Opinion
DOCKET NO. A-5820-10T1
04-16-2013
J.S. URBAN RENEWAL COMPANY, Plaintiff-Respondent, v. SAMUEL SCHWIMMER, MENDEL SCHWIMMER and MENDEL & SAMUEL SCHWIMMER PARTNERSHIP, Defendants-Appellants.
Ronald A. Cohen, attorney for appellants. The Kelly Firm, P.C., attorneys for respondent (Chryssa Yaccarino, of counsel and on the brief).
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
Before Judges Nugent and Carchman.
On appeal from the Superior Court of New Jersey, Chancery Division, Union County, Docket No. C-82-01.
Ronald A. Cohen, attorney for appellants.
The Kelly Firm, P.C., attorneys for respondent (Chryssa Yaccarino, of counsel and on the brief). PER CURIAM
For more than ten years, plaintiff J.S. Urban Renewal Company and defendants Samuel Schwimmer, Mendel Schwimmer, and Mendel & Samuel Schwimmer Partnership, have been embroiled in a dispute over the extent to which defendants may burden an access easement to their commercial property, and how much they must pay to plaintiff as a common area maintenance (CAM) charge for using the easement. In this appeal, defendants challenge a Chancery Division order that adopted a Special Master/Arbitrator's (SMA) recommendation and entered judgment against defendants for $195,323.78. Defendants argue that because the SMA did not cause the proceedings to be recorded verbatim as required by Rule 4:41-3, the trial court could not properly adopt his findings of fact, and should have conducted a plenary hearing. Having considered the record in light of defendants' arguments, we conclude the trial court correctly determined both that defendants had waived their right to a verbatim record, and that the documentary evidence supported the SMA's factual determinations. Accordingly, we affirm.
The order had been prepared by plaintiff's attorney and was styled "Order Confirming Arbitrator Award and Entering Judgment."
Plaintiff owns an industrial park in Linden, New Jersey. The park has many buildings occupied by commercial tenants. Defendants own a building on land that is either within, or adjacent to, the park. When defendants purchased the land and building from plaintiff in 1985, plaintiff granted an access easement across its property, and defendants agreed to pay their proportionate share of the easement's CAM charges.
The record and briefs contain conflicting information and statements as to whether all of the defendants purchased the land and building in 1985, and whether plaintiff or a predecessor corporation sold the property. These discrepancies are not relevant to the issues that the parties have presented in this appeal.
The easement is not precisely described in the record. According to the certification of defendant, Samuel Schwimmer, to gain access to defendants' property "it has always been necessary to travel up one side of the oval roadway that rings around plaintiff's property." This "side of the oval roadway" is apparently the easement area. Delivery trucks traversing the easement are supposed to back up to defendants' loading docks and then exit by the same route, rather than circling the oval-shaped road to return to the park's access gate. CAM expenses include those incurred for maintaining the paved roadway, operating sprinklers, and removing snow.
The parties' dispute over the easement resulted in the court entering the 2002 and 2007 court orders central to the dispute now before us. In May 2001, plaintiff filed a lawsuit alleging defendants had stopped paying their fair share of the CAM in 1997; permitted trucks, tractors, and trailers to drive over the easement, which had only been intended for automobiles; and trespassed on plaintiff's property outside of the easement area. Defendants disputed the allegations and claimed the truckers leaving their loading docks were forced to circle the entirety of the oval road around the park, and thereby traverse part of plaintiff's property outside of the easement, because the easement area was often blocked by parked cars owned by employees of plaintiff's other tenants.
The lawsuit concluded after a trial. On August 1, 2002, the court dismissed plaintiff's complaint for damages based on CAM charges. The same day, the court entered an amended summary judgment order restraining defendants, their employees, agents, and business invitees from using the easement area for parking and from using plaintiff's property outside of the easement area; prohibiting plaintiff from permitting such parking within the easement that would block and prevent defendants from using it; and permitting defendants to use so much of plaintiff's property necessary for ingress and egress when the easement was obstructed by vehicles not owned or used by defendants.
During the ensuing years, the parties traded accusations about violations of the 2002 order. In 2004, plaintiff filed a motion to enforce litigant's rights, alleging that defendants had disregarded the 2002 order and had not paid CAM charges. For reasons that are not clear from the record, the case was eventually placed on the inactive list and was not restored until August 2006. Following a status conference, the court entered an order memorializing that the parties would hire off-duty Linden Police Officers for thirty days to monitor and record violations of the 2002 order. From December 4, 2006 through January 2, 2007, the police prepared violation reports which documented that defendants routinely violated the 2002 order.
Following two days of evidentiary hearings, the court entered an order on December 19, 2007, that found defendants had violated both the easement and the court's 2002 order; entered judgment against defendants for $11,250; provided that defendants would be fined $100 per day for future violations of the 2002 order; and required defendants to "reimburse [p]laintiff for any outstanding [CAM] charges . . . within ten . . . days of receiving documentation from [p]laintiff setting forth the amount owed." The parties' dispute over these CAM charges led to this appeal. Defendants paid the $11,250 but declined to pay the CAM charges plaintiff requested, asserting the charges were outrageous and that plaintiff did not explain how it calculated the charges.
In July 2008 plaintiff moved to enforce the court's December 2007 order and sought a judgment for the CAM charges. Defendants cross-moved to modify the December 2007 order to permit them to use the industrial complex's primary gate rather than a secondary gate. Defendants also sought sanctions against plaintiff for willfully interfering with defendants' use of the secondary gate. The court referred the matter to mediation, which was unsuccessful.
Thereafter, in September 2010, the court entered an order appointing a SMA. The record does not contain copies of either the motion papers or the transcript of the hearing that resulted in the entry of the September 2010 order. The order itself recites that the "parties . . . agreed to the appointment of the [SMA] . . ." and appointed Lewis M. Markowitz, "as a [SMA] to hear and provide the court with a recommendation regarding the pending motions of the parties." The order further provided that the SMA was to "arbitrate future disputes between the parties regarding the use of the easement and [to] have the full authority and all powers consistent with rules governing the courts of the State of New Jersey." Lastly, the order provided: "The issues presented in relation to the pending motions shall be subjected to the authority of the [SMA]."
The SMA wrote to the attorneys, obtained copies of relevant pleadings, and held a pre-hearing conference with the attorneys and their clients on December 14, 2010. He conducted an evidentiary hearing on January 31, 2011. None of the parties requested that the hearing be recorded. On March 7, 2011, the SMA submitted his report to the court and recommended a judgment in favor of plaintiff for $195,323.78. That amount included CAM charges, a substantial penalty for defendants' violations of the court's 2002 and 2007 orders, and interest.
The report summarized the evidence the parties presented at the hearing, including the testimony of Clifford Slavin, plaintiff's principal, and defendant Samuel Schwimmer. According to the report, Slavin testified that for a number of years, plaintiff billed defendants, and defendants paid 38.5% of the CAM charges for the "sprinkler system/water/sewer." The SMA noted that the parties had no written agreement specifying that percentage, but found there was a "clear course of dealing spanning many years whereby the defendants were charged 38.5% of the CAM charges and paid same without question or comment." Schwimmer testified that a fair percentage for the sprinklers was 34.3%, but the SMA was "not exactly certain where that number came from." The SMA based his recommendation as to the CAM charges on the parties' course of dealing. He found "this course of dealing to be fair and reasonable and in accordance with the longstanding conduct between the parties." He also determined the charges were commercially reasonable.
The SMA next addressed the CAM charges for snow removal. The parties' testimony was that defendants' building was approximately 110,000 square feet; the remaining buildings in the complex were 203,000 square feet; and defendants owned approximately 35% of the buildings on the site based on square footage of building space. Additionally, defendants owned 3.4 acres, while the remaining acreage in the industrial park totaled 9.195 acres. Based on that ratio, defendants owned approximately 29% of the total acreage on site. The SMA recommended that defendants pay 25% of CAM charges for paving and snow removal.
The SMA computed the number of days defendants had violated the December 2007 and August 2002 court orders. Disregarding days when defendants' business was closed, the SMA determined that defendants had violated the court order 757 days. Accordingly, he recommended they pay $75,700. Lastly, the SMA recommended the court reject two of plaintiff's claims and award three percent interest on the money defendants owed to plaintiffs.
Ten days after the SMA issued his report, plaintiff submitted a proposed order of judgment to the court. Six days later, defendants wrote to the court and asserted that the SMA had "ignored certain crucial evidence relating to discrepancies in the various bills for which plaintiff seeks reimbursement, while discrediting other evidence put forth by the defendants." Defendants asked the court to "schedule a conference with counsel to determine how best to voice [their] concerns, rather than just entering an [o]rder that would undoubtedly result in a lengthy and expensive appeal."
Two months later, defendants filed a motion seeking a plenary hearing in Superior Court. In their supporting memorandum, defendants acknowledged that they consented to the court's referral of the matter to the SMA. Nevertheless, they argued that because the proceedings before the arbitrator were not recorded, "the resultant lack of recording . . . created issues regarding the findings of fact and weight given to certain evidence." Defendants also supported their motion with a certification from Samuel Schwimmer in which he acknowledged: "The parties agreed that the submission of these issues to a [SMA] would be more expeditious and economical than a plenary hearing, and, speaking for the defendants, we hoped that a plan to avoid future litigation would emerge."
