Appellate Division Questions The “Liberal Policy In Favor of Arbitration”

 by:  Peter J. Gallagher (@pjsgallagher) (LinkedIn)

I have written a few times recently about the enforceability of arbitration agreements. Although usually (always?) a dry topic, it has become somewhat “hot” recently in New Jersey. The Appellate Division’s published decision in Kleine v. Emeritus at Emerson is the most recent example.

In Kleine, plaintiff filed a personal injury claim against the nursing facility in which she was living. The nursing home moved to dismiss or stay the case in favor of arbitration pursuant to an arbitration provision in her admission agreement. The trial court granted the motion and plaintiff appealed. The Appellate Division reversed, and in doing so, took a number of shots at the “liberal policy favoring arbitration,” which was developed in the lower federal courts and the U.S. Supreme Court, and which applies even in the face of contrary state law.


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Appellate Division Holds That Trial Court Had The Right To Decide If Foreclosure-Related Dispute Was Arbitrable, But Decided It Wrong

by:  Peter J. Gallagher (@pjsgallagher)

Most of the current litigation over foreclosures has played out in the courts, but a recent decision from the Appellate Division, Banquez v. Deutsche Bank National Trust Company, involved a foreclosure-related dispute that was headed to arbitration. Actually, the decision in Banquez sent the dispute to arbitration after the trial court originally held that it could stay in state court where the plaintiff originally filed it. It is an interesting decision on the enforceability of arbitration agreements, particularly on the issue of whether an arbitrator or a court gets to decide the threshold question of whether a dispute is arbitrable.

In Banquez, plaintiff purchased residential property in Linden and executed a note and mortgage to the lender. At the same time, plaintiff signed a separate arbitration agreement with the lender. The agreement gave either party the “absolute right” to demand that any “Claim” be submitted to arbitration. The agreement defined “Claim” broadly and required that any dispute about whether a Claim was subject to the agreement would be resolved by an arbitrator, not a court. The agreement also contained several “Excluded Claims” that would not be covered by the agreement, including actions “to effect a judicial or quasi-judicial foreclosure.” The agreement was silent as to whether an arbitrator or a court would decide whether a purported Excluded Claim would be governed by the agreement. Finally, the agreement contained a class action waver, which prohibited plaintiff from participating in a class action, absent the lender’s consent, if the lender elected to arbitrate a claim. The agreement provided that the validity and effect of the class action waiver was to be “determined exclusively by a court and not by an arbitrator.”


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