446 BELLEVUE LLC VS. GLOBAL LIFE ENTERPRISES, LLC VS. PRITI PANDYA-PATEL (C-000030-15, MERCER COUNTY AND STATEWIDE) ( 2018 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court."
Although it is posted on the internet, this opinion is binding only on the
parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-0730-17T2
446 BELLEVUE LLC,
Plaintiff,
v.
GLOBAL LIFE ENTERPRISES,
LLC,
Defendant-Appellant,
and
CHAI PROPERTY DEVELOPMENT, LLC,
RAFAEL LEVY; MUNI KAZMIR; JOHN
KALLIS, STEVE MITNICK, as Assignee
For the Benefit of Creditors of
Global Life Enterprises LLC,
Defendants,
and
BASEL TERMANINI and SAMIR AYASSO,
Defendants/Third-Party
Plaintiffs-Respondents,
v.
PRITI PANDYA-PATEL; RAJESH GROVER;
SATYASAGAR MORISETTY; PRG CONSULTING
CORP., BOOND INT'L and MVP OF PALMS,
LLC,
Third-Party Defendants-
Appellants,
and
HEMANT MEHTA,
Third-Party Defendant.
_______________________________________
Argued June 28, 2018 – Decided July 16, 2018
Before Judges Yannotti and Haas.
On appeal from Superior Court of New Jersey,
Chancery Division, Mercer County, Docket No.
C-000030-15.
H. Matthew Taylor argued the cause for
appellant (Gordon & Rees Scully Mansukhani,
attorneys; Alexander Nemiroff and H. Matthew
Taylor, on the briefs).
Thomas M. Kenny argued the cause for
respondents (Riker Danzig Scherer Hyland &
Perretti, LLP, attorneys; Frank J. Vitolo, of
counsel and on the brief; Thomas M. Kenny, on
the brief).
PER CURIAM
Appellants Global Life Enterprises, LLC (GLE), Priti Pandya-
Patel, Rajesh Grover, Satyasagar Morisetty, PRG Consulting Corp.
(PRG), Boond Int'l LLC (Boond), and MVP of Palms LLC (MVP) appeal
from the October 10, 2017 Chancery Division order denying their
motion to compel arbitration in their dispute with respondents
Basel Termanini and Samir Ayasso. Because the trial judge
neglected to make any meaningful findings of fact or conclusions
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of law in support of the October 10, 2017 order, we are constrained
to reverse and remand for further proceedings.
In order to attempt to give some context to the issues
presented by the parties on appeal, which we will ultimately not
be able to resolve, we rely upon the allegations contained in
respondents' third-party complaint against appellants. In doing
so, we note that appellants contest a number of respondents'
assertions and that the judge did not resolve any of these
disputes.
In May 2013, Patel, Grover, Morisetty, Termanini, and Ayasso
formed GLE1 for the purpose of purchasing several properties in
Trenton that were formerly part of a hospital campus. They
intended to develop the site "into a health and wellness one-stop
shop" with a number of health services available on site.
The five partners signed a written Operating Agreement
(Agreement) setting forth the terms by which GLE would be operated.
Termanini and Ayasso signed the Agreement as individuals and each
owned 20% of the shares of GLE in their own names. The three
1
GLE is a Florida member-managed limited liability company.
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other partners, who also each owned 20% of the company, placed
their shares in the name of corporations they controlled.2
Of significance to the present case, Article 10.8 of the
Agreement set forth an arbitration provision, which stated:
All disputes arising under this [A]greement
shall promptly be submitted to arbitration in
Pittsburgh, Pennsylvania before one
arbitrator in accordance with the rules of the
American Arbitration Association. The
arbitrator may assess costs, including counsel
fees, in such manner as the arbitrator deems
fair and equitable. The award of the
arbitrator shall be final and binding upon all
parties, and judgment upon the award may be
entered in any court of competent
jurisdiction.
Article 10.6 further stated that the "[A]greement shall be governed
by and interpreted and enforced in accordance with the substantive
laws of the Commonwealth of Pennsylvania"; and Article 10.12
required that "[a]ny suit involving any dispute or matter arising
under this Agreement may only be brought to binding arbitration
through the Court of Common Pleas of [the] Commonwealth of
Pennsylvania in Pittsburgh."3
2
Patel's shares were owned by MVP; Grover's shares were owned by
PRG; and Morisetty's shares were owned by Boond.
3
At the time the Agreement was signed, respondents Termanini and
Ayasso resided in Pennsylvania, as did appellant Satyasgar. Patel
and Grover lived in New Jersey.
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In September 2013, GLE purchased the properties. Respondents
assert they contributed $2 million to finance the purchase, which
was secured by a mortgage on one of the properties.
