NJ Supreme Court Says Orders Compelling Arbitration Are Considered Final Orders Which Are Appealable As Of Right
The relevant facts of the case are as follows: On February 27, 2003, Pittella entered into a “retail installment sale contract” with Pine Belt to finance the purchase of a car she bought at the Pine Belt auto dealership. Pittella simultaneously signed an arbitration agreement entitled “Option to Arbitrate Disputes,” which obligated Pitella to submit to binding arbitration any dispute arising out her financing, leasing or acquisition of the vehicle. In addition, the arbitration provision of the retail installment contract specifically informed Pitella that:
IF ARBITRATION IS CHOSEN BY ANY PARTY WITH RESPECT TO A CLAIM, DISPUTE OR CONTROVERSY, NEITHER YOU NOR WE WILL HAVE THE RIGHT TO LITIGATE THAT CLAIM IN COURT OR TO HAVE A JURY TRIAL ON THAT CLAIM, OR TO ENGAGE IN PRE-ARBITRATION DISCOVERY, EXCEPT AS PROVIDED IN THE ARBITRATION RULES. FURTHER, YOU WILL NOT HAVE THE RIGHT TO PARTICIPATE AS A REPRESENTATIVE OR MEMBER OF ANY CLASS OF CLAIMANTS PERTAINING TO ANY CLAIMS SUBJECT TO ARBITRATION. THE ARBITRATOR’S DECISION WILL GENERALLY BE FINAL AND BINDING. OTHER RIGHTS THAT YOU WOULD HAVE IF YOU WENT TO COURT MAY ALSO NOT BE AVAILABLE IN ARBITRATION. IT IS IMPORTANT THAT YOU READ THE ENTIRE ARBITRATION PROVISION CAREFULLY BEFORE SIGNING THESE DOCUMENTS.
As is typical in the auto industry, Pine Belt assigned the contract to GMAC which financed Pitella's purchase. On February 12, 2008, GMAC repossessed the car for non-payment and filed suit against Pittella in the Special Civil Part for a deficiency balance of $14,013.15.
In response to GMAc's lawsuit, Pittella filed an answer, a counterclaim, and a third-party complaint against Pine Belt.alleging violations of the New Jersey Consumer Fraud Act, breach of contract, fraud and breach of implied covenant of good faith and fair dealing,” Pittella claimed that Pine Belt charged an excessive price for the extended warranty on the car, and that “the disclosures and representations regarding the cost of the extended warranty [were] false, inaccurate or misleading” because Pine Belt retained “a substantial percentage” of the $3,400 warranty purchase price as profit for itself. Pittella also asserted “class action allegations” against Pine Belt on behalf of a proposed class of individuals who had purchased similar extended warranty plans from Pine Belt during the previous six years.
The action was transferred to the Law Division. In lieu of filing an answer, Pine Belt moved for summary judgment to compel arbitration and to dismiss the class action claims.
On July 31, 2008, the trial court partially granted Pine Belt’s motion and entered an order compelling “binding arbitration” of Pittella’s individual claims against Pine Belt, but did not stay GMAC’s claims pending the arbitration. The court initially denied the motion to dismiss Pittella’s class action claim because it found the class action waiver clause unenforceable. However, Pine Belt moved for reconsideration and, on August 29, 2008, the Law Division reversed itself, dismissing Pittella’s class action claim “with prejudice.”
Pittella and GMAC subsequently resolved their dispute in the pending litigation and, on March 5, 2009, executed a “stipulation of dismissal with prejudice” thus conclusively ending the entire litigation.
Within forty-five days of the March 5, 2009 dismissal, on April 14, 2009 Pittella filed a notice of appeal from the July 31, 2008 and August 29, 2008 orders. Pine Belt moved to dismiss the appeal “as untimely,” arguing that Pittella was required to file her appeal within forty-five days of the July 31, 2008 orders compelling binding arbitration and the dismissal of the class action claims.
The Rule itself makes it clear that any order compelling arbitration should be considered a final judgment subject to appeal as of right under R. 2:2-3(a)(3). And in fact, prior New Jersey Supreme Court precedent held exactly that, in Wein v. Morris, 194 N.J. 364, 380 (2008) - that an order compelling arbitration as to all parties and all issues is indeed a final judgment appealable as a matter of right under R. 2:2-3(a)(3).
So it would seem to have been a slam dunk for Pine Belt to have prevailed before the New Jersey Supreme Court because clearly Pitella did not file her appeal within 45 days of the July 31, 2008 order compelling arbitration. Not so, said the Supreme Court.
Pittella countered that the July 31, 2008 orders did not dispose of all issues as to all parties, and therefore were not final judgments appealable as of right. For its part, Pine Belt argued Pine Belt argues Pittella’s appeal was not timely because all orders compelling arbitration are deemed final for appeal purposes under the express wording of Rule 2:2-3(a), including orders that do not dispose of all issues as to all parties.
The NJ Supreme Court elected to decide only the following issue:
Whether orders compelling arbitration as to some, but not all parties, in a litigation are excepted from this Court’s unconditional holding in Wein v. Morris, 194 N.J. 364 (2008) that all orders compelling arbitration are deemed final and immediately appealable as of right.
Ultimately, the Supreme Court agreed with Pitella's argument - that the July 31, 2008 order compelling arbitration could not be considered a final judgment subject to appeal as of right under R. 2:2-3(a)(3) because at the time that order was entered the trial court still had to decide GMAC's deficiency claim against Pitella. Therefore, the order compelling arbitration did not resolve all disputes as to all parties which distinguished this case from the fact pattern of Wein v. Morris.
Said the Supreme Court:
Said the Supreme Court:
The case is important for lawyers and their clients because the Supreme Court has now made clear that any order compelling arbitration is considered final and appealable, and therefore any appeal from such an order must be filed within 45 days of the date it is entered.Because it addressed less than all issues as to all parties, it was not clear that the order compelling arbitration of Pittella’s claims against Pine Belt was final under Rule 2:2-3(a) and Wein. That question and its resolution are now crystal clear: orders compelling or denying arbitration are deemed final and appealable as of right as of the date entered. Based on the prior lack of clarity, we affirm that portion of the Appellate Division decision denying the motion to dismiss the appeal from the final judgment. We do so with the following warning: as of today, litigants and lawyers in New Jersey are on notice that all orders compelling and denying arbitration shall be deemed final for purposes of appeal, regardless of whether such orders dispose of all issues and all parties, and the time for appeal therefrom starts from the date of the entry of that order.
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