Court Opinion

ID: 4460643
Source: CourtListenerOpinion
Date Created: 2019-12-03 15:07:59.010533+00
Date Added: 2024-06-11T09:43:51.741176
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
                               APPROVAL OF THE APPELLATE DIVISION
        This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the
     internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.

                                                         SUPERIOR COURT OF NEW JERSEY
                                                         APPELLATE DIVISION
                                                         DOCKET NO. A-3732-18T1

JAMES TROUT,

          Plaintiff-Respondent,

v.

WINNER FORD,

     Defendant-Appellant.
_____________________________

                    Argued November 14, 2019 – Decided December 3, 2019

                    Before Judges Gooden Brown and Mawla.

                    On appeal from the Superior Court of New Jersey, Law
                    Division, Camden County, Docket No. L-4712-17.

                    John Scott Fetten argued the cause for appellant
                    (Montgomery Fetten, attorneys; John Scott Fetten, of
                    counsel and on the briefs; Courtney Ann Reed Keren,
                    on the briefs).

                    Leo Bernard Dubler, III, argued the cause for
                    respondent (Law Offices of Leo B. Dubler, III,
                    attorneys; Leo B. Dubler, III, and Mark R. Natale, on
                    the brief).

PER CURIAM
     Defendant Winner Ford appeals from a March 29, 2019 order denying its

motion to compel arbitration of claims raised in plaintiff James Trout's

complaint. We affirm.

     This matter was previously before us. We recounted the background as

follows:

           In December 2015, plaintiff traded in his used car to
           defendant. The vehicle had an outstanding loan, which
           had to be satisfied at the trade-in. Plaintiff executed
           two agreements, namely, a trade-in agreement and a
           separate lease agreement for his new vehicle. The
           trade-in agreement has not been provided to us as a part
           of the record.

                  Plaintiff paid a seventy-five dollar fee, which was
           added to the loan payoff and not the future purchase or
           lease. Plaintiff claimed the fee was never disclosed or
           itemized and that defendant offered various
           explanations for its purpose, namely, to satisfy the per
           diem interest on the outstanding loan; "to allow time to
           receive credit approval, process the vehicle transaction,
           and make the payoff;" to cover title transfer costs, the
           cost of a bank check for the payoff amount, and the time
           and gas mileage of clerical staff to secure the bank
           draft; and the cost of express mail delivery of the pay-
           off amount to the bank. Plaintiff claimed he never
           received an explanation for the fee and only learned
           about it after the trade-in.

                 Plaintiff filed a Law Division complaint on
           behalf of himself and a purported class asserting four
           counts for violation of the [Consumer Fraud Act], one
           count of common law fraud, and one count for violation

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            of the [Truth in Consumer Contract, Warranty and
            Notice Act.]

            [Trout v. Ford, No. A-3529-17 (App. Div. 2018) (slip
            op. at 1-2)].

      The first motion judge granted defendant's motion to compel arbitration

based on a provision contained in the lease agreement between the parties. Id.

at 4. The lease arbitration provision stated:

            READ   THIS          ARBITRATION   PROVISION
            CAREFULLY           AND   IN   ITS   ENTIREY
            ARBITRATION

            Arbitration is a method of resolving any claim, dispute,
            or controversy (collectively, a "Claim") without filing
            a lawsuit in court. Either you or Lessor/Finance
            Company/Holder ("us" or "we") (each, a "Party") may
            choose at any time, including after a lawsuit is filed, to
            have any Claim related to this contract decided by
            arbitration. Neither party waives the right to arbitrate
            by first filing suit in a court of law. Claims include but
            are not limited to the following: 1) Claims in contract,
            tort, regulatory or otherwise; 2) Claims regarding the
            interpretation, scope, or validity, of this provision, or
            arbitrability of any issue except for class certification;
            3) Claims between you and us, our employees, agents,
            successors, assigns, subsidiaries, or affiliates; 4)
            Claims arising out of or relating to your application for
            credit, this contract, or any resulting transaction or
            relationship, including that with the dealer, or any such
            relationship with third parties who do not sign this
            contract.

            RIGHTS YOU AND WE AGREE TO GIVE UP

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                                        3
            If either you or we choose to arbitrate a Claim, then you
            and we agree to waive the following rights:
            • RIGHT TO A TRIAL, WHETHER BY A JUDGE OR
            A JURY
            • RIGHT TO PARTICIPATE AS A CLASS
            REPRESENTATIVE OR A CLASS MEMBER IN
            ANY CLASS CLAIM YOU MAY HAVE AGAINST
            US WHETHER IN COURT OR IN ARBITRATION
            • BROAD RIGHTS TO DISCOVERY AS ARE
            AVAILABLE IN A LAWSUIT
            • RIGHT TO APPEAL THE DECISION OF AN
            ARBITRATOR
            • OTHER RIGHTS THAT ARE AVAILABLE IN A
            LAWSUIT

            RIGHTS YOU AND WE DO NOT GIVE UP: . . .5)
            Right to seek remedies in small claims court for
            disputes or claims within that court's jurisdiction

                  ....