Thereafter, GLE's development plans did not go well. In
September 2014, the five partners agreed to attempt to sell the
properties, and they retained an agent to assist them in this
effort.
The agent put the partners in touch with Hemant Mehta, who
offered to buy the properties for $1.5 million. Mehta formed a
company called 446 Bellevue LLC (Bellevue) to complete the
purchase. Respondents allege that Mehta then changed the terms
of his offer and the deal fell apart. Later in 2014, Patel located
another potential purchaser, Munir Kazmir, who was a principal in
a company called Chai Property Development LLC (Chai). In April
2015, Chai agreed to purchase the properties for $4.5 million.
Bellevue then filed a complaint against GLE, alleging that
it had an agreement to buy the properties, which GLE breached by
attempting to sell them to Chai. While this litigation progressed,
GLE failed to pay taxes on the properties, and they became subject
to a tax lien. At an auction, a company called NJNY Lien purchased
one of the properties, located at 446 Bellevue Avenue in Trenton.
Respondents allege that Bellevue had an agreement with this company
to transfer this property to Bellevue.
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In February 2016, four of the partners agreed to liquidate
all of GLE's assets and dissolve the company.4 GLE made a general
assignment for the benefit of creditors and retained an attorney
to act as its assignee for the purpose of selling the assets.
Respondents Termanini and Ayasso allege that in June 2016,
GLE entered into a fraudulent settlement agreement of its
litigation with Bellevue. Under the terms of the settlement, GLE
admitted that it breached, and tortuously interfered with, the
agreement Bellevue alleged it had with GLE to purchase all the
properties. GLE also agreed to convey three of the properties to
Bellevue for $10, and consented to the entry of a $7 million
judgment against GLE in Bellevue's favor. This judgment
purportedly represented compensatory damages to Bellevue in
connection with the costs it incurred in acquiring the 446 Bellevue
Avenue property from NJNY Lien.
On August 12, 2016, the trial judge entered a consent judgment
incorporating the terms of the settlement between Bellevue and
appellants. Respondents alleged that the consent judgment was
void because appellants lacked the authority to consummate it
under the parties' Agreement.
4
Patel cast the lone dissenting vote.
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In February 2017, Bellevue filed its third amended complaint
in the still extant litigation. In this pleading, Bellevue named
respondents Termanini and Ayasso as defendants for the first time,
and sought damages against them for allegedly inducing GLE to
commit the breach and other wrongs that were the subject of the
settlement agreement. Bellevue did not name the three appellants
as individual defendants. Respondents allege that appellants made
a secret deal with Bellevue that if they agreed to the settlement,
Bellevue would not pursue any claims against them in their
individual capacities.
In June 2017, respondents responded by filing an eight-count,
third-party complaint against appellants and their three
companies, with additional claims directed against Bellevue and
Mehta. Specifically, respondents asserted that appellants
breached their fiduciary duty and duty of loyalty to them (counts
one and two); breached the terms of the Agreement (count three);
and committed legal and equitable fraud (count eight). In count
four, respondents alleged that appellants, Bellevue, and Mehta
conspired against them. In the remainder of their third-party
complaint, respondents raised separate claims against Bellevue and
Mehta, including tortious interference (counts five and six), and
legal and equitable fraud (count seven).
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In August 2017, appellants filed a motion to compel
arbitration pursuant to Article 10.8 of the Agreement. They
asserted that the matters raised in respondents' third-party
complaint involved "disputes arising under" the Agreement and,
therefore, arbitration was required.
Respondents opposed the motion, and asserted that the
arbitration provision in the Agreement did not apply to any of the
matters in dispute between the parties. Respondents also alleged
that because Bellevue and Mehta were not parties to the Agreement,
the counts of the complaint that pertained to them could not be
arbitrated. Therefore, respondents argued that no part of the
dispute should be referred to arbitration because doing so would
lead to "piecemeal litigation."
The task presented to the trial judge by the parties'
competing positions was clear. When a motion to compel arbitration
is filed, a court must conduct "a two-step inquiry into (1) whether
a valid agreement to arbitrate exists and (2) whether the
particular dispute falls within the scope of that agreement."
Trippe Mfg. Co. v. Niles Audio Corp., 401 F.3d 529, 532 (3d Cir.
2005). "Although arbitration is traditionally described as a
favored remedy, it is, at its heart, a creature of contract." Kimm
v. Blisset, LLC, 388 N.J. Super. 14, 25 (App. Div. 2006) (citations
omitted). "Thus, courts examine arbitration provisions 'on a
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case-by-case basis.'" Waskevich v. Herold Law, P.A., 431 N.J.
