Court Opinion

ID: 4429750
Source: CourtListenerOpinion
Date Created: 2019-08-20 19:29:39.83751+00
Date Added: 2024-06-11T14:51:11.271996
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NOT FOR PUBLICATION WITHOUT THE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-4915-17T2

JESSICA STUTHEIT,

          Plaintiff-Respondent,

v.

ELMWOOD PARK AUTO MALL,
ESSO MOTOR CARS, ILYA
IGDALEV, and MICHAEL SHOR,

     Defendants-Appellants.
________________________________

                    Submitted December 12, 2018 – Decided December 26, 2018

                    Before Judges Nugent and Mawla.

                    On appeal from Superior Court of New Jersey, Law
                    Division, Bergen County, Docket No. L-1002-18.

                    Christopher J. Koller, attorney for appellants.

                    Law Offices of Elliott Malone, LLC, attorneys for
                    respondent (Elliott Malone, of counsel and on the brief;
                    Paul DePetris, on the brief).

PER CURIAM
      Defendants appeal from a May 15, 2018 order denying their motion to

dismiss plaintiff Jessica Stutheit's complaint as to defendants Ilya Igdalev and

Michael Shor, and to dismiss the complaint and compel arbitration as to

defendant Esso Motor Cars, Inc. d/b/a Elmwood Park Automall (collectively

Esso). We reverse and remand for further proceedings consistent with this

opinion.

      The following facts are taken from the motion record. In November 2016,

plaintiff signed a contract with Esso to purchase a vehicle by trading in her used

vehicle to finance most of the purchase. The contract included a warranty

disclaimer, a "waive and release" provision, and an arbitration provision. The

arbitration language read as follows:

                AGREEMENT     TO   ARBITRATE   ANY
            CLAIMS. READ THE FOLLOWING ARBITRATION
            PROVISION CAREFULLY, IT LIMITS YOUR
            RIGHTS, INCLUDING THE 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
            ("claims") that may arise out of or relating to the sale
            or lease identified in this agreement. By agreeing to
            arbitrate the parties understand and agree that they are
            giving up their rights to maintain other available
            resolution processes, such as a court action or
            administrative proceeding, to resolve their disputes.
            Consumer Fraud, Used Car Lemon Law, and Truth-in-

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                                        2
            Lending claims are just three examples of the various
            types of claims subject to arbitration under this
            agreement. . . . The decision of the arbitrator shall be
            binding upon the parties. Any further relief sought by
            either party will be subject to the decision of the
            arbitrator. . . .

                THIS   ARBITRATION    PROVISION  IS
            GOVERNED BY THE FEDERAL ARBITRATION
            ACT. THIS ARBITRATION PROVISION LIMITS
            YOUR RIGHTS, INCLUDING THE RIGHT TO
            MAINTAIN A COURT ACTION. PLEASE READ IT
            CAREFULLY, PRIOR TO SIGNING.

      Plaintiff filed a complaint in February 2018, alleging violations of the

Consumer Fraud Act (CFA), breach of contract and warranty, violation of the

covenant of good faith and fair dealing, promissory estoppel, and civil

conspiracy to commit a tort. She claimed she experienced "issues with the

vehicle," which began as soon as her initial drive home from the dealership. The

complaint alleged plaintiff was misled about the vehicle's condition, inspection,

value, trade-in value, trade-in repair requirements and costs, and whether the

vehicle had new tires. The complaint alleged that due to safety concerns, she

could not use the vehicle.

      The complaint also described defendants as two businesses, Elmwood

Park Auto Mall and Esso Motor Cars, and asserted Igdalev was the owner and

Shor the general manager.      The complaint alleged Igdalev and Shor were

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personally involved in the transaction, and Igdalev had been previously charged

for defrauding consumers in used car transactions.

      Defendants filed a motion to dismiss for failure to state a claim and

compel arbitration. In his affidavit in support of the motion, Shor stated he

owned Esso with another individual, but Igdalev "never had an ownership

interest in Esso and was never employed by Esso." Igdalev made the same claim

in an affidavit he signed and filed in support of the motion to dismiss.

      The motion judge broached the subject of Igdalev's involvement in the

business during oral argument of defendants' motion to dismiss. The following

colloquy occurred:

            THE COURT: Is that wishful thinking, [plaintiff's
            counsel]? Were you thinking that this case would be a
            lot better if you had [Igdalev] involved . . . with the
            company?

            [PLAINTIFF'S COUNSEL]: No. I think he doesn't own
            it because he can't own it. He still runs the show, he
            still communicated with my client, he still came to my
            office trying to have me not file the lawsuit to begin
            with. So there's no question –

            THE COURT: Oh, but you don't want to be a witness
            in it. Are you going to have to get rid of the case . . . ?

