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The Biber Partnership, P.C. v. Diamond Hill Joint Venture, LLC

404 N.J. Super. 96, 960 A.2d 774 (App. Div. 2008)

ARBITRATION; CONSOLIDATION — Where a single party is subject to two separate arbitration agreements with two separate parties, and those agreements offer different arbitration procedures, the two separate arbitration proceedings, although dealing with a common set of facts, will not be consolidated because of the prejudice caused to the parties if they were obligated to abide by an arbitration provision other than the one contained in their own agreement.

An architect contracted with a structural engineering firm for the engineering firm to act as its consultant in connection with four construction projects being handled by the architect. Their contract did not contain an arbitration provision. One of the projects involved services rendered to a building where the architect and the building’s owner had a contract with an arbitration provision. This provision provided for a three person arbitration panel.

Disputes arose between the architect and engineering firm and the architect sued the engineering firm. Then, they entered into a settlement agreement. It specified that the dispute was to be submitted to arbitration before a single, specific arbitrator. Shortly before entering into the settlement agreement, the architect made a demand for arbitration against the owner under their own contract. For twenty months, the two arbitration matters proceeded separately with no attempt to consolidate them. On the day that the hearings between the architect and owner were to begin, the architect filed an action to consolidate both proceedings. The lower court rejected the application for consolidation, finding that the engineering firm’s burden that would result from consolidation would far outweigh any harm that might be suffered by the architect compared to continuing with the two separate proceedings.

The architect appealed, but the Appellate Division affirmed, finding that the denial of the consolidation motion was not an abuse of discretion. It held that the arbitration between the architect and engineering firm called for a single arbitrator and a consolidation would have compelled arbitration before three arbitrators chosen pursuant to the contract between the architect and owner. The Court was also mindful that the architect took twenty months before seeking consolidation. It noted that it was only on the eve of hearing with the owner that the architect filed its motion. The risk of undue delay is a circumstance under law that weighs against consolidation. Also, delaying arbitration that has reached the hearing stage is a prime example of undue delay. The Court went on to state that even if a prompt motion to consolidate had been made, it would have still been inappropriate (in this instance) because consolidating the two disputes would have substantially altered the terms of the settlement agreement reached between the architect and engineering firm.

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