Opinion
DOCKET NO. A-0931-11T1
05-09-2013
CRAIG REZAC, Plaintiff-Appellant, v. JMK AUTO SALES, INC., a New Jersey Corporation, Defendant-Respondent.
Gregory B. Pasquale argued the cause for appellant (Shain, Schaffer & Rafanello, P.C., attorneys; Mr. Pasquale, on the brief).
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
Before Judges Fisher and Nugent.
On appeal from the Superior Court of New Jersey, Law Division, Somerset County, Docket No. L-2160-10.
Gregory B. Pasquale argued the cause for appellant (Shain, Schaffer & Rafanello, P.C., attorneys; Mr. Pasquale, on the brief).
Respondent has not filed a brief. PER CURIAM
Plaintiff, Craig Rezac, appeals from a Law Division Order that granted partial summary judgment to defendant, JMK Auto Sales, Inc., and dismissed plaintiff's claims that arose out of a motor vehicle lease and an excessive wear and use protection plan. The court based its decision on an arbitration clause in the parties' Motor Vehicle Retail Order. We reverse.
The facts are undisputed. On March 27, 2008, plaintiff and defendant signed a Motor Vehicle Retail Order in which plaintiff requested defendant to "[p]lease enter my order for one 2008 BMW Sav Model X3.30I." The retail order contained an arbitration clause that provided in part:
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 agreement. By agreeing to arbitration, the parties understand and agree that they are waiving their rights to maintain other available resolutions processes, such as court action or administrative proceeding, to settle their disputes. Consumer Fraud, 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 (i) waive any right to pursue any claims arising under this agreement including statutory, state or federal claims, as a class action arbitration, or (ii) to have an arbitration under this agreement consolidated with any other arbitration or proceeding . . . . In the event that any subsequent lease, finance, or other agreement between the parties contains a provision for arbitration of claims which conflicts with or is inconsistent with this arbitration provision, the terms of such subsequent arbitration provision shall govern and control to the extent of such conflict or inconsistency.
The same day that the parties signed the retail order, they entered into a BMW Financial Services Motor Vehicle Lease Agreement. Paragraph thirty-five of the lease agreement states, in pertinent part:
Although there is no dispute the parties entered into the lease agreement, no one signed it on behalf of defendant.
Other Terms . . . Entire Agreement. This Lease describes all agreements between us with respect to the Lease of the Vehicle. All prior agreements, whether oral or in writing, are superseded.
The lease agreement contained no arbitration clause. It contained an "Excessive Wear and Use" clause that required the lessee, plaintiff, to pay the costs of repairs "not the result of normal wear and use," including "dented, scratched, chipped, rusted, pitted, broken . . . body parts, paint, . . . [and] grill work[.]" When plaintiff signed the lease agreement, he purchased an "Ultimate Protection Plan" offered by Safe-Guard Products International, Inc. that included "Tire, Wheel [and] Rim Protection, Windshield Protection and Dent [and] Ding Protection." The plan provided, among other things, that it would reimburse plaintiff for costs incurred "to repair minor cracks and stars on the front windshield only caused by propelled rocks or other road hazard debris . . ."; and dent and ding protection for "door dings and minor dents[,]" but not large or deep dents. Plaintiff alleges in his brief that he purchased the protection "because the sales person represented . . . that by purchasing 'Ultimate Vehicle Protection' [plaintiff] would not have to pay excess wear and tear charges at the end of the Lease for any dings or scratches . . . or small cracks in the windshield."
Plaintiff does not support his assertion by a reference to the appendix or transcript as required by Rule 2:6-2(a)(4); nor does he make such an assertion in the "Statement of Undisputed Material Facts in Support of Plaintiff's Cross-Motion for Partial Summary Judgment" that he filed with the trial court.