            [PLAINTIFF'S COUNSEL]: I hope not.

            THE COURT: Well, did you know that? Did you know
            that Mr. Igdalev . . . came to [plaintiff's counsel?]

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                                        4
                   ....

             [DEFENDANTS' COUNSEL]: I found out about two
             minutes ago when we were chatting, Your Honor.

      The judge denied defendants' motion.          He found the wording in the

arbitration clause "did not clearly and unambiguously signal to the parties in

question, that 1) there was a waiver of a right to a jury trial, or to a lesser extent

2) that arbitration would be the only means of pursuing potential claims." The

judge ruled it was not fair and equitable to compel arbitration against plaintiff

as "an average member of the public" since she did not have "full knowledge

that her legal right[] to bring a claim . . . was waived."

      Additionally, the motion judge denied the motion to dismiss the individual

defendants because the allegations contained in plaintiff's complaint regarding

Igdalev's role, taken as true, would survive a motion to dismiss. Specifically,

the judge made the following findings:

             Further, regarding the application of the arbitration
             clause, . . . Igdalev, on the other hand, claims via
             certification that his involvement in this matter is
             frivolous, as he has nothing to do with these car
             dealerships, and never has done business with the
             plaintiff. On the other hand, he seeks alternatively that
             claims against him be compelled to arbitration[.] . . .
             Those two positions are inconsistent. As such, this
             matter will not be compelled to arbitration as to any
             defendant.

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                                          5
This appeal followed.

                                        I.

      Appellate review of a trial court's ruling on a motion to dismiss is de novo.

Frederick v. Smith, 416 N.J. Super. 594, 597 (App. Div. 2010) (citing

Seidenberg v. Summit Bank, 348 N.J. Super. 243, 250 (App. Div. 2002)). "A

complaint should be dismissed for failure to state a claim pursuant to Rule 4:6-

2(e) only if 'the factual allegations are palpably insufficient to support a claim

upon which relief can be granted.'" Ibid. (quoting Rieder v. State Dep't of

Transp., 221 N.J. Super. 547, 552 (App. Div. 1987)). "This standard requires

that 'the pleading be searched in depth and with liberality to determine whether

a cause of action can be gleaned even from an obscure statement.'"            Ibid.

(quoting Seidenberg, 348 N.J. Super. at 250); see also Printing Mart-Morristown

v. Sharp Elecs. Corp., 116 N.J. 739, 746 (1989).

      The validity of an arbitration agreement is a question of law, and

therefore, we review the order 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 Federal Arbitration Act (FAA), 9 U.S.C. §§ 1—16, and the New

Jersey Arbitration Act (NJAA), N.J.S.A. 2A:23B-1 to -32, reflect federal and

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state policies that favor arbitration of disputes. The FAA "preempts state laws

that single out and invalidate arbitration agreements." Roach v. BM Motoring,

LLC, 228 N.J. 163, 174 (2017) (citing Doctor's Assocs. v. Casarotto, 517 U.S.

681, 687 (1996)). Therefore, a court "cannot subject an arbitration agreement

to more burdensome requirements than other contractual provisions."         Ibid.

(quotations and citations omitted). However,"[a]rbitration's favored status does

not mean that every arbitration clause, however phrased, will be enforceable."

Atalese v. U.S. Legal Servs. Grp., LP, 219 N.J. 430, 441 (2014) (citing Hirsch,

215 N.J. at 187).

      Our Supreme Court has stated:

                  An agreement to arbitrate, like any other
            contract, "must be the product of mutual assent, as
            determined under customary principles of contract
            law." NAACP of Camden Cty. E. v. Foulke Mgmt., 421
            N.J. Super. 404, 424 (App. Div. 2011)[.] . . .

                    ....

                   Mutual assent requires that the parties have an
            understanding of the terms to which they have agreed.
            "An effective waiver requires a party to have full
            knowledge of his legal rights and intent to surrender
            those rights." Knorr v. Smeal, 178 N.J. 169, 177 []
            (2003) (citing W. Jersey Title & Guar. Co. v. Indus. Tr.
            Co., 27 N.J. 144, 153 [] (1958)). "By its very nature,
            an agreement to arbitrate involves a waiver of a party's
            right to have her claims and defenses litigated in court."
            Foulke, 421 N.J. Super. at 425 []. But an average

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                                        7
            member of the public may not know — without some
            explanatory comment — that arbitration is a substitute
            for the right to have one's claim adjudicated in a court
            of law.

                   Moreover, because arbitration involves a waiver
            of the right to pursue a case in a judicial forum, "courts
            take particular care in assuring the knowing assent of
            both parties to arbitrate, and a clear mutual
            understanding of the ramifications of that assent." Ibid.

                   . . . [U]nder New Jersey law, any contractual
            "waiver-of-rights provision must reflect that [the party]
            has agreed clearly and unambiguously" to its terms.
            [Leodori v. Cigna Corp., 175 N.J. 293, 302 (2003)]; see,
            e.g., Dixon v. Rutgers, the State Univ. of N.J., 110 N.J.
            432, 460-61 [] (1988) (holding that collective
            bargaining agreement cannot deprive one of statutory
            rights to evidentiary materials in [an] anti-
            discrimination case because "[u]nder New Jersey law[,]
            for a waiver of rights to be effective it must be plainly
            expressed")[.]

            [Atalese, 219 N.J. at 442-43.]

If the meaning of an arbitration provision is ambiguous, it should be construed

against the party who drafted the provision. Roach, 228 N.J. at 174 (citing

Kieffer v. Best Buy, 205 N.J. 213, 224 (2011)).

      On appeal, defendants argue the motion judge erred by not compelling

arbitration because the arbitration provision clearly waived the right to bring

any action in court, which clearly included plaintiff's right to a jury trial.

Defendants also argue, regardless of Igdalev's status, any claims against him had

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                                        8
to be brought in arbitration because the arbitration provision covers all claims

related to, or arising out of, the sale of the vehicle. We address these arguments

in turn.

                                        II.

      As we noted, the motion judge found the contract unclear and ambiguous

as to whether plaintiff had waived her right to a jury trial, let alone waived her

right to assert her claims in court altogether. Our de novo review leads us to a

different conclusion.

      Although the arbitration language here did not specifically contain a

provision regarding waiver of a jury trial, we conclude its explicit waiver of the

right to "maintain a court action" would clearly include the right to a jury trial.

Indeed, the arbitration provision explicitly stated court was not a forum for

dispute resolution under the contract in at least three separate locations, which

are noted as follows:

                AGREEMENT     TO   ARBITRATE   ANY
            CLAIMS. READ THE FOLLOWING ARBITRATION
            PROVISION CAREFULLY, IT LIMITS YOUR
            RIGHTS, INCLUDING THE RIGHT TO MAINTAIN
            A COURT ACTION.

             . . . By agreeing to arbitrate the parties understand and
            agree that they are giving up their rights to maintain
            other available resolution processes, such as a court

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                                        9
            action or administrative proceeding, to resolve their
            disputes. . . .

                THIS ARBITRATION PROVISION LIMITS
            YOUR RIGHTS, INCLUDING THE RIGHT TO
            MAINTAIN A COURT ACTION. PLEASE READ IT
            CAREFULLY, PRIOR TO SIGNING.

      We are satisfied the multiple references stating a party could not maintain

a "court action" constituted sufficiently clear and unambiguous language

advising plaintiff she could not seek a jury trial. See Griffin v. Burlington

Volkswagen, Inc., 411 N.J. Super. 515, 518 (App. Div. 2010) (upholding an

arbitration clause stating the parties, by agreeing to arbitration, "waiv[ed] their

rights to maintain other available resolution processes, such as a court action or

administrative proceeding, to settle their disputes.") For these reasons, we

reverse the motion judge's decision that arbitration could not be compelled.

      However, the question of whether the claims against Igdalev are also

subject to arbitration is not as clear and require remand for further discovery and

proceedings. As we noted, Igdalev joined in the motion to dismiss and swore in

an affidavit that he did not "own, work, and [had] never owned or been employed

by [defendants]" and had never "met, interacted, communicated or transacted

any business with [p]laintiff." However, the colloquy during oral argument

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                                       10
showed Igdalev had some involvement in attempts to settle the dispute, which

implicate him as having some ties to the business.

      On appeal, defendants argue Igdalev, as a non-signatory to the agreement,

came within the scope of arbitration "on the basis of agency principles." We

decline to address this argument as it was not squarely raised before the motion

judge. We "will decline to consider questions or issues not properly presented

to the trial court when an opportunity for such a presentation is available unless

the questions so raised on appeal go to the jurisdiction of the trial court or

concern matters of great public interest." State v. Robinson, 200 N.J. 1, 20

(2009) (quoting Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 234 (1973)).

      Nevertheless, as the motion judge noted, Igdalev's role was unclear.

Therefore, construing the allegations in the complaint in plaintiff's favor, as we

must pursuant to Rule 4:6-2(e), the motion to dismiss cannot be granted as to

Igdalev without further discovery.     Indeed, if Igdalev is found to have no

involvement regarding the business, he would not be subject to arbitration. For

these reasons, we reverse and remand to the motion judge to permit discovery

limited to Igdalev's role and for further proceedings consistent with this opinion.

      Reversed and remanded. We do not retain jurisdiction.

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