Defendants contended nevertheless, that the SMA miscalculated CAM charges for water and sewer by ignoring documentary evidence, including a spread sheet defendants had presented; and mis-assessed CAM charges for paving and snow removal based on building and land ratios by overlooking the fact that defendants' access easement was also used by other industrial park tenants. Defendants also claimed the SMA credited hearsay testimony, without written back-up, when he awarded $15,000 on plaintiff's claim for damage to a water main. Defendants disputed that they caused the damage.
As to the $100 per day penalties, defendants challenged the SMA's reliance upon Slavin's testimony, arguing, among other things, that Slavin wasn't present during each day the alleged violations occurred. Defendants accused the SMA of making "selective" credibility determinations.
Lastly, defendants disagreed with the SMA's recommendation and computation of interest for two reasons: The interest was calculated on an incorrect award and some of the interest was calculated on CAM charges that were less than one year old.
Plaintiff responded to defendants' motion, submitting a certification and documentary evidence to refute defendants' contentions.
In an oral decision delivered from the bench on June 10, 2011, the court denied defendants' motion. The court rejected defendants' argument that a plenary hearing should be conducted because the proceedings before the SMA were not recorded. The court noted, "the parties did not raise that matter before the Arbitrator and freely and voluntarily participated in proceedings without a verbatim record being kept."
The court next addressed defendants' argument that there was no factual basis for the SMA's report. The court found that
it is clear, from the review of the record, that the [SMA] did review the testimony and did consider the arguments of the parties. That the calculations which defendant claimed are erroneous are not, in fact, errors but rather conclusions reached by the [SMA] which are different from the arguments advanced by the defendant.
The court concluded that "the record fully supports the conclusions reached by the [SMA]." Acknowledging that the SMA's decision is "reasonably debatable, since it is based on findings that relate to the testimony[,]" the court declined to substitute its judgment for that of the SMA "when the [SMA] clearly considered the evidence before him before rendering a decision." The court filed a memorializing order confirming the arbitration award and entering judgment. Defendants appealed.
Defendants raise the following points for out consideration:
POINT I: THE SPECIAL MASTER FAILED TO COMPLY WITH R.4:41-3 AND THEREFORE THE TRIAL COURT COULD NOT CONFIRM THE FINDINGS CONTAINED IN HIS REPORT.
POINT II: WITHOUT A VERBATIM RECORD OF THE PROCEEDINGS BEFORE THE SPECIAL MASTER, THE TRIAL COURT COULD NOT ADOPT HIS FINDINGS OF FACT AND SHOULD HAVE CONDUCTED ITS OWN HEARING.
Defendants first argue that the SMA violated Rule 4:41-3, which requires that "[u]nless the order of reference otherwise directs, the master shall cause the proceedings to be recorded verbatim . . . ." They further assert the absence of a verbatim record prevented the trial court from properly reviewing the proceedings and now impedes adequate appellate review.
Plaintiff counters that defendants participated in the proceedings before the SMA, never requested that the proceedings be recorded, and never objected to the proceedings not being recorded. Plaintiff also contends that the proceeding before the SMA was an arbitration and therefore the SMA was not bound by Rule 4:41-3. Lastly, plaintiff asserts that sufficient credible evidence in the record supports the trial court's finding that the SMA committed no errors.
We begin by addressing the parties' dispute on appeal as to whether the proceeding conducted by the SMA was a proceeding conducted pursuant to Rule 4:41-4, as defendants argue, or an arbitration, as plaintiff argues. When a party seeks appellate review of the report of a SMA,
we "employ our ordinary standards of review, considering them in the same manner as we would the findings and conclusions of a judge sitting as a finder of fact." State v. Chun, 194 N.J. 54, 93 (2008). We "accept the fact findings to the extent that they are supported by substantial credible evidence in the record." Ibid. Legal
conclusions, on the other hand, are owed "no particular deference." Ibid.
[Abbott ex rel. Abbott v. Burke, 199 N.J. 140, 146, n.2 (2009).]
On the other hand, "[a]n arbitrator's factual determinations concerning the merits of the dispute submitted to him are not reviewable by the court as such[.]" Ukranian Nat'l Urban Renewal Corp. v. Joseph L. Muscarelle, Inc., 151 N.J. Super. 386, 396 (App. Div.), certif. denied, 75 N.J. 529 (1977); see also N.J.S.A. 2A:23B-23 (enumerating the grounds for vacating an arbitration award under New Jersey's version of the Uniform Arbitration Act and not including among those grounds challenges to an arbitrator's factual determinations).
The court's order appointing the SMA did not comply with Rule 4:41-1, which states:
The reference for the hearing of a matter by a judge of the Superior Court shall be made to a master only upon approval by the Assignment Judge, and then only when all parties consent or under extraordinary circumstances. The order of reference shall state whether the reference is consensual and, if not, shall recite the extraordinary circumstances justifying the reference.The court did not obtain the approval of the Assignment Judge before making the reference for the hearing before the SMA. Additionally, the court did not fix the SMA's compensation as required by Rule 4:41-2; did not require that the SMA first meet with the attorneys within ten days of the issuance of the order as required by Rule 4:41-4; and did not otherwise refer in its order to Rule 4:41. More significantly, defendants did not object to the appointment of a SMA in the absence of the Assignment Judge's approval, did not object to the hearings proceeding in the absence of a verbatim transcript, and failed to comply with Rule 4:41-5(b) by serving written objections to the award within ten days after being served with notice of its filing.
The court's and the parties' non-compliance with Rule 4:41 lends credence to plaintiff's argument that "[a]ll involved treated this as an arbitration proceeding." Plaintiff's position is undermined, however, by the language in the order requiring the SMA to hear and provide the court with a recommendation, and the SMA complying with that directive rather than filing an arbitration award.
We need not resolve the parties' dispute about the nature of the proceeding before the SMA, however, because defendants waived their right to have their proceedings before the SMA recorded. First, defendants agreed to have the SMA conduct the proceedings and did not object to the SMA doing so without making a verbatim recording. Defendants were entitled to proceed in that manner. Nothing prevented the parties from agreeing to any form of dispute resolution, including a hearing before a SMA pursuant to Rule 4:41-1, an arbitration proceeding, or a hybrid proceeding that included some procedures applicable to a proceeding before a SMA and others applicable to traditional commercial arbitration. With that in mind, we note: "The rule that a party waives a ground for challenging an adverse disposition when it fails to note a timely objection is simply a procedural rule of litigation necessary to avoid unfairness to the other party and waste of adjudicatory resources." Barcon Assoc. v. Tri-County Asphalt Corp., 86 N.J. 179, 197 (1981). In Barcon, the Supreme Court recognized that "[i]t would be inequitable and wasteful to allow a party to withhold its objections until after the [arbitration] panel has rendered an unfavorable decision." Ibid.
We have no records of motions or other documentary evidence resulting in the order appointing the SMA, and we have no transcripts of the proceeding that resulted in the appointment. See R.2:6-1 (requiring an appellant to submit as part of the appendix parts of the record "essential to the proper consideration of the issues, including such parts as the appellant should reasonably assume will be relied upon by the respondent in meeting the issues raised").
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Here, defendants consented to the dispute resolution procedure embodied in the court's order appointing the SMA. From the implicit concession in their reply brief that they were unaware of Rule 4:41-1, it is evident they were unaware of the requirement that proceedings before the SMA must be recorded verbatim. Stated differently, they willingly consented to having the SMA make factual determinations that would then be submitted to the court, for the court's approval without a transcript of testimony before the SMA.
More significantly, defendants now insist upon compliance with one aspect of Rule 4:41, namely, the requirement that the SMA cause a verbatim record to be made of the proceedings, when they did not insist on compliance with numerous other of the Rule's requirements, and disregarded the provision of Rule 4:41-5(b) permitting the parties within ten days of being served with notice of the filing of the SMA's report to serve written objections to the recommendations. Defendants did not comply with that rule, but instead waited until plaintiff moved for judgment before challenging the SMA's recommendations.
To permit defendants to nullify the proceedings before the SMA by selectively and belatedly enforcing part of a rule would result in unfairness to plaintiff and waste of adjudicatory resources. Barcon supra, 86 N.J. at 197. The trial court implicitly applied the doctrine of waiver to avoid that inequitable result. The court did not err by doing so.
Defendants argue in Point II of their brief that without a verbatim record of the proceedings before the SMA, the trial court could not adopt the SMA's findings of fact and should have conducted its own hearing. In view of our conclusion that defendants waived their right to a verbatim record of the hearing before the SMA, their argument warrants no further discussion. R.2:11-3(e)(1)(E). We add only that our review of the documentary record, including the SMA's report, confirms the trial court's opinion that the SMA's decision was supported by ample evidence in the record before him.
Affirmed.
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION