Goffe v. Foulke Mgmt. Corp., A-3/4 September Term 2018

Citation238 N.J. 191,208 A.3d 859
Decision Date05 June 2019
Docket NumberA-3/4 September Term 2018,081258
Parties Janell GOFFE, Plaintiff-Respondent, v. FOULKE MANAGEMENT CORP. t/a Cherry Hill Triplex/Cherry Hill Mitsubishi and Antonio (Tony) Salisbury, Defendants-Appellants. Sasha Robinson and Tijuana Johnson, Plaintiffs-Respondents, v. Mall Chevrolet, Inc., Defendant-Appellant.
CourtUnited States State Supreme Court (New Jersey)

Laura D. Ruccolo, Mt. Laurel, argued the cause for appellants (Capehart & Scatchard, attorneys; Laura D. Ruccolo, of counsel and on the briefs).

Charles N. Riley, Cherry Hill, argued the cause for respondents (Charles N. Riley, on the briefs).

Jennifer Borek, Jersey City, argued the cause for amicus curiae New Jersey Coalition of Automotive Retailers (Genova Burns, attorneys; Jennifer Borek, of counsel and on the brief, and Matthew I.W. Baker, Newark, on the brief).

Joseph A. Osefchen, Marlton, argued the cause for amicus curiae NAACP Camden County East (DeNittis Osefchen Prince, attorneys; Joseph A. Osefchen and Stephen P. DeNittis, Marlton, on the briefs).

William D. Wright argued the cause for amicus curiae New Jersey Association for Justice (The Wright Law Firm, attorneys; William D. Wright, on the brief).

Andrew M. Milz submitted a brief on behalf of amici curiae Consumers League of New Jersey and National Association of Consumer Advocates (Flitter Milz, attorneys; Andrew M. Milz, of counsel and on the brief, Cary L. Flitter and Jody Thomas Lopez-Jacobs, on the brief).

JUSTICE LaVECCHIA delivered the opinion of the Court.

This consolidated appeal involves claims that fraudulent sales practices by two car dealerships induced consumers to enter into agreements for the purchase of cars. The essential question on appeal, though, is whether plaintiffs may avoid being compelled to arbitrate those claims.

Plaintiffs challenge the formation and validity of their sales agreements on the bases that the dealerships' fraudulent practices and misrepresentations induced them to sign the transactional documents and that the agreements are invalid due to violations of statutory consumer fraud requirements. As part of the overall set of documents, plaintiffs signed arbitration agreements. Those agreements contained straightforward and conspicuous language about arbitration and broadly delegated arbitrability issues to an arbitrator.

Trial court orders in those individual matters compelled plaintiffs to litigate their various common law and statutory claims challenging the overall validity of the sales contracts in the arbitral forum. Each trial court determined the arbitration agreements to be enforceable. The Appellate Division reversed those orders.

We hold that the trial courts' resolution of these matters was correct and consistent with clear rulings from the United States Supreme Court that bind state and federal courts on how challenges such as plaintiffs' should proceed. Those rulings do not permit threshold issues about overall contract validity to be resolved by the courts when the arbitration agreement itself is not specifically challenged.

Supreme Court holdings treat an arbitration agreement as severable and enforceable, notwithstanding a plaintiff's general claims about the invalidity of the contract as a whole. Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 403-04, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967) ; see also Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 445-46, 126 S.Ct. 1204, 163 L.Ed.2d 1038 (2006). The same approach pertains to issues of arbitrability. In order to be decided by a court, an arbitrability challenge -- a challenge as to whether a particular matter is subject to arbitration or can be decided by a court -- must be directed at the delegation clause itself (which itself constitutes an arbitration agreement subject to enforcement); a general challenge to the validity of the agreement as a whole will not suffice to permit arbitration to be avoided. Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63, 72, 130 S.Ct. 2772, 177 L.Ed.2d 403 (2010).

We thus approach the instant matter mindful of our obligation to comply with the Supreme Court's holdings on the severability doctrine that applies to arbitration agreements. Plaintiffs assert common law and statutory violation theories that allegedly invalidate their overall sales agreements or otherwise render them unenforceable. While we do not address the merits of those claims, it is clear to us that plaintiffs attack the sales contracts in their entirety, challenging their formation process and arguing that they are, at best, unenforceable. They do not challenge the language or clarity of the agreements to arbitrate or the broad delegation clauses contained in those signed arbitration agreements. In this setting, the Supreme Court's precedent compels only one conclusion. On the question of who gets to decide plaintiffs' general claims about the validity of their sales contracts, we hold that an arbitrator must resolve them, as well as any arbitrability claims that plaintiffs may choose to raise under these delegation clauses.

I.
A.

Plaintiffs Robinson and Goffe each signed several documents in connection with their respective car purchases from defendant car dealerships.1 The common forms used by the dealerships2 allow for a singular description of the documents in issue, although we recite the alleged purchase experience of each plaintiff.

1.

On November 5, 2016, plaintiff Sasha Robinson contacted Mall Chevrolet in Cherry Hill about buying a car and allegedly was told that, if she purchased from the dealership, she would have two days within which to change her mind, return it, and get her money back. Later that day, she went to the dealership and discussed purchasing a 2016 Chevrolet Malibu. Mall Chevrolet employees told Robinson that -- in addition to trading in a Chevrolet Cruze that she jointly owned with her mother, Tijuana Johnson -- she would have to provide a $ 1000 deposit for the Malibu and that her monthly car payment on the remaining loan would be $ 549. Robinson says she was told that Johnson would be required to co-sign in order to complete the transaction.

Robinson moved ahead with the car purchase transaction that day, signing several documents. Johnson's signature does not appear on any of them.

One document Robinson signed is a two-page Motor Vehicle Retail Order (MVRO). Among other things, the MVRO lists the date of the sale, Robinson's address, email, phone numbers, the salesperson who worked with her, the car she was purchasing, and the one she was trading in. The MVRO lays out the financial terms of the transaction, including the price of the new car, various fees, the price of the trade-in, and the deposit amount.

Robinson signed the MVRO in multiple places. Above her second signature, the MVRO states:

Customer agrees that this Order on the face and on the reverse side and any attachments to it includes all the terms and conditions.... THIS ORDER SHALL NOT BECOME BINDING UNTIL ACCEPTED BY DEALER OR HIS AUTHORIZED REPRESENTATIVE. Customer by execution of this Order acknowledges that they have read the terms and conditions and have received a true copy of the Order. I am 18 years of age or older and of full legal capacity to enter into this contract. I ACKNOWLEDGE THAT I HAVE RECEIVED, READ, UNDERSTAND AND HAVE SIGNED THE ARBITRATION AGREEMENT WHICH APPLIES TO THIS TRANSACTION. CUSTOMER AGREES THAT CUSTOMER WILL BRING ANY CLAIMS CUSTOMER MAY HAVE HAD AGAINST DEALER, EXCEPT FOR UCC CLAIMS BUT, INCLUDING CLAIMS UNDER THE NEW JERSEY CONSUMER FRAUD ACT, WITHIN 180 DAYS FROM THE DATE OF THIS AGREEMENT AND IF NOT BROUGHT WITHIN 180 DAYS ALL CLAIMS WILL BE TIME BARRED. UCC CLAIMS MUST BE BROUGHT WITHIN ONE YEAR.

Robinson also signed an arbitration agreement. The agreement is detailed but, in relevant part, states:

In consideration of the mutual promises made in this agreement, you and we agree that either you or we have an absolute right to demand that any dispute be submitted to an arbitrator in