Party That Drafted Arbitration Provision Moves To Have Provision Deemed Unenforceable. It Lost.

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

Most cases involving commercial contracts and arbitration provisions follow a similar pattern. They generally involve consumers arguing that they cannot be bound by arbitration clauses found in the fine print of boilerplate contracts that they had no ability to negotiate. But Shah v. T & J Builders, LLC turns this scenario on its head. In Shah, plaintiffs, the consumers, drafted the contract that contained the arbitration clause but later argued that it was unenforceable. To make matters worse (or at least more unusual), plaintiffs took this position after participating in an arbitration proceeding with defendant for two years. Not surprisingly, plaintiffs efforts to have their own arbitration clause deemed unenforceable were unsuccessful.

In Shah, plaintiffs hired defendant to build an extension on their home. The contract, which was "heavily negotiated between the parties," albeit without counsel, was drafted by plaintiffs. It contained an arbitration clause that required the parties to arbitrate "any dispute [ ] relative to the performance of [the] contract that [they could not] satisfactorily resolve." After one such dispute arose, plaintiffs terminated the contract and defendant filed an arbitration demand. Plaintiffs answered the demand and filed a counterclaim, alleging breach of contract and violations of New Jersey Consumer Fraud Act. Nowhere in their answer or counterclaim did plaintiffs address, much less challenge, the arbitration clause.

The parties, through counsel, then pursued their claims in arbitration for almost two years, exchanging discovery and expert reports, participating in a site inspection, and participating in several conferences with the arbitrator. Two weeks before the scheduled arbitration date, the parties submitted their pre-arbitration briefs. This is where the fun began.

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Field of Bad Dreams?

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

In Field of Dreams, James Earl Jones's character makes a famous speech about baseball being "the one constant through all the years." While "America has rolled by like an army of steamrollers," and has been "erased like a blackboard, rebuilt, and erased again . . . baseball has marked the time." In D.W. v. L.W., the Law Division started its opinion with a less poetic, but more ominous baseball-related statement: "This case involves separated parents, young children, and Little League baseball." If you have been to more than a few youth sporting events, you can probably guess what was at issue in the case. Nonetheless, the court's opinion is a good read as it is part homage to little league baseball and part framework for how parents should (and should not) behave at youth sporting events.

In D.W., a husband and wife's child played in a "coach-pitch league." Although they were separated, they agreed that they could both attend the games as long as the husband stayed at least 50 feet from the wife. A few months later, the husband filed a follow-up motion to attend their son's football games. The wife opposed the motion and further asked the court to ban the husband from continuing to attend their son's baseball games because he had "acted inappropriately at the baseball field, in a publicly embarrassing manner, by making negative and demeaning comments about the team coach's baseball-related decisions, within earshot of the coach's wife." She further claimed that the couple's daughter later started repeating the husband's comments, and that the husband had posted similar commentary about the coach on Facebook. The husband denied that he acted inappropriately, and further claimed that it was his wife "who, at least previously, did not approve of the coach's baseball-related abilities." (As an aside, how many "baseball-related decisions" does a coach really make in a 7-year-old's coach-pitch game?)

The court began its opinion by emphasizing the importance of youth sports in America. More than 40 years ago, the Appellate Division recognized that little league baseball was a "piece of public Americana." It has been almost universally praised as a "social and cultural tool for positive childhood development and inclusion." According to the court, the benefits of little league baseball go beyond "simply teaching children to hit, field and catch," but include developing "good citizenship, sportsmanship, and maturity of character." In fact, the court took judicial notice that "the results of particular Little League games are not nearly as significant as the underlying goal of developing a child's ongoing personal character in a positive fashion."

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Party Cannot Lose Its Right To Jury Trial For Violating Procedural Rules

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

It is not often that a case that starts in the Special Civil Part — New Jersey's small-claims court — ends up before the New Jersey Supreme Court. But this is exactly what happened in Williams v. American Auto Logistics. It could not have been cost effective for the plaintiff to see this case through two separate bench trials, two separate appeals to the Appellate Division, and finally an appeal to the Supreme Court. But the issue in the case was so important that, notwithstanding the costs, the effort was likely worthwhile.

In Williams, plaintiff had his car shipped from Alaska to New Jersey by defendant. After he picked up the car, he discovered water damage in the trunk. Plaintiff sued in the Special Civil Part after efforts to amicably resolve the dispute failed. Plaintiff did not demand a jury trial in his complaint, but defendant did in its answer. At the pretrial conference, the trial court referred the parties to mediation, which was unsuccessful. Upon returning from mediation, defendant waived its jury demand. Plaintiff objected, but the trial court granted defendant's request. In support of its decision, the trial court noted that plaintiff had violated Rule 4:25-7 by failing to make the requisite pretrial submissions. (Among other things, Rule 4:25-7 requires parties to submit proposed voir dire questions, jury instructions, and jury verdict forms.) The trial court held that it could deny plaintiff's request for a jury trial as a sanction for this failure. Therefore, the case proceeded to a bench trial, where the trial court found no merit to plaintiff's claims.

Plaintiff appealed and the Appellate Division reversed and remanded. It held that a jury demand can only be withdrawn by consent, even when only one party demanded a jury trial and that party seeks to withdraw the demand. It further explained that "a trial judge may impose sanctions, including striking the jury demand, on a party that fails to submit the requisite pretrial information," but that the trial court in Williams erred by "allowing a single party to unilaterally waive the jury demand."

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