When plaintiff terminated the lease and returned the BMW, defendant charged him $400 for dings, dents and scratches to the rear bumper; and $600 for "1 Windshield-Rain Sensor [at] $600." When plaintiff submitted those claims for payment under the ultimate protection plan, he learned that defendant had not paid Safe-Guard for full protection, but instead had paid for a plan that provided only tire and wheel coverage, appearance protection, and key replacement. The limited plan cost less than the ultimate protection plan. Although defendant claimed in interrogatories that plaintiff had not purchased excess wear coverage, plaintiff produced documents, one of which included a "Dealer Signature," verifying that he had purchased "Ultimate Vehicle Protection," including "windshield protection" and "dent [and] ding protection." Plaintiff alleges defendant "pocketed" the difference between the amount of money plaintiff paid defendant for the ultimate protection plan and the lesser amount defendant paid to Safe-Guard for the limited protection plan.
When defendant refused to accept responsibility for not purchasing the ultimate protection plan, plaintiff filed a four-count complaint alleging consumer fraud (count one), common law fraud (count two), breach of contract (count three), and unjust enrichment (count four). Plaintiff alleged that defendant had "violate[d] the New Jersey Consumer Protection Act by failing to sign the lease agreement and failing to advise [p]laintiff that he had the right to seek an independent professional appraisal of the excessive wear and use charges identified on the Lease End inspection form." Plaintiff also alleged defendant had violated the New Jersey Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -20, by selling "non-existent insurance."
Seven months after defendant filed its answer, it filed a motion to dismiss the complaint. Relying upon the arbitration clause in the Motor Vehicle Retail Order, defendant argued that plaintiff voluntarily agreed to arbitrate claims arising out of the BMW lease.
Defendant filed a cross-motion for partial summary judgment as to defendant's liability for violating the CFA. During oral argument, plaintiff asserted that "[t]he purchase order says your claims are subject to arbitration except that if there is a lease, the lease controls." Plaintiff reasoned that because the lease language stated that the terms of the lease superseded prior agreements, it nullified the purchase order. Plaintiff also argued that defendant's violation of the CFA was apparent from omissions in the lease agreement. Defendant relied upon the documents it had submitted with its motion.
Deciding that "[s]ummary judgment on the merits is not sufficiently germane to a motion to dismiss under an arbitration clause to be filed as a cross-motion rather than as an independent motion[,]" the court "severed [plaintiff's] cross-motion for partial summary judgment" and treated it as a separate motion.
The court reserved decision and subsequently issued a written opinion. The court determined that the parties "entered into two consecutively executed, written contracts," and "the arbitration clause contained in the earlier retail order did not survive the execution of the subsequent lease agreement only with respect to disputes that would arise out of the lease agreement." The court further explained that, though nothing prevented defendant from including an arbitration provision in its form lease agreement, defendant had neither included an arbitration clause in the lease nor incorporated the retail order's arbitration provision into the lease agreement.
The court next determined that disputes concerning the ultimate protection plan were subject to arbitration. The court explained:
The contract that governs the ultimate vehicle protection coverage is a contract that is separate from the lease agreement. I find that disputes that arise out of the coverage contract are subject to the arbitration clause found in the retail order contract. The two charges listed on the final inspection for the excess wear-and-tear on the vehicle must be arbitrated between the parties. The dispute as to those charges arises out of the coverage contract that is separate from the lease agreement.
The court denied plaintiff's cross-motion for summary judgment because "[t]he material issue that remains unresolved is whether the kind of repairs that plaintiff's vehicle needed were the kind of repairs that were covered by the protection plan that he purchased or whether they were the kind of repairs that were excluded under the protection plan." The court also determined that with respect to plaintiff's partial summary judgment motion based on the CFA, the motion was premature because "no discovery [has taken] place and the evidence has not been fully developed."
The court entered a confirming order denying plaintiff's motion for partial summary judgment as to the CFA allegation in his complaint. In a separate order, the court granted defendant's motion to dismiss both the allegations in the complaint concerning the ultimate protection plan coverage and the CFA claim related to the ultimate protection plan. The court denied defendant's motion to dismiss plaintiff's CFA claim related to the lease agreement.
