Court Opinion

ID: 4700837
Source: CourtListenerOpinion
Date Created: 2021-07-02 14:10:48.399922+00
Date Added: 2024-06-11T09:01:54.354622
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NOT FOR PUBLICATION WITHOUT THE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-0963-20

DANIEL SIKORSKI,
Individually and on behalf
of all others similarly situated,

          Plaintiff-Respondent,

v.

NEW JERSEY VENTURES
PARTNERS, LLC d/b/a
GATEWAY CLASSIC CARS
OF NJ, SAL AKBANI,

          Defendants-Appellants,

and

TRAILER SOLUTIONS – FL,
LLC, COLLECTOR CARS
LENDING, AND ANDREW
ACKERMAN,

     Defendants-Respondents.
__________________________

                   Argued June 8, 2021 – Decided July 2, 2021

                   Before Judges Fisher, Gilson, and Gummer.
             On appeal from the Superior Court of New Jersey, Law
             Division, Gloucester County, Docket No. L-0861-20.

             Anthony E. Bush argued the cause for appellants
             (Eckert Seamans Cherin & Mellott, LLC, attorneys;
             Anthony E. Bush of counsel and on the briefs, Kevin F.
             Farrington on the briefs).

             Andrew R. Wolf argued the cause for respondent (The
             Wolf Law Firm, LLC and Jonathan Rudnick, attorneys;
             Bharati O. Sharma and Jonathan Rudnick on the brief).

PER CURIAM

       In this putative consumer class action, defendants New Jersey Ventures

Partners, LLC d/b/a Gateway Classic Cars of NJ (Gateway) and Sal Akbani1

(collectively the Gateway defendants) appeal an order denying their motion to

compel arbitration and to dismiss the complaint with prejudice.         Finding

unpersuasive defendants' argument that they can compel arbitration because

Gateway is a purported third-party beneficiary of a contract between plaintiff

and a bank that loaned plaintiff money, we affirm.

       Plaintiff bought a used 1971 Chevrolet Camaro from Gateway. Plaintiff

and Gateway executed a "Motor Vehicle Purchase Contract," which contained a

"[c]omplete [a]greement" clause, stating the contract "constitute[d] the entire

agreement between the [p]arties." It did not contain an arbitration clause and

1
    According to plaintiff, Akbani is Gateway's "principal" and "manager."
                                                                             A-0963-20
                                        2
said nothing about arbitration or any limit on plaintiff's ability to bring a lawsuit

against Gateway.

      To obtain additional funds to purchase the car, plaintiff obtained a loan

from Medallion Bank. Two days after he signed the purchase contract with

Gateway, plaintiff signed a Medallion Bank "SIMPLE INTEREST NOTE AND

SECURITY AGREEMENT." The agreement identified plaintiff as "borrower"

or "you"; the "1971 Chevrolet Camaro" as the property; Medallion Bank as the

"lender," "we," or "us"; and, erroneously, Collector Car Lending as the seller. 2

The agreement expressly stated that "Medallion Bank, and not the seller of the

[p]roperty . . . is the [l]ender in this transaction." Gateway was not identified as

a party to the agreement, was not given any rights under the agreement, and did

not execute the agreement.

      The agreement contained the following provision:

             Notice of Limited Agency. This Note is a direct loan
             from us to you. For your convenience, we have asked
             the Seller of the Property you are purchasing with the
             proceeds of this Note to prepare and obtain your
             signature on this Note. Seller has no authority to
             approve or make this Note. Seller is not our agent in

2
  According to plaintiff, Collector Car Lending (CCL) is a "service provider for
lenders." Gateway's showroom manager described CCL as "a documentation
agent for lenders." Plaintiff submitted a finance application online to CCL,
identifying Gateway as the seller, and subsequently received a loan from
Medallion Bank. Gateway agrees it was the seller.
                                                                               A-0963-20
                                         3
     connection with the sale of the Property or in
     connection with any down payment or trade-in
     arrangements or for any purpose whatsoever other than
     for preparing and obtaining your signature on this Note.
     No employee or agent of Seller is authorized to make
     any promises or agreements with you about this Note.
     No oral or written promises or agreements between you
     and Seller about this Note are enforceable. Any
     representations, promises, or agreements between you
     and Seller in connection with the Property or any down
     payment or other matter in connection with the
     purchase must be resolved between you and Seller. If
     you have any questions about Seller's authority in
     connection with this Note, please contact us . . . .

The agreement contained an arbitration clause, which provided:

     ARBITRATION. Either you or we may choose to have
     any dispute arising under this Note resolved by binding
     neutral arbitration under the rules then in effect of the
     American Arbitration Association ("AAA") or any
     other arbitration organization you choose and that we
     approve in writing ("the Arbitration Organization").
     The arbitration shall be conducted under the then
     current rules of the Arbitration Organization and is
     governed by the Federal Arbitration Act (9 U.S.C. § 1
     et. seq.) and not by any state law concerning arbitration.

     ....

     This arbitration provision shall survive termination or
     expiration of this Note.       NO CLASS ACTION
     ARBITRATION MAY BE BROUGHT OR ORDERED
     UNDER THIS ARBITRATION PROVISION AND
     THERE SHALL BE NO JOINDER OF PARTIES,
     EXCEPT FOR JOINDER OF PARTIES TO THIS
     NOTE. IF EITHER YOU OR WE CHOOSE TO
     ARBITRATE, THE FOLLOWING WARNINGS

                                                                  A-0963-20
                                 4
            APPLY: ALL DISPUTES BETWEEN YOU AND US
            WILL    BE    RESOLVED      BY   BINDING
            ARBITRATION; YOU WILL GIVE UP THE RIGHT
            TO SEEK REMEDIES IN COURT, INCLUDING THE
            RIGHT TO A JURY TRIAL; YOUR ABILITY TO
            COMPEL OTHER PARTIES TO PRODUCE
            DOCUMENTS OR BE EXAMINED WILL BE MORE
            LIMITED IN ARBITRATION THAN IN A
            LAWSUIT; AND, YOUR RIGHTS TO APPEAL OR
            CHANGE AN ARBITRATION AWARD IN COURT
            WILL BE VERY LIMITED.

      After plaintiff paid for the car, the car was delivered to plaintiff and he

had it inspected. The inspection revealed several problems, leading plaintiff to

believe someone had "tampered" with the car and that it was not the car Gateway

had advertised. Plaintiff asked Gateway for a refund or a substitute car; Gateway

refused. Plaintiff subsequently learned the car could catch on fire and was

dangerous to drive.

      Plaintiff filed a putative class-action complaint with a jury demand,

alleging, among other things, Gateway violated certain Automotive Sales

Practices (ASP) regulations, N.J.A.C. 13:45A-26B.1 to -26B.4; the New Jersey

Consumer Fraud Act, N.J.S.A. 56:8-1 to -226 (CFA); and the Truth-in-

Consumer Contract, Warranty and Notice Act, N.J.S.A. 56:12-14 to -18

(TCCWNA). Plaintiff also demanded pursuant to the Declaratory Judgment

Act, N.J.S.A. 2A:16-50 to -62, a declaratory judgment that the purchase contract

                                                                           A-0963-20
                                       5
violated the ASP regulations, the CFA, and TCCWNA and claimed Gateway

had breached its warranties to plaintiff.

      In lieu of an answer, the Gateway defendants moved to compel arbitration

and dismiss the complaint with prejudice. They did not base their motion on

anything in the Gateway purchase contract but relied solely on their contention

that Gateway was a third-party beneficiary of the note agreement between

plaintiff and Medallion Bank and could enforce the arbitration clause contained

in that agreement.

      In a well-reasoned written opinion, Judge James R. Swift denied the

motion, holding the language used in the arbitration clause of the Medallion note

agreement was "unambiguous" that the note agreement and its arbitration clause

applied only to plaintiff and Medallion Bank. He also found Gateway and

plaintiff had "entered into their own, separate contract when [p]laintiff agreed

to purchase the car" and Gateway "could have added [its] own arbitration clause

into the [p]urchase [c]ontract with [p]laintiff," but "chose not to do so and [is]

instead trying to enforce a right in a contract in which [it was] not a party to,

and [p]laintiff has not assented to." Finding the language of the Medallion note

agreement "unequivocally contradicted" Gateway's third-party-beneficiary

claim, Judge Swift held "there is nothing to indicate that the parties intended to

                                                                            A-0963-20
                                        6
have [Gateway] as an intended third-party beneficiary" and found if plaintiff and

Medallion wanted Gateway to be "a third-party beneficiary and [able to] enforce

rights under the Note, they would have included language that indicates such."

Judge Swift concluded the Gateway defendants "cannot enforce the arbitration

provision because there is no mutual assent between [Gateway] and [p]laintiff,"

the Medallion note agreement "unambiguously states that the arbitration

provision is between [p]laintiff and Medallion Bank," and Gateway was "not a

third-party beneficiary" based on a lack of intent and the plain language of the

Medallion note agreement stating the note agreement was "solely between

[p]laintiff and Medallion Bank." Finding Gateway was "trying to enforce a right

. . . [it did] not have," Judge Swift denied the motion. We agree and affirm.

      We review de novo a decision about an arbitration agreement's

enforceability. Skuse v. Pfizer, Inc., 244 N.J. 30, 46 (2020); see also Kernahan

v. Home Warranty Adm'r of Fla., Inc., 236 N.J. 301, 316 (2019) ("Whether a

contractual arbitration provision is enforceable is a question of law, and we need

not defer to the interpretative analysis of the trial . . . court[] unless we find it

persuasive.").

      This cornerstone of our law on arbitration bears repeating: "[t]here must

be mutual assent to arbitrate." Cottrell v. Holtzberg, ___ N.J. Super. ___, ____

                                                                               A-0963-20
                                         7
(App. Div. 2021) (slip op. at 13); see also Skuse, 244 N.J. at 48 ("An arbitration

agreement must be the result of the parties' mutual assent, according to

customary principles of state contract law."). As our Supreme Court held in

Kernahan, "[a]n arbitration agreement is valid only if the parties intended to

arbitrate because parties are not required 'to arbitrate when they have not agreed

to do so.'" 236 N.J. at 317 (quoting Volt Info. Scis., Inc. v. Bd. of Trs. of Leland

Stanford Junior Univ., 489 U.S. 468, 478 (1989)). Courts have deemed mutual

assent to arbitrate a requirement for the enforcement of an arbitration clause

based on elemental contract-law principles, see id. at 319 ("[a]s a general

principle of contract law, there must be a meeting of the minds for an agreement

to exist before enforcement is considered"), and because in agreeing to arbitrate,

a party surrenders the essential rights of access to our courts and trial by jury,

see Skuse, 244 N.J. at 48-49; Atalese v. U.S. Legal Servs. Grp., L.P., 219 N.J.

430, 442-43 (2014).

      Mutual assent, meaning "the knowing assent of both parties to arbitrate

and a clear understanding of the ramifications of that assent," NAACP of

Camden Cnty. E. v. Foulke Mgmt. Corp., 421 N.J. Super. 404, 425 (App. Div.

2011), is so critical to the enforceability of an arbitration clause that courts will

find unenforceable arbitration clauses containing language insufficiently "clear

                                                                              A-0963-20
                                         8
to place a consumer on notice that he or she is waiving a constitutional or

statutory right." Atalese, 219 N.J. at 443.

        The party seeking to enforce an arbitration agreement must prove the non-

moving party "assented to it." Midland Funding LLC v. Bordeaux, 447 N.J.

Super. 330, 337 (App. Div. 2016). Because Gateway's actual contract with

plaintiff is devoid of any arbitration language, the Gateway defendants attempt

to engraft Gateway onto plaintiff's contract with Medallion as a third-party

beneficiary, relying on a nearly fifteen-year-old unpublished Law Division case

and a reversed Appellate Division decision. Quoting our decision in Garfinkel

v. Morristown Obstetrics & Gynecology Associates, P.A., 333 N.J. Super. 291

(App.     Div.   2000),   rev'd,   168   N.J.   124   (2001),   defendants    argue

"'[n]onsignatories of a contract . . . may be subject to arbitration if the nonparty

is an agent of a party or a third[-]party beneficiary to the contract.'" Id. at 308

(quoting Mut. Benefit Life Ins. Co. v. Zimmerman, 783 F. Supp. 853, 865

(D.N.J.), aff'd, 970 F.2d 899 (3d Cir. 1992)). Reversing our decision and finding

the arbitration clause as a whole to be unenforceable because it was ambiguous,

the Supreme Court stated it has "stressed that '[i]n the absence of a consensual

understanding, neither party is entitled to force the other to arbitrate their

dispute. Subsumed in this principle is the proposition that only those issues may

                                                                              A-0963-20
                                         9
be arbitrated which the parties have agreed shall be.'" Garfinkel v. Morristown

Obstetrics & Gynecology Assocs., P.A., 168 N.J. 124, 132 (2001) (quoting In re

Arbitration Between Grover & Universal Underwriters Ins. Co., 80 N.J. 221,

228 (1979)).

      Unable to point to any language establishing plaintiff assented to

arbitrating his claims against Gateway, the Gateway defendants argue plaintiff

must arbitrate his claims against them because he and Medallion did not

expressly exclude Gateway from the arbitration provision in the Medallion note

agreement. That argument turns our arbitration jurisprudence on its head –

instead of proving actual assent to arbitrate, the party seeking to compel

arbitration can simply rely on the absence of language refusing to arbitrate –

and ignores the note agreement's language specifically limiting its applic ation

to plaintiff and Medallion.

      If we were to accept Gateway's argument, plaintiff would be deprived of

his rights of access to the courts and to a jury trial on his claims against the

Gateway defendants when no contractual language – neither Gateway's purchase

contract nor the Medallion note agreement – "clearly state[d that] purpose." See

Marchak v. Claridge Commons, Inc., 134 N.J. 275, 282 (1993). Basing a right

to arbitrate on an absence of language instead of the presence of language

                                                                          A-0963-20
                                      10
establishing mutual assent would defeat our long-standing principle that "[i]t is

requisite to waiver of a legal right that there be 'a clear, unequivocal, and

decisive act of the party.'" W. Jersey Title & Guar. Co. v. Indus. Tr. Co., 27

N.J. 144, 153 (1958) (quoting Aron v. Rialto Realty Co., 100 N.J. Eq. 513, 517

(Ch. 1927), aff'd, 102 N.J. Eq. 331 (E. & A. 1928)). Applying that principle to

arbitration, "[t]he 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, 134 N.J. at 282; see also Hirsch v. Amper Fin. Servs., LLC, 215

N.J. 174, 187 (2013).3

3
   That concept – that the parties' intent must be clear – applies equally to
creation of third-party beneficiaries. "The contractual intent to recognize a right
to performance in the third person is the key. If that intent does not exist, then
the third person is only an incidental beneficiary, having no contractual
standing." Broadway Maint. Corp. v. Rutgers, State Univ., 90 N.J. 253, 259
(1982); see also Ross v. Lowitz, 222 N.J. 494, 513 (2015). The Gateway
defendants have failed to establish an intent by plaintiff and Medallion to give
Gateway a "right to performance" of the Medallion note agreement. See ibid.
That it was the ultimate recipient of the funds Medallion loaned to plaintiff may
have made Gateway an "incidental beneficiary"; it did not make it an intended
third-party beneficiary with a right to compel performance. See ibid. Even if it
did, "we are not satisfied that the third-party beneficiary status . . . means
binding arbitration is a predetermined sequela of that status when the claim is
considered against the canvas of our arbitration jurisprudence." Crystal Point
Condo. Ass'n, Inc. v. Kinsale Ins. Co., 466 N.J. Super. 471, 486 (App. Div.
2021).
                                                                             A-0963-20
                                       11
      Effectively, the Gateway defendants want us to expand the scope of the

arbitration clause in the Medallion note agreement to include Gateway. That we

cannot do. See Yale Materials Handling Corp. v. White Storage & Retrieval

Sys., Inc., 240 N.J. Super. 370, 374 (App. Div. 1990) (holding a court "may not

rewrite a contract to broaden the scope of arbitration"); see also Crystal Point,

466 N.J. Super. at 485-86 (declining to expand an arbitration provision of an

insurance policy to include a purported third-party beneficiary of the policy).

      Affirmed.

                                                                           A-0963-20
                                      12