            . . . If a waiver of class action rights is deemed or found
            to be unenforceable for any reason in a case in which
            class action allegations have been made, the remainder
            of this arbitration provision shall be unenforceable.
            The validity and scope of the waiver of class action
            rights shall be decided by the court and not by the
            arbitrator.

            [Id. at 2-4.]

We reversed the order because the lease agreement's arbitration provision was

vague and unenforceable. Id. at 9.

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     Following our decision, defendant filed a second motion to compel

arbitration based on a provision contained in a motor vehicle retail order

(MVRO), which stated:

           AGREEMENT TO ARBITRATE ANY CLAIMS.
           READ        THE      FOLLOWING          ARBITRATION
           PROVISION CAREFULLY, IT LIMITS YOUR
           RIGHTS, INCLUDING YOUR RIGHT TO
           MAINTAIN A COURT ACTION.
           The parties to this agreement agree to arbitrate any
           claim, dispute, or controversy, including all statutory
           claims and any state or federal claims, that may arise
           out of or relating to the sale or lease identified in this
           [MVRO] and the financing thereof. By agreeing to
           arbitration, the parties understand and agree that they
           are waiving their rights to maintain other available
           resolution processes, such as a court action or
           administrative proceeding, to settle their disputes. New
           Jersey Consumer Fraud Act, Used Car Lemon Law, and
           Truth–in–Lending claims are just three examples of the
           various types of claims subject to arbitration under this
           agreement. The parties also agree to waive any right to
           pursue any such claims including statutory, state or
           federal claims, as a class action. There are no
           limitations on the types of claims that must be
           arbitrated, except for New Car Lemon Law and
           Magnuson-Moss Warranty Act Claims, which are
           excluded from arbitration under this agreement. The
           arbitration shall be conducted in accordance with the
           Rules of the American Arbitration Association before a
           single arbitrator. The Costs included in the arbitration
           process shall be shared as provided by the Association's
           Rules. The arbitration shall take place in New Jersey
           at the address of the dealership listed on the Retail
           Order Form. The decision of the arbitrator shall be
           binding upon the parties. Any further relief sought by

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                                       5
            either party will be subject to the decision of the
            arbitrator. This arbitration provision limits your right
            including to maintain a court action and have a jury
            trial. Please read it carefully, prior to signing.

      A different motion judge denied defendant's motion with prejudice,

finding the arbitration provisions under the lease agreement and the MVRO

contained "separate and distinct arbitration agreements," and under Rockel v.

Cherry Hill Dodge, 368 N.J. Super. 577, 581 (App. Div. 2004), conflicted with

one another and were therefore unenforceable. The judge also found defendant

waived its right to pursue arbitration under the MVRO because it did not rely

upon the document when filing its first motion even though both the lease and

the MVRO were executed at the same time.

                                        I.

      The validity of an arbitration agreement is a question of law; therefore,

we review the order denying the request to compel arbitration de novo. Barr v.

Bishop Rosen & Co., Inc., 442 N.J. Super. 599, 605 (App. Div. 2015) (citing

Hirsch v. Amper Fin. Servs., LLC, 215 N.J. 174, 186 (2013)). "The issue of

whether a party waived its arbitration right is a legal determination subject to de

novo review[,]" however, "the factual findings underlying the waiver are entitled

to deference and are subject to review for clear error." Cole v. Jersey City Med.,

215 N.J. 265, 275 (2013) (citations omitted).

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      Although defendant did not raise the MVRO arbitration provision until

after we reversed the first motion judge, it claims it did not waive its right to

enforce the MVRO arbitration provision because it consistently sought to

compel arbitration. It contends waiver does not apply because proceeding to

arbitration does not prejudice plaintiff.        Defendant argues Rockel is

distinguishable because the MVRO and lease agreement's respective arbitration

provisions are not in conflict. It also argues plaintiff is not an "innocent" and

"unaware" consumer as was the case in Rockel because he was a dealership

employee, who drafted his own contracts. Defendant asserts public policy

requires enforcement of the MVRO arbitration provision and its class action

waiver. It claims, as a stand-alone document, the terms of the MVRO are

"undeniably enforceable" and could be raised separately from the lease

arbitration provision.

                                       A.

      "Waiver is the voluntary and intentional relinquishment of a known right."

Knorr v. Smeal, 178 N.J. 169, 177 (2003). See also Cole, 215 N.J. at 276.

"Waiver is never presumed[,]" but can be "overcome by clear and convincing

evidence that the party asserting it chose to seek relief in a different forum."

Cole, 215 N.J. at 276 (quoting Spaeth v. Srinivasan, 403 N.J. Super. 508, 514

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                                       7
(App. Div. 2008)). "[W]aiver can occur implicitly if 'the circumstances clearly

show that the party knew of the right and then abandoned it, either by design or

indifference.'" Id. at 277 (quoting Knorr, 178 N.J. at 177). "Such a waiver must

be done 'clearly, unequivocally, and decisively.'" Ibid.

