Wade Clark Mulcahy LLP

In Jesan Construction Group, LLC v. 3125-3129 Summit Avenue, the Appellate Court upheld an arbitrator’s interpretation of a New Jersey law and the accompanying $433,690 judgment against Defendant. Plaintiff Jesan Construction Group was hired by Defendant 3125-3129 Summit Avenue to perform concrete and masonry work on the Summit Avenue property in Union City. Plaintiff was on schedule from September 2015 through January 2016, at which point they asked for partial payment and Defendant declined. In August 2020, the parties entered into an agreement to arbitrate. The parties exchanged written discovery and the arbitrator concluded that the Defendant never paid Plaintiff for their services because one of the checks issued was never cleared. Under New Jersey case law, an "arbitrator's factual determinations concerning the merits of the dispute submitted to him are not reviewable by the court." Ukranian Nat'l Urb. Renewal Corp. v. Joseph L. Muscarelle, Inc., 151 N.J. Super. 386, 396 (App. Div. 1977). Appellate Courts may review arbitration decisions under the plain error standard, and may overturn arbitration awards if “the award was procured by corruption, fraud, or other undue means." N.J.S.A. 2A:23B-23(a).

Defendant argued that the arbitrator erred as a matter of both fact and law because 1) the parties were not in privity of contract; 2) liability was not determined under New Jersey law; 3) the arbitrator impermissibly relied on a mediation letter in making their decision, and 4, the arbitrator did not articulate a cause of action upon which the award was granted. However, the Court was not swayed by any of these arguments. First, Defendant admitted in the initial Answer that there was a signed contract between the parties, thereby admitting privity. The Court dismissed both the liability argument and the cause of action argument and found that the arbitrator sufficiently explained their findings. Lastly, the Court dismissed the mediation letter argument because this was not addressed with the trial judge previously.

This case serves as a reminder to consult legal counsel prior to signing a binding arbitration agreement. Arbitrators have broad power in New Jersey and their decisions are typically binding and will only be vacated on very limited grounds.