                                                     SYLLABUS

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the
convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the
interest of brevity, portions of any opinion may not have been summarized.)

                            Tahisha Roach v. BM Motoring, LLC (077125) (A-69-15)

Argued January 3, 2017 – Decided March 9, 2017

SOLOMON, J., writing for a unanimous Court.

          In this appeal, the Court determines whether defendants’ failure to advance the required arbitration fees for
arbitration before the American Arbitration Association (AAA) constitutes a material breach of the parties’ dispute
resolution agreement (DRA), thereby precluding defendants from enforcing the agreement to arbitrate.

         Plaintiffs Emelia Jackson and Tahisha Roach purchased used cars from BM Motoring, LLC, and Federal
Auto Brokers, Inc., doing business as BM Motor Cars (collectively, BM). As part of the transaction, each plaintiff
signed an identical DRA, which required resolution of disputes through an arbitration in accordance with the rules of
the AAA before a retired judge or an attorney. Two months later, Jackson filed a demand for arbitration against BM
with the AAA, asserting a claim under the New Jersey Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -204, for
treble damages and other relief based on overcharges and misrepresentations by BM. Despite repeated requests by
the AAA, BM did not advance the filing fees that the DRA obligated it to pay, or otherwise respond to the claim.
The AAA dismissed Jackson’s arbitration claim for non-payment of fees.

          Six months after her vehicle purchase, Roach filed a complaint in the Superior Court against BM and its
president and vice president (collectively, defendants), alleging violations of the CFA and other consumer protection
laws. Defendants filed a motion to dismiss the complaint for lack of jurisdiction based on the arbitration provision
of the DRA. The court dismissed the complaint without prejudice in favor of arbitration. Roach then filed an
arbitration demand with the AAA, which dismissed the claim because BM had previously failed to comply with the
AAA’s rules and procedures. Roach did not receive a response from BM to her arbitration demand.

          Plaintiffs then filed this action against defendants, who moved to dismiss the complaint in favor of
arbitration. Defendants contended that they did not contemplate using the AAA as the forum for arbitration, and
consistently had not arbitrated customer disputes before the AAA, because of the excessive filing and administrative
fees that the AAA charged. In opposition to the motion, plaintiffs asserted that defendants materially breached the
DRA by failing to advance filing and arbitration fees, and waived their right to arbitration. Defendants contended
that they neither breached the DRA nor waived arbitration because the AAA was not the appropriate arbitral forum.
The trial court found that the parties intended to resolve disputes by arbitration, and the matter should therefore
proceed in arbitration. The court ordered the parties to attempt to reinstate plaintiffs’ claims with the AAA, and
comply with AAA rules. The court further provided that if the AAA refused to administer the claim, plaintiffs could
reinstate their complaint. The AAA reinstated the arbitration, and the court dismissed plaintiffs’ complaint with
prejudice. The Appellate Division affirmed the dismissal of the complaint, finding that there was a sufficient factual
dispute as to the proper forum for arbitration that defendants’ conduct did not constitute a material breach of the
DRA, nor did they voluntarily and intentionally waive their right to enforce the DRA.

         The Court granted plaintiffs’ petition for certification. 224 N.J. 528 (2016).

HELD: Defendants’ non-payment of filing and arbitration fees amounted to a material breach of the DRA.
Defendants are therefore precluded from enforcing the arbitration provision, and the case will proceed in the courts.

1. Under the Federal Arbitration Act and the New Jersey Arbitration Act, N.J.S.A. 2A:23B-1 to -32, arbitration
agreements rest on equal footing with other contracts. Therefore, arbitration agreements are governed by principles
of contract law and generally applicable contract defenses, which may be applied to invalidate arbitration
agreements. The court must afford the terms of an arbitration agreement their plain and ordinary meaning, and must
discern the parties’ intent from the provisions of the agreement. If the meaning of a provision is ambiguous, it

                                                           1
should be construed against the drafter. (pp. 12-13)

2. In the event of a breach of a material term of an agreement, the non-breaching party is relieved of its obligations
under the agreement. A breach is material if it goes to the essence of the contract. To determine whether a breach is
material, this Court adopts the flexible criteria set forth in Section 241 of the Restatement (Second) of Contracts
(1981). Subsection (e) of Section 241 implicates the obligation of good faith and fair dealing that all contracts
impose on the parties through an implied covenant that neither party shall do anything that will have the effect of
destroying or impairing the right of the other party to receive the benefits of the contract. (pp. 13-15)

3. The Court has never decided whether failure to advance arbitration fees is a material breach of an agreement to
arbitrate. To answer that question, the Court turns to authority from other jurisdictions for guidance. The Ninth and
Tenth Circuit Courts of Appeals both have held that a party’s failure to pay required fees constitutes a material
breach of an arbitration agreement. See Pre-Paid Legal Servs., Inc. v. Cahill, 786 F.3d 1287, 1294 (10th Cir.), cert.
denied, 136 S. Ct. 373 (2015); Sink v. Aden Enters., Inc., 352 F.3d 1197 (9th Cir. 2003); see also Brown v.
Dillard’s, Inc., 430 F.3d 1004, 1012 (9th Cir. 2005) (holding business materially breached arbitration agreement by
refusing to “participate in properly initiated arbitration proceedings”). (pp. 15-18)

