Capparelli v. Lopatin
212 A.3d 979
| N.J. Super. Ct. App. Div. | 2019Background
- Former business partners (plaintiff and defendant) executed a May 2, 2013 global settlement providing a mediation/arbitration mechanism (three‑person panel with neutral Michael Marotte) to wind down their companies.
- Parties later executed a March 16, 2015 arbitration agreement (referencing New Jersey Uniform Arbitration Act) and on May 28, 2015 entered a separate May 2015 settlement that carved out collection disputes and named Marotte as the sole final decisionmaker (no replacement mechanism provided).
- Marotte was dismissed from the three‑person panel by plaintiff in July 2017 and then withdrew from serving under the May 2015 agreement; parties could not agree on a replacement.
- Plaintiff sought a court order to appoint a replacement under the May 2015 agreement; defendant defended and counterclaimed for declaratory relief to have the three‑person panel pick a replacement under the May 2013 agreement.
- After a plenary hearing focused on the parties’ intent, the trial court declared the May 2015 agreement null and void on grounds of frustration of purpose and impossibility of performance and relegated the parties to the earlier arbitration agreement; plaintiff appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether trial court erred in excluding Marotte's live testimony | Excluding Marotte deprived court of key evidence about the parties' intent | Exclusion within trial court's discretion and cumulative | Court: exclusion not an abuse of discretion; if error, harmless given testimonial record |
| Whether May 2015 agreement should be voided despite severability and anti‑amendment clauses | Agreement's language and severability required enforcing remaining provisions; settlement policy favors enforcement | May 2015 made Marotte indispensable; his withdrawal frustrated purpose and made performance impossible | Court: voided entire May 2015 agreement — clear and convincing evidence of frustration/impossibility; severability inapplicable because central purpose defeated |
| Whether May 2015 agreement was governed by NJ Uniform Arbitration Act allowing court appointment of substitute | Plaintiff: Act applies and court could appoint substitute arbitrator | Defendant: May 2015 is a stand‑alone settlement, not an arbitration agreement; Act does not apply | Court: May 2015 was not an arbitration agreement (no invocation of arbitration or panel); Act did not apply; parties relegated to May 2013 arbitration agreement |
| Whether plaintiff's equitable relief barred by unclean hands or plaintiff's misconduct | Plaintiff argued defendant had unclean hands, so court should not void agreement | Defendant did not invoke unclean hands to block legal rights; unclean hands applies to equitable relief against wrongdoer | Court: unclean hands inapplicable here because plaintiff sought equitable relief (plaintiff was the suitor); doctrine not a ground to save May 2015 agreement |
Key Cases Cited
- Nolan v. Lee Ho, 120 N.J. 465 (discussing strong public policy favoring settlements and standard to vacate settlements)
- Conway v. 287 Corp. Ctr. Assocs., 187 N.J. 259 (extrinsic evidence admissible to interpret integrated agreements)
- Quinn v. Quinn, 225 N.J. 34 (court enforces parties’ intent; will not rewrite clear contracts)
- JB Pool Mgmt., LLC v. Four Seasons at Smithville Homeowners Ass'n, 431 N.J. Super. 233 (doctrine and relationship of frustration of purpose and impossibility)
- A‑Leet Leasing Corp. v. Kingshead Corp., 150 N.J. Super. 384 (discussing implied condition and relief for frustration/impossibility)
- Gen. Inv. Corp. v. Angelini, 58 N.J. 396 (treating interrelated documents as a unitary contract)
- In re Resnick, 284 N.J. Super. 47 (reading related documents in pari materia)