NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

PER CURIAM.

This matter arises out of a complex civil action that the trial court, with the acquiescence of the parties, referred to binding arbitration in February 2007. Unfortunately, the terms of the arbitration were not memorialized in an arbitration agreement. Over the ensuing four years, the arbitrator supervised discovery exchanged between the parties. On the day the arbitration hearing was scheduled to begin in December 2011, one of the parties raised for the first time various issues about the terms of the arbitration, which the opposing party disputed. The arbitrator referred that dispute to the trial court, which concluded that there was not a sufficient "meeting of the minds" concerning the terms of the arbitration to enable it to proceed.

For the reasons expressed in this opinion, we reverse the trial court's ruling and reinstate the arbitration. Under the circumstances presented here, in the absence of a written arbitration agreement executed by the parties, we conclude that the terms of the New Jersey Arbitration Act, N.J.S.A. 2A:23B-1 to-32 ("the Arbitration Act"), govern the arbitration by default. We further conclude that any modifications or supplements to the Arbitration Act's usual terms and conditions should have been expressly and timely set forth in writing. In the absence of such an express agreement containing such special terms, the usual statutory provisions must control.

I.

The underlying dispute concerns a first-party insurance claim by plaintiff, Petersburg Regency, L.L.C., ("Regency") against defendant, Selective Way Insurance Company ("Selective Way"). Regency owns and operates a hotel in Petersburg, Virginia. The hotel property is insured by Selective Way through a multiple-coverage commercial policy.

In September 2003, the hotel was damaged by Hurricane Ivan. A year later, in September 2004, Regency filed a complaint in the Law Division, alleging that Selective Way had breached its obligations to Regency as insurer and also had engaged in bad faith by failing to adjust Regency's property loss in a proper manner. At the time of plaintiff's complaint, its proof of claim amounted to approximately $8.8 million.1

Selective Way answered the complaint, acknowledging that certain coverage applies to the property damage but noting a "disagreement as to what damage resulted from the hurricane/tropical storm." At the same time, Selective Way filed a counterclaim, alleging that Regency had engaged in fraud or misrepresentation in connection with the claim for coverage and thus seeking reimbursement for the payments it had already made to Regency on the claim.

On February 14, 2007, the parties' counsel appeared for a settlement conference in the trial court. Although the court had assigned the case a March 12, 2007 trial date, there remained several open discovery-related issues concerning the exchange of expert reports and the completion of depositions. Rather than having the trial date adjourned to accommodate the outstanding discovery, counsel assented to a dismissal of the action and to proceed with binding arbitration. Apparently, the now-deceased judge noted the referral to arbitration on a standard disposition form2 removing the case from the court's calendar, although counsel apparently was not furnished with a copy of it. More importantly, the parties failed to prepare and execute a written agreement spelling out the terms and conditions of the arbitration.

The parties agreed to have a retired judge serve as the arbitrator. Over the next four years, the arbitrator supervised extensive discovery between the parties, issuing a series of case management orders. However, we have been advised that the arbitrator made no substantive rulings, such as dismissing or limiting any of the parties' competing claims. Nor did the arbitrator reach the stage of hearing any testimony.

The arbitration hearing was scheduled to begin on December 15, 2011. Selective Way appeared that day with new counsel. The new attorney first raised before the start of the hearing a question about whether the arbitrator should be disqualified because of the prior employment of an attorney employed by the arbitrator's law firm.

After that disqualification concern was resolved, Selective Way's counsel raised other concerns. Among other things, Selective Way asserted that the maximum award obtained by Regency should be capped at the amount of Regency's original claim.3 Selective Way further contended that it had preserved a right to appeal a final award by the arbitrator on a plenary basis, beyond the limited grounds authorized under the Arbitration Act. See N.J.S.A. 2A:23B-24. Selective Way also took the position around that time that it had a right to file and obtain a ruling by the trial court on a summary judgment motion concerning its counterclaim before the arbitration went forward. Regency objected to these demands, insisting that they were never part of the agreement to arbitrate.

