Justia Arbitration & Mediation Opinion Summaries

In November 2008, following the collapse of the housing market, the New Jersey Supreme Court implemented a statewide Residential Mortgage Foreclosure Mediation Program to address the economic crisis that left many facing the loss of their homes. After defaulting on her home loan with plaintiff GMAC Mortgage, LLC, defendant TamiLynn Willoughby entered into the Foreclosure Mediation Program. The mediation process led to an agreement between GMAC and Willoughby that gave Willoughby a path to save her home through a permanent modification of the loan. The agreement, executed in 2010, set forth the required down payment and monthly payments, the unpaid principal balance, the amount in arrears, and the length and interest rate of the loan. Willoughby complied with that agreement, paying the down payment and each monthly installment for one year. Then, GMAC began sending Willoughby proposals differing from the 2010 agreement, which GMAC claimed was provisional. Willoughby moved to enforce the 2010 settlement agreement, but instead the chancery court ordered additional mediation sessions. Willoughby never accepted in writing any of GMAC s proposals to modify the original agreement. Protracted litigation ensued. Willoughby's efforts to enforce the 2010 settlement agreement proved fruitless, and GMAC s foreclosure action ended with a Sheriff's sale of Willoughby's home. Willoughby was denied relief by the chancery court, which held that the 2010 mediation agreement was provisional and not enforceable as a final settlement agreement. The Appellate Division affirmed. The New Jersey Supreme Court reversed, concluding Willoughby and GMAC entered into an enforceable settlement agreement through the Foreclosure Mediation Program. The case was remanded to the chancery court to consider an appropriate remedy. View "GMAC Mortgage, LLC v. TamiLynn Willoughby" on Justia Law

Plaintiffs Emelia Jackson and Tahisha Roach purchased used cars from BM Motoring, LLC, and Federal Auto Brokers, Inc., doing business as BM Motor Cars (collectively, BM). As part of the transaction, each plaintiff signed an identical DRA, which required resolution of disputes through an arbitration in accordance with the rules of the AAA before a retired judge or an attorney. Two months later, Jackson filed a demand for arbitration against BM with the AAA, asserting a claim under the New Jersey Consumer Fraud Act (CFA) for treble damages and other relief based on overcharges and misrepresentations by BM. Despite repeated requests by the AAA, BM did not advance the filing fees that the DRA obligated it to pay, or otherwise respond to the claim. The AAA dismissed Jackson’s arbitration claim for non-payment of fees. Six months after her vehicle purchase, Roach filed a complaint in the Superior Court against BM, and similarly, received no response from BM in response to the arbitration demand. Plaintiffs then filed this action against defendants, who moved to dismiss the complaint in favor of arbitration. Defendants contended that they did not contemplate using the AAA as the forum for arbitration, and consistently had not arbitrated customer disputes before the AAA, because of the excessive filing and administrative fees that the AAA charged. In opposition to the motion, plaintiffs asserted that defendants materially breached the DRA by failing to advance filing and arbitration fees, and waived their right to arbitration. Defendants contended that they neither breached the DRA nor waived arbitration because the AAA was not the appropriate arbitral forum. The trial court found that the parties intended to resolve disputes by arbitration. The court ordered the parties to attempt to reinstate plaintiffs’ claims with the AAA; if the AAA refused to administer the claim, plaintiffs could reinstate their complaint. The AAA reinstated the arbitration, and the court dismissed plaintiffs’ complaint with prejudice. The Appellate Division affirmed the dismissal of the complaint, finding that there was a sufficient factual dispute as to the proper forum for arbitration that defendants conduct did not constitute a material breach of the DRA, nor did they voluntarily and intentionally waive their right to enforce the DRA. The Supreme Court reversed the trial court’s judgment, finding defendants’ non-payment of filing and arbitration fees amounted to a material breach of the DRA. Defendants were therefore precluded from enforcing the arbitration provision, and the case proceeded in the courts. View "Roach v. BM Motoring, LLC" on Justia Law

Defendant Glenn Ciripompa was a tenured high school math teacher in the Bound Brook School District. Defendant's behavior came under the scrutiny of the Bound Brook Board of Education (Board) after the Board received copies of student Twitter posts alleging "Mr. C" was electronically transmitting nude photographs. An investigation uncovered defendant's pervasive misuse of his District-issued laptop and iPad, as well as evidence of inappropriate behavior toward female colleagues, often in the presence of students. The results of the investigation spurred the Board to seek defendant's termination from his tenured position and served as the substantive allegations of the two-count tenure complaint against defendant. In this appeal, the issue presented for the Supreme Court's review centered on whether an arbitrator exceeded his authority by applying the standard for proving a hostile-work-environment, sexual-harassment claim in a law against discrimination (LAD) case to a claim of unbecoming conduct in the teacher disciplinary hearing. After review, the Supreme Court found that the arbitrator impermissibly converted the second charge of unbecoming conduct into one of sexual harassment. The arbitrator's review was not consonant with the matter submitted; rather, he imperfectly executed his powers as well as exceeded his authority by failing to decide whether Count II stated a successful claim of unbecoming conduct in support of termination. The arbitrator's award was therefore ruled invalid. View "Bound Brook Bd. of Edu. v. Ciripompa" on Justia Law

In May 2013, plaintiffs Annemarie Morgan and Tiffany Dever filed suit against defendants Sanford Brown Institute, its parent company, Career Education Corporation, and Sanford Brown's chief executive officer, admission and financial aid officers, and clinical director. Sanford Brown was a private, for-profit educational institution with a campus in Trevose, Pennsylvania, that offered medical-related training programs. In the complaint, plaintiffs claimed that defendants misrepresented the value of the school's ultrasound technician program and the quality of its instructors, instructed students on outdated equipment and with inadequate teaching materials, provided insufficient career-service counseling, and conveyed inaccurate information about Sanford Brown's accreditation status. The complaint further alleged that Sanford Brown employed high-pressure and deceptive business tactics that resulted in plaintiffs financing their education with high-interest loans, passing up the study of ultrasound at a reputable college, and losing career advancement opportunities. The Sanford Brown enrollment agreement included payment terms for tuition and fees, disclaimers, and an arbitration provision. Without answering the complaint, defendants filed a motion to compel arbitration and to dismiss plaintiffs' claims. The Appellate Division found the parties clearly and unmistakably agreed an arbitrator would determine issues of arbitrability and that plaintiffs failed to specifically attack the delegation clause. The panel therefore determined that arbitrability [was] for the arbitrator to decide. The Supreme Court reversed, finding that the Appellate Division and trial court did not have the benefit of "Atalese v. U.S. Legal Servs. Grp.," (219 N.J. 430, 436 (2014), cert. denied, __ U.S. __, 135 S. Ct. 2804, 192 L. Ed.2d 847 (2015)) at the time they rendered their decisions. The New Jersey Court held in "Atalese" that an arbitration provision in a consumer contract that fails to explain in some minimal way that arbitration is a substitute for a consumer s right to pursue relief in a court of law was unenforceable. This case was therefore remanded for further proceedings in light of Atalese. View "Morgan v. Sanford Brown Institute" on Justia Law