Super. 293, 298 (App. Div. 2013) (quoting Rockel v. Cherry Hill
Dodge, 368 N.J. Super. 577, 580 (App. Div. 2004)).
The trial judge did not perform this required analysis and,
instead, simply denied appellant's motion to compel arbitration.
His short oral decision does not quote, or even cite, Article 10.8
of the Agreement. The judge made no fact findings at all, thus
leaving the parties' disputed factual allegations completely
unresolved. The judge did not review any of the claims respondents
raised in their third-party complaint that appellants alleged were
subject to arbitration. The judge also failed to consider whether
the motion should be "governed by and interpreted and enforced in
accordance" with Pennsylvania law as stated in Article 10.6 of the
Agreement, or brought in the first instance in the Court of Common
Pleas in Pittsburgh under Article 10.12.
Instead, the judge listed two conclusory bases for his
decision denying the motion. First, the judge referred to this
court's unpublished decision in Kaufman v. Maresca, No. A-3611-04
(App. Div. Jan. 3, 2006), and stated:
In terms of looking at the arbitration,
of course, arbitration is highly favored, and
there's always a presumption that there should
be arbitration, but it's not absolute.
Obviously, we have the Kaufman case here.
It's an unpublished case, but it's a case that
makes a lot of sense and talks about the party
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– "When the party seeking enforcement of an
arbitration clause does so with less than
clean hands" – I'm not saying there weren't
clean hands here, but what I'm saying . . .
obviously is that this operating agreement
wasn't complied with, so there's an analogy
there – "where arbitration will not fully
resolve the entire controversy," – which it
wouldn't do – "and where equity jurisprudence
is particularly adapted to do complete justice
in the situation."
We disagree with the judge's analysis. First, an unpublished
opinion has no prejudicial value. Badiali v. N.J. Mfrs. Ins.
Grp., 220 N.J. 544, 559 (2015); see also R. 1:36-3. Just as
importantly, Kaufman is completely distinguishable from the facts
of this case, as we have been able to discern them. In Kaufman,
the party seeking to compel arbitration initially filed his action
in the Law Division. (slip op. at 3). Thus, unlike appellants
in the present case, this party "ignored the very terms of the
operating agreement on which he relie[d] to compel arbitration."
Id. at 8.
In addition, the party waited to seek to compel arbitration
until after the court had set a trial date. Id. at 4. In this
case, however, appellants filed their motion within two months of
their receipt of respondents' third-party complaint.
Under these "unique circumstances[,]" where "the party
seeking enforcement of the arbitration clause [did] so with less
than clean hands," the Kaufman court held that the trial court
10 A-0730-17T2
properly denied the party's motion. While the judge relied upon
Kaufman in this case, he also contradictorily stated, "I'm not
saying there weren't clean hands here[.]" Thus, Kaufman provided
no support for the judge's denial of appellants' motion to compel
arbitration.
The other basis for the judge's decision was his belief that
because certain of the claims, which he did not specifically
identify,5 might not be subject to arbitration, none of the matters
raised in respondent's third-party complaint could be referred to
arbitration even if they fell under the broad terms of Article
10.8 of the Agreement.6 The judge stated:
So obviously, this would be piecemeal
litigation. There's no dispute about that.
There's conspiracy and fraud claims here
involving multiple parties, some of whom – one
of whom would be part of the arbitration. So
there's really no way that this case can be
litigated through Superior Court and through
5
We presume the judge was referring to the counts of respondents'
third-party complaint that solely involved Bellevue and Mehta.
Again, however, we cannot be sure because of the absence of fact
findings.
6
It appears that the judge also incorrectly relied upon the
unpublished Kaufman decision for this conclusion. In addition to
concluding that the party seeking arbitration in that case did not
act with clean hands, the Kaufman panel noted that "arbitration
[would] not resolve the entire controversy," and that "equity
jurisprudence [was] particularly adapted to do complete justice
in the situation," as additional grounds for affirming the trial
court's decision in that case to deny the motion to compel
arbitration. (slip op. at 10).
11 A-0730-17T2
an arbitration. They have to be combined.
And even though it's a favored provision, the
Court's going to deny the application to
enforce the arbitration clause.
This ruling is contrary to the Federal Arbitration Act (FAA),
9 U.S.C.A. §§ 1 to 16, which "was enacted 'to abrogate the then-
existing common law rule disfavoring arbitration agreements[.]'"
Hirsch v. Amper Financial Services, LLC, 215 N.J. 174, 187 (2013)
(also noting that the New Jersey Arbitration Act, N.J.S.A. 2A:23B-
1 to -32, "is similar in nature to the FAA" and likewise favors
the enforcement of arbitration agreements). Importantly, the FAA
"requires piecemeal resolution when necessary to give effect to
an arbitration agreement." EPIX Holdings Corp. v. Marsh & McLennan
Companies, Inc., 410 N.J. Super. 453, 479 (App. Div. 2009) (quoting
Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1,
20 (1983); see also Waskevich, 431 N.J. Super. at 300.
Thus, when a trial court is faced with a situation where some
of the claims are subject to arbitration and some are not, the
court should bifurcate the claims, sending those covered by the
parties' agreement to arbitration, while keeping jurisdiction of
those that are not. Waskevich, 431 N.J. Super. at 300. The court
may also stay the litigation pending the conclusion of the
arbitration. Hirsch, 215 N.J. at 196 n.5. In addition, "if any
claim is severable from the claims proceeding to arbitration"
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between the parties, the court "may limit the stay to certain
claims." Ibid. (citations omitted).
These rules apply "even where the result would be the possibly
inefficient maintenance of separate proceedings in different
forums." EPIX, 410 N.J. Super. at 479-80 (quoting Dean Witter
Reynolds, Inc. v. Byrd, 470 U.S. 213, 217 (1985)). Thus, the fact
that one of the parties could be inconvenienced by proceeding in
two forums, this "is not a sufficiently compelling ground to
overcome New Jersey's strong public policy favoring arbitration
where the parties have expressly agreed to this method of dispute
resolution." Id. at 480. Accordingly, "our courts have routinely
permitted litigation in separate forums where a plaintiff alleges
claims against multiple defendants, some of whom have agreed to
arbitrate their disputes and others have not, even where common
questions of law and fact create significant overlap." Ibid.
The judge did not consider any of these established precedents
in denying appellant's motion to compel arbitration, and this
appeal followed.7 On appeal, appellants argue that the judge
should have submitted all of the issues between the parties to
arbitration or, in the alternative, severed the claims involving
7
In a separate ruling, the judge granted respondents' motion to
vacate the consent judgment between Bellevue and GLE. None of the
parties have appealed that determination and, therefore, it is not
before us.
13 A-0730-17T2
only Bellevue and Mehta, while sending the remaining claims to
arbitration.
As already noted, we are unfortunately unable to address
appellants' contentions and respondents' opposition to same
because the judge did not make adequate findings of fact or
conclusions of law. No one – not the parties and not this court
– can properly function or proceed without some understanding of
why a judge has rendered a particular ruling. See Curtis v.
Finneran, 83 N.J. 563, 569-70 (1980) (requiring trial court to
clearly state its factual findings and correlate them with the
relevant legal conclusions). The failure to provide findings of
fact and conclusions of law "constitutes a disservice to the
litigants, the attorneys and the appellate court." Ibid. (quoting
Kenwood Assocs. v. Bd. of Adjustment, Englewood, 141 N.J. Super.
1, 4 (App. Div. 1976).
In this case, we cannot be sure whether the facts respondents
allege in their third-party complaint are accurate or whether, as
appellants assert, their factual allegations are neither complete
nor correct. The judge did not analyze any of the individual
counts of the complaint, other than to note that "[t]here's
conspiracy and fraud claims here involving multiple parties[.]"
The brief explanation for the judge's ruling is not grounded in
the applicable law. Thus, there is nothing for us to review.
14 A-0730-17T2
We acknowledge that our review of an order denying a motion
to compel arbitration is de novo. Hirsch, 215 N.J. at 186.
However, as the court recently stated, "our function as an
appellate court is to review the decision of the trial court, not
to decide the motion tabula rasa." Estate of Doerfler v. Federal
Ins. Co., ___ N.J. Super. ___ (App. Div. 2018) (slip op. at 5).
Under these circumstances, we have no alternative but to reverse
the October 10, 2017 order, and remand this matter to the trial
court for further proceedings. In remanding this matter, we do
not suggest a preferred result, but only that the trial court
reconsider the matter and fulfill its duty to the parties to fully
address the factual and legal arguments presented in this case.
On remand, we suggest that the court promptly conduct a
conference with the parties to determine whether additional
briefing and oral argument is necessary to enable the court to
address the issues raised. The court should then consider
appellants' motion anew and render a decision that includes
detailed findings of fact and comprehensive conclusions of law.
By discharging its duty in this regard, the court will ensure that
"the litigants have been heard and their arguments considered.
Justice requires no less." Bailey v. Bd. of Review, 339 N.J.
Super. 29, 33 (App. Div. 2001).
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Reversed and remanded. We do not retain jurisdiction.
16 A-0730-17T2