This matter arises from a contractual dispute between Gallen Contracting Inc. (“Gallen”) and Centurion Construction, Inc. (“Construction”). Construction had hired Gallen to perform concrete work for an automobile dealership in Wayne pursuant to a written agreement. The agreement required that the parties submit disputes to mediation, followed by binding arbitration if mediation failed. The issue in Centurion Companies, Inc. v. Gallen Contracting, Inc., 2025 N.J. Super. Unpub. LEXIS 861 (App. Div. May 27, 2025) was whether the arbitration award entered against not only Construction but also Centurion Companies, Inc. (“Companies”), a similarly named but separate corporation, was properly entered or whether the award entered against Companies should have been vacated.
After a dispute arose under the contract, Construction fired Gallen and Gallen sued Construction. Gallen subsequently amended its complaint and identified defendant as “Centurion Construction Inc., a/k/a Centurion Companies.” However, Gallen’s amended complaint failed to assert any specific allegations against Companies.
Construction filed a motion to compel mediation and arbitration, which the trial court judge granted. Thereafter, Gallen and Construction entered into a June 2018 arbitration agreement delineating plaintiff Gallen Contracting, Inc. and defendants, Centurion Construction, Inc. and Glen Poppee, individually, as the parties participating in the arbitration. The arbitration agreement specifically provided a signature line for Centurion Construction, Inc. and the individually named defendant. It did not contain any signature line for Centurion Companies, Inc.
The arbitration hearing took place, and the arbitrator awarded damages to Gallen under the contract in the amount of $408,645. The arbitrator directed Gallen to prepare a consent order to memorialize the award. After the issuance of the arbitrator’s letter opinion, Construction objected to the inclusion of “a/k/a Centurion Companies” in any order memorializing the award. Construction requested that the arbitrator issue a corrected award, reflecting that the entry of the award was against Construction, not Companies. Construction contended that the arbitrator made an evident mistake in his identification of the parties bound to the award.
The arbitrator rejected that request. The arbitrator found that Companies played an active part in the work associated with the contract and concluded that he had the discretion to amend Gallen’s pleading under the court rules and rules of evidence.
Thereafter, plaintiffs filed a verified complaint and order to show cause to vacate the award against Companies. Plaintiffs argued that the arbitrator exceeded his powers because Companies was not a party to the contract, Companies did not agree to arbitrate, and Companies did not sign the arbitration award. Plaintiffs argued that the arbitrator made an evident mistake in entering the award against both Companies and Construction. Further, plaintiffs argued that the arbitrator exceeded his power and lacked authority to issue an award against an entity (not a party) on a claim never submitted.
The trial court determined that the arbitration award was entered in error against Companies because Gallen did not properly advise Companies of the notice of the claim against them and Companies did not have a fair opportunity to defend. Thus, the trial court judge found that the arbitration award entered in the matter as to Companies was contrary to clearly established public policy.
This order was appealed to the Appellate Division. Gallen argued that the trial court judge made a mistake in vacating the arbitration award entered against Companies. The Appellate Division rejected that argument.
The Court noted that the arbitration agreement was clear and unambiguous. It bound Gallen and Construction only. Companies was not a party to the agreement, nor did it sign the agreement. There was nothing in the arbitration agreement that indicated Companies agreed to mediate or arbitrate any disputes under the contract because Companies was not a party to that agreement.
The Appellate Division noted that the general rule is that an action on a contract cannot be maintained against a person who is not a party to it. While there are some exceptions to that rule, the Appellate Division pointed out that Gallen failed to present any of these exceptions to the arbitrator in support of the entry of the award against Companies as a non-party to the contract and the arbitration agreement.
Further, the Appellate Division agreed with the trial judge’s conclusion that the arbitrator exceeded the scope of his authority by entering the award against Companies. The arbitrator had acknowledged that Construction and Companies were two separate and distinct entities, as well as recognized that only Gallen and Construction had signed the contract.
Based upon these findings, the Appellate Division ruled that the arbitrator expanded the clear and unambiguous terms of the contract to Companies, a non-party. The Court also agreed with the trial court judge that Gallen did not provide notice that it was asserting claims against both Companies and Construction. The Appellate Division pointed out that an arbitrator may not issue an award in the absence of indicia that all parties to the arbitration have reasonable advanced notice of the claim.
Hence, the Appellate Division upheld the trial court’s decision to vacate the arbitration award against Centurion Companies, Inc. and affirmed the trial court’s decision.