4. As a preliminary matter, the Court must consider whether plaintiffs acted in accordance with the DRA when they
filed arbitration claims with the AAA. The DRA provides that arbitration shall be conducted before a single
arbitrator, who is a retired judge or attorney. The AAA maintains a national roster of arbitrators, which includes
arbitrators who are retired judges and attorneys. Therefore, the filing of an arbitration claim with the AAA is not
inconsistent with the DRA’s requirement of arbitrating before a single retired judge or attorney. In addition, the
DRA requires the parties to arbitrate in accordance with the rules of the AAA. A commercial arbitration rule of the
AAA, which was in effect when the DRA was signed and remains in effect today, provides that parties who agree to
arbitrate in accordance with AAA rules thereby consent to AAA-administered arbitration. Therefore, the DRA,
which requires arbitration in accordance with the AAA rules, permits arbitration by the AAA. In light of these
provisions, plaintiffs’ decision to arbitrate their respective claims with the AAA was proper under the DRA. (pp.
18-20)

5. Having addressed the preliminary question, the Court must next determine whether defendants’ prelitigation
conduct constituted a material breach of the DRA. The benefit expected under an arbitration agreement is the ability
to arbitrate claims. A failure to advance required fees that results in the dismissal of the arbitration claim deprives a
party of the benefit of the agreement. Defendants’ failure to advance the required arbitration fees goes to the
essence of the DRA, and constitutes a material breach of the agreement. Defendants’ failure to pay the AAA fees,
or respond to plaintiffs’ arbitrations demands, also violated standards of good faith and fair dealing, and constitutes a
breach of the implied covenant of good faith and fair dealing. (pp. 21-22)

6. Defendants’ knowing refusal to cooperate with plaintiffs’ arbitration demands, filed in reasonable compliance
with the parties’ agreement, constitutes a material breach of the DRA and bars defendants from compelling
arbitration under the agreement. The Court makes no determination as to whether defendants’ conduct constitutes a
waiver of the right to compel arbitration. The Court also declines to establish a bright-line rule for determining
whether a refusal or failure to respond to a written arbitration demand, within a reasonable time, constitutes a
material breach of an arbitration agreement that precludes its enforcement. Such determinations must be made on a
case-by-case basis, after consideration of the terms of the agreement and conduct of the parties. Here, plaintiffs
satisfied their obligations under the DRA, and defendants’ non-payment of filing and arbitration fees amounted to a
material breach of the agreement. Defendants are therefore precluded from enforcing the arbitration provision, and
the case will proceed in the courts. (pp. 22-23)

          The judgment of the Appellate Division is REVERSED, and the matter is REMANDED to the trial court
for further proceedings consistent with the Court’s opinion.

       CHIEF JUSTICE RABNER and JUSTICES LaVECCHIA, ALBIN, PATTERSON, FERNANDEZ-
VINA, and TIMPONE, join in JUSTICE SOLOMON’S opinion.




                                                           2
                                     SUPREME COURT OF NEW JERSEY
                                       A-69 September Term 2015
                                                077125

TAHISHA ROACH and EMELIA
JACKSON, on behalf of
themselves and all others
similarly situated,

    Plaintiffs-Appellants,

         v.

BM MOTORING, LLC and FEDERAL
AUTO BROKERS, INC., both
corporations, t/a BM MOTOR
CARS, BORIS FIDELMAN and
MIKHAIL FIDELMAN,

    Defendants-Respondents.


         Argued January 3, 2017 – Decided March 9, 2017

         On certification to the Superior Court,
         Appellate Division.

         Henry P. Wolfe argued the cause for
         appellants (The Wolf Law Firm and Law Office
         of David C. Ricci, attorneys; Mr. Wolfe, Mr.
         Ricci and Andrew R. Wolf, on the briefs).

         Thomas C. Jardim argued the cause for
         respondents (Jardim, Meisner & Susser,
         attorneys; Mr. Jardim and Matthew A.
         Stoloff, on the brief).

         Andrew P. Bell argued the cause for amicus
         curiae Consumers League of New Jersey (Locks
         Law Firm, attorneys; Mr. Bell, James A.
         Barry and Michael A. Galpern, on the brief).

         Thaddeus P. Mikulski, Jr., submitted a brief
         on behalf of amicus curiae National
         Employment Lawyers Association of New
         Jersey.

