Cervalin v. Universal Global, Inc.

LAVEAU CERVALIN, Plaintiff-Appellant, v. UNIVERSAL GLOBAL, INC., d/b/a METRO HONDA, and TRUIST BANK, f/k/a BRANCH BANKING AND TRUST COMPANY, ^[1] Defendants-Respondents.

No. A-0974-20

Superior Court of New Jersey, Appellate Division

July 6, 2021

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted June 8, 2021

On appeal from the Superior Court of New Jersey, Law Division Hudson County, L-1085-20.

Houston & Totaro, attorneys for appellant (Madeline L Houston and Melissa J. Totaro, on the briefs).

Piro Zinna Cifelli Paris & Genitempo, LLC, attorneys for respondent Universal Global, Inc., and co-counsel for respondent Truist Bank; and Ballard Spahr, LLP, co-counsel for respondent Truist Bank (Todd M. Galante, Brian Frankoski, and William P. Reiley, on the joint brief).

Before Judges Fisher, Gilson, and Gummer.

PER CURIAM

Plaintiff appeals an order compelling arbitration and dismissing with prejudice his complaint. Because the language of the parties' agreements clearly sets forth an intent to arbitrate, we affirm the aspect of the order compelling arbitration. We reverse the aspect of the order dismissing the complaint with prejudice because the appropriate procedural step was to stay the case pending the arbitration not to dismiss it with prejudice, and remand with a direction that a new order be entered compelling arbitration and staying the action pending conclusion of those proceedings.

I.

Plaintiff purchased a used 2016 Honda Pilot from defendant Universal Global, Inc., d/b/a Metro Honda (Metro). As part of the transaction, plaintiff and Metro entered into and executed two agreements, both of which had an arbitration clause. The Motor Vehicle Retail Order contained the following arbitration clause:

AGREEMENT TO ARBITRATE ALL CLAIMS. READ THE FOLLOWING ARBITRATION PROVISION CAREFULLY, IT LIMITS YOUR RIGHTS, AND WAIVES THE RIGHT TO MAINTAIN A COURT ACTION, OR TO PURSUE A CLASS ACTION IN COURT AND IN ARBITRATION.

The parties to this agreement agree to arbitrate all claims, disputes, or controversies, including all statutory claims and any state or federal claims ("claims"), that may arise out of or relating to this agreement and the sale or lease identified in this agreement. By agreeing to arbitrate, the parties understand and agree that they are giving up their rights to use other available resolution processes, such as a court action or administrative proceeding, to resolve their disputes. Further, the parties understand that they may not pursue any claim, even in arbitration, on behalf of a class or to consolidate their claim with those of other persons or entitles. Consumer Fraud, Used Car Lemon Law, and Truth-in-Lending claims are just three examples of the various types of statutory claims subject to arbitration under this agreement. The arbitration shall be administered by the American Arbitration Association under its Consumer Arbitration Rules, before a single arbitrator who shall be a retired judge or an attorney. Dealership shall advance both party's filing, service, administration, arbitrator, hearing, and 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 agreement is found to be unenforceable for any reason, the remaining provisions shall remain enforceable. In the event that any claims are based on a lease, finance, or other agreement between the parties related to this sale or lease as well as this agreement, and if such lease, finance or other agreement contains a provision for arbitration of claims which conflicts with or is inconsistent with this arbitration provision, the terms of such other arbitration provision shall govern and control. THIS ARBITRATION PROVISION LIMITS YOUR RIGHTS, AND WAIVES THE RIGHT TO MAINTAIN A COURT ACTION OR PURSUE A CLASS ACTION IN COURT OR IN ARBITRATION. PLEASE READ IT CAREFULLY, PRIOR TO SIGNING.

Plaintiff signed directly below the arbitration.

Plaintiff and Metro also executed a document entitled "RETAIL INSTALLMENT SALE CONTRACT - SIMPLE FINANCE CHARGE (WITH ARBITRATION PROVISION)" (finance contract), which stated on the first page, "[b]y signing this contract, you choose to buy the vehicle on credit under the agreements in this contract." The finance contract contained the following language on the first page directly above plaintiff's signature:

Agreement to Arbitrate: By signing below, you agree that, pursuant to the Arbitration Provision on page 5 of this contract, you or we may elect to resolve any dispute by neutral, binding arbitration and not by a court action. See the Arbitration Provision for additional information concerning the agreement to arbitrate.

