CHANA RINGEL VS. BR LAKEWOOD, LLC CHANA RINGEL VS. BENJAMIN RINGEL (C-000127-15 AND C-000152-16, OCEAN COUNTY AND STATEWIDE) (CONSOLIDATED) ( 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NOT FOR PUBLICATION WITHOUT THE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 NOS. A-1785-18T2
A-1786-18T2
CHANA RINGEL and
CR LAKEWOOD, LLC,
individually, and derivatively
on behalf of BCR LAKEWOOD
HOLDINGS, LLC,
Plaintiffs-Respondents,
v.
BR LAKEWOOD, LLC and
BENJAMIN RINGEL,
Defendants-Appellants.
CHANA RINGEL, individually,
and derivatively on behalf of BCR
OAKRIDGE, LLC,
Plaintiffs-Respondents,
v.
BENJAMIN RINGEL, and SUNSET
HILL OAKRIDGE PLAZA, LLC,
Defendants-Appellants.
Argued telephonically April 21, 2020 –
Decided June 17, 2020
Before Judges Yannotti, Currier and Firko.
On appeal from the Superior Court of New Jersey,
Chancery Division, Ocean County, Docket Nos. C-
000127-15 and C-000152-16.
Bruce H. Nagel argued the cause for appellants (Nagel
Rice, LLP, attorneys; Bruce H. Nagel and Robert H.
Solomon, of counsel and on the briefs).
Matthew N. Fiorovanti argued the cause for
respondents (Giordano, Halleran & Ciesla, PC, and
Koffsky Schwalb, LLC, attorneys; Matthew N.
Fiorovanti and Efrem Schwalb, on the briefs).
PER CURIAM
In these back-to-back appeals, defendants 1 appeal from the December 7,
2018 orders denying their motions to dismiss the complaint and compel
arbitration. The Chancery court concluded defendants waived their right to
arbitration. We agree and affirm.
Plaintiff Chana Ringel and defendant Benjamin Ringel are siblings who
purchased a shopping center (Oakridge property) from their father in 2004.
1
We refer to defendants in both cases collectively as "defendants." Otherwise
we refer to them as the Lakewood defendants and the Oakridge defendants when
discussing the individual cases.
A-1785-18T2
2
They established BCR Oakridge, LLC to serve as the holding company for the
property. In 2010, Chana and Benjamin purchased a collection of properties
(Lakewood properties) from various revocable trusts set up by their father. BCR
Lakewood Holdings, LLC was formed to serve as the holding company for the
Lakewood properties.
The operating agreements for both holding companies include a dispute
resolution procedure. In essence, if Chana and Benjamin are unable to resolve
an issue regarding the management of the business, their respective positions on
the issue are submitted to an arbitrator for a binding determination on which
position is in the best interest of the business.
In June 2015, plaintiffs filed a verified complaint against Benjamin and
BR Lakewood, LLC (Lakewood matter), alleging Benjamin mismanaged BCR
Lakewood and engaged in self-dealing. In its answer, the Lakewood defendants
raised multiple affirmative defenses, including dismissing the complaint and
compelling arbitration under the operating agreement. A counterclaim also
included a request for enforcement of the arbitration clause.
In July 2016, plaintiffs filed a verified complaint against Benjamin and
Sunset Hill Oakridge Plaza, LLC (Oakridge matter). The complaint alleged that
Benjamin mismanaged BCR Oakridge, resulting in the foreclosure of the
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Oakridge property. In addition, Benjamin, through Sunset, later purchased the
Oakridge property at a sheriff’s sale without notifying Chana. The Oakridge
defendants' answer and counterclaim did not raise the arbitration agreement as
an affirmative defense.
The parties engaged in extensive litigation in both cases for the next two
years, including the exchange of written discovery, and multiple motions
concerning the production of financial documents. In the Oakridge matter, the
court held numerous case management conferences, resulting in the issuance of
five case management orders. The October 26, 2018 order set a trial date for
June 25, 2019.
In the Lakewood matter, multiple motions were filed concerning the
court's appointment of a special fiscal agent and the agent's role in the litigation.
The court ruled on discovery and summary judgment motions and issued six
case management orders. The October 26, 2018 order also scheduled trial for
June 25, 2019.
Defendants moved in October and November 2018 to dismiss the
Lakewood and Oakridge matters and compel arbitration. Plaintiffs opposed the
motions, asserting that defendants had waived their right to arbitration as
established under Cole v. Jersey City Med. Ctr., 215 N.J. 265 (2013).
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In addressing the Cole factors, plaintiffs noted forty-one months had
elapsed between the filing of the Lakewood complaint and defendants'
application; twenty-seven months had passed since the filing of the Oakridge
complaint. They also described the extensive discovery and protracted motion
practice in the litigations, causing them to incur substantial financial expense.
In addition, plaintiffs pointed out that in the Oakridge matter, defendants did not
raise arbitration as an affirmative defense.
In response, defendants refuted plaintiffs' arguments. They also asserted,
that as an Orthodox Jew, Benjamin held a religious belief that it was his
obligation not to litigate in a secular court against another Jewish person.
Benjamin explained that was the reason why he delayed asserting his right to
arbitration.
In its December 7, 2018 decision denying defendants' motions, the
Chancery court referenced the Cole factors, stating:
The question is whether the parties have waived
arbitration through their actions. In determining
whether a party has waived its right to compel
arbitration, . . . [t]he [c]ourt must weigh a series of
factors, examining those factors in the[ir] context and
based upon a totality of the circumstances to make a
decision.
....
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As plaintiff[s] rightly point[] out, there has been
a significant delay in making the arbitration request,
. . . on the defendant[s'] behalf. The defendant[s] have
continued to make motions in this case, litigating it . . .
as if they were not anticipating moving to arbitration.
Relating to the third and fourth factor, discovery
has certainly been conducted in this case. Again, to the
uninitiated it may appear that the delay in . . . the
request to arbitrate may be a part of the litigation
strategy.
I'll note that Ben[jamin] is a sophisticated party.
As he noted in his certification, he participated in
litigation with his father and his uncle for [twenty-one]
years. He's also involved in . . . numerous commercial
real estate operations.
Presumably, in filing this complaint and
consulting with his lawyer, they discussed . . . the high
value that he's placed on the religious aspects of
litigating against one's sister, that he had to consider
this . . . greatly at the beginning of this initiation of this
litigation, and with consultation with his lawyer chose
to not pursue the arbitration early on. It can only be
assumed by the [c]ourt that this was a litigation
strategy.
I would also note that . . . much of the litigation
involved in this matter also involves finance or the
surrounding issues involve finance. And, presumably,
the availability of finance . . . may have been a
consideration and a tactic in delay in this matter.
Under the circumstances, I'm satisfied . . . that
factor does weigh against transferring the matter [to
arbitration]. Moreover, arbitration . . . was not raised
[as] an affirmative defense in defendant[s'] answer.
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And, finally, there is . . . a pending trial date in
this case. As in Cole, a trial date has been set.
[P]ermitting arbitration at this time would without
doubt prejudice the plaintiff[s].
I'll note that, further, . . . reviewing . . . those
factors, with regard to the filing of the motions,
particularly dispositive motions in the matter, there
have been multiple lawyers . . . for Ben[jamin]. There
has been a lengthy discovery over . . . three years in one
case, two years in the other case. There . . . have been
applications to [transfer the case to the Law Division].
...
All of these things had to [be weighed] and the
[c]ourt finds that at . . . this late date, that permitting
arbitration would be a prejudice to the plaintiffs having
spent the time, and effort in conducting discovery and
preparing for trial, and the extraordinary . . . efforts that
were taken in obtaining the discovery . . . .
In their reply defendants argue that litigating this
case in a secular court would create undue
entanglement between government and religion in
violation of the establishment clause. . . . Deciding the
case at hand does not require this [c]ourt to determine
religious law. In essence, Ben[jamin] has accused
Chana of violating secular prohibitions and the mere
fact that Ben[jamin] . . . is religious and Chana is
religious, a fact that this [c]ourt does not doubt, it does
not entitle them to arbitration.
The allegations are straightforward. The
allegations are founded in the law as applied to the
business entities and . . . the parties' cross-claims allege
violations of fiduciary duties . . . involved with the
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business entities and don't have any religious aspects at
all.
The [c]ourt is satisfied that it can decide this case
without having to entangle itself with any religious
doctrine . . . and at this time it would [be] inappropriate
for this [c]ourt to compel arbitration. Likewise, the
[c]ourt will not stay the matter.
On appeal, defendants contend the court (1) exceeded its jurisdiction in
determining defendants waived their right to compel arbitration; and (2) erred
in finding defendants waived their right to compel arbitration without
conducting an evidentiary hearing. We are unconvinced by these arguments.
In Cole, the Court established factors for a court, not an arbitrator, to
evaluate in assessing whether a party to an arbitration agreement waived its right
to arbitrate. 215 N.J. at 280 (citations omitted). Therefore, defendants'
argument that the trial court lacked jurisdiction to determine the waiver issue is
without merit.
Our review of the court's decision is de novo. Id. at 275 (citations
omitted). However, "the factual findings underlying the waiver determination
are entitled to deference and are subject to review for clear error." Ibid. (citing
Rova Farms Resort, Inc. v. Inv'rs Ins. Co. of Am., 65 N.J. 474, 483-84 (1974)).
In conducting our review, we are governed by the principles established in Cole.
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"Any assessment of whether a party to an arbitration agreement has
waived that remedy must focus on the totality of the circumstances." Id. at 280.
"In deciding whether a party . . . waived its right to arbitrate, [a court]
concentrate[s] on the party's litigation conduct to determine if it is consistent
with its reserved right to arbitrate the dispute." Ibid. The following factors
should also be considered:
(1) the delay in making the arbitration request; (2) the
filing of any motions, particularly dispositive motions,
and their outcomes; (3) whether the delay in seeking
arbitration was part of the party's litigation strategy; (4)
the extent of discovery conducted; (5) whether the party
raised the arbitration issue in its pleadings, particularly
as an affirmative defense, or provided other notification
of its intent to seek arbitration; (6) the proximity of the
date on which the party sought arbitration to the date of
trial; and (7) the resulting prejudice suffered by the
other party, if any.
[Id. at 280-81.]
In addition, a court will find waiver occurred "if arbitration is simply
asserted in the answer and no other measures are taken to preserve the
affirmative defense." Id. at 281 (citations omitted).
We turn to the court's findings underlying the waiver determination in this
case. In considering the delay in requesting arbitration, the court noted the
considerable length of time between the start of litigation and defendants'
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motion to compel arbitration. The delay was forty-one months in the Lakewood
matter and twenty-seven months in the Oakridge matter.
The court addressed factor two in stating defendants filed dispositive
motions. The record reflects defendants filed a motion for partial summary
judgment and a compelled buyout of plaintiffs' interests, in addition to nine other
applications, in the Lakewood matter. In the Oakridge litigation, defendants
filed a motion to transfer the case to the Law Division.
In considering factor three, the court found the delay in requesting
arbitration was part of a litigation strategy. In light of our deferential standard
given to the trial court's fact-finding, we cannot discern any error in this
conclusion reached after presiding over this contentious litigation for more than
three years. Moreover, defendants filed the motion to compel arbitration shortly
after the court sanctioned them in the Oakridge matter for failing to comply with
discovery orders.
The trial court acknowledged the extensive discovery conducted by the
parties in his assessment of factor four. Thousands of documents had been
exchanged. Written discovery had concluded in the Lakewood case.
Under factor five, the court noted defendants only raised the arbitration
agreement as an affirmative defense and counterclaim in the Lakewood matter.
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However, as stated above, defendants did not pursue arbitration until fo rty-one
months after the initiation of that suit. In addressing factor six, the court
observed there was a scheduled trial date in both cases.
Finally, in considering factor seven, the court concluded that plaintiffs
would be prejudiced if required to go to arbitration because of the time and
"extraordinary" effort expended in conducting discovery and in preparing for
trial. The trial court's finding comports with the guidance enunciated on this
factor in Cole: "If we define prejudice as '"the inherent unfairness—in terms of
delay, expense, or damage to a party's legal position—[then prejudice] occurs
when the party's opponent forces it to litigate an issue and later seeks to arbitrate
that same issue."'" 215 N.J. at 282 (alteration in original) (quoting PPG Indus.
v. Webster Auto Parts, 128 F.3d 103, 107 (2d Cir. 1997)).
We discern no error in the court's finding that the Cole factors weighed in
favor of plaintiffs. We reject defendants' assertion that the court erred in not
holding an evidentiary hearing. Defendants did not request an evidentiary
hearing before the Chancery court. They did not raise this issue until the appeal.
Moreover, defendants have not presented this court with any information that
might have been gleaned from a hearing. We are satisfied there was sufficient
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evidence in the record to support the court's conclusion that defendants waived
their right to arbitration, requiring a denial of the motion to compel arbitration.
Affirmed.
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