NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Plaintiff Sara Bacon filed a civil action in the Law Division, Special Civil Part, against Defendant Bob Ciasulli Auto Group, Inc., d/b/a Toyota Universe,1 seeking redress related to an extended service agreement she purchased from defendant on May 15, 2008, for a purchase price of $1819. In the complaint filed on January 21, 2014, plaintiff alleged breach of contract, violation of the implied covenant of good faith and fair dealing, violations of the Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to-195, rescission or reformation, and unjust enrichment. The complaint also included a demand for a trial by jury.
Defendant filed an answer to plaintiff's complaint in the form of a general denial and included twenty specific legally recognized affirmative defenses as well as a twenty-first separate affirmative defense "reserv[ing] the right to add additional separate defenses based upon pretrial discovery and such information as may become available." Of particular note here, in its nineteenth affirmative defense, defendant claims plaintiff's civil action should be dismissed because the parties "executed an agreement to arbitrate all claims raised in the Complaint." Alternatively, defendant also included in its answer a demand for "a trial by a jury as to all issues."
After joinder of issue and engaging in discovery, the parties received a notice from the court setting the matter down for trial on May 19, 2014. Pursuant to Rule 6:4-7(b),2 defendant requested the trial be adjourned to complete discovery. After accommodating an initial conflict, the trial was adjourned to June 16, 2014. The parties appeared that date as directed and were sent for a settlement conference, which ultimately proved unsuccessful. The case was thereafter rescheduled for trial on
September 15, 2014.
Sometime thereafter, plaintiff concluded the amount of monetary damages she could reasonably anticipate recovering from defendant would exceed the jurisdictional limit of the Special Civil Part.3 Thus, on July 25, 2014, plaintiff moved pursuant to Rule 6:4-1(b) to transfer the matter to the Law Division. On August 14, 2014, defendant filed its opposition to plaintiff's motion to transfer and a cross-motion to dismiss plaintiff's complaint and compel arbitration.
On August 28, 2014, the parties received an order signed by the Presiding Judge of the Civil Division granting plaintiff's motion to transfer the matter to the Law Division and denying defendant's motions to dismiss the case and compel arbitration. The order was not accompanied by a memorandum of opinion describing the judge's factual findings and reasons in support of his decision, nor did it indicate that the judge's findings and legal analysis were orally placed on the record on a specific date, as required by Rule 1:7-4(a). Furthermore, despite defendant's timely request for oral argument and the clear mandate of Rule 6:3-3(b)(1), the judge decided these two motions without oral argument.
Defendant now appeals as of right4 the court's order denying its motion to dismiss plaintiff's cause of action and compel plaintiff to submit this dispute to binding arbitration under an agreement allegedly entered into by the parties at the time plaintiff purchased this automobile from defendant. Despite the absence of a statement of reasons from the motion judge, neither party has requested that we enforce the mandate of Rule 1:7-4(a) and remand the matter for the trial judge to explain his ruling.
Although the parties' position on this issue is a factor worthy of due consideration, it is not by any means dispositive. As an intermediate appellate court, we have an independent, non-delegable responsibility to enforce the rules adopted by the Supreme Court. However, in the interest of conserving judicial resources and avoiding further litigation expense to the parties, we have opted to decide this appeal. In reaching this decision, we are also mindful that resolution of the discrete issue before us involves a purely legal determination, triggering a de novo standard of review, Hirsch, supra, 215 N.J. at 186 (citing Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995)). After reviewing the record presented by the parties and considering the legal arguments advanced, we affirm.
The record shows that on May 5, 2008, plaintiff purchased from defendant a new 2008 Toyota RAV-4, paying cash for the purchase price. The automobile sales agreement contained the following arbitration clause:
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, 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 resolution processes, such as a 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. The arbitration shall be conducted in accordance with the rules of the American Arbitration Association before a single arbitrator, who shall be a retired judge or an attorney. Dealership shall advance both party's [sic] filing, service, administration, arbitrator, hearing, or other fees, subject to reimbursement by decision of the arbitrator. Each party shall bear his or her own attorney, expert, and other fees and costs, except when awarded by the arbitrator under applicable law. The arbitration shall take place in New Jersey at a mutually convenient place agreed upon by the parties or selected by the arbitrator. 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. If any part of this arbitration clause, other than waivers of class action rights, is found to be unenforceable for any reason, the remaining provisions shall remain enforceable. If a waiver of class action and consolidation rights is found unenforceable in any action in which class action remedies have been sought, this entire arbitration clause shall be deemed unenforceable, it being the intention and agreement of the parties not to arbitrate class actions or in consolidated proceedings. 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. THIS ARBITRATION PROVISION LIMITS YOUR RIGHTS, INCLUDING YOUR RIGHT TO MAINTAIN A COURT ACTION. PLEASE READ IT CAREFULLY, PRIOR TO SIGNING.
On May 5, 2008, the same day she purchased her car, plaintiff signed a "Toyota Extra Care Vehicle Service Agreement Application." Although the application reflects an effective date of "5/5/2008," the application also contains the following disclaimer:
This is not your Vehicle Service Agreement, nor does it constitute an interim agreement. This Application is subject to approval or rejection by the Administrator; any contrary statements made by your dealer shall be of no effect. THIS PARAGRAPH IS NOT APPLICABLE IN ARIZONA.