      Our Supreme Court stated courts must focus on the totality of the

circumstances and apply a fact-sensitive analysis to determine if a party reserved

its right to arbitrate the dispute or waived that right. Id. at 280. The factors a

court must consider are: (1) the delay in making the arbitration request; (2) the

filing of any motions, particularly dispositive motions, and their outcomes; (3)

whether the delay in seeking arbitration was part of the party's litigation

strategy; (4) the extent of discovery conducted; (5) whether the party raised the

arbitration issue in its pleadings, particularly as an affirmative defense, or

provided other notification of its intent to seek arbitration; (6) the proximity of

the date on which the party sought arbitration to the date of trial; and (7) the

resulting prejudice suffered by the other party, if any. Id. at 280-81. "No one

factor is dispositive." Id. at 281.

      Pursuant to Cole, defendant waived its right to assert the MVRO's

arbitration provision.    Although defendant raised the issue of arbitration

generally in its answer, it failed to invoke the MVRO arbitration provision and

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                                        8
proceeded only on the lease arbitration provision. Also, defendant's initial

motion to compel arbitration did not mention the MVRO's provision. Defendant

waited over a year to assert the MVRO arbitration provision.

      Therefore, our reversal of the initial order compelling arbitration was

dispositive of defendant's ability to later raise arbitration under the MVRO .

Defendant's failure to proffer all relevant documentation, despite its awareness

of the MVRO arbitration provision from the onset, is the sort of piece meal

litigation strategy prohibited under Cole.

      Furthermore, "[a]n arbitration agreement is a contract, . . . and is subject,

in general, to the legal rules governing the construction of contracts." McKeeby

v. Arthur, 7 N.J. 174, 181 (1951) (citation omitted). Therefore, the completion

of factual discovery had little import on the motion judge's ability to adjudicate

the dispute over the arbitration contract provision.

      Additionally, defendant's after-the-fact assertion of arbitration under the

MVRO clearly prejudiced plaintiff. Plaintiff has endured multiple rounds of

motion and appellate litigation for nearly two years, which have only decided

the proper forum for adjudication of his claims. The Cole factors preponderate

in favor of plaintiff. For these reasons, we decline to disturb the motion judge's

findings on the waiver.

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                                        B.

      We also agree with the motion judge the conflicting arbitration provisions

in the lease agreement and the MVRO rendered each unenforceable under

Rockel. In Rockel, a case involving plaintiffs who sued an auto dealer for

unconscionable sales practices, we held arbitration could not be compelled

where "the presence of two unrelated arbitration clauses contained in the

contract documents, as well as their conflicting terms[,]" created ambiguity.

Rockel, 368 N.J. Super. at 581. We stated, "the arbitration agreement is highly

ambiguous because the parties executed two documents which contain separate

and somewhat disparate arbitration clauses. This ambiguity, we conclude, is

fatal to the compelling of the arbitration of plaintiffs' CFA claims." Ibid.

      Here, the two arbitration provisions substantively differ from one another.

The lease agreement, which we already declared ambiguous, addresses

plaintiff's statutory claims whereas the MVRO subjects plaintiff's statutory

claims, in general and under specific statutes, to arbitration; the lease agreement

uses passive language regarding the ability to pursue claims in court, whereas

the MVRO contains an express waiver of such claims; the lease agreement

venues the arbitration in the American Arbitration Association (AAA) or "any

other organization which is approved," and the MVRO limits arbitration to the

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                                       10
AAA; the lease agreement states small claims cases are not arbitrable, whereas

the MVRO covers all claims; and the lease agreement states "the validity and

scope of waiver of class action rights shall be decided by the court and not by

the arbitrator," whereas the MVRO contains no such provision. The conflicting

provisions render the parameters of arbitration ambiguous.         A reasonable

consumer reading each document, which were two parts of the one transaction,

would have no clear understanding of which provision applied.

      Finally, we reject defendant's assertion Rockel does not apply to plaintiff

because he was its learned employee. Defendant raised the issue of plaintiff's

employment during the motion hearing, at which point the judge asked plaintiff

to respond.   Plaintiff stated this issue was previously addressed at a case

management conference where the parties determined it related to class

certification. The motion judge agreed stating, "it's an issue on commonality."

Defendant did not respond to the judge's statement.

      Arbitration agreements are interpreted under the objective, "average

consumer" standard. Atalese v. U.S. Legal Servs. Grp., L.P., 219 N.J. 430, 446

(2014); see also Morgan v. Sanford Brown Inst., 225 N.J. 289, 308 (2016).

Therefore, plaintiff's employment was irrelevant to the issue of arbitration,

especially considering defendant's counsel did not respond to the judge's finding

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                                      11
or explain how plaintiff's employment status overcame the ambiguity of the

arbitration provisions and required arbitration.

      The remainder of defendant's arguments are without sufficient merit to

warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).

      Affirmed.

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