Delgado v. BMW Fin. Servs. NA

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DANIEL DELGADO, Plaintiff-Appellant, v. BMW FINANCIAL SERVICES NA, LLC, Defendant-Respondent, and PARK AVENUE BMW and ALLSTATE NEW JERSEY PROPERTY CASUALTY INSURANCE COMPANY SERVICES, Defendants.

No. A-0933-22

Superior Court of New Jersey, Appellate Division

August 29, 2023

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.

Submitted August 15, 2023

On appeal from the Superior Court of New Jersey, Law Division Bergen County, Docket No. L-1755-22.

Maite Matos, attorney for appellant.

Saul Ewing LLP, attorneys for respondent (Ryan L. DiClemente and Kellie A. Lavery, of counsel and on the brief).

Before Judges Currier and Enright.

PER CURIAM

Plaintiff Daniel Delgado appeals from the November 4, 2022 order dismissing his complaint against defendants BMW Financial Services (BMW) and Park Avenue BMW (Park Ave)^[1] and compelling arbitration. We affirm.

Plaintiff leased a 2021 BMW sedan from Park Ave on September 4, 2020. The lease provided:

This Motor Vehicle Lease Agreement . . . is entered between the lessee [plaintiff] . . . and the lessor . . . named above [Park Ave]. . . . "Assignee" refers to [BMW] or . to Financial Services Vehicle Trust. [BMW] will administer this [l]ease on behalf of itself or any assignee. The consumer lease disclosures contained in this [l]ease are made on behalf of [Park Ave] and its successors or assignees.

The lease established the amount of monthly payments due from plaintiff, the value of the car, the adjusted capitalized cost, the residual value, and the option to purchase the vehicle at the end of the lease term. The total cost of the lease, including amounts due at signing or delivery, total monthly payments amounts charged at the end of the lease, and the residual value, amounted to $96,553.25.

The lease contained an arbitration agreement (agreement). The agreement stated in bold, red, all-capitalized letters: "PLEASE REVIEW-IMPORTANT- AFFECTS MY LEGAL RIGHTS" under a bold, all-capitalized letter section title reading "ARBITRATION CLAUSE." The clauses in the agreement pertinent to the issues presented here stated:

NOTICE^[2]: Either [Park Ave] or [plaintiff] may choose to have any dispute between us decided by arbitration and not in a court or by jury trial. If a dispute is arbitrated, [plaintiff] will give up [his] right to participate as a class representative or class member on any class claim [he] may have against [Park Ave] including any right to class arbitration or any consolidation of individual arbitrations. Discovery and rights to appeal in arbitration are generally more limited than in a lawsuit, and other rights [Park Ave] and [plaintiff] 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 clause, and the arbitrability of the claim or dispute), between [plaintiff] and [Park Ave] or [Park Ave's] employees, agents, successors or assigns, which arise out of or relate to my credit application, lease, purchase or condition of this [v]ehicle, this [l]ease or any resulting transaction or relationship (including any such relationship with third parties who do not sign this [l]ease) shall, at [Park Ave's] or [plaintiff's] 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 or other mass action. [Plaintiff] expressly waive[s] any right [he] may have to arbitrate a class action. [Plaintiff] may choose the following arbitration organization and its applicable rules: the National Arbitration Forum . . . or any organization that [plaintiff] may choose subject to [Park Ave's] approval. [Plaintiff] may get a copy of the rules of these organizations by contacting the arbitration organization or visiting its website.

. . . .

The arbitrator's award shall be final and binding on all parties . . . .

The agreement included addresses for Park Ave and BMW as assignee.

Just above plaintiff's signature, the lease provided in bold letters:

By signing below, [plaintiff] acknowledge[s] that: This [l]ease is completely filled out; [plaintiff] ha[s] no ownership rights in the [v]ehicle unless and until [he] exercise[s] [his] option to purchase the [v]ehicle; [plaintiff] ha[s] read all pages of this [l]ease carefully and agree[s] to all of its terms; and [he] ha[s] received a completely filled in copy of this [l]ease.

Both plaintiff and a Park Ave representative signed the agreement.

After leasing the car, plaintiff modified the vehicle with special rims and tires, alleging he spent approximately $17,000 for the alterations.

The vehicle was stolen in December 2021. BMW advised plaintiff the payoff figure was $75,504.08. Plaintiff did not complete any of the required documents or tender the certified funds necessary to purchase the car. Instead, plaintiff made a claim to Allstate for the loss of the car. Allstate retained a market valuation report that determined the value of the vehicle was $93,152. BMW agreed to accept the valuation and Allstate tendered payment to satisfy the claim. Plaintiff asserts he is entitled to the monies he invested in the car.

Plaintiff filed a complaint, asserting claims for breach of contract, conversion, breach of the covenant of good faith and fair dealing, violations of the Consumer Fraud Act, N.J.S.A. 56:8-1 to -227, unjust enrichment, and breach of fiduciary duty.

Thereafter, BMW moved to dismiss the complaint and compel arbitration. BMW sought to arbitrate the claims regarding the actual value of the vehicle at the time it was stolen and the amount Allstate was required to pay BMW. BMW asserted those claims fell within the scope of the agreement. Plaintiff contended the agreement was unclear, and because BMW was not a party to the original lease, the agreement was not enforceable.

In an oral decision issued November 4, 2022, the court held the claims plaintiff alleged in his complaint fell "expressly within the scope of the arbitration clause." The court found the agreement was valid and enforceable "and it expressly provide[d] that the parties intend[ed] [that] . . . any existing or future controversy . . . be submitted to arbitration." The judge stated,

There is no dispute that . . . plaintiff executed the agreement as part of the lease of the vehicle and . . . plaintiff's claims unequivocally . . . fall within the scope of the existing arbitration clause in this case.

There is absolutely no doubt before the [c]ourt that this arbitration clause exists and that the plaintiff's claims arise [out of] and relate to the vehicle and the lease.

The court also found the lease clearly defined any assignee would be subject to the lease terms, including the agreement.

The court granted BMW's motion in a memorializing order the same day, dismissing the complaint only as to BMW and Park Ave and compelling arbitration.

On appeal, plaintiff contends the trial court erred in dismissing the complaint and compelling arbitration because the agreement was ambiguous as to his waiver of rights, the party enforcing the agreement was not an original party to it, and enforcement of the agreement detrimentally affects the public interest because it is unconscionable.

"We apply a de novo standard of review when determining the enforceability of contracts, including arbitration agreements." Goffe v. Foulke Mgmt. Corp., 238 N.J. 191, 207 (2019) (citing Hirsch v. Amper Fin. Servs., LLC, 215 N.J. 174, 186 (2013)). As such, the enforceability of arbitration agreements is a question of law and no deference is owed to the trial court "unless [the appellate court] find[s] it persuasive." Kernahan v. Home Warranty Adm'r of Fla., Inc., 236 N.J. 301, 316 (2019) (citing Morgan v. Sanford Brown Inst., 225 N.J. 289, 302-03 (2016)). The question of whether a party agreed to arbitrate is also subject to de novo review "because that issue involves the application of established facts to the legal question of what constitutes assent to a contract." Antonucci v. Curvature Newco, Inc., 470 N.J.Super. 553, 561 (App. Div. 2022) (citing Skuse v. Pfizer, Inc., 244 N.J. 30, 50 (2020)).

Plaintiff contends the agreement did not clearly and unambiguously inform him he was waiving his right to present his claims in a court. We disagree.

An arbitration agreement is a waiver of the right to have claims and defenses heard in court. Therefore, a party must have knowledge of the right to use the court system and also the intent to surrender that right. Atalese v. U.S. Legal Servs. Grp., L.P., 219 N.J. 430, 442 (2014).

Because the "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," courts must "take particular care in assuring the knowing assent of both parties to arbitrate." Ibid. A court should therefore determine whether ...