The fifth page of that contract contained an arbitration clause, which provided in part:

ARBITRATION PROVISION

PLEASE REVIEW - IMPORTANT - AFFECTS YOUR LEGAL RIGHTS

1. EITHER YOU OR WE MAY CHOOSE TO HAVE ANY DISPUTE BETWEEN U.S. DECIDED BY ARBITRATION AND NOT IN COURT OR BY JURY TRIAL.

2. IF A DISPUTE IS ARBITRATED, YOU WILL GIVE UP YOUR RIGHT TO PARTICIPATE AS A CLASS REPRESENTATIVE OR CLASS MEMBER ON ANY CLASS CLAIM YOU MAY HAVE AGAINST U.S. INCLUDING ANY RIGHT TO CLASS ARBITRATION OR ANY CONSOLIDATION OF INDIVIDUAL ARBITRATIONS.

3. DISCOVERY AND RIGHTS TO APPEAL IN ARBITRATION ARE GENERALLY MORE LIMITED THAN IN A LAWSUIT, AND OTHER RIGHTS THAT YOU AND WE WOULD HAVE IN COURT MAY NOT BE AVAILABLE IN ARBITRATION.

Any claim or dispute, whether in contract, tort, statute or otherwise (including the interpretation and scope of this Arbitration Provision, and the arbitrability of the claim or dispute), between you and us . . ., which arises out of or relates to your credit application, purchase or condition of this vehicle, this contract or any resulting transaction or relationship . . . shall, at your or our election, be resolved by neutral, binding arbitration and not by a court action. . . . Any claim or dispute is to be arbitrated by a single arbitrator on an individual basis and not as a class action. . . . You may choose the American Arbitration Association, 1633 Broadway, 10th Floor, New York, New York 10019 (www.adr.org), or any other organization to conduct the arbitration subject to our approval. You may get a copy of the rules of an arbitration organization by contacting the organization or visiting its website. Arbitrators shall be attorneys or retired judges and shall be selected pursuant to applicable rules. . . . Any arbitration under this Arbitration Provision shall be governed by the Federal Arbitration Act (9 U.S.C. § 1 et. seq.) and not by any state law concerning arbitration. Any award by the arbitrator shall be in writing and will be final and binding on all parties, subject to any limited right to appeal under the Federal Arbitration Act.

Plaintiff signed the bottom of the page containing the arbitration clause. Metro subsequently assigned the finance contract to BB&T.

According to plaintiff, after he purchased the car, he discovered it "had serious pre-existing and undisclosed physical damage." He reported the damage to Metro, which "refused to repair the damage or offer any other type of relief to plaintiff."

Plaintiff filed a complaint, naming Metro and BB&T as defendants. Pleading common-law fraud and violations of the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1 to -226 (CFA), and the Magnuson-Moss Warranty -Federal Trade Commission Improvement Act, 15 U.S.C. §§ 2301 to 2312 (MMWA), plaintiff alleged Metro: (1) sold him the car at a higher price than advertised; (2) orally agreed to one price but included additional charges improperly or unbeknownst to him; and (3) made misrepresentations in regard to the car's condition and history of damage and whether it qualified as a Honda certified pre-owned vehicle. After filing answers, defendants moved to compel arbitration and stay the case. Plaintiff opposed the motion, arguing the arbitration clauses were unenforceable because they contained conflicting and unclear provisions and were displayed in an inconspicuous manner and that, even if the motion judge found the clauses to be enforceable, the MMWA claim was not subject to arbitration.

In a written order and opinion, the motion judge granted the aspect of defendants' motion seeking to compel arbitration and dismissed the complaint with prejudice. The motion judge found "the two arbitration provisions are clear and unambiguous waivers of right to seek judicial remedy and therefore are enforceable" and any differences in the arbitration clauses were resolved by the supersession clause of the Retail Order, which provided that if a finance agreement "contain[ed] a provision for arbitration of claims which conflicts with or is inconsistent with this arbitration provision, the terms of such other arbitration provision shall govern and control." The motion judge rejected plaintiff's argument that the MMWA claim could not be compelled to binding arbitration, citing Davis v. S. Energy Homes, Inc., 305 F.3d 1268 (11th Cir. 2002). The motion judge noted defendants had requested a stay pending arbitration but "dismisse[d] this action in recognizing that the arbitration is binding." Plaintiff appeals that decision, making the same arguments he made to the motion judge and asserting the Retail Order's supersession clause does not resolve the differences between the arbitration clauses.

II....