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First Financial Equities, Inc. v. Anderson

A-5734-07T3 (N.J. Super. App. Div. 2009) (Unpublished)

ARBITRATION; APPEALS — Although New Jersey courts have previously determined that an order compelling arbitration is a final judgment for purposes of an appeal, it has never made a definitive ruling on the converse issue, an order denying arbitration; thus, a court does not need to dismiss such an appeal as interlocutory when doing so would not advance substantial justice between the parties.

A mortgage broker was employed by a mortgage banker licensed by the State of New York to be its Director of Sales in New York. The parties executed an employment agreement which included a provision relating to the payment of a “Contingent Bonus.” The broker also signed a series of promissory notes to the mortgage banker, each of which stated that the terms and conditions of the employment agreement were specifically incorporated and made a part of each of the note as if they were set forth therein at length verbatim. In addition, each note stated that it was to be “strictly governed and controlled” by New Jersey law and that the jurisdiction and venue for any disputes would be the Superior Court of New Jersey, Bergen County.

The employment agreement, on the other hand, stated that it was to be governed by and construed in accordance with New York law. The agreement also stated that the parties had a duty to mediate, and if that was not successful, the dispute would be finally and solely settled by arbitration, to be conducted in New York, in accordance with the Commercial Arbitration Rules of the American Arbitration Association. The State of New York subsequently suspended the mortgage banker’s license. According to the broker, the mortgage banker arranged for his employment with another entity and assured him that if he accepted the position, he would have no further liability under the promissory notes. Although the broker accepted the position with the other entity, the employment ended shortly thereafter. The mortgage banker then filed suit in Bergen County to collect on the notes, claiming that the broker was in default since he was no longer employed by the mortgage banker. The broker, relying on the language in the employment agreement, sought to dismiss the action in favor of arbitration.

The lower court denied the broker’s motion. The broker appealed.

The Appellate Division reversed. As to whether the appeal should had been dismissed as interlocutory, the Court noted that its practice in this area has not been entirely uniform. It stated that although it had previously determined that an order compelling arbitration is a final judgment for purposes of appeal, it has never made a definitive ruling on the converse issue, an order denying arbitration. The Court ruled that it would not dismiss the appeal as interlocutory because to do so would not advance substantial justice between the parties. It held that arbitration is favored as a means of resolving disputes in New Jersey and New Jersey law require a liberal construction of contracts in favor of arbitration. It also ruled that doubts concerning the scope of arbitrable issues must be resolved in favor of arbitration over litigation. It concluded that here, the parties’ agreement included a very broad arbitration clause, under which they agreed to submit all disputes, claims or causes of action arising out of or relating to the employment agreement to arbitration. Further, it found that the notes at issue not only referred to the employment agreement, but also specifically directed that the terms of the employment agreement be incorporated into the notes. Accordingly, the Court ruled that the lower court disregarded the strong public policy favoring arbitration and the clear language of the parties’ agreement and the note.


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