Court Opinion

ID: 4173514
Source: CourtListenerOpinion
Date Created: 2017-06-01 14:12:52.836836+00
Date Added: 2024-06-11T14:38:46.096743
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NOT FOR PUBLICATION WITHOUT THE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-4188-15T3

DEEDRA L. BOWEN,

        Plaintiff-Appellant,

v.

HYUNDAI MOTOR AMERICA,

        Defendant-Respondent.

______________________________

              Argued April 24, 2017 – Decided June 1, 2017

              Before Judges Currier and Geiger.

              On appeal from the Superior Court of New
              Jersey, Law Division, Atlantic County, Docket
              No. L-6224-14.

              Lewis G. Adler argued the cause for appellant
              (Mr. Adler and Paul DePetris, attorneys; Mr.
              Adler and Mr. DePetris, on the briefs).

              David S. Haase argued the cause for respondent
              (White and Williams LLP, attorneys; Mr. Haase
              and Siobhan K. Cole, of counsel and on the
              brief).

PER CURIAM

        In this appeal, we address the issue of whether an aggrieved

consumer of a new automobile, who successfully pursued and was
granted a repurchase of her vehicle through a manufacturer's

informal dispute settlement mechanism, may reject that settlement

offer and file a court action for similar relief in order to pursue

an attorney's fee award not available to the consumer under the

manufacturer's settlement program.                Because we find that the two

recourses of action are not mutually exclusive, and an award of

attorney's fees is mandatory under the New Jersey Motor Vehicle

Warranty Act (Lemon Law), N.J.S.A. 56:12-29 to -49, we reverse.

       Plaintiff     Deedra   Bowen      purchased     a   new    Hyundai     Sonata

manufactured by defendant Hyundai Motor America.                       The selling

dealer issued the manufacturer's warranty.                 During the warranty

period      the   vehicle   experienced       a    recurring     problem    despite

multiple attempts at repairing the issue.

       Through counsel, plaintiff served a notice of demand for

revocation of acceptance of the vehicle pursuant to the New Jersey

Uniform     Commercial      Code   (UCC),     N.J.S.A.     12A:2-608,       and   the

Magnuson-Moss Warranty-Federal Trade Commission Improvement Act

(Magnuson-Moss), 15 U.S.C.A. §§ 2301 to 2312.               Plaintiff requested

that defendant accept the return of the car, refund all payments

made   to    date,   including     any    down     payment,      and   satisfy    any

outstanding financing or loan obligations.                 The demand requested

attorney's fees of $1250.          The letter concluded:

                                          2                                  A-4188-15T3
              If   the   aforesaid   action   proceeds,   the
              consumer(s)    shall   seek   the   remedy   of
              revocation and actual/incidental/consequen-
              tial and statutory damages as well as
              attorney's fees and court costs.      While the
              attorney's fees in this matter are currently
              small,   as   the   case   progresses   through
              litigation, the attorney's fees and costs
              shall continue to accrue.

     After requesting further information, defendant responded

that its review of the repair history for the car did not warrant

a repurchase.       However, "in the interest of goodwill," defendant

offered $2000 and a repair supervised by a Hyundai specialist if

the problem recurred.        Defendant also advised that plaintiff could

participate in its alternative dispute program, BBB Auto Line

(BBB), provided by defendant at no cost to its consumers.                              A

decision   rendered     under    the   program       was      not   binding    on   the

consumer; a consumer was not entitled to attorney's fees, civil

penalties or punitive damages.

     Defendant's warranty, in fact, required plaintiff to submit

any disputes regarding warranty coverage to BBB prior to seeking

any Magnuson-Moss remedies in a court action.                           Although New

Jersey's Lemon Law does not require consumers to submit their

claims   to    an   informal    resolution         program     before    instituting

litigation     in   court,     the   BBB       program   is    available      for   the

resolution of Lemon Law claims.                See N.J.S.A. 56:12-39.

                                           3                                   A-4188-15T3
       Plaintiff submitted a customer claim form to the BBB program

seeking revocation pursuant to Magnuson-Moss and the New Jersey

UCC   but    specifically      withholding   her   Lemon       Law   claims.   The

arbitrator rendered an award in favor of plaintiff, finding that

a repurchase of the vehicle was the fair resolution and remedy for

the dispute.

       Plaintiff rejected the arbitration award and subsequently

filed an action in Superior Court asserting claims under Magnuson-

Moss, the New Jersey UCC and Lemon Law.

       The   parties   engaged     in   discovery.        Plaintiff     answered

interrogatories, produced requested documents, gave a deposition

and retained an expert to provide a report.                     Plaintiff filed

several motions to procure discovery from defendant.                  On the eve

of    arbitration,     the    parties   entered    into    a    stipulation      of

settlement in which defendant agreed to a Lemon Law repurchase of

the vehicle, with the issue of plaintiff's entitlement to and

amount of counsel fees to be submitted to the court for its

determination.

       Plaintiff argued before the trial judge that, as a prevailing

party, she was entitled to attorney's fees under the Lemon Law,

N.J.S.A. 56:12-42.           Her counsel freely conceded that the only

objective of rejecting the BBB arbitration award in favor of court

litigation was the opportunity to recoup his attorney's fees.                  The

                                        4                                 A-4188-15T3
judge denied plaintiff's fee application in an oral decision on

April 1, 2016, finding that plaintiff was not entitled to fees in

the court action filed solely for the purpose of recovering counsel

fees because such fees were not permitted in the BBB arbitration.

      Plaintiff moved for reconsideration, and the judge issued a

written decision and order on May 20, 2016, denying the motion.

Although    the    court    "[a]ssum[ed]       that   plaintiff's    counsel     is

entitled to an award of fees by virtue of the fee shifting

provision in the Lemon Law," he found that the level of success

achieved in the litigation was a factor to be considered in

determining an award of counsel fees under the Lemon Law.                        He

reasoned that both the arbitration and the settlement of the court

litigation had resulted in an award to plaintiff of the repurchase

of her vehicle. "Therefore, there was no level of success achieved

in the litigation, with the exception of generating an attorney's

fee."

      On appeal, plaintiff argues that she was a prevailing party

in   the   Lemon    Law    litigation,       and   therefore,   is   entitled    to

attorney's fees, notwithstanding the results achieved in the BBB

arbitration.       We agree.

      We review a trial judge's decision on an application for

counsel    fees    and    costs   for   an    abuse   of   discretion.     "[F]ee

determinations by trial courts will be disturbed only on the rarest

                                         5                                A-4188-15T3
of    occasions,    and     then     only    because     of   a    clear      abuse    of

discretion."       Packard-Bamberger & Co. v. Collier, 167 N.J. 427,

444 (2001) (citing Rendine v. Pantzer, 141 N.J. 292, 317 (1995)).

We apply a similar standard to the court's denial of a motion for

reconsideration.         Cummings v. Bahr, 295 N.J. Super. 374, 389 (App.

Div. 1996). However, we owe no deference to an exercise of the

trial    court's        discretion     that     is   based        on   that    court's

misapprehension of the applicable law.                  Myron Corp. v. Atlantic

Mut. Ins., 407 N.J. Super. 302, 309 (App. Div. 2009)

       The Magnuson–Moss Act was enacted in 1975 "to aid consumers

by ensuring significant guarantees of quality and performance of

warranty provisions for purchased consumer goods, and 'to improve

the   adequacy     of    information        available    to   consumers,       prevent

deception, and improve competition in the marketing of consumer

products.'"      Fedor v. Nissan, 432 N.J. Super. 303, 311-12 (App.

Div. 2013) (quoting 15 U.S.C.A. § 2302(a)).                   The Act also sought

to advance the intent of Congress that warrantors "establish

procedures    whereby       consumer    disputes        [could     be]   fairly       and

expeditiously       settled        through      informal      dispute      settlement

mechanisms."       Id. at 312 (alteration in original) (quoting 15

U.S.C.A. § 2310(a)(1)).            The Federal Trade Commission (FTC) was

directed by Congress to "prescribe rules setting forth minimum

requirements for any informal dispute settlement procedure which

                                            6                                   A-4188-15T3
is incorporated into the terms of a written warranty." Id. (citing

15 U.S.C.A. § 2301(a)(2)).

     The   FTC   Informal   Dispute   Settlement   Procedures   Rule,   16

C.F.R. § 703 (2015), governs the mechanism procedures to be

followed in an informal dispute proceeding.         The decision of an

arbitrator is not binding, id. § 703.5(j), and a dissatisfied

consumer may pursue all available state and federal legal remedies.

Id. § 703.5(g)(1).

     In addressing the issue of whether the informal dispute

settlement mechanisms were required to include attorney's fees as

a remedy, the FTC issued an advisory opinion in 2005.            The FTC

informed that: "Rule 703 does not require that all remedies that

a court might award a plaintiff who prevails in a warranty lawsuit

must be within the power of an [informal dispute settlement

mechanism] decision maker."     Fedor, supra, 432 N.J. Super. at 319

(alteration in original) (citing Unpublished Informal Advisory

Opinion of Federal Trade Commission Staff re: Informal Dispute

Settlement Procedure in 16 C.F.R. 703, Letter from FTC Acting

Associate Director (October 25, 2005)).       Specifically,

           [t]he FTC emphasized that an informal dispute
           settlement   mechanism,    "operating   as   a
           prerequisite to (but not a substitute for)
           legal action[,]" does not need to award
           attorney's fees to be fully compliant with the
           Magnuson-Moss Act and Rule 703, as the
           objective is informal settlement of the

                                      7                          A-4188-15T3
          dispute. "Congress envisioned [the informal
          dispute    settlement    mechanisms]    as   a
          warrantor's opportunity to cure a possible
          breach of warranty" and avoid litigation.
          Accordingly, the FTC concluded the Magnuson-
          Moss Act "does [n]ot [c]ontemplate the [a]ward
          of [a]ttorneys' [f]ees or [c]osts" by informal
          dispute settlement mechanisms; such remedies
          are only available to consumers who prevail
          in an action before the court.

          [Id. at 319-20 (alterations      in   original)
          (citations omitted).]

     New Jersey also established its Lemon Law statute in an effort

to simplify consumer efforts to remedy new automobile defects.      A

consumer may present a dispute for resolution to three forums: (1)

a summary dispute resolution procedure established within the

Division of Consumer Affairs (Division), N.J.S.A. 56:12-37; (2) a

Superior Court action, N.J.S.A. 56:12-39; or (3) a manufacturer's

informal dispute resolution procedure, N.J.S.A. 56:12-36.          "A

consumer 'shall be awarded reasonable attorney's fees' under the

Lemon Law if he or she is successful in an action brought in the

Superior Court or a summary proceeding before the Division."

Fedor, supra, 432 N.J. Super.    at 318 (emphasis added) (quoting

N.J.S.A. 56:12-42).

     The use of the word "shall" in the statute mandates an

attorney fee award, see Aponte-Correa v. Allstate Ins. Co., 162

N.J. 318, 325 (2000); it is not optional.        However defendant

argues, and the trial judge agreed, that plaintiff was not a

                                8                           A-4188-15T3
prevailing party because she obtained the same relief in the Lemon

Law action as she did in the Magnuson-Moss BBB arbitration, and

therefore, she is not entitled to counsel fees.                    We discern no

support for this argument.

     The parties agree that the repurchase value under the Lemon

Law suit is greater than the BBB's repurchase award.                     That fact,

however, is not the only determinant to our discussion of whether

plaintiff achieved the status of a prevailing party.                          Under

defendant's     warranty,       plaintiff    was   required   to    first    pursue

relief through the BBB program, which she did.                The arbitrator's

decision was not legally binding upon her.                Plaintiff chose to

reject the decision and pursue her state remedies under the New

Jersey Lemon Law.

     After full discovery between the parties and just prior to

an arbitration proceeding, the parties entered into a stipulation

of settlement.     Defendant agreed to a Lemon Law repurchase of the

vehicle and plaintiff was granted the relief she sought in her

complaint.      We have stated that a "plaintiff is considered a

prevailing party when 'actual relief on the merits of [the] claim

materially      alters    the    relationship      between    the    parties       by

modifying the defendant's behavior in a way that directly benefits

the plaintiff."     Warrington v. Village Supermarket, Inc., 328 N.J.

Super.   410,    420     (App.    Div.   2000)     (alteration      in    original)

                                         9                                  A-4188-15T3
(citations omitted).      "'[T]he magnitude of the relief obtained is

irrelevant';    an   award   of   nominal    damages   is    sufficient     to

constitute a party as prevailing."          Id. at 421.     "When an action

ends    in   settlement   conferring     relief   sought,     a   prevailing

plaintiff's claim for attorneys' fees is not relinquished."               Id.

at 422 (citations omitted).

       When plaintiff achieved a favorable settlement in the court

action, she was entitled to an award of counsel fees.             As we have

previously stated: "A consumer should be able to resolve his claim

with the manufacturer without counsel fees, but where counsel is

needed, the consumer is entitled to an award of reasonable counsel

fees to obtain full relief under the statute."            Casal v. Hyundai

Motor America, 436 N.J. Super. 296, 303 (App. Div. 2014).

       Defendant argues that if consumers are able to "exploit a

loophole in the interplay between the Magnusson-Moss Act and the

New Jersey Lemon Law," the informal dispute resolution mechanisms

will cease to exist to the detriment of consumers and contrary to

the intent of Congress and this State Legislature.            We have been

provided no evidence of that dire prediction in the decades that

have passed since these laws were enacted.1

1
  Defendant described the informal dispute resolution program in
its brief as "enormously successful."

                                    10                               A-4188-15T3
     To   the    contrary,    we   lauded      the   benefits    provided    by

alternative dispute resolutions mechanisms in Fedor, supra, where

we noted that:

           there are no filing fees or costs for the
           consumer to initiate use of the mechanism, 16
           C.F.R. § 703.3(a); legal representation is not
           required and the proceedings are tailored to
           self-represented consumers; an independent
           expert inspects the vehicle and all records
           of complaints, at no cost to the consumer;
           decisions are swiftly made, unburdened by the
           formality of court process, id. § 703.5(d);
           and the result is non-binding, thus ensuring
           a dissatisfied consumer retains the ability
           to initiate full judicial review, id. §
           703.5(g)(1), (j).

           [432 N.J. Super. at 320-21.]

     A consumer is free to reject the BBB award and proceed with

a cause of action for breach of warranty under the Lemon Law with

the hope of achieving additional relief, including attorney's

fees.

     We, therefore, remand to the trial court for a determination

of the appropriate counsel fee and litigation costs award.

     Although the amount of fees is not an issue for us to resolve,

we note, and agree with, defendant's argument that plaintiff is

not entitled to an award of counsel fees for counsel's time and

participation pertaining to the BBB arbitration.            Attorney's fees

are not a permissible remedy in the dispute resolution process.

As   we   have   stated,     plaintiff   was     entitled   to    reject    the

                                    11                                A-4188-15T3
arbitrator's award and pursue her Lemon Law claims, including

counsel fees, in state court.     It would be inappropriate for a

plaintiff, however, to be permitted to assert as part of her claim,

fees that were incurred in the dispute resolution proceeding.      To

allow otherwise would be contrary to the plain language of the

Magnuson-Moss statute.   Plaintiff and her counsel were fully aware

that the BBB program did not permit an award of counsel fees.

     We leave the appropriate determination of counsel fees to the

trial court to be considered within the guidelines established by

our Supreme Court.   See Rendine, supra, 141 N.J. at 335.        The

court shall exercise its discretion to set a fair and reasonable

fee for the work required in pursuing plaintiff's remedy under the

New Jersey Lemon Law statute, other than the services related to

the dispute resolution proceeding.

     Reversed and remanded.   We do not retain jurisdiction.

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