JAMES TROUT VS. WINNER FORD (L-4712-17, CAMDEN COUNTY AND STATEWIDE) ( 2019 )

NOT FOR PUBLICATION WITHOUT THE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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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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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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(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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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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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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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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