Grandvue Manor, LLC v. Cornerstone Contracting Corp.

• Decision Date: 07 March 2022
• Docket Number: DOCKET NO. A-3702-20
• Citation: 471 N.J.Super. 135,272 A.3d 36
• Parties: GRANDVUE MANOR, LLC, Plaintiff-Appellant, v. CORNERSTONE CONTRACTING CORP., George Pusser, and Derek D'Ambra, Defendants-Respondents.
• Court: New Jersey Superior Court — Appellate Division

471 N.J.Super. 135

272 A.3d 36

GRANDVUE MANOR, LLC, Plaintiff-Appellant,

v.CORNERSTONE CONTRACTING CORP., George Pusser, and Derek D'Ambra, Defendants-Respondents.

DOCKET NO. A-3702-20

Superior Court of New Jersey, Appellate Division.

Argued January 12, 2022

Decided March 7, 2022

Joseph B. Fiorenzo argued the cause for appellant (Sills Cummis & Gross, PC, attorneys; James M. Hirschhorn and David Phillips, of counsel and on the briefs; Joseph B. Fiorenzo, Newark, on the briefs).

Andrea C. Sisca (Ivey, Barnum & O'Mara, LLC) of the New York and Connecticut bars, admitted pro hac vice, argued the cause for respondents (Mueller Law Group, Andrea C. Sisca and Stephen G. Walko (Ivey, Barnum & O'Mara, LLC) of the New York and Connecticut bars, admitted pro hac vice, attorneys; Gregory K. Mueller, Paul S. Haberman, Andrea C. Sisca, and Stephen G. Walko, on the brief).

Before Judges Hoffman, Whipple and Geiger.

The opinion of the court was delivered by

WHIPPLE, J.A.D.

Plaintiff Grandvue Manor, LLC, (Grandvue) appeals from a July 7, 2021, Law Division order granting a motion to dismiss and compel arbitration with defendant Cornerstone Contracting Corp. (Cornerstone) and dismissing the complaint for lack of personal jurisdiction over defendants George Pusser and Derek D'Ambra. We affirm but remand to the trial court to correct the order and enter a stay pending completion of arbitration.

In 2017, Linda and Anthony Palmeri wanted to build a luxury home in Stanfordville, New York. They established Grandvue as a New Jersey limited liability corporation headquartered in Hackensack as the vehicle to build the home. On December 7, 2017, Grandvue entered into a contract with Cornerstone to build the $10 million residence. Cornerstone is a corporation headquartered in Greenwich, Connecticut. George Pusser is the President of Cornerstone and Derek D'Ambra is its Chief Financial Officer. The contract consisted of two American Institute of Architect (AIA) agreements; the Standard Form of Agreement Between Owner and Contractor (the Agreement), and the General Conditions for the Contract of Construction (General Conditions). The contract required substantial completion by April 7, 2019, which was within sixteen months from the date of the contract.

The contract contained a choice of law provision to govern by the law of the place where the project was located, excluding that jurisdiction's choice of law rules, and if the parties selected arbitration as the method of binding dispute resolution, then the Federal Arbitration Act would govern. Thus, the parties selected the law of New York, the place of the project, to govern the contract. With respect to initial dispute resolution, the Agreement provided that the architect would serve as the initial decision-maker unless the parties appoint another individual who was not a party to the Agreement.

Under section 6.2 of the Agreement, the parties checked the box "Arbitration pursuant to Section 15.4 of AIA Document A201-2017."

§ 6.2 Binding Dispute Resolution

For any [c]laim subject to, but not resolved by, mediation pursuant to Article [fifteen] of AIA Document A201-2017, the method of binding dispute resolution shall be as follows: ...

[X] Arbitration pursuant to Section 15.4 of AIA Document A201-2017

[ ] Litigation in a court of competent jurisdiction

[ ] Other ([s]pecify )

If the [o]wner and [c]ontractor do not select a method of binding dispute resolution, or do not subsequently agree in writing to a binding resolution method other than litigation, [c]laims will be resolved by litigation in a court of competent jurisdiction.

Section 15.4 of the General Conditions states, in pertinent part:

§ 15.4 Arbitration

§ 15.4.1 If the parties have selected arbitration as the method for binding dispute resolution in the Agreement, any [c]laim subject to, but not resolved by, mediation shall be subject to arbitration which, unless the parties mutually agree otherwise, shall be administered by the American Arbitration Association in accordance with its Construction Industry Arbitration Rules in effect on the date of the Agreement. The [a]rbitration shall be conducted in the place where the [p]roject is located, unless another location is mutually agreed upon. A demand for arbitration shall be made in writing, delivered to the other party to the [c]ontract, and filed with the person or entity administering the arbitration. The party filing a notice of demand for arbitration must assert in the demand all [c]laims then known to that party on which arbitration is permitted to be demanded.

....

§ 15.4.2 The award rendered by the arbitrator or arbitrators shall be final, and judgment may be entered upon it in accordance with applicable law in any court having jurisdiction thereof.

The General Conditions define "claims," in pertinent part as follows:

A [c]laim is a demand or assertion by one of the parties seeking, as a matter of right, payment of money, a change in the [c]ontract [t]ime, or other relief with respect to the terms of the [c]ontract. The term "[c]laim" also includes other disputes and matters in question between the [o]wner and [c]ontractor rising out of or relating to the [c]ontract. ...

On March 6, 2020, Grandvue filed a complaint against Cornerstone, Pusser, and D'Ambra. Grandvue alleged that defendants had not achieved substantial completion of the project, breached the contract and the implied covenant of good faith and fair dealing, committed fraud and negligent misrepresentation, breached New York lien law, breached their fiduciary duties, committed conversion, unjustly enriched themselves, and violated the New Jersey Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -224, and the New Jersey Racketeer Influenced Corrupt Organization Act (RICO), N.J.S.A. 2C:41-1 to -6.2.

Defendants moved to dismiss for lack of personal jurisdiction over Cornerstone and Pusser and to compel arbitration pursuant to the provisions of the Agreement. A revised motion to dismiss for lack of personal jurisdiction included D'Ambra. Initially, the court denied the motions without prejudice and ordered discovery on the issue of personal jurisdiction. After jurisdictional discovery, defendants renewed their motions.

On July 2, 2021, the court delivered an oral opinion finding sufficient minimum contacts for personal jurisdiction over the individual defendants but dismissing the complaint for the matter to be submitted to arbitration. The court concluded that, under New Jersey law, the arbitration provision is clear and unambiguous as to the requirement that the parties submit to arbitration and as to the parties' waiver of their right to a jury trial. The court noted that the litigants are sophisticated parties that freely entered into a contract to build a house for over $10 million.

On July 7, 2021, without explanation regarding the discrepancy with the transcript, the court entered an order dismissing the action for lack of personal jurisdiction as to Pusser and D'Ambra and compelling arbitration. This appeal followed.

I.

We review the interpretation of a contract de novo. See Jennings v. Pinto, 5 N.J. 562, 569-70, 76 A.2d 669 (1950). We pay no special deference to the trial court's interpretation, so we review the contract with fresh eyes. Kieffer v. Best Buy, 205 N.J. 213, 222-23, 14 A.3d 737 (2011). Grandvue argues that, under this contract, it did not voluntarily waive its right to a jury trial for its statutory claims under CFA and RICO. We disagree.

As a threshold matter, we address whether the law of New Jersey or New York applies to the enforceability and construction of the arbitration provision. "Ordinarily, when parties to a contract have agreed to be governed by the laws of a particular state, New Jersey courts will uphold the contractual choice if it does not violate New Jersey's public policy." Instructional Sys., Inc. v. Computer Curriculum Corp., 130 N.J. 324, 341, 614 A.2d 124 (1992).

[T]he law of the state chosen by the parties will apply, unless either:

(a) the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties' choice, or

(b) application of the law of the chosen state would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state in the determination of the particular issue and which would be the state of the applicable law in the absence of an effective choice of law by the parties.

[ Id. at 342, 614 A.2d 124.]

Here, the parties clearly and unambiguously chose New York law, where the project is located. New York's law on choice of law provisions provides:

The parties to any contract, agreement or undertaking, contingent or otherwise, in consideration of, or relating to any obligation arising out of a transaction covering in the aggregate not less than two hundred fifty thousand dollars, including a transaction otherwise covered by subsection (a) of section 1-301 of the uniform commercial code, may agree that the law of this state shall govern their rights and duties in whole or in part, whether or not such contract, agreement or undertaking bears a reasonable relation to this state. This section shall not apply to any contract, agreement or undertaking (a) for labor or personal services, (b) relating to any transaction for personal, family or household services, or (c) to the extent provided to the contrary in subsection (c) of section 1-301 of the uniform commercial code.

[ N.Y. Gen. Oblig. § 5-1401(1) (2018).]

In addition, with respect to the effect of an arbitration agreement, New York law provides:

A written agreement to submit any controversy thereafter arising or any existing controversy to arbitration is enforceable without regard to the justiciable character of the controversy and confers jurisdiction on the courts of the state to enforce it and to enter judgment on an award. In determining any matter arising under this article, the court shall not consider whether the claim

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