272 A.3d 36
N.J. Super. Ct. App. Div.2022Background
- Grandvue Manor, LLC (NJ LLC) contracted with Cornerstone Contracting Corp. (CT corp., Greenwich, CT) in Dec. 2017 to build a $10M home in Stanfordville, NY using AIA Form Agreement and General Conditions.
- Contract contained a choice-of-law clause selecting New York law and an AIA-based arbitration clause (§6.2 / §15.4) requiring arbitration in the project location for any "claim" not resolved by mediation.
- Grandvue sued Cornerstone and two Cornerstone officers, Pusser (president) and D'Ambra (CFO), asserting contract breach, fraud, negligent misrepresentation, New York lien claims, NJ Consumer Fraud Act and NJ RICO, among others.
- Defendants moved to dismiss for lack of personal jurisdiction over the individuals and to compel arbitration; after jurisdictional discovery the court orally found personal jurisdiction over the individuals but compelled arbitration.
- The court’s written July 7, 2021 order compelled arbitration but (inconsistently) dismissed the complaint for lack of personal jurisdiction as to Pusser and D'Ambra; Grandvue appealed.
- Appellate court affirmed the order compelling arbitration, held the arbitration waiver was clear and covered the statutory claims, and remanded to correct the clerical error and direct entry of a stay pending arbitration under the FAA.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Enforceability of arbitration clause / waiver of jury and statutory rights | Arbitration clause fails to clearly and unambiguously waive right to jury / court for statutory claims (Atalese standard) | Parties knowingly agreed to AIA arbitration; sophisticated parties; waiver is clear | Court: Waiver was clear and unambiguous for sophisticated parties; arbitration enforceable and jury right waived |
| Choice of law for construing arbitration provision | New Jersey law should govern enforceability and Atalese waiver analysis | Contract selects New York law (project situs); New York favors arbitration | Court applied the parties' clear choice of New York law (noting NJ principles) and found arbitration enforceable under that framework |
| Scope of arbitration (do statutory and tort claims fall within "claim") | Some statutory/tort claims (CFA, RICO) not subject to arbitration | AIA "claim" language is broad and covers disputes arising out of or relating to the contract | Court: All asserted claims arise out of or relate to the contract and are arbitrable |
| Personal jurisdiction and disposition error | Trial court erred by entering written order dismissing for lack of personal jurisdiction despite oral finding of PJ | Defendants had moved to dismiss; written order included dismissal language (clerical) | Court held the dismissal for lack of PJ was a clerical inconsistency; remanded to correct order and enter a stay under FAA §3 pending arbitration |
Key Cases Cited
- Nationwide Gen. Ins. Co. v. Invs. Ins. Co. of Am., 332 N.E.2d 333 (N.Y. 1975) (describes limited court role in initial arbitrability screening)
- Atalese v. U.S. Legal Servs. Grp., L.P., 219 N.J. 430 (2014) (arbitration clauses waiving judicial/jury rights must be clear and unambiguous)
- Instructional Sys., Inc. v. Computer Curriculum Corp., 130 N.J. 324 (1992) (enforce contractual choice-of-law absent public policy conflict)
- Martindale v. Sandvik, Inc., 173 N.J. 76 (2002) (recognition of federal and state policies favoring arbitration)
- Goffe v. Foulke Mgmt. Corp., 238 N.J. 191 (2019) (FAA as "supreme law of the land" regarding arbitration principles)
- Kindred Nursing Ctrs. Ltd. P'ship v. Clark, 137 S. Ct. 1421 (2017) (FAA preempts state rules that discriminate against arbitration)