470 (App. Div. 1968), rev’d on other grounds, 53 N.J. 308 (1969). It is the certitude provided by a settlement which encourages litigants to resolve their dispute amicably.

In recognition of the value placed on the settlement of litigation, the Legislature adopted the Uniform Mediation Act and the Supreme Court adopted Rule 1:40. Each recognizes the role of complementary dispute resolution (CDR) programs to assist parties to a litigated matter to resolve their dispute short of a trial. Indeed, Rule 1:40-1 expressly states the CDR programs, including mediation, “constitute an integral part of the judicial process[.]” The CDR programs recognized by the Court are available in the municipal courts, Rule 1:40-8, in Family Part matters, Rule 1:40-5, in civil, probate, and general equity actions, Rule 1:40-6, and in Special Civil Part matters, Rule 1:40-7.

N.J.S.A. 2A:23C-5 and Rule 1:40-4(d) (Rule 1:40-4(c) also establishes an evidentiary privilege similar to N.J.R.E. 408) provide that the mediator, the parties, or any other participant in a mediation may not disclose any mediation communication to anyone other than a participant in the mediation session. See also N.J.R.E. 519(a) and (b). The statute and the rule, however, recognize that the privilege may be waived by the parties. N.J.S.A. 2A:23C-5; R. 1:40-4(d); see also N.J.R.E. 519(b).

The purpose of mediation is to assist the parties to resolve their dispute without further resort to the judicial process. Accordingly, the ultimate goal of any mediation is settlement of some or all of the issues in dispute. When the parties have reached a settlement, the terms of the settlement are to be reduced to writing and a copy of the writing is provided to all parties. R. 1:40-4(i). The mediator is not required to send the written agreement to the judge referring the matter to mediation or report the settlement to the court, unless the case has been stayed pending mediation. Ibid. The express terms of the rule are as follows:

If the mediation results in the parties’ total or partial agreement, it shall be reduced to writing and a copy thereof furnished to each party. The agreement need not be filed with the court, but if formal proceedings have been stayed pending mediation, the mediator shall report to the court whether agreement has been reached. If an agreement is not reached, the matter shall be referred back to court for formal disposition.

[R. 1:40-4(i).]

Notably, the rule does not provide that any agreement must be reduced to writing during the mediation session or that all parties must receive a copy of the agreement before they leave the mediation session. Stated differently, the language of the rule does not prohibit the mediator or one of the parties to reduce the terms of the agreement to writing shortly after conclusion of the mediation session.

Contemporaneous reduction of the terms to writing and obtaining signatures on the document at the mediation is not necessary.

The Supreme Court and the courte have consistently held that an agreement to resolve a matter will be enforced as long as the agreement addresses the principal terms required to resolve the dispute. Weichert Co. Realtors v. Ryan, 128 N.J. 427, 435 (1992); Bistricer v. Bistricer, 231 N.J. Super. 143, 148, 151 (App. Div. 1987); Berg Agency v. Sleepworld-Willingboro, Inc., 136 N.J. Super. 369, 376-77 (App. Div. 1975). The addition of terms to effectuate the settlement that do not alter the basic agreement will not operate to avoid enforcement of an agreement to settle a litigated matter. Bistricer, supra, 231 N.J. Super. at 148, 151.

The mediation process is utilized to afford the parties an opportunity to present their position before an experienced professional with the goal of resolving some or all of the differences between the parties. See State v. Williams, 184 N.J. 431, 441 (2005). In contrast to arbitration, the mediation process is non-binding only in the sense that the process is not designed or intended to impose a result on any party. Mediation is also not intended or designed as a meaningless and impotent detour on the way to judgment. The very purpose of the process is to resolve the dispute.

A delay of three days to memorialize a settlement reached through mediation does not vitiate the settlement. To be sure, preparation of a writing memorializing the agreement at the mediation session may be the preferable and advisable course. However, some disputes may be complicated and the writing to memorialize the agreement may require some time to produce.

In Beazer East, Inc. v. The Mead Corp., 412 F.3d 429, 436 (3d Cir. 2005), cert. denied, 546 U.S. 1091, 126 S. Ct. 1040, 163 L. Ed. 2d 857 (2006), the court stated that “an agreement is not binding unless it is reduced to writing.” In so ruling, the court emphasized that any other rule would ignore and eviscerate the confidentiality provisions governing mediation. Ibid.; see also Barnett v. Sea Land Serv., Inc., 875 F.2d 741, 744 (9th Cir. 1989) (declining to enforce an oral settlement agreement because proof of an oral agreement contravened the confidentiality of the proceeding). N.J.S.A. 2A:23C-4 and Rule 1:40-4(d) present obstacles to enforcement of an oral agreement reached through mediation when the parties do not waive the confidentiality conferred on the proceeding.

However, a settlement reached during a Rule 1:40 mediation session may be enforced, when the parties waived the confidentiality provisions of the Uniform Mediation Act, N.J.S.A. 2A:23C-1 to -13, specifically, N.J.S.A. 2A:23C-4 and Rule 1:40-4(d).

NOTE from Paul G. Kostro, Esq.: If you are interested in Conflict Management Services; Collaborative Law; Mediation; Arbitration; or have Other Legal Matters that need attention, please call me to schedule an appointment — I can be reached by telephone at (908)486-2200; or by Email.

My Law Office is located at 726 West Saint Georges [W. St. Georges] Avenue (Route 27), Linden, Union County, NJ 07036. [MAP]