Faced with this dispute over significant aspects of the process, the arbitrator declined to proceed with the arbitration. Instead, he directed the parties to present their dispute over these alleged special terms to the trial court.

The parties then filed divergent certifications from their respective counsel who had been representing them in February 2007 when the case was referred to arbitration. According to Selective Way's former counsel, the insurer would not have agreed to proceed to arbitration unless these additional conditions were included. Regency's attorney, on the other hand, certified that no such special terms had been agreed upon.

Selective Way moved in the trial court to restore its counterclaim for the limited purpose of enabling the court to rule on its application for summary judgment on the counterclaim. In the alternative, Selective Way asked the court to enforce its version of the applicable terms and conditions of the arbitration. Regency cross-moved to compel the binding arbitration to proceed without the additional terms and conditions sought by the insurer. Meanwhile, Selective Way filed — apparently provisionally — a complaint in the Virginia state court, seeking the same relief that it sought in its New Jersey counterclaim. Thereafter, Regency duplicatively filed its own affirmative claims, in the form of counterclaims in the Virginia action.4

After considering the parties' positions at oral argument, the trial court ruled that the arbitration should not proceed. In his oral opinion, the motion judge considered whether an evidentiary hearing was warranted to evaluate the parties' differing recollections about what they had contemplated about the arbitration in February 2007, but determined that such a hearing would not be helpful in resolving the controversy. In his February 24, 2012 order reflecting his decision, the judge specifically found that "there was `no meeting of the minds' on the conditions, parameters, and/or scope of the nature of the arbitration, or the right to appeal." The judge also denied Selective Way's motion to restore its counterclaim or for alternative relief, and denied the insurer's summary judgment motion as moot. In essence, the judge left the parties, as he noted in his bench ruling, to litigate their disputes and pursue their remedies in the Virginia courts.

Regency filed the instant appeal of the trial court's order to the extent that it, in effect, terminated the arbitration. Selective Way has not cross-appealed.

II.

At the outset of our discussion, we must underscore what both parties have frankly acknowledged before us at oral argument: the arbitration agreement should, in retrospect, have been memorialized in 2007 in a written document addressing all of the material terms and conditions of that alternative process. That failure has produced the current unfortunate situation, in which six years have passed since the February 2007 agreement without yielding a final determination of the underlying case.

It is inexcusable that the court should have to resolve at this late juncture the parties' quarrel over the arbitration's terms and conditions, when the parties have actively participated in an arbitration process for over four years. In the meantime, the parties have presumably paid the arbitrator's fees and they have abided by the arbitrator's discovery rulings. Now the court is being asked to re-enter the fray to solve a problem that the parties could have prevented long ago by placing their arbitration agreement in a clear written agreement.5 In that vein, it is also worth noting that Regency's complaint was filed in the Law Division in September 2004, nearly nine years ago, and the merits of their dispute have yet to be heard by an arbitrator, a judge, or a jury.

Counsel in this case have mutually acknowledged that this sort of untenable situation should not be repeated. We thus begin our legal analysis by urging litigants and their attorneys to memorialize the terms of an arbitration in writing before embarking on the process.6

Fortunately, the Legislature has provided a solution to the present quandary. The Arbitration Act provides, in N.J.S.A. 2A:23B-3, that it is intended to have comprehensive application:

The statute is consistent with the public policy favoring arbitration where it has been elected by the disputing parties. Martindale v. Sandvik, Inc., 173 N.J. 76, 84 (2002). The exceptions in N.J.S.A. 2A:23B-3 for collective bargaining matters obviously do not apply here.