Defendant appealed from the order dismissing the claims related to the ultimate protection plan and filed a motion for leave to appeal the order denying his partial summary judgment motion. We denied plaintiff's motion for leave to file the interlocutory appeal. Accordingly, we do not address that issue.
A trial court order "compelling or denying arbitration shall be deemed final for purposes of appeal[.]" GMAC v. Pittella, 205 N.J. 572, 575 (2011).
The parties' disputes arise from three contracts. The interpretation and construction of contracts are matters of law to be decided by the court subject to plenary review on appeal. Kaur v. Assured Lending Corp., 405 N.J. Super. 468, 474 (App. Div. 2009). Parties may agree in a contract to waive statutory remedies in favor of arbitration. Leodori v. Cigna Corp., 175 N.J. 293, 300, cert. denied, 540 U.S. 938, 124 S. Ct. 74, 157 L. Ed. 2d 250 (2003). Although arbitration is "favored . . . as a means of resolving disputes," see Martindale v. Sandvik, Inc., 173 N.J. 76, 84 (2002), "'arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit.'" Angrisani v. Fin. Tech. Ventures, L.P., 402 N.J. Super. 138, 148-49 (App. Div. 2008) (quoting AT & T Techs., Inc. v. Commc'ns Workers of Am., 475 U.S. 643, 648, 106 S. Ct. 1415, 1418, 89 L. Ed. 2d 648, 655 (1986)).
Here, plaintiff and defendant entered into three agreements. Only the first, the motor vehicle retail order, contained an arbitration clause. That agreement was explicitly superseded by the terms of the second agreement, the motor vehicle lease agreement, which unequivocally stated: "This lease describes all agreements between us with respect to the Lease of the Vehicle. All prior agreements, whether oral or in writing, are superseded." Nothing in the record before us suggests defendant argued to the trial court that the phrase, "[a]ll prior agreements . . . are superseded," did not include the retail order. Nothing in the record suggests defendant argued to the trial court that the clause, "[t]his lease describes all agreements between us with respect to the Lease of the Vehicle," was somehow modified by the retail order. And defendant has filed no appellate brief. In short, defendant has not disputed two propositions: the motor vehicle lease agreement superseded the retail order; and the motor vehicle lease agreement described all agreements between defendant and plaintiff.
Following defendant's failure to file a timely answering brief, we entered an order that no brief would be accepted for filing on defendant's behalf.
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Our disagreement with the trial court concerns its conclusion that the parties' disputes "aris[ing] out of the [protection plan] are subject to the arbitration clause found in the retail order contract." The trial court did not explain why it reached that conclusion, or why it implicitly concluded that the protection plan related to the purchase order. The parties to the protection plan were plaintiff and Safe-Guard. The protection plan did not contain an arbitration clause. Significantly, the dispute about the protection plan had its genesis in the lease agreement. The retail order contained no terms concerning wear and use on the BMW at the expiration of the lease; the lease agreement required plaintiff to pay for costs to repair the vehicle "not the result of normal wear and use[.]" Defendant sold the protection plan to plaintiff not to cover anything related to the retail order, but specifically to cover costs to repair excessive wear and use damage that the lease agreement obligated plaintiff to pay.
The only agreement that contained an arbitration clause, the retail order, had been superseded by the lease agreement, which "describe[d] all agreements between [plaintiff and defendant] with respect to the Lease of the Vehicle." Considering that plaintiff purchased the ultimate protection plan so that he would not have to pay for excessive wear and use damage to the BMW as he was obligated to do under the lease, and further considering that the lease agreement superseded the retail order, there is no basis for concluding that plaintiff agreed to submit to arbitration disputes that arose out of the lease agreement and protection plan. As we have previously stated, "a party cannot be required to submit to arbitration any dispute which he had not agreed so to submit." Angrisani, supra, 402 N.J. Super. at 148-149.
Reversed and remanded for further proceedings consistent with this opinion.
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION