Alternative Dispute Resolution
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The New Jersey Appellate Division decided Delam Construction v. 15 Thornton Road on December 10, 2007. The parties had entered into a contract for Delam to construct a building. Defendant, Thornton, owed Delam a balance of $187,368 for Delam’s work on the project. Delam filed suit for breach of contract and later added Thornton’s managing member as a defendant.
Thornton counterclaimed alleging construction deficiencies.
Discovery took place and trial was scheduled more than one year after the complaint was filed. By then, defendant had obtained new counsel, trial was adjourned and the court sent the matter to arbitration after defendant’s new attorney raised for the first time an arbitration clause in the original contract. Plaintiff alleged that defendant had waived its right to arbitration by participating in the litigation for over one year. The court examined the competing interests between, on the one hand, favoring commercial arbitration as a speedy and inexpensive alternative to litigation, particularly in construction contract disputes, and on the other hand, whether the active and prolonged litigation resulted in a waiver of the right to compel arbitration.
The court noted an earlier decision where a trial judge’s compelling arbitration nearly five years after the original complaint, was rejected.
After wrestling with the issue of when a waiver has occurred, the court ruled in favor of allowing the matter to proceed to arbitration.
The court relied upon “prejudice” as the “touchstone” for determining when a waiver has occurred. The court was influenced by the perceived lack of prejudice to plaintiff given that much of the same information generated through discovery would be admissible in the arbitration. The court was also persuaded by the assumed knowledge by plaintiff that by filing in court, plaintiff was ignoring the mandatory contractual arbitration provision. Finding neither side blameless, the court directed the matter to arbitration.
The court recognized this was a difficult choice. Parties litigating in this area should be mindful that there are federal cases which hold otherwise. As always, the ultimate outcome was somewhat case specific and fact sensitive.
Written by Thomas J. Pryor on December 12th, 2007 with comments disabled.
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Mediators want a high percentage of mediations which successfully resolve all matters in dispute.There is nothing more frustrating to than a mediation which fails because the lawyers have failed to recognize outstanding legal issues and how the resolution of those issues affects the “value of the case."
Written by New Jersey Law Blog on March 15th, 2007 with comments disabled.
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In Michael S. Kimm v. Blisset, LLC., et als. the Appellate Division of the Superior Court of New Jersey drew distinctions between: 1) fee disputes between attorneys and clients; 2) arbitrations in Court annexed proceedings; and 3) arbitrations held pursuant to private agreements. In addition, the Court focused on the meaning of the recently enacted New Jersey Arbitration Act, N.J.S.A. 2 A: 23 B-1 to 32 as it relates to the powers of an arbitrator.
Written by New Jersey Law Blog on September 12th, 2006 with comments disabled.
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In a recent study conducted by Cornell Professor David Sherwyn, he presented a case study of a large employer following implementation of a program of alternative dispute resolution.
Written by New Jersey Law Blog on July 20th, 2006 with comments disabled.
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When first entering into the mediation process, it is not unusual for one or both sides to not have much faith that mediation will be able to solve the dispute. However, experience has shown that a skilled, trained, mediator, with knowledge of the industry, can help to bring an amicable solution to even the most adverse situation.
As reported in The Washington Business Review, the Marty and Dorothy Silverman Foundation ("Foundation") is seeking payment of nearly $25 million for 31 acres of property from the University Heights Association ("UHA") in Albany, N.Y. The UHA is a consortium of the Albany Medical Center, Albany Law School, Albany College of Pharmacy and The Sage College's Albany campus, and is looking to improve the inventory of buildings on the four campuses as well as create a medical research hub and improve the surrounding neighborhood. The UHA contends that the $25 million in dispute were not loans that needed to be repaid and that the Foundation intended to forgive the payments. Foundation lawyers indicate that the UHA filed tax returns and financial statements in which it listed the payments as loans and that the loans are to be repaid.
The parties have been trying to come to a meeting of the minds that is acceptable to everybody, without success, for over three years.
After the filing of two lawsuits by the Foundation, the UHA attempted to seek Chapter 11 bankruptcy protection in a defensive move to protect association assets, but a Federal Bankruptcy Court Judge dismissed the filing as premature. State Supreme Court Justice Karla Moskowitz has ordered the two sides to try to work out their differences through the Alternative Dispute Resolution program in Manhattan.
While the parties are somewhat skeptical that mediation can help settle this longstanding dispute, both sides will give it a good faith try. The UHA indicated that the Chapter 11 could be refiled, depending on the outcome of mediation.
The Court will pick a mediator who is acceptable to both sides. The mediation process, which is anticipated to take between thirty and forty-five days, is non-binding.
It will be interesting to see if the mediation process can help these parties resolve their differences and avoid a costly fight played out in the courts.
Written by Lewis J. Pepperman on June 6th, 2006 with comments disabled.
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With a recently retired Federal Judge playing the role of a mediator, a dispute between power giant American National Power ("ANP") and the Town of Blackstone ("Blackstone") in Massachusetts is taking a break from the Courthouse. The pending litigation concerns an estimated $10 million in tax revenue that Blackstone officials maintain the company must pay the town through 2019 concerning one of the company’s co-generation plants. The mediation is an attempt to resolve two legal actions the company has filed in protest of its bills, which actions are pending before the Massachusetts Appellate Tax Board in Boston and the Middlesex County Superior Court in Framingham, MA.
The combatants met for two lengthy sessions of mediation and among those participating were Blackstone Town Administrator Raymond Houle, Selectman Chairman Charles Sawyer and other members of the selectmen’s panel.
A mediated settlement will be of obvious benefit to all involved since it will allow the town and the company to avoid a costly litigation battle. During last October’s financial town meeting, Blackstone voters, acting on the request of officials, appropriated $50,000 as a down payment on the legal costs of taking a stand against ANP in court. This year, officials are asking for an even heftier fortification of the war chest -- $250,000 -- to carry on the courtroom battle, if necessary.
Arguing that softening market conditions for electricity have lessened the value of its holdings, ANP wants the town to reduce its assessments, thereby lowering the company’s tax bills. The town calculates ANP’s taxes in two ways: Like any property owner, ANP gets a tax bills for its real estate and land. When the company built its plant in the late 1990s, it also negotiated a plan known as a Payment in Lieu of Taxes, or PILOT, fixing assessments on turbines and other business equipment for 20 years, through 2019.
The two methods resulted in a combined assessment of roughly $2.87 million on the company this year. But the company, as it did last year, protested the assessment in court and paid only a portion of it -- about $1.94 million. The payment represents 100 percent of the company’s obligations on real estate, but only about two-thirds of what the town maintains it owes under the PILOT. If the trend continued for the life of the agreement, the town would stand to lose about $10 million in revenue.
This is another example of the beneficial role mediated resolutions can play in business litigation.
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Written by Lewis J. Pepperman on May 15th, 2006 with comments disabled.
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