Subject to certain enumerated non-waivable provisions, the Arbitration Act does offer parties an opportunity to modify or supplement the standard terms and conditions of arbitrations that proceed under the statue. To that end, N.J.S.A. 2A:23B-4 provides:

As the Supreme Court has explained, the statute thus "sets forth the details of the arbitration procedure that will apply unless varied or waived by contract." Fawzy v. Fawzy, 199 N.J. 456, 469 (2009) (emphasis added) (citing N.J.S.A. 2A:23B-4).

In some instances, as here, parties who have committed to participate in arbitration unfortunately fail to specify the terms or conditions of the arbitration sufficiently in a written agreement. Where that lapse has occurred, the terms of the Arbitration Act can operate essentially as a "gap-filler," to remedy the parties' omission.

This principle was illustrated in Kimm v. Blisset, LLC, 388 N.J.Super. 14 (App. Div. 2006), certif. denied, 189 N.J. 428 (2007). The plaintiff in Kimm, an attorney, sued the defendants seeking to recover unpaid legal fees. Id. at 18. Almost one year later, during a settlement conference, the parties orally agreed to submit their dispute to binding arbitration and to the appointment of a retired judge to act as their arbitrator. Id. at 20. The record in Kimm did not reflect that they made any other agreement concerning the nature or scope of the arbitration or the arbitrator's powers. Ibid. Nor, at the arbitration hearing, did the parties discuss these issues. Id. at 20-21. The arbitrator ultimately issued a written decision and award, finding only one of the defendants liable for unpaid legal fees. Id. at 22. Later, the arbitrator issued a "supplemental arbitration award," to which the defendants objected, arguing that the arbitrator was powerless to act having already issued the original, binding award. Id. at 23-24. The plaintiff contended that the arbitrator had such authority. Id. at 24. The trial court agreed with defendants and vacated the supplemental award. Ibid.

On appeal in Kimm, we upheld the trial court's determination. We recognized that there was no dispute that the parties had agreed to arbitration and had in fact gone through the arbitration process. Id. at 32. We held, however, that

Because of a lack of evidence in the record that the parties had specifically granted the arbitrator authority to act after issuing the initial award, we affirmed the trial court's ruling vacating the supplemental award. Id. at 33-34, 36. We further concluded that "once the arbitrator's powers ceased, plaintiff's only rights to seek to alter the award, in the event that he chose to do so, were those granted pursuant to the [arbitration] statute." Id. at 35-36 (emphasis added).

Selective Way argues that Kimm is distinguishable because, in the present case, the arbitration hearing has not begun. That is a distinction without a difference. Although we are not relying upon principles of estoppel to preclude the insurer's objection to the process, the fact of the matter is that if the insurer had wanted special terms engrafted upon the process, it should have expressed those terms in a mutually-signed arbitration agreement at the outset. For example, as N.J.S.A. 2A:23B-4(d) explicitly permits, the parties could have expanded the scope of appellate review of the arbitrator's award — which is one of the special terms desired by Selective Way — by expressing that condition in a written agreement. That simply did not occur here. As we have instructed, "[i]n the absence of an express designation in an agreement, the Arbitration Act governs the arbitration." Manger v. Manger, 417 N.J.Super. 370, 375 (App. Div. 2010).

We do not fault the motion judge for declining to conduct an evidentiary hearing to attempt to divine the 2007 intent of the parties when they acceded to binding arbitration. The judge properly exercised his discretion in determining that such a hearing, given the dramatically-opposed certifications of counsel and the intervening passage of years, would not be fruitful. Cf. Barblock v. Barblock, 383 N.J.Super. 114, 124 (App. Div.) (noting that plenary hearings at times may not be helpful or required to resolve contested issues), certif. denied, 187 N.J. 81 (2006).

The third paragraph of the trial court's February 24, 2012 order declining to compel arbitration is consequently reversed. Given that disposition, there is no need for this court to reach any of the other dispositions of the trial court being challenged on appeal.7

Reversed in part, and remanded for the entry of an order compelling the completion of the arbitration. We do not retain jurisdiction.