Court Opinion

ID: 4638755
Source: CourtListenerOpinion
Date Created: 2020-12-02 15:10:11.959521+00
Date Added: 2024-06-11T07:58:51.286980
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
                  APPROVAL OF THE APPELLATE DIVISION

                                         SUPERIOR COURT OF NEW JERSEY
                                         APPELLATE DIVISION
                                         DOCKET NO. A-2258-19T1

MELISSA KNIGHT,

        Plaintiff-Appellant,
                                                       APPROVED FOR PUBLICATION
v.                                                            December 2, 2020

VIVINT SOLAR DEVELOPER, LLC1                               APPELLATE DIVISION

and PHILIP CHAMBERLAIN,

        Defendants-Respondents.

               Submitted October 7, 2020 – Decided December 2, 2020

               Before Judges Fuentes, Rose and Firko.

               On appeal from the Superior Court of New Jersey, Law
               Division, Camden County, Docket No. L-2852-18.

               Flitter Milz, PC, attorneys for appellant (Cary L. Flitter,
               Andrew M. Milz and Jody T. Lopez-Jacobs, on the
               briefs).

               Ballard Spahr, LLC, attorneys for respondent Vivint
               Solar Developer, LLC (Daniel JT McKenna and Jenny
               N. Perkins, on the brief).

               Montgomery McCracken Walker & Rhoads, LLP,
               attorneys for respondent Philip Chamberlain (William
               K. Kennedy and Alexandra S. Jacobs, on the brief).

1
     Improperly pled as Vivint Solar.
      The opinion of the court was delivered by

ROSE, J.A.D.

      In this Law Division action, plaintiff Melissa Knight filed a complaint

alleging violations of the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1 to

-195, New Jersey Commercial Code, Leases, N.J.S.A. 12A:2A-102 to -109, and

common law fraud against defendants Vivint Solar Developer, LLC and its

salesperson, Philip Chamberlain.      Defendants thereafter moved to compel

arbitration and stay the action. Relying on our Supreme Court's then-recent

decision in Goffe v. Foulke Management Corporation, 238 N.J. 191 (2019), the

trial court granted defendants' motion, concluding the arbitrator must decide

threshold issues concerning the overall validity of the parties' purported written

agreement, which contained the arbitration provision.

      Plaintiff now appeals from the court's January 29, 2020 order. Because it

is unclear from the record whether plaintiff agreed to arbitrate disputes under

the agreement, we vacate the order and remand for a plenary hearing for the trial

court to first make that threshold determination.

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                                         I.

      We summarize the pertinent facts and procedural history from the record

before the trial court. In doing so, we note the facts are largely disputed and

otherwise undeveloped.

      Seeking to reduce her energy costs, plaintiff contacted Vivint and inquired

about its solar panel service.     In April 2016, Vivint sent Chamberlain to

plaintiff's home to discuss its services. Plaintiff, a widow, lived in the home

with her mother and seven children.           According to plaintiff, Chamberlain

promised Vivint's solar panels would reduce her energy bills, and that her

electric company and Vivint would pay plaintiff for the surplus electricity

produced from the solar panels.       Plaintiff contends she memorialized that

understanding by affixing her signature to the "signature line" of Chamberlain's

otherwise blank iPad screen. It is undisputed that Chamberlain never gave

plaintiff a hard copy of the agreement that plaintiff believed she signed.

      Shortly after Vivint installed the solar panels on the roof of her home in

early 2017, plaintiff "notic[ed] outrageous withdrawals from [her] checking

account in amounts [she] could not afford."           Upon receiving "harassing"

collection calls from Vivint, plaintiff retained counsel to represent her interests.

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      In March 2017, Vivint sent plaintiff's attorney a copy of its Residential

Solar Power Purchase Agreement (RSPPA), dated August 2, 2016. The RSPPA

listed as customers plaintiff and James Reilly, who had sold the home to plaintiff

and her then-husband, James Knight, in 2008. The last page of the seventeen-

page RSPPA contains the purported signatures of plaintiff and Reilly; a box

above their names contains a checkmark, indicating the customers' assent to

arbitration.2 Plaintiff insists she did not sign the RSPPA, which contains the

arbitration provision at issue on this appeal.

      Beginning on the bottom of page ten of the RSPPA, the arbitration

provision spans to the top of the page twelve. The "Scope of th[e] Arbitration

Provision" is set forth on page eleven and provides, in pertinent part:

                   Either You or We may, without the other's
            consent, elect mandatory, binding arbitration for any
            claim, dispute, or controversy arising out of or relating
            to (i) any aspect of the relationship between You and
            Us, whether based in contract, tort, statute, or any other

2
  It is undisputed that Reilly neither was present during plaintiff's 2016 meeting
with Chamberlain nor otherwise involved in the transaction between the parties.
When deposed, Chamberlain stated Vivint's computer program "automatically
populate[d]" the agreement with the potential owners of the residence, and
Chamberlain assumed Reilly – the name automatically inserted by the system –
was Knight's husband. According to plaintiff's merits brief, Reilly filed a federal
lawsuit alleging "theft of credit identity" against Vivint based on its actions in
the present matter. See Reilly v. Vivint Solar, Inc., No. 1:18-cv-12356 (NLH-
JS) (D.N.J. June 8, 2020).

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                                         4
             legal theory; (ii) this Agreement or any other agreement
             concerning the subject matter hereof; (iii) any breach,
             default, or termination of this Agreement; and (iv) the
             interpretation, validity, or enforceability of this
             Agreement, including the determination or the scope or
             applicability of [the arbitration provision] (each a
             "Dispute"). Any questions about whether any Dispute
             is subject to arbitration shall be resolved by interpreting
             this arbitration provision in the broadest way the law
             will allow it to be enforced.

Plaintiff filed this civil action the following year.

      In November 2018, a different Law Division judge denied without

prejudice Vivint's initial motion to compel arbitration. The motion judge was

unable to "determine whether or not the arbitration clause ought to be enforced."

Accordingly, the judge ordered limited discovery regarding the signing of the

RSPPA and "the validity of the . . . arbitration clause," which would "turn on

that." In reaching his decision, the judge noted the "number of lawsuits" filed

against Vivint and its "admissions" in those matters.

      Inexplicably – more than four months later – Vivint disclosed another

RSPPA, purportedly signed by plaintiff. Dated April 11, 2016, this RSPPA is

identical to the August 2, 2016 version, but only identifies Reilly as the

customer. Plaintiff's purported signature is affixed above Reilly's printed name

on the last page of the April 11, 2016 RSPPA, but her name is not printed on the

document. Similar to the first RSPPA, the August 2, 2016 RSPPA contains a

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checkmark above plaintiff's alleged signature, indicating the customer's assent

to arbitration.

        The parties dispute whether Chamberlain displayed the text of either

RSPPA on his iPad or otherwise reviewed its terms with plaintiff during their

April 2016 meeting at her home. In her November 21, 2018 sworn statement in

opposition to Vivint's initial motion to compel arbitration, Knight asserted:

Chamberlain "never showed me any contract documents in paper or on the iPad,

nor did he mention a contract." When deposed, Chamberlain countered he

"thoroughly" reviewed the RSPPA with plaintiff, but acknowledged his iPad

only displayed the signature line of the agreement. Chamberlain admitted he

intentionally listed a variation of plaintiff's email address on the RSPPA, thereby

acknowledging the document was not emailed to plaintiff.

        According to plaintiff, there were no "check boxes on the iPad" and

"Chamberlain never showed me any arbitration clause or mentioned it in any

way."     Chamberlain generally stated the RSPPA "is discussed with the

homeowner in full" and the "homeowner" would have checked the boxes above

the signature line.

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                                        6
      In July 2019 – one month after the Supreme Court decided Goffe – Vivint

"renewed" its motion to compel arbitration 3 and filed a simultaneous summary

judgment motion. 4 At the outset of argument on October 25, 2019, the trial court

indicated it had reviewed the previous judge's oral decision, which denied

Vivint's motion to compel arbitration without prejudice, and the Supreme

Court's holding in Goffe. The trial court then set forth its understanding of the

Goffe decision:

                    Now in my reading of this, and I'm not trying to
            make this simplistic because it's . . . an important case
            to everyone, but Goffe seems to be on all fours with this
            case and it . . . basically [states] a case gets arbitrated
            when it's a claim [of] fraud [in] the contract. If it's a
            question of the formation of the arbitration clause then
            the courts hear it. And I think Goffe couldn't be clearer
            . . . on that issue. . . . There's no attack on the language
            of the arbitration clause here. It's whether this
            agreement was lawful . . . . The arguments made by
            . . . plaintiff that it was done on [Chamberlain's] iPad,
            she didn't review it, she didn't get copies of the e-mails
            [because Chamberlain varied her email address.] . . .
            She never got to approve the cancellation. She didn't
            understand the contract. It wasn't explained to her.

3
  Vivint apparently annexed the April 11, 2016 RSPPA as an exhibit to its
motion.
4
    Chamberlain did not join Vivint's motion to compel arbitration, but his
attorney asserted during argument that plaintiff's claims against Chamberlain
would be sent to arbitration if the arbitration provision is enforced. Chamberlain
also filed a summary judgment motion.

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                                         7
                   And this certainly doesn't go to whether the
            arbitration clause is valid. It goes to whether the
            contract is valid. And Goffe further goes [on] to
            explain the distinctions between the two. . . .
            [Plaintiff's] challenge is [to] the contract as a whole
            rather than the arbitration agreement.

      The court then afforded the parties a full opportunity to present argument.

In her effort to distinguish the facts of Goffe from the present matter, plaintiff

argued, among other things:

                    Here, in this case, we have a complete factual
            dispute about what was signed, if anything was signed.
            The agreement proffered by . . . defendants here is a
            forgery and a fraud. We have direct testimony on that,
            that it wasn't signed by . . . plaintiff . . . . [T]he contract
            is in the name of a man named James Reilly. Miss
            Knight's name appears nowhere on this contract that
            . . . defendants seek to compel arbitration under.

                  So there's a clear fact dispute here over what, if
            anything, was signed.

                  In Goffe, it's important to note . . . that there was
            a clear and conspicuous arbitration agreement at issue.
            Here, no arbitration agreement was presented at all to
            anyone, let alone Miss Knight. This contract was
            created fraudulently outside of her presence. She never
            saw any of this contract.

                   ....

                  Now defendants are trying to say this "x" with a
            signature line [on the RSPPA] is the agreement to . . . a
            twenty-year contract in somebody else's name that

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                                          8
              [plaintiff] never saw. There's no way under these facts
              that Miss Knight had an understanding of this contract,
              the arbitration agreement within there, because it was
              all hidden from her.

              [(Emphasis added).]

      Relying on our Supreme Court's decision in Atalese v. U.S. Legal Servs.

Grp., L.P., 219 N.J. 430 (2014), plaintiff further argued: "[A]rbitration requires

mutual assent. It requires the parties to have an understanding of the terms to

which they have agreed . . . . Goffe doesn't change that in any respect." Plaintiff

elaborated:

                   In Goffe, there was a signed agreement and there
              was no dispute about that. Here we don't have a signed
              agreement. We have an agreement in a total stranger's
              name with a forged signature on it.

                     So that threshold issue of whether there is any
              valid agreement to arbitrate, any valid agreement in
              general cannot be met here. Miss Knight can't have her
              right to be in court waived on the basis of something
              she had never seen and that . . . defendants have
              admittedly hidden from her.

              [(Emphasis added).]

      The trial court, however, was not persuaded. Citing Goffe, the court

reasoned "the mutual assent issue [here] was to the entire contract." As such,

"an arbitrator must resolve plaintiff's claims about the validity of the sales

contract, as well as any arbitrator [sic] claims that plaintiff may choose to raise."

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Accordingly, the court granted the motion to compel arbitration and denied

summary judgment.

      One week later, the court sua sponte ordered briefing and a rehearing on

December 13, 2019 to reconsider Vivint's motion to compel arbitration in light

of a then-recent unpublished opinion from this court,5 because that opinion

"discuss[ed] the enforcement of [an] arbitration clause with facts similar to the

facts in [the present] case."

      On the return date of the court's reconsideration motion, before hearing

from the parties, the court noted its concerns about limiting its prior ruling to "a

single sentence" in the Goffe opinion, i.e., "if the contract's in dispute, you're

testing the whole thing, it goes to an arbitrator. . . . If you're just contesting the

arbitration clause, then [the court] hear[s] it." In response, plaintiff argued she

could not "have agreed to arbitration when she had no notice of the arbitration

agreement whatsoever[.]" Pointing to her deposition testimony, plaintiff stated

5
  An unpublished opinion has no precedential value "and except to the extent
required by res judicata, collateral estoppel, the single controversy doctrine or
any other similar principle of law, no unpublished opinion shall be cited by an y
court." R. 1:36-3. A court may only "acknowledg[e] the persuasiveness of a
reasoned decision on analogous facts." Sauter v. Colts Neck Volunteer Fire Co.
No. 2, 451 N.J. Super. 581, 600 (App. Div. 2017).

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"she did not check any boxes" on the RSPPA, including the "box that said that

she agreed to the arbitration clause within the [RSPPA]."

      The court again rejected plaintiff's argument, concluding "this is a cl assic

bait and switch [case] just like Goffe," noting defendants "made promises; they

got her to sign." Recognizing plaintiff "attempt[ed] to distinguish [her matter]

by indicating that the arbitration agreement is almost like separately contested

because she didn't sign it, the box wasn't checked," the court found that was "a

factual issue," which is not "a distinction that Goffe makes." Accordingly, the

court entered the order under review, compelling arbitration and staying the

action.6 This appeal followed.

      On appeal, plaintiff raises several overlapping arguments for our

consideration. Distilled to their essence, plaintiff maintains the Supreme Court's

decision in Goffe does not abrogate the trial court's function to first ascertain

whether the parties mutually assented to arbitrate their disputes.          Plaintiff

reiterates her argument that defendants committed fraud in the execution and

formation of the RSPPA.        She further argues she specifically attacked the

6
  The order also directs the arbitrator to "decide the threshold issue of whether
an agreement to arbitrate was formed and whether that agreement to arbitrate is
enforceable. If the arbitrator finds in the affirmative, the arbitrator shall decide
the merits of the parties' claims. If the arbitrator finds in the negative, the matter
may return to th[e] [c]ourt."
                                                                              A-2258-19T1
                                        11
formation of the arbitration clause through her denial that she checked any boxes

on Chamberlain's iPad, including the checkmark in the box assenting to

arbitration. She therefore contends she lacked notice of the RSPPA's arbitration

provision and did not agree to its terms.

                                        II.

      We exercise de novo review of a trial court's order compelling arbitration.

Goffe, 238 N.J. at 207; see also Skuse v. Pfizer, Inc., 244 N.J. 30, 46 (2020).

"In reviewing such orders, we are mindful of the strong preference to enforce

arbitration agreements, both at the state and federal level." Hirsch v. Amper

Fin. Servs., LLC, 215 N.J. 174, 186 (2013). That preference, however, "is not

without limits." Garfinkel v. Morristown Obstetrics & Gynecology Assocs.,

P.A., 168 N.J. 124, 132 (2001).

      Under section two of the Federal Arbitration Act (FAA), 9 U.S.C. § 1 to

16, states may regulate arbitration agreements under general contract principles.

Atalese, 219 N.J. at 441 (quoting Martindale v. Sandvik, Inc., 173 N.J. 76, 85

(2002)).   Accordingly, arbitration clauses may be invalidated on grounds

existing at law or equity that call for the revocation of any contract. Ibid.

      An arbitration agreement must be the product of mutual assent. Id. at 442

(quoting NAACP of Camden Cty. East v. Foulke Mgmt. Corp., 421 N.J. Super.

                                                                           A-2258-19T1
                                       12
404, 424 (App. Div. 2011)). "Mutual assent requires that the parties have an

understanding of the terms to which they have agreed." Ibid. "The point is to

assure that the parties know that in electing arbitration as the exclusive remedy,

they are waiving their time-honored right to sue."          Marchak v. Claridge

Commons, Inc., 134 N.J. 275, 282 (1993). Indeed, any contractual waiver of

rights, including arbitration provisions, must reflect that the parties have clearly

and unambiguously agreed to the terms. Atalese, 219 N.J. at 443. The parties

must have full knowledge of their rights and show an intent to surrender those

rights. Id. at 442-43. That did not occur here.

      As stated, in granting Vivint's motion, the trial court's decision is rooted

in its interpretation of Goffe. While we agree the court was, of course, bound

by Supreme Court precedent, we part company with the court's conclusion that

the present matter is "on all fours" with Goffe. In the two actions consolidated

in that case, the plaintiffs brought various fraud allegations against the defendant

car dealerships. 238 N.J. at 202. Both plaintiffs opposed the defendant's

motions to compel arbitration; both plaintiffs claimed they had been

fraudulently induced to enter into their contracts with the dealerships. Id. at

202-03.

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      In our Goffe published opinion, we reversed the trial courts' decisions

compelling arbitration. 454 N.J. Super 260, 284 (App. Div. 2018). In doing so,

we held that the formation of a contract is a threshold issue to be decided by the

trial court. Id. at 277-78, 283-84. The Supreme Court disagreed and reversed.

Writing for the Court, Justice LaVecchia observed that the plaintiffs sought

            to distinguish their claims by emphasizing their
            position that there was no mutual assent to arbitrate
            their claims because the arbitration agreements they
            signed were "the product of fraud and trickery . . . and
            were not voluntarily and knowingly agreed to."
            However, the disputed facts that plaintiffs allege go to
            whether the dealerships performed a bait-and-switch
            related to enticing plaintiffs to enter into the contract as
            a whole . . . . They have not raised a specific claim
            attacking the formation of the arbitration agreement
            that each signed.

            Moreover, the argument that either plaintiff did not
            understand the import of the arbitration agreement and
            did not have it explained to her by the dealership is
            simply inadequate to avoid enforcement of these clear
            and conspicuous arbitration agreements that each
            signed.

            [238 N.J. at 212 (emphasis added).]

      The Court thus distinguished an arbitration agreement in a previous matter

it had considered, again observing:

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                                       14
             Unlike the Guidotti[7] plaintiff, they do not claim not to
             have seen the arbitration agreement, for their signatures
             are on the written documents. They do not dispute the
             validity of the arbitration agreement or its delegation
             clause other than to say that it is invalid as a result of
             the invalidity of the contract as a whole.

             [Id. at 215 (emphasis added).]

      Having reviewed the record, we conclude there exist questions of fact

concerning the mutuality of assent to the arbitration provision, which is

necessary to bind both parties to arbitration. Similar to the plaintiffs in Goffe,

Knight alleges the RSPPA "as a whole" is invalid. However, in sharp contrast

to the plaintiffs in Goffe, Knight challenges the arbitration provision. She

asserts Chamberlain neither displayed the provision nor explained its legal

ramifications to her at any time. Crucially, plaintiff denies checking any boxes

on Chamberlain's iPad "blank" screen, including the box, which would otherwise

indicate her assent to be bound by the terms of an arbitration provision. In that

regard, she did not "sign" the arbitration agreement. Indeed, plaintiff claims she

did not receive the first RSPPA until eleven months after she agreed to the

installation of Vivint's solar panels.

7
  Guidotti v. Legal Helpers Debt Resolution, L.L.C., 716 F.3d 764 (3d Cir.
2013).
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                                         15
      Notably, plaintiff asserted – from the outset of the litigation – that she

never checked any boxes on the RSPPA, including the arbitration provision. We

therefore reject Vivint's argument that plaintiff only specifically challenged the

arbitration provision in her reply brief on reconsideration. In any event, in its

ultimate decision, the trial court specifically noted there existed "a factual issue"

as to whether plaintiff checked the arbitration box.

      On the other hand, Chamberlain asserts plaintiff "signed the RSPPA and

every agreement on there." He disputes that plaintiff signed a blank screen on

his iPad. And Chamberlain claims Vivint's RSPPAs "[are] discussed with the

homeowner in full" and the "homeowner" would have checked the boxes above

the signature line. Notably, Chamberlain, however, does not claim he provided

plaintiff with an electronic or hard copy of the RSPPA at any time.

      In sum, the arbitrator cannot decide the validity of the RSPPA, unless and

until the trial court initially resolves the issues of fact pertaining to the formation

of the arbitration provision, and determines the parties agreed to arbitrate their

claims. Absent that agreement, the arbitrator is not empowered to determine

plaintiff's issues concerning the formation and execution of the RSPPA. In that

regard, we are unpersuaded by defendants' argument that because the arbitration

agreement is contained within the RSPPA, which plaintiff also challenges, the

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arbitrator must determine its validity. In our view, that procedure puts the cart

before the horse. We hasten to add we offer no view on the outcome of the

remand proceedings.

      Reversed and remanded. We do not retain jurisdiction.

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