Two divorcing law partners who reached an agreement in principle for winding up their business — complete with an arbitration clause — must submit to arbitration their lingering disputes over office property and outstanding fees, a state appeals court says.
The Appellate Division reversed a trial judge who found that the outstanding points of dissent effectively invalidated the agreement and cleared the case for litigation.
"Once the parties agree on an arbitration clause, all remaining issues concerning the contract containing that clause must be submitted to the arbitrator," the Appellate Division ruled Monday in Wolf v. Galex, A-756-12.
Richard Galex and Andrew Wolf ended their partnership as of Jan. 1, 2011, for what Galex describes as "differing philosophies" about office administration and firm finances. Wolf is a consumer fraud attorney and Galex does personal injury work.
Even with separate practices, the two continued sharing office space, but in April 2011 that filed complaints against one another when numerous disputes cropped up in connection with the split.
Galex eventually left in February 2012 to join Lomurro Davison Eastman & Munoz in Freehold, while Wolf remained at the North Brunswick office.
They’d already begun mediation before retired Judge Jack Lintner, which Middlesex County Superior Court Judge Travis Francis directed them to continue.
During a January 2012 session with Lintner, Galex and Wolf signed a handwritten document framing settlement terms.
One clause provided that, "Any disputes arising under this agreement shall be subject to binding arbitration before" Lintner. Other provisions stated that the agreement was subject to the parties reaching an accord on personal property at the office and the language of the formal documents yet to be signed.
Galex’s lawyer, Anthony Vignuolo, had left the session for medical reasons before the signing, Galex and Vignuolo say.
Even with a general agreement in place, Galex and Wolf grappled over personal items, including desks and file cabinets that Galex intended to remove from the space when he left, as well as the office’s phone number, which Galex sought to retain, claiming it belonged to him even before the two lawyers partnered in 2004.
Wolf asked Francis to enforce the purported settlement. Galex challenged whether they’d entered into an enforceable contract, contending that an agreement on personal property in the office was a condition precedent to the settlement.
Francis denied the motion to enforce, as well as Wolf’s subsequent motion to compel arbitration. Because the outstanding issues hadn’t been resolved, there was no agreement and the arbitration clause was not enforceable, the judge said.
In September, Francis ordered discovery, but the Appellate Division stayed the proceedings pending appeal.
On Monday, Appellate Division Judges Susan Reisner, Jonathan Harris and Margaret Hayden reversed, finding a "meeting of the minds on the essential terms" and remanding the case for enforcement of the arbitration clause.
A document need not include all settlement terms to make out a binding contract, the court noted.
As for the provisions that subjected the settlement to agreement on outstanding issues, they did not set forth a condition precedent, the judges said, noting the "omnibus mechanism to resolve all disputes ‘arising from’ the agreement — binding arbitration."
"Taken in context, the ‘subject to’ language in both paragraphs reflected an agreement to dot the i’s and cross the t’s, and not an acknowledgement that the case was not yet settled because an essential term was missing," the panel said in a per curiam opinion. "Moreover, the parties signed the handwritten agreement, not a step one would expect these experienced attorneys to take if they believed they had no settlement."
Galex and Wolf each still have a 50 percent interest in the North Brunswick office, where about $140,000 worth of renovations have been performed, according to Vignuolo.
The two also never reached an agreement on a division of fees — those incurred before the split, and those earned afterward but in matters the firm took on before its dissolution.
Vignuolo, a senior partner at Borrus, Goldin, Foley, Vignuolo, Hyman & Stahl in North Brunswick, says he stressed to the appellate court that he was not present when Galex signed the handwritten document.
"Even a lawyer needs a lawyer," Vignuolo says. "If you have a deal, and your lawyer walks out of the room, and you can’t finalize it … that should mean something."
Lintner still could find the agreement invalid, after which the dispute would be headed back to court for discovery, Galex says.
"It’s not over," he says. "I’m hopeful … that Judge Lintner will do the right thing. He’s going to have to decide what was his intent and what was the intent of the parties."
The firm had three associates, three secretaries and a paralegal when the partnership dissolved, Galex says.
Wolf declines comment.
His appellate counsel, Bruce Greenberg of Lite, DePalma, Greenberg in Newark, says Lintner already demonstrated the agreement’s validity by having a typewritten version produced and forwarded to the parties, none of whom objected to it.
"I don’t see how they could even ask Judge Lintner to declare the settlement invalid," Greenberg says.
As for Vignuolo’s absence, Greenberg says: "If there were a condition that [he] had to approve the settlement … Galex would have inserted that."