                               1
    JUSTICE SOLOMON delivered the opinion of the Court.

    Plaintiffs Emelia Jackson and Tahisha Roach purchased used

cars from BM Motoring, LLC, and Federal Auto Brokers, Inc.,

which do business as BM Motor Cars (collectively, BM).       Each

plaintiff signed an identical Dispute Resolution Agreement (DRA)

as part of the transaction.   The DRA provided for arbitration

“in accordance with the rules” of the American Arbitration

Association (AAA), “before a single arbitrator, who shall be a

retired judge or attorney.”

    After Jackson purchased her car, she filed an arbitration

demand against BM with the AAA.       Despite repeated requests by

the AAA, BM did not advance any filing fees or otherwise respond

to the claim.   The AAA dismissed Jackson’s arbitration claim for

non-payment of fees.

    A few months after Roach’s vehicle purchase, she filed a

complaint against BM and its president and vice president

(collectively, defendants) in the Law Division of the Superior

Court.   The court granted defendants’ motion to dismiss Roach’s

complaint and compelled arbitration.       Roach, accordingly, filed

an arbitration demand with the AAA.       The AAA, however, dismissed

Roach’s arbitration claim because BM had previously failed to

comply with the AAA’s rules and procedures.




                                  2
    Plaintiffs then filed this case against defendants, who

moved to dismiss plaintiffs’ complaint in favor of arbitration.

In opposition to defendants’ motion, plaintiffs asserted two

affirmative defenses:     (1) defendants materially breached the

DRA by failing to advance filing and arbitration fees in

response to plaintiffs’ AAA arbitration demands; and (2)

defendants waived their right to compel arbitration through

their conduct.    Defendants countered that they neither breached

the DRA nor waived arbitration because the AAA was not the

appropriate arbitral forum.     The trial court dismissed

plaintiffs’ complaint with prejudice, and the Appellate Division

affirmed.

    We find that plaintiffs’ choice of the AAA as the arbitral

forum complied with the DRA and hold that defendants’ failure to

advance arbitration fees was a material breach of that

agreement.     We conclude, therefore, that defendants are barred

from compelling arbitration.     Thus, we reverse the judgment of

the Appellate Division without reaching the issue of whether

defendants’ conduct constituted a waiver of the right to compel

arbitration.

                                  I.

    The facts of record, which are not in dispute for the

purposes of this appeal, are as follows.

                                  A.

                                  3
    In August 2013, plaintiff Emelia Jackson purchased a used

2007 BMW from BM.   As part of the purchase, Jackson signed a DRA

obligating the parties to resolve “any and all claims, disputes

or issues” through arbitration.       The DRA specifies that

         [t]he arbitration shall be conducted in
         accordance with the rules of the American
         Arbitration Association [AAA] before a single
         arbitrator, who shall be a retired judge or
         attorney.    Dealership shall advance both
         party’s      [sic]      filing,      service,
         administration, arbitrator, hearing, or other
         fees, subject to reimbursement by decision of
         the arbitrator.1

    In October 2013, Jackson filed an individual arbitration

claim with the AAA against BM and served a copy on BM.         Jackson

sought treble damages under the Consumer Fraud Act, N.J.S.A.

56:8-1 to -204, alleging that BM refused to sell the vehicle for

its advertised price, overcharged for title and registration,

and misrepresented the terms of an extended warranty.




1 Several copies of the DRA appear in the appendix. Because of
the small font size in those documents, none are easy to
read. However, we cannot tell from the record whether any of
the copies are the same size as the original agreement. We note
that state law “requires that ‘a consumer contract . . . be
written in a simple, clear, understandable and easily readable
way.’” Morgan v. Sanford Brown Inst., 225 N.J. 289, 310 (2014)
(quoting N.J.S.A. 56:12-2). N.J.S.A. 56:12-10 provides certain
guidelines to assess whether a consumer contract meets that
standard. Among other factors to consider are whether “the main
promise” and the “[c]onditions and exceptions” of an agreement
are in “at least 10 point type.” N.J.S.A. 56:12(b)(3). We do
not consider this issue, however, as it has not been raised by
the parties.

                                  4
    Approximately one week later, the AAA advised BM by letter

that it was required to pay the applicable filing fees and

arbitrator compensation deposit by October 29, 2013.   BM failed

to pay, and the AAA notified both parties by a second letter

that it could decline to administer future consumer disputes

involving BM if BM did not adhere to the AAA’s policies.    The

AAA extended the payment deadline for ten days and suggested

that “the opposing party” could pay the outstanding amount and

seek recovery of the fees through the arbitrator’s award.    BM

again failed to pay the required fees or to take any action to

acknowledge the letters from the AAA.

    On November 13, 2013, the AAA sent a final letter to both

parties, stating that the AAA declined to administer Jackson’s

claim for non-payment of fees.   The letter also indicated that

the AAA would not administer “any other consumer disputes”

involving BM due to BM’s failure to comply with the AAA’s rules

and instructed BM to remove the AAA name from its arbitration

agreement.   At no time did Jackson receive a response to her

arbitration demand from BM.

                                 B.

    In February 2013, plaintiff Tahisha Roach purchased a used

2000 Nissan from BM and signed a DRA as part of the purchase

agreement.   Six months later, Roach filed a complaint in the Law

Division against defendants, alleging violations of the Consumer

                                 5
Fraud Act, the Automotive Sales Practices Regulations, N.J.A.C.

13:45A-26A.1 to -26B.4, the New Jersey Uniform Commercial Code,

N.J.S.A. 12A:9-101 to -809, and the Truth in Consumer Contract,

Warranty and Notice Act, N.J.S.A. 56:12-14 to -18.

    Defendants filed a motion to dismiss for lack of

jurisdiction based on the terms of the DRA.   The court dismissed

the action without prejudice in favor of arbitration.

    In January 2014, Roach filed an arbitration demand with the

AAA and sent notice of the demand to defendants.   The AAA

replied by letter to both parties, stating that BM had

“previously not complied with [the AAA’s] request to adhere [to

its] policies regarding consumer claims; therefore, [the AAA]

currently cannot accept for administration any disputes

involving [defendants].”   Two weeks later, the AAA sent a second

letter repeating that it “must decline to administer this claim

and any other claims between this business and its consumers.”

The AAA closed Roach’s claim.   As with Jackson, Roach never

received a response to her arbitration demand from BM.

                                C.

    In March 2014, Roach and Jackson filed a complaint in the

Superior Court, Law Division, asserting individual and other

claims against defendants.

    Defendants moved to dismiss plaintiffs’ complaint and

compel arbitration.   In support of their motion, defendants

                                6
asserted that the DRA did not “contemplate using AAA as the

forum and venue for arbitration” and that BM had “consistently

not arbitrated disputes with its customers by utilizing

AAA . . . primarily because of the excessive filing and

administrative fees charged by AAA.”    Defendants also claimed

that Jackson and Roach never pursued arbitration in accordance

with the DRA.

    In response, plaintiffs explained their efforts to comply

with the DRA and represented that “[a]t no time prior to filing

the present motion papers did [d]efendants or their attorney

express any objections about the AAA administering arbitrations

under the [DRA].”    Plaintiffs asserted that they terminated the

DRA because defendants materially breached the agreement by

failing to pay the AAA fees and engage in arbitration.

    The trial court found that the parties intended “to go to

arbitration” by signing the DRA and, thus, they “should remain

faithful to that clause, and . . . [the matter] should be

arbitrated.”    The court ordered the parties to attempt to

reinstate plaintiffs’ claims with the AAA and to comply with AAA

rules.   If the AAA refused to administer the claim, the trial

court provided that plaintiffs could return to court and

reinstate their complaint.    The AAA reinstated arbitration, and




                                 7
the court entered a final order dismissing plaintiffs’ complaint

with prejudice.2

     On appeal, the Appellate Division affirmed the dismissal.

The panel concluded that the record showed a sufficient factual

dispute as to the proper forum for arbitration to justify

defendants’ failure to respond to plaintiffs’ arbitration

claims.   Accordingly, it found that defendants had not

materially breached the DRA.   The panel also concluded that

defendants did not voluntarily and intentionally waive their

right to enforce the DRA, that defendants’ litigation conduct

was not inconsistent with their right to enforce the arbitration

agreement, and that plaintiffs suffered no prejudice from the

timing of the motion because they had recourse if defendants did

not abide by the trial court’s order.

     This Court granted plaintiffs’ petition for certification.

224 N.J. 528 (2016).   We also granted the Consumers League of

New Jersey (CLNJ) leave to appear as amicus curiae and the

National Employment Lawyers Association of New Jersey, Inc.

(NELA-NJ) leave to file a brief as an amicus curiae.

                                II.




2 Although not part of the record on appeal, plaintiffs contend
that, after the AAA reinstated their arbitration demands, BM
again refused to pay the applicable fees. The parties agreed,
however, to hold in abeyance the arbitration proceedings pending
plaintiffs’ appeal of the trial court’s order.
                                 8
                                  A.

     Plaintiffs argue that, in the context of a consumer

contract for the sale of a used car, a dealership’s failure to

advance the filing fees could effectively bar a consumer’s

ability to arbitrate, making the requirement to advance fees a

material term of the agreement.       To avoid incentivizing

businesses to ignore arbitration demands in hopes that the

customer will abandon the claim, plaintiffs urge this Court to

adopt the rule advanced in Brown v. Dillard’s, Inc., 430 F.3d

1004, 1012 (9th Cir. 2005) -- that a business’s refusal to

participate in “properly initiated arbitration proceedings”

precludes that business from later enforcing the arbitration

agreement.   Plaintiffs also contend that, regardless of whether

defendants had a valid objection to the AAA as the forum,

failure to respond in any way to the arbitration demands was a

material breach of the DRA.

     Plaintiffs further argue that the purported “dispute” as to

the proper forum for arbitration is a fabrication and defendants

had no good-faith basis for ignoring plaintiffs’ demands filed

with the AAA.   In support, plaintiffs cite the provision in the

DRA that disputes be arbitrated in accordance with AAA rules, as

well as AAA Rule R-2, which specifies that parties who agree to

arbitrate in accordance with its rules thereby consent to AAA-

administered arbitration.

                                  9
                                B.

    In defendants’ view, the Appellate Division properly

determined that defendants did not materially breach the DRA

because the agreement does not designate the AAA as the proper

forum and instead provides for arbitration “by a retired judge

or retired attorney who would follow the AAA rules.”    Defendants

thus argue that plaintiffs, in initiating arbitration with the

AAA, failed to adhere to the DRA.    Defendants assert that, as a

result, they were not obligated to advance any fees or comply

with the AAA’s demands, and their failure to do so was not in

bad faith.

    Defendants stress that they made clear before the trial

court that they were willing to arbitrate and never refused to

do so.   Because there was a genuine factual dispute over the

proper forum for arbitration and the proper interpretation of

the DRA, the trial court and Appellate Division were correct to

find no material breach.

    Defendants additionally argue that they did not waive their

right to compel arbitration because they immediately moved to

dismiss plaintiffs’ complaint and to enforce arbitration and did

not improperly use the litigation process.    Defendants assert

that plaintiffs suffered no prejudice when their complaint was

dismissed in favor of arbitration.

                                C.

                                10
    The CLNJ contends as amicus that the DRA is a contract of

adhesion offered by defendants to consumers on a take-it-or-

leave-it basis and that, as a result, any ambiguity in the DRA

should be strictly construed against defendants.   According to

the CLNJ, plaintiffs properly availed themselves of the

arbitration provision in the agreement by commencing arbitration

with the AAA because the DRA implicitly designates AAA as the

arbitral forum and because, even if the DRA lacks a choice-of-

forum provision, plaintiffs’ choice should not be disturbed

absent a showing of substantial prejudice to defendants.

    The NELA-NJ adds that, as a matter of public policy, this

Court should not allow retailers to deny consumers their basic

contractual rights by requiring an arbitration agreement as a

condition of a purchase.   The NELA-NJ argues for the adoption of

a bright-line rule that “a party’s refusal or failure to either

respond to a written demand for arbitration or to promptly

engage in the arbitration process within a reasonably short

timeframe constitutes a material breach of an arbitration

agreement that precludes enforcement by the breaching party.”

                               III.

    We begin with a review of the principles that govern the

interpretation of contracts and arbitration agreements.

                                A.



                                11
    Congress enacted the Federal Arbitration Act (FAA), 9

U.S.C.A. §§ 1 to 16, to “reverse the longstanding judicial

hostility” towards arbitration agreements and to “place

arbitration agreements upon the same footing as other

contracts.”   Gilmer v. Interstate/Johnson Lane Corp., 500 U.S.

20, 24, 111 S. Ct. 1647, 1651, 114 L. Ed. 2d 26, 36 (1991).

Section 2 of the FAA provides:

         A written provision in . . . a contract
         evidencing a transaction involving commerce to
         settle by arbitration a controversy thereafter
         arising out of such contract or transaction .
         .  .   shall   be valid,    irrevocable, and
         enforceable, save upon such grounds as exist
         at law or in equity for the revocation of any
         contract.

         [9 U.S.C.A. § 2.]

The New Jersey Legislature codified the same principles in favor

of arbitration in the New Jersey Arbitration Act, N.J.S.A.

2A:23B-1 to -32.   See Atalese v. U.S. Legal Servs. Grp., L.P.,

219 N.J. 430, 440 (2014), cert. denied, ___ U.S. ___, 135 S. Ct.

2804, 192 L. Ed. 2d 847 (2015).

    The FAA preempts state laws that single out and invalidate

arbitration agreements.   Doctor’s Assocs. v. Casarotto, 517 U.S.

681, 687, 116 S. Ct. 1652, 1656, 134 L. Ed. 2d 902, 909 (1996).

Thus, to keep arbitration agreements on “equal footing” with

other contracts, a court “‘cannot subject an arbitration

agreement to more burdensome requirements than’ other


                                  12
contractual provisions.”   Atalese, supra, 219 N.J. at 441

(quoting Leodori v. CIGNA Corp., 175 N.J. 293, 302, cert.

denied, 540 U.S. 938, 124 S. Ct. 74, 157 L. Ed. 2d 250 (2003)).

Therefore, arbitration agreements, such as the DRA here, are

contracts governed by principles of contract law, and “generally

applicable contract defenses . . . may be applied to invalidate”

them.   Doctor’s Assocs., supra, 517 U.S. at 687, 116 S. Ct. at

1656, 134 L. Ed. 2d at 909.

    In our review of an arbitration agreement, the agreement’s

terms “are to be given their plain and ordinary meaning.”      M.J.

Paquet v. N.J. DOT, 171 N.J. 378, 396 (2002).    We are tasked

with discerning “the intent of the parties.”    Kieffer v. Best

Buy, 205 N.J. 213, 223 (2011).   If the meaning of a provision is

ambiguous, the provision should be construed against the drafter

because, “as the drafter, it chose the words that may be

susceptible to different meanings.”     Id. at 224.

    In the event of a “breach of a material term of an

agreement, the non-breaching party is relieved of its

obligations under the agreement.”     Nolan v. Lee Ho, 120 N.J.

465, 472 (1990).   As this Court has explained, a breach is

material if it “goes to the essence of the contract.”     Ross Sys.

v. Linden Dari-Delite, Inc., 35 N.J. 329, 341 (1961).     To

determine if a breach is material, we adopt the flexible

criteria set forth in Section 241 of the Restatement (Second) of

                                 13
Contracts (1981) (Restatement (Second)).3    Thus, we must

consider:

            (a) the extent to which the injured party
            will be deprived of the benefit which he
            reasonably expected;

            (b) the extent to which the injured party can
            be adequately compensated for the part of that
            benefit of which he will be deprived;

            (c) the extent to which the party failing to
            perform or to offer to perform will suffer
            forfeiture;

            (d) the likelihood that the party failing to
            perform or to offer to perform will cure his
            failure,   taking   account   of   all   the
            circumstances   including   any   reasonable
            assurances; [and]

            (e) the extent to which the behavior of the
            party failing to perform or to offer to
            perform comports with standards of good faith
            and fair dealing.

            [Restatement (Second), supra, § 241.]

     Subsection (e) implicates the duty of good faith and fair

dealing that all contracts impose on their parties.    Wilson v.

Amerada Hess Corp., 168 N.J. 236, 245 (2001) (citing Restatement

(Second), supra, § 205).    This duty is an “implied covenant that

‘neither party shall do anything which will have the effect of



3 Our adoption of Section 241 is in line with this Court’s
reliance on the Second Restatement of Contracts to decide
breach-of-contract claims. See, e.g., Owen v. CNA Ins./Cont’l
Cas. Co., 167 N.J. 450, 466-67 (2001) (applying Second
Restatement to construe non-assignment provision); Kutzin v.
Pirnie, 124 N.J. 500, 516 (1991) (adopting Section 374(1) of
Second Restatement to determine damages).
                                 14
destroying or injuring the right of the other party to receive

the fruits of the contract.’”    Sons of Thunder, Inc. v. Borden,

Inc., 148 N.J. 396, 420 (1997) (quoting Palisades Props., Inc.

v. Brunetti, 44 N.J. 117, 130 (1965)).

                                 B.

     This Court has never decided whether failure to advance

arbitration fees is a material breach of an agreement to

arbitrate.   To answer this question, we turn to authority from

other jurisdictions for guidance.

     The Ninth Circuit addressed this issue in Sink v. Aden

Enters., Inc., 352 F.3d 1197 (9th Cir. 2003).   In that case, an

employee filed a federal lawsuit against his employer, and the

court referred the matter to arbitration pursuant to the

parties’ employment agreement.   Id. at 1198.   The arbitrator

dismissed the claim when the employer refused to advance the

arbitration fees.   Id. at 1198-99.   The employee returned to

court, and the district court concluded that the employer both

defaulted4 and waived its right to arbitrate.   Id. at 1199.     The




4 The Ninth Circuit defined “default” as “the omission or failure
to perform a legal or contractual duty; esp., the failure to pay
a debt when due.” Sink v. Aden Enters., Inc., 352 F.3d 1197,
1199 n.2 (9th Cir. 2003) (quoting Default, Black’s Law
Dictionary (7th ed. 1999)). Under the FAA, a district court is
not obligated to stay litigation in favor of arbitration if a
party is in default. Pre-Paid Legal Servs., Inc. v. Cahill, 786
F.3d 1287, 1295 (10th Cir.), cert. denied, ___ U.S. ___, 136 S.
Ct. 373, 193 L. Ed. 2d 292 (2015).
                                 15
Ninth Circuit affirmed the trial court, concluding that the

employer defaulted in the arbitration because its “failure to

pay required costs of arbitration was a material breach” of the

parties’ agreement.    Id. at 1201-02.     The Ninth Circuit

explained that referring the case to arbitration at that point

would

          allow a party refusing to cooperate with
          arbitration    to     indefinitely     postpone
          litigation.       Under     [the    employer’s]
          interpretation, the sole remedy available to
          a party prejudiced by default would be a court
          order compelling a return to arbitration. The
          same offending party could then default a
          second time, and the prejudiced party’s sole
          remedy,   again,   would   be   another   order
          compelling arbitration. This cycle could
          continue, resulting in frustration of the
          aggrieved party’s attempts to resolve its
          claims.

          [Id. at 1201.]

