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  • Writer's pictureAlexander J. Kemeny

Don't Sleep on Your Right to Arbitrate in New Jersey or You May Lose that Right


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On May 24, 2024, the Appellate Division, issued a decision in Marmo & Sons Gen. Contracting, LLC v. Biagi Farms, LLC, 2024 WL 2492213 (N.J. Super. Ct. App. Div. May 24, 2024). The case serves as a reminder to those who may want to pursue arbitration in New Jersey that, if they fail to pursue arbitration in a timely manner, they may lose the ability to do so.


Under New Jersey law, “waiver” is “the intentional relinquishment of a known right.,” such as the right under a contract to require that a dispute be submitted to arbitration instead of being tried in court. As such, the question of whether a party has waived a right, such as the right to arbitrate, is us usually a question of intent. However, that intent can be inferred from a party’s conduct – not just its explicit statements.


In Marmo & Sons, the contractor, filed a motion to compel arbitration about half a year after it had filed a lawsuit in court against its customers. The motion sought to enforce a contractual requirement to arbitrate The trial court refused to enforce arbitration against the customer and denied the motion. In rejecting the contractor’s motion, the trial court found that the contractor’s actions through the litigation process constituted a waiver of its arbitration rights. The trial court considered factors like delays, extent of discovery, and the absence of arbitration in previous pleadings.


The contractor appealed and the trial court’s decision was upheld. Like the trial court, the Appellate Division found that the contractor’s conduct, particularly its pursuit of discovery through judicial means and the absence of earlier discussion of arbitration, indicated a clear waiver of arbitration rights.


In affirming the trial court's decision, the Appellate Division applied the “totality of the circumstances” developed by the New Jersey Supreme Court, in Cole v. Jersey City Medical

Center, 215 N.J. 265, 280-81 (2013), to determine whether a party has waived its contractual right to arbitration. Under that test, following factors are weighed: (1) the delay in requesting arbitration, (2) the motion practice that has been conducted and the outcomes of any motions filed, (3) whether the delay in seeking arbitration is part a litigation strategy, (4) the extent of discovery performed, (5) whether the party seeking arbitration raised the issue as part if is initial pleadings or provided other notification of its intent to pursue arbitration, (6) the proximity of the trial date to when the part requested arbitration, and (7) the prejudice, if any, that the other party will suffer because of the delay in seeking arbitration. Id. 215 N.J. at 281-83.


The decision should serve as a reminder to lawyers and their clients that they should move promptly if they wish to enforce an arbitration provision. By failing to seek arbitration in a timely manner, a party can lose their contractual right to arbitrate.



 

Kemeny, Ramp & Renaud, LLC is committed to pursuing vigorous, cost-effective strategies designed to secure the best possible results. The attorneys at our firm are experienced in arbitration, mediation, litigation and trial advocacy; and they are available to assist you. Call us at (732) 853-1725 to schedule a consultation.

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