CLAREMONT CONSTRUCTION GROUP, INC. VS. KEYSTONE MOUNTAIN LAKES REGIONAL COUNCIL OF CARPENTERS, ETC. (L-0871-19, SOMERSET COUNTY AND STATEWIDE) ( 2020 )

NOT FOR PUBLICATION WITHOUT THE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-5651-18T3
CLAREMONT CONSTRUCTION
GROUP, INC.,
Plaintiff-Appellant,
v.
KEYSTONE MOUNTAIN LAKES
REGIONAL COUNCIL OF
CARPENTERS, f/k/a NORTHEAST
REGIONAL COUNCIL OF
CARPENTERS and THE NORTHEAST
CARPENTERS FUNDS,
Defendants-Respondents.
_________________________________
Submitted January 22, 2020 – Decided February 18, 2020
Before Judges Yannotti and Firko.
On appeal from the Superior Court of New Jersey, Law
Division, Somerset County, Docket No. L-0871-19.
Hedinger & Lawless, LLC, attorneys for appellant
(Robert T. Lawless, on the briefs).
Kroll Heineman Carton LLC, attorneys for respondents
(Bradley Mark Parsons, of counsel and on the brief).
PER CURIAM
Plaintiff Claremont Construction Group, Inc. (Claremont) appeals from an
order entered by the Law Division on August 19, 2019 compelling it to
participate in binding arbitration. We affirm the order insofar as it compels
binding arbitration, however, we reverse in part and remand to the trial court for
entry of an amended order dismissing the complaint without prejudice.
I.
Claremont was the general contractor for a project in Jersey City. The
parties entered into a Project Labor Agreement (PLA) in which they agreed that
Claremont and its subcontractors would employ union workers. The PLA
incorporated the terms of the Collective Bargaining Agreements (CBA) of the
subcontractors and the union, defendant Keystone Mountain Lakes Regional
Council of Carpenters (Keystone). 1
The PLA further provided that the subcontractors would be required to
pay certain fringe benefits to the unions for the workers. The PLA stated that if
any subcontractor failed to make a required contribution, Claremont would
withhold monies due to the subcontractor and pay the unions the amounts
withheld.
1
We refer to defendants, unions, and the funds collectively as Keystone.
A-5651-18T3
2
Additionally, the PLA provided a three-Step grievance procedure
covering "[a]ny question, dispute or claim arising out of, or involving the
interpretation or application of [the PLA] . . . ." Further, the PLA provided that
all grievances "shall be resolved pursuant to the exclusive procedure" outlined
therein, culminating in binding arbitration before the designated arbitrator.
Article nine of the PLA sets forth the procedure for grievances and
arbitration:
If the grievance shall have been submitted but not
resolved in Step [two], any of the participating Step
[two] entities may, within [twenty-one] calendar days
after the initial Step [two] meeting, submit the
grievance in writing (copies to other participants) to J.J.
Pierson, Jr., Esq. who shall act as the Arbitrator under
this procedure. The Labor Arbitration Rules of the
American Arbitration Association (AAA) shall govern
the conduct of the arbitration hearing, at which all Step
[two] participants shall be parties. The decision of the
Arbitrator shall be final and binding on the involved
Contractor, Local Union and employees and the fees
and expenses of such arbitrations shall be borne equally
by the involved Contractor and Local Union.
The general contractor has the option to "participate in full in all
proceedings at these Steps, including Step [three] arbitration." The PLA also
provides that if the general contractor participates in the grievance, it "shall be
part[y]" to any following Step three arbitration. (Emphasis added). The PLA
states:
A-5651-18T3
3
Should any Contractor or Subcontractor or the General
Contractor become delinquent in the payment of fringe
benefits as required by this agreement, it is agreed that
General Contractor and/or Owner will be notified in
writing by authorized representatives of the involved
union via certified mail of the specific documented
details of such delinquencies. Upon receipt of such
certified mail notice, if the delinquency has not been
paid, General Contractor and/or Owner agrees to
withhold from outstanding monies due an alleged
delinquent Contractor/Subcontract/General Contractor
the amount claimed, or less if the amount due is less
than the amount claimed by the union. The amount
withheld will be paid by the General Contractor and/or
Owner within fourteen . . . days after receipt of an
arbitration award or order of a court of competent
jurisdiction by the union, if not paid prior to said date
by the delinquent Contractor/Subcontractor/General
Contractor. With respect to the amounts owed by
Contractors or Subcontractors pursuant to the relevant
union agreements, the withholding of monies owed to
Contractors as provided in this paragraph shall be the
General Contractor’s sole responsibility.
Sky High Management, LLC (Sky High) was one of Claremont's
subcontractors. Between September 2017 and August 2018, Sky High became
delinquent in its payments of fringe benefits for its workers, and Keystone
notified Claremont. In response, Claremont withheld approximately $440,000
in monies due to Sky High's malfeasance and paid these monies over to
Keystone.
A-5651-18T3
4
In August 2018, Sky High owed an additional $180,250.53 for the
workers' fringe benefits. Claremont was notified of Sky High's delinquencies
on August 24, 2018 and terminated Sky High's subcontract. The August 24,
2018 notice triggered Claremont's obligation to withhold outstanding monies
owed to Sky High as set forth in article eleven of the PLA. Citing a provision
of the contract, Claremont asserted that no additional monies were due to Sky
High. Keystone's communications with Sky High and Claremont satisfied Step
one of the grievance procedure.
In December 2018, following an unsuccessful resolution of the matter,
Keystone initiated a grievance proceeding with Sky High for the fringe benefits
due under the contract. Claremont participated in the Step two meeting and
asserted it had no obligation to pay Keystone because it had terminated Sky
High's contract and Sky High was not entitled to any additional payments under
the contract.
On June 11, 2019, Keystone demanded arbitration under Step three of the
PLA's grievance resolution process, which prompted Claremont to file this
lawsuit and to enjoin the arbitration process. After hearing oral argument on
August 19, 2019, the trial court entered an order dismissing Claremont's
complaint with prejudice and compelling the parties to proceed to binding
A-5651-18T3
5
arbitration. On the record, the trial court reasoned that "the way that the contract
is written, the [c]ourt [must] favor the fact that the . . . binding arbitration is
really what has occurred here by use of the [S]tep two grievance procedure by
Claremont in reference to this matter."
On appeal, Claremont challenges the order compelling arbitration.
Claremont argues that the PLA does not obligate it to participate in binding
arbitration and there is no language in the PLA supporting the trial court's
conclusion. We are not persuaded by Claremont's arguments.
II.
We use a de novo standard of review when determining the enforceability
of arbitration agreements. Goffe v. Foulke Mgmt. Corp., 238 N.J. 191, 207
(2019) (citing Hirsch v. Amper Fin. Servs., LLC, 215 N.J. 174, 186 (2013)).
The validity of an arbitration agreement is a question of law, and we conduct a
plenary review of such legal questions. Atalese v. U.S. Legal Servs. Grp., L.P.,
219 N.J. 430, 446 (2014) (citing Hirsch, 215 N.J. at 186); Barr v. Bishop Rosen
& Co., 442 N.J. Super. 599, 605 (App. Div. 2015) (citations omitted).
It is also well-established that this State has a strong public policy
"favoring arbitration as a means of dispute resolution and requiring a liberal
construction of contracts in favor of arbitration." Alamo Rent A Car, Inc. v.
A-5651-18T3
6
Galarza, 306 N.J. Super. 384, 389 (App. Div. 1997) (citing Marchak v. Claridge
Commons, Inc., 134 N.J. 275, 281 (1993)). However, the scope of arbitration is
governed by the agreement of the parties. Young v. Prudential Ins. Co. of Am.,
Inc., 297 N.J. Super. 605, 617 (App. Div. 1997); Singer v. Commodities Corp.
(U.S.A.), 292 N.J. Super. 391, 402 (App. Div. 1996) (quoting Cohen v. Allstate
Ins., 231 N.J. Super. 97, 101 (App. Div. 1989)) ("[T]he scope of arbitration [is]
dependent solely upon the parties' agreement.").
Courts should review whether the arbitration clause explicitly states its
purpose "to assure that the parties know that in electing arbitration as the
exclusive remedy, they are waiving their time-honored right to sue." Marchak,
134 N.J. at 282. Thus, "only those issues may be arbitrated which the parties
have agreed [to arbitrate]." Singer, 292 N.J. Super. at 403 (quoting Grover v.
Universal Underwriters Ins., 80 N.J. 221, 229 (1979)).
Here, the CBA and PLA were negotiated and agreed to by Claremont. The
PLA provides that the general contractor may participate in all grievances and
Claremont voluntarily did so. In addition, the PLA states that any of the entities
who participate in the Step two process qualify to submit the dispute to binding
arbitration, to be conducted in accordance with the "Labor Arbitration Rules of
the [AAA]."
A-5651-18T3
7
Saliently, under Article nine of the PLA, Claremont's decision to
participate in Step two of the process subjects Claremont to arbitration with the
AAA. In our view, the trial court correctly found that once Claremont chose to
participate in Step two, Claremont committed to arbitrate at Step three. In
rendering its decision, the trial court placed the issue in the proper context—that
arbitration has long been a favored method of dispute resolution particularly as
it relates to labor disputes. Cty. Coll. of Morris Staff Ass'n v. Cty. Coll. of
Morris, 100 N.J. 383 (1985).
Applying these principles, we reject Claremont's argument that since it
did not initiate the Step two meeting it cannot be compelled to arbitrate. It does
not matter whether Claremont or Keystone initiated that process. Since
Claremont participated in the Step two meeting and Keystone properly sought
arbitration of their dispute pursuant to the express terms of the PLA, the trial
court correctly compelled arbitration.
We conclude that Claremont's remaining arguments—to the extent we
have not addressed them—lack sufficient merit to warrant any further discussion
in a written opinion. R. 2:11-3(e)(1)(E).
While the trial court correctly ordered the parties to arbitrate their dispute,
the court erred by dismissing the complaint with prejudice. Since there was no
A-5651-18T3
8
adjudication on the merits of the complaint, the trial court improperly exercised
its authority under Rule 4:37-1(b). We therefore remand to the trial court, with
directions to enter an amended order, dismissing the complaint without
prejudice.
Affirmed in part, reversed and remanded in part. We do not retain
jurisdiction.
A-5651-18T3
9