    Two years later, in Brown, supra, the Ninth Circuit held

that a business materially breached an arbitration agreement by

refusing to “participate in properly initiated arbitration

proceedings.”   430 F.3d at 1006.      The plaintiff was a former

employee of a Dillard’s department store who signed an

arbitration agreement as a condition of her continued

employment.   Id. at 1006-07.   The plaintiff filed a notice of

intent to arbitrate with the AAA after she was terminated and

paid her share of the filing fees, but Dillard’s failed to pay

its share.    Id. at 1008-09.   After the plaintiff filed a

                                  16
complaint in state court, Dillard’s removed the action to

federal court and moved to compel arbitration.    Id. at 1009.

The district court denied Dillard’s motion, ibid., and the Ninth

Circuit affirmed:

         If we took Dillard’s view and allowed it to
         compel arbitration notwithstanding its breach
         of the arbitration agreement, we would set up
         a perverse incentive scheme. Employers like
         Dillard’s would have an incentive to refuse to
         arbitrate claims brought by employees in the
         hope that the frustrated employees would
         simply abandon them.    This tactic would be
         costless to employers if they were allowed to
         compel arbitration whenever a frustrated but
         persistent   employee   eventually   initiated
         litigation. We decline to adopt a rule that
         would encourage companies to refuse to
         participate in properly initiated arbitration
         proceedings.

         [Id. at 1012.]

    The Tenth Circuit has likewise held that a party’s failure

to pay required fees constitutes a material breach of an

arbitration agreement.    Pre-Paid Legal Servs., Inc. v. Cahill,

786 F.3d 1287, 1294 (10th Cir.), cert. denied, ___ U.S. ___, 136

S. Ct. 373, 193 L. Ed. 2d 292 (2015).    In Pre-Paid Legal

Services, the plaintiff sued its former employee in state court

for breach of a non-compete clause in his employment contract.

Id. at 1288.   The employee removed the action to federal court

and moved to stay litigation pending arbitration, pursuant to

the parties’ arbitration agreement.    Ibid.   The district court

granted the stay, and Pre-Paid initiated arbitration proceedings

                                 17
with the AAA, paying the required fees.     Ibid.   The employee,

however, did not pay his share, and, after repeated requests for

payment, the AAA terminated the arbitration.     Id. at 1288-89.

Thereafter, the district court lifted the stay, allowing

litigation to proceed.     Id. at 1289.   The Tenth Circuit

affirmed, concluding that the employee “breached the arbitration

agreement by failing to pay his fees in accordance with AAA

rules.”   Id. at 1294.   The panel noted that its decision was

consistent with the Ninth Circuit’s determinations in Sink and

Brown.    Ibid.

                                 IV.

    With those principles in mind, we turn to the case

presently before the Court.    We exercise plenary review over the

legal determinations that support an order to compel arbitration

but remain “mindful of the strong preference to enforce

arbitration agreements.”    Hirsch v. Amper Fin. Servs., LLC, 215

N.J. 174, 186 (2013).

                                  A.

    As a preliminary matter, we note that defendants’ arguments

against a finding of breach rely on the assumption that

plaintiffs did not act in accordance with the DRA when they

filed arbitration claims with the AAA.     If the DRA did not

permit plaintiffs to file a claim with the AAA, plaintiffs’

actions would not have triggered defendants’ obligation to

                                  18
respond, and the non-payment of fees would not constitute a

breach of the DRA.    Thus, we must first determine whether the

DRA allowed plaintiffs to arbitrate with the AAA.

     Our interpretation of the DRA requires us to give the DRA’s

terms their “plain and ordinary meaning.”    M.J. Paquet, supra,

171 N.J. at 396.     If the meaning of a provision is ambiguous, it

should be construed against defendants as the agreement’s

drafters in this case.    See Kieffer, supra, 205 N.J. at 224.

     The DRA provides that “[t]he arbitration shall be conducted

. . . before a single arbitrator, who shall be a retired judge

or attorney.”    The AAA maintains a national roster of

arbitrators, which includes arbitrators who are retired judges

and attorneys.   Therefore, the filing of an arbitration claim

with the AAA is not inconsistent with the DRA’s requirement of

arbitrating before a single retired judge or attorney.

     In addition, the DRA calls for the parties to arbitrate “in

accordance with the rules” of the AAA.    AAA Commercial

Arbitration Rule R-2, which was in effect at the time the DRA

was signed and remains in effect today, specifies that parties

who agree to arbitrate in accordance with AAA rules consent to

AAA-administered arbitration.5    Thus, we conclude that


5  In its letter acknowledging receipt of Jackson’s arbitration
demand, the AAA confirmed that its Commercial Arbitration Rules,
as opposed to its Consumer Arbitration or other rules, would
apply to the arbitration.
                                  19
arbitration “in accordance with” the AAA rules permits

arbitration by the AAA.

    Plaintiffs chose to arbitrate with the AAA, and a

“plaintiff’s choice of forum is entitled to preferential

consideration.”   Yousef v. Gen. Dynamics Corp., 205 N.J. 543,

557 (2011).   Because we find that the language of the DRA

permitted arbitration with the AAA -- or at the very least left

open to question the proper forum -- we will not disturb

plaintiffs’ reasonable choice to arbitrate with the AAA.

    We add that our conclusion should come as no surprise to

defendants.   By requiring that arbitration be conducted pursuant

to the AAA’s rules, defendants reasonably should have expected

that customers would file claims directly with the AAA.

Moreover, even if the terms of the DRA “are susceptible to at

least two reasonable alternative interpretations,” Highland

Lakes Country Club & Cmty. Ass’n v. Franzino, 186 N.J. 99, 122

(2006) (quoting M.J. Paquet, supra, 171 N.J. at 396), as

defendants assert, the agreement is ambiguous and should be

“strictly construed against” defendants, ibid. (quoting In re

Estate of Miller, 90 N.J. 210, 221 (2002)).   That is especially

true because the DRA has indicia of being a contract of adhesion

in that plaintiffs lacked equal “bargaining power” in agreeing

to its terms.   See id. at 122-23.

                                B.

                                20
    We must next determine whether defendants’ prelitigation

conduct constituted a material breach of the DRA.    As we do so,

we keep in mind the Second Restatement’s “flexible criteria” for

assessing a material breach, Neptune Research & Dev., Inc. v.

Teknics Indus. Sys., Inc., 235 N.J. Super. 522, 532 (App. Div.

1989), and recognize that defendants’ material breach would

relieve plaintiffs of their obligations under the DRA, Nolan,

supra, 120 N.J. at 472.

    The benefit expected under an arbitration agreement is the

ability to arbitrate claims.   A failure to advance required fees

that results in the dismissal of the arbitration claim deprives

a party of the benefit of the agreement.    Therefore, the failure

to advance fees “goes to the essence” of the DRA and amounts to

a material breach.   Ross Sys., supra, 35 N.J. at 341;

Restatement (Second), supra, § 241(a).

    Additionally, defendants owed plaintiffs a duty of good

faith and fair dealing.   See Wilson, supra, 168 N.J. at 245;

Restatement (Second), supra, § 241(e).     That is, by entering

into the DRA, they implicitly covenanted to do nothing “which

[would] have the effect of destroying or injuring the right of

[plaintiffs] to receive the fruits of the [DRA].”    Wilson,

supra, 168 N.J. at 245 (quoting Sons of Thunder, Inc., supra,

148 N.J. at 421).



                                21
     There is no dispute that defendants failed to advance

filing fees after Jackson filed her arbitration claim with the

AAA and failed to otherwise engage in arbitration after the AAA

refused to arbitrate Roach’s claim due to defendants’ prior

actions.   Several months after the arbitration demands were

filed and served, plaintiffs filed their complaint in the

Superior Court.   It was only then that defendants first asserted

that the DRA “does not contemplate using AAA as the forum” and

that they consistently do not arbitrate before the AAA because

of “the excessive administrative fees.”     Had there truly been a

dispute regarding the proper forum, defendants should have

alerted plaintiffs within a reasonable time.    As the Appellate

Division noted, “BM’s non-response to plaintiffs’ initial claim

was problematic.”   We conclude that defendants’ failure to pay

the AAA fees or respond to plaintiffs’ arbitration demands was

not only problematic, but also did not comport with the

standards of good faith and fair dealing.

     Thus, we hold that defendants’ knowing refusal to cooperate

with plaintiffs’ arbitration demands, filed in reasonable

compliance with the parties’ agreement, amounts to a material

breach of the DRA and, as such, bars the breaching party from

later compelling arbitration.6   We share the concerns of the


6 We find that the Second Restatement’s factors in Section 241(a)
and (e) heavily favor the result here and are not undercut by
                                 22
Ninth Circuit as expressed in Brown that, without a finding of

material breach, the result would be a “perverse incentive

scheme” -- a company could ignore an arbitration demand and, if

the claimant did not abandon the claim, later compel

arbitration.   Brown, supra, 430 F.3d at 1012.

    Nevertheless, we establish no bright-line rule.    The

determination of whether refusal or failure to respond to a

written arbitration demand within a reasonable time period

constitutes a material breach of an arbitration agreement that

precludes enforcement by the breaching party must be made on a

case-by-case basis after considering the agreement’s terms and

the conduct of the parties.

    Here, plaintiffs satisfied their obligations under the DRA,

and defendants’ non-payment of filing and arbitration fees

amounted to a material breach of the agreement.   Defendants are

therefore precluded from enforcing the arbitration provision,

and the case will proceed in the courts.

                                V.

    The judgment of the Appellate Division is reversed, and the

matter is remanded to the trial court for further proceedings

consistent with this opinion.




the other Section 241 factors. Accordingly, we see no need to
address factors (b) through (d), which are not pertinent here.
                                23
     CHIEF JUSTICE RABNER and JUSTICES LaVECCHIA, ALBIN,
PATTERSON, FERNANDEZ-VINA, and TIMPONE, join in JUSTICE
SOLOMON’S opinion.




                               24