If you have not received notification regarding the status of your Agreement Application within 30 days of the Agreement Application Date or if you have any questions regarding your Agreement, please write to: Toyota Motor Insurance Services, Inc., Customer Service Center [an address and telephone number are listed therein].
This disclaimer supports plaintiff's position as reflected in her answers to defendant's interrogatories that "at the time of the vehicle purchase on May 5, 2008, [d]efendant was unable to offer the [extended] warranty due to personnel issues. [I] was told to come back." The application plaintiff signed on May 5, 2008, described the coverage level she purchased as "Platinum," the highest coverage among the five selections listed. The application also indicated a "BB9" plan code, which provided coverage for four years or 100,000 miles.
On May 15, 2008, ten days after she purchased her car, plaintiff returned to the dealership to purchase the extended service agreement. The record shows plaintiff gave defendant a check in the amount of $1819, which defendant deposited in its business account and plaintiff's bank honored on May 16, 2008.
Defendant also gave plaintiff a receipt for the $1819 payment. The only document that refers specifically to the extended service agreement, the May 5, 2008 application form, does not include an arbitration provision nor mentions or refers in any way to the explicit arbitration provision in the sales agreement.
Although not directly germane to our analysis, defendant does not dispute that it obtained a service agreement covering plaintiff directly from Toyota. The record shows that on August 4, 2008, Toyota cancelled plaintiff's service agreement, claiming it had been "issued in error." The cancellation form indicates Toyota refunded the $1819 premium directly to defendant. The cancellation form was signed by one of defendant's employees, but not by plaintiff. In fact, plaintiff maintains she did not consent to the cancellation of the service agreement.
According to plaintiff, she began hearing noises coming from her car on March 8, 2013. She took the car to a Toyota dealership for inspection, expecting the cost for diagnosing the problem and any needed repairs would covered by the extended service agreement. However, after looking up her vehicle in the system, the Toyota dealership told her that defendant had cancelled her service agreement nearly five years earlier, on August 4, 2008. The Toyota dealership inspected the car and told plaintiff the vehicle needed repairs in excess of $6000. According to plaintiff, she was still experiencing problems with her vehicle as of July 16, 2014.
Defendant argues that the arbitration provision contained in the sales agreement covers any dispute involving the service agreement because such dispute "arises out of" the sales agreement. Defendant emphasizes that the only documentary evidence supporting the existence of the service agreement is dated the same day plaintiff purchased the car. Under this line of reasoning, the extended service agreement must arise from the purchase of the car because its only purpose was to provide supplemental warranty protection for the vehicle. Although the sales agreement can exist without the extended service agreement, the service agreement cannot exist without the car.
Defendant cites Griffin v. Burlington Volkswagen, Inc., 411 N.J.Super. 515 (App. Div. 2010), in support of this argument. We disagree that our holding in Griffin is applicable to the facts of this case. In Griffin, the plaintiff purchased a car by signing a retail order form which contained an arbitration provision. Id. at 516-18. The arbitration provision stated, in relevant part, that the parties agreed to arbitrate any claim "aris[ing] out of or relating to the purchase or lease identified in this Motor Vehicle Retail Order and the financing thereof." Id. at 518.
When a third-party lender refused to provide financing, the dealership reported to the police that the plaintiff had stolen the car. The plaintiff was subsequently arrested. Id. at 517. The plaintiff sued the dealership in tort and for statutory violations. Ibid. On these facts, we held the plaintiff's claims depended on the parties' respective rights in the car and the financing arrangement. Id. at 519-20. As a result, the claim "arose out of" the retail order, and the arbitration provision, which specifically referenced "financing," was enforced. Ibid.
Here, the extended service agreement was a separate contract entered into by the parties after the purchase of the car had concluded. Plaintiff paid separate consideration for this supplemental warranty. The date of the extended agreement is not germane to the question of whether the terms of the sales contract should be imputed into this legally independent contract. In Atalese v. United States Legal Services Group, L.P., 219 N.J. 430, 446 (2014), our Supreme Court recently held a contractual arbitration provision was unenforceable because it lacked the necessary "clear and unambiguous language that the plaintiff is waiving her right to sue or go to court to secure relief." Here, the extended service agreement does not contain an arbitration provision nor does it refer in any way to the sales contract's arbitration clause.
Atalese is our Supreme Court's most recent comprehensive examination of arbitration provisions in a consumer context. The Court first looked to customary contract principles regarding the requirement of mutual assent and a meeting of the minds. Id. at 442. Writing for a unanimous Court, Justice Albin emphasized that:
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. 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. But an average 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.
[Id. at 442-43 (citations omitted) (internal quotation marks omitted).]
There is no evidence to suggest that when plaintiff purchased the extended service agreement she knowingly agreed to be bound by the broad arbitration provision contained in the contract to purchase the car. Plaintiff paid significant consideration to purchase supplemental repair coverage from the manufacturer of the car after she had concluded the purchase of the car. There is no specific language in the extended service application that apprises the average consumer that the arbitration provision in the sales agreement would be imputed into this independent agreement. Defendant has not produced any evidence showing plaintiff knowingly agreed to submit claims arising from the extended service agreement to binding arbitration.