Opinion
DOCKET NO. A-1278-15T1
06-29-2016
ELLIOT AMES, D.O., Plaintiff-Appellant, v. PREMIER SURGICAL CENTER, L.L.C.; CRAIG ROSEN, M.D.; TODD LIPSCHULTZ, M.D.; BRIAN ZELL, M.D.; ROBERT PONZIO, D.O., PETER CORDA, D.O.; VENNETTE PERKINS, M.D.; JEFFREY POLCER, D.O.; ADAM SACKSTEIN, M.D.; KAVITA GUPTA, D.O.; ABHIJEET RASTOGI, M.D.; KIERAN SLEVIN, M.D.; YOUSSEF JOSEPHSON, D.O.; and YOHAN LEE, M.D., Defendants-Respondents.
Begelman, Orlow & Melletz, attorneys for appellant (Paul R. Melletz, on the briefs). Berkowitz, Lichtstein, Kuritsky, Giasullo & Gross, L.L.C., attorneys for respondents Premier Surgical Center, L.L.C.; Craig Rosen, M.D.; Todd Lipschultz, M.D.; Brian Zell, M.D.; Robert Ponzio, D.O.; Peter Corda, D.O.; Vennette Perkins, M.D.; Jeffrey Polcer, D.O.; Adam Sackstein, M.D.; Kavita Gupta, D.O.; Youssef Josephson, D.O.; and Yohan Lee, M.D. (Stewart M. Leviss, on the brief). Jeffrey A. Weiner, attorney for respondents Abhijeet Rastogi, M.D. and Kieran Slevin, M.D., joins in the brief of other respondents.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Leone and Whipple. On appeal from Superior Court of New Jersey, Chancery Division, Camden County, Docket No. C-64-15. Begelman, Orlow & Melletz, attorneys for appellant (Paul R. Melletz, on the briefs). Berkowitz, Lichtstein, Kuritsky, Giasullo & Gross, L.L.C., attorneys for respondents Premier Surgical Center, L.L.C.; Craig Rosen, M.D.; Todd Lipschultz, M.D.; Brian Zell, M.D.; Robert Ponzio, D.O.; Peter Corda, D.O.; Vennette Perkins, M.D.; Jeffrey Polcer, D.O.; Adam Sackstein, M.D.; Kavita Gupta, D.O.; Youssef Josephson, D.O.; and Yohan Lee, M.D. (Stewart M. Leviss, on the brief). Jeffrey A. Weiner, attorney for respondents Abhijeet Rastogi, M.D. and Kieran Slevin, M.D., joins in the brief of other respondents. PER CURIAM
Plaintiff appeals a July 15, 2015 order denying his Emergent Order to Show Cause seeking a Temporary Restraining Order (TRO), and an October 9, 2015 order granting defendant's motion to dismiss plaintiff's complaint with prejudice. We affirm.
Plaintiff was a surgeon specializing in hand surgery prior to his retirement and a founding member of defendant Premier Surgical Center, LLC (Premier or the LLC), along with all remaining named individual defendants. Premier was formed on April 19, 1999; at the time of its creation, each founding member purchased "units" of Premier reflecting their capital contribution to the enterprise. Plaintiff purchased thirteen units for a total contribution of $150,000.
On January 14, 2015, plaintiff mailed his patients a letter declaring his retirement from hand surgery. On February 4, 2015, defendant Craig Rosen notified plaintiff, via letter, that his retirement from hand surgery was a "unit redemption event" pursuant to the terms of Premier's operating agreement (the agreement). Specifically, Rosen stated that plaintiff's retirement triggered the agreement's "unit redemption clause" pursuant to Sections 7.07(I)(c) and (j) of the agreement, which provide:
A Member shall be removed from the LLC upon the "Approval of the Members" for any of the following reasons:
. . . .
(c) such Member's retirement from the practice of medicine;
. . . .
(j) such Member fails to perform surgical procedures on the patients whom they refer to [Premier].
Section 7.03(b) of the agreement controls the unit redemption process. Pursuant to that section of the agreement, the purchase price of the units equals the current balance of the Member's capital account at the time of redemption, at which point the LLC purchases the units. Plaintiff was notified that the LLC would purchase his units for a total of $29,956 on May 14, 2015, although plaintiff asserts that a fair valuation of his units amounts to $1,213,513.00. Plaintiff accordingly attempted to negotiate the value of his units; these negotiations ultimately failed and plaintiff's units were purchased by the LLC for $29,956. Plaintiff was also effectively expelled from the premises.
On June 29, 2015, plaintiff filed a Verified Complaint in the Chancery Division seeking injunctive relief and damages. Plaintiff subsequently filed the motion for a TRO, despite the Alternative Dispute Resolution provisions contained within the agreement. Section 10.01-03 of the agreement provide that, in the event of a dispute, the parties to the dispute are required to negotiate in good faith. The agreement further provides that, if negotiation is unsuccessful, the parties are required to mediate their disputes pursuant to the Commercial Mediation Rules of the American Arbitration Association (AAA). Finally, the agreement contains an arbitration clause requiring mandatory arbitration if mediation fails. Section 10.05 of the agreement also provides, however, that a party may seek a remedy in court if that party seeks injunctive relief.
On July 15, 2015, after hearing argument on plaintiff's application for a TRO, the trial court denied injunctive relief. Defendant subsequently submitted a motion to dismiss the complaint, which was heard on October 9, 2015. The court granted defendant's motion, and entered an order to that effect the same day. This appeal followed.
Plaintiff first appeals the trial court's July 15 order denying temporary restraints. Plaintiff asserts that he satisfied the elements required for preliminary injunctive relief pursuant to our Supreme Court's holding in Crowe v. De Gioia, 90 N.J. 126, 132-134 (1982).
We disagree. We initially note that we review denials of applications for preliminary injunctive relief for an abuse of discretion. Rinaldo v. RLR Inv., LLC, 387 N.J. Super. 387, 395-96 (App. Div. 2006) (citing Horizon Health Ctr. v. Felicissimo, 135 N.J. 126, 137 (1994)). We are bound by the trial judge's factual findings if they are supported by substantial, credible evidence in the record. Triffin v. Automatic Data Processing, Inc., 411 N.J. Super. 292, 315 (App. Div. 2010).
In Crowe, our Supreme Court detailed the four-prong test that applicants must satisfy in order to obtain preliminary injunctive relieve. First, the applicant must establish that he or she is subject to irreparable harm, which is limited to equitable (as opposed to monetary) relief; second, the applicant must establish that the right to relief is an established legal right; third, the applicant must establish a "preliminary showing of a reasonable probability of ultimate success on the merits;" and finally, the court must weigh the "relative hardship to the parties in granting or denying relief." Crowe, supra, 90 N.J. at 132-34 (citations omitted). The applicant for injunctive relief must demonstrate the evidence supporting each prong of the test by clear and convincing evidence. Subcarrier Commc'ns, Inc. v. Day, 299 N.J. Super. 634, 639 (App. Div. 1997) (citations omitted).
The trial court concluded that plaintiff did not establish that he will be subject to irreparable harm, or that he is likely to succeed on the merits of the underlying case. We agree. Plaintiff's complaint alleges money damages and damage to his reputation. The trial judge found that, because of the lack of evidence as to harm to plaintiff's reputation, plaintiff's application for an injunction primarily concerned monetary damages. We conclude that the trial judge's finding is supported by sufficient, credible evidence in the record. Because monetary damages do not constitute irreparable harm, we discern no basis to disturb the trial judge's decision. See Crowe, supra, 90 N.J. at 132-33.
Plaintiff also alleges that the trial court erred in concluding that he did not have a likelihood of success on the merits. We disagree. To succeed on his application for injunctive relief, plaintiff was required to demonstrate the likelihood of his success on the merits by clear and convincing evidence. Subcarrier Commc'ns, supra, 299 N.J. Super. at 639. The trial judge concluded that plaintiff no longer works as an orthopedic surgeon, and that his retirement from that aspect of his practice was clearly communicated to his clients and other members of the LLC. The trial judge also concluded that Section 7.07(I)(j) of the agreement provides for the removal of a member from the LLC when they no longer "perform surgical procedures on the patients whom they refer to [Premier]," and that plaintiff's retirement was activity contemplated by this specific removal and unit redemption provision. The judge's findings were supported by sufficient credible evidence in the record and we discern no basis to disturb the trial judge's findings.
Finally, plaintiff asserts that the trial court incorrectly granted defendant's motion to dismiss with prejudice. We use principles of contract law to review a trial court's interpretation of an arbitration clause within a broader agreement. See Atalese v. U.S. Legal Servs. Grp., L.P., 219 N.J. 430, 445-46 (2014) (citing Kieffer v. Best Buy, 205 N.J. 213, 222-23 (2011)). We review the trial court's interpretation of the clause de novo. Ibid. (citing Hirsch v. Amper Fin. Servs., 215 N.J. 174 (2013)).
Plaintiff asserts that the trial court should decide the question of arbitrability. We agree in light of our Supreme Court's recent decision in Morgan v. Sanford Brown Inst., ___ N.J. ___, ___ (2016).
The trial court concluded that N.J.S.A. 2A:23B-6(c) "provides that it is for the arbitrator to determine whether [an] arbitration provision is enforceable." In Morgan, however, our Supreme Court adopted the reasoning of the United States Supreme Court in concluding that "[c]ourts should not assume that the parties agreed to arbitrate arbitrability unless there is clea[r] and unmistakeabl[e] evidence that they did so." Morgan, supra, slip op. at 18 (quoting Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63, 69 n.1, 130 S. Ct. 2772, 2777 n.1, 177 L. Ed. 2d 403, 411 n.1 (2010)). Accordingly, under Morgan, the question of arbitrability is one decided by the court unless the parties' agreement provides for the delegation of such a question to an arbitrator via a delegation clause. Id. at 22 (citing Rent-A-Ctr., supra, 561 U.S. at 70, 130 S. Ct. at 2777-78, 177 L. Ed. 2d at 411).
In determining whether arbitrability is a question for an arbitrator to decide, we utilize state-law contract principles as described in Atalese. Ibid. (citing Atalese, supra, 219 N.J. at 442). In this case, the arbitration clause does not specifically provide for the delegation of the question or arbitrability to an arbitrator.
Although defendants assert that the language of the arbitration clause assigns the question to an arbitrator via reference to the AAA rules, such delegation is not "clearly and unmistakably established" by the language in the agreement. Atalese, supra, 219 N.J. at 444 (quoting Garfinkel v. Morristown Obstetrics & Gynecology Assocs., 168 N.J. 124, 132 (2001)). To the extent defendants assert a valid delegation clause exists, we conclude that any such delegation clause fails to comport with the requirements of Atalese, supra.
The trial court here, who ruled before the Morgan decision was issued and thus did not have the benefit of that opinion, stated that N.J.S.A. 2A:23B-6(c) "provides that it is for the arbitrator to determine whether [an] arbitration provision in enforceable." Nonetheless, the trial judge also made findings as to the arbitrability of plaintiff's claims. The trial judge concluded that "[i]t's clear that all of the claims made in the litigation arise out of the respective rights attributable to the members of the agreement." The trial judge described why all of plaintiff's remaining claims fell within the scope of the agreement's arbitration clause. We agree with the trial judge's reasoning that the language of the arbitration clause encompasses the claims that plaintiff alleged in his complaint. We therefore discern no reason for the trial court to re-examine arbitrability.
Four of the eight counts set forth in plaintiff's complaint do not state causes of action, but assert remedies sought, such as punitive damages, equitable relief, waiver, and non-applicability of the agreement. The remaining counts were found to be arbitrable. In reviewing the complaint, the trial judge determined that "plaintiff disputes his termination under the agreement, which triggers the valuation of the interests and argues that there have been deviations from the operating agreement in the past. He also makes . . . claims . . . against an individual . . . . [T]he agreement provides that all disputes . . . shall be subject to the three tiered resolution process . . . 'even claims between parties, between members arising out of this agreement.'"
On appeal, plaintiff asserts that the arbitration clause is invalid because it provides insufficient notice of the waiver of his right to bring claims to court. See Atalese, supra, 219 N.J. at 446-47. Plaintiff specifically argues that the trial court should have invalidated the arbitration clause, in whole or in part, because of its failure to conform to the requirements for arbitration clauses that our Supreme Court announced in Atalese. We note that plaintiff failed to raise this argument below; we accordingly apply the "plain error" rule in this case. For any such error to constitute reversible error in this context, it "must amount to plain error, or error that was 'clearly capable of producing an unjust result.'" Dimaria Const., Inc. v. Interarch, 351 N.J. Super. 558, 571 (App. Div. 2001) (citing R. 1:7-5), aff'd 172 N.J. 182 (2002); see also R. 2:10-2.
In this case, we discern no error "capable of producing an unjust result." R. 2:10-2. Plaintiff's claims were within the scope of the arbitration agreement. Additionally, although the arbitration agreement could have been more specific, we discern no unjust result in this case because the arbitration clause was specific enough to put plaintiff on notice that he was waiving his rights to bring his claims in court.
The fourth count of plaintiff's complaint asserts "Non-Applicability of Arbitration," and argues the agreement does not specifically address waiver of such statutory claims as the New Jersey Revised Uniform Limited Liability Act, N.J.S.A. 42:2C-1 et seq. and the New Jersey Punitive Damages Act, N.J.S.A. 2A:15-5.9. Plaintiff did not actually assert a claim under either statute. --------
Affirmed. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION