Case Title: Goffe v. Foulke Management Corp.

Citation: 

Docket Number: 

State: new-jersey

Court: New Jersey Supreme Court

Date: 2019-06-05T00:00:00Z

Document:
SYLLABUS

This syllabus is not part of the Court’s opinion. 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
Court. In the interest of brevity, portions of an opinion may not have been summarized.

            Janell Goffe v. Foulke Management Corp. (A-3/4-18) (081258)

Argued February 25, 2019 -- Decided June 5, 2019

LaVECCHIA, J., writing for the Court.

       This consolidated appeal involves claims that fraudulent sales practices by two car
dealerships induced consumers to enter into agreements for the purchase of cars. The
question is whether plaintiffs may avoid being compelled to arbitrate those claims.

       Plaintiffs challenge the formation and validity of their sales agreements on the
bases that the dealerships’ fraudulent practices and misrepresentations induced them to
sign the transactional documents and that the agreements are invalid due to violations of
statutory consumer fraud requirements. As part of the overall set of documents, plaintiffs
signed arbitration agreements. Those agreements contained straightforward and
conspicuous language that broadly delegated arbitrability issues -- issues of whether a
particular matter is subject to arbitration or can be decided by a court -- to an arbitrator.

       Plaintiff Sasha Robinson contacted Mall Chevrolet in Cherry Hill about buying a
car and allegedly was told that, if she purchased from the dealership, she would have two
days within which to change her mind, return it, and get her money back. Robinson
moved ahead with the car purchase transaction that day. She signed several documents,
including one that set forth the price of the new car, various fees, the price of the trade-in,
and the deposit amount. That document included an agreement to arbitrate “all claims
and disputes arising out of . . . [the] purchase of any goods,” including disputes as to
“whether the claim or dispute must be arbitrated.” When Robinson sought to return the
Malibu, she was told that the representation about being able to rescind the deal was a
mistake and that she was bound by the documents she signed. She alleges that the
representatives attempted to “coerce” her into signing purchase documents.

        Janell Goffe went to Cherry Hill Mitsubishi in response to an Internet
advertisement for a Buick. Goffe was told that she could obtain the car that day if she
traded in her 2006 Infiniti, paid $250 that day, and then later paid $750. She was told
that financing on the Buick was approved. Goffe went ahead with the proposed deal and
signed several documents -- including an arbitration agreement -- identical in form to
those that Robinson signed. When Goffe returned later with the remainder of the down
payment, she was informed that financing had not been approved and that she could
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retain the Buick only if she agreed to a larger down payment and higher monthly
payments. Goffe refused and cancelled the deal.

       Each trial court determined the arbitration agreements to be enforceable and
entered orders compelling plaintiffs to litigate their various claims challenging the overall
validity of the sales contracts in the arbitral forum. The Appellate Division reversed
those orders.  454 N.J. Super. 260 (App. Div. 2018). The Court granted defendants’
petitions for certification.  235 N.J. 202 (2018);  235 N.J. 200 (2018).

HELD: The trial courts’ resolution of these matters was correct and consistent with clear
rulings from the United States Supreme Court that bind state and federal courts on how
challenges such as plaintiffs’ should proceed. Those rulings do not permit threshold
issues about overall contract validity to be resolved by the courts when the arbitration
agreement itself is not specifically challenged. Here, plaintiffs attack the sales contracts
in their entirety, not the language or clarity of the agreements to arbitrate or the broad
delegation clauses contained in those signed arbitration agreements. The Supreme
Court’s precedent compels only one conclusion: an arbitrator must resolve plaintiffs’
claims about the validity of their sales contracts as well as any arbitrability claims that
plaintiffs may choose to raise.

1. In applying the Federal Arbitration Act (FAA), the United States Supreme Court has
provided substantial guidance on the question of whether arbitration should be compelled
in situations such this. Section two of the FAA provides that agreements to arbitrate any
controversy arising out of a commercial contract “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. § 2. New Jersey case law acknowledges the preeminence of the
national policy established by Congress through the FAA as well as the Supreme Court’s
holdings interpreting and implementing that policy. (pp. 22-24)

2. The United States Supreme Court has held that when a plaintiff raises a claim of fraud
in the inducement of a contract as a whole -- rather than fraud in the making of the
arbitration agreement itself -- the FAA requires that the dispute be resolved by the
arbitrator. Prima Paint Corp. v. Flood & Conklin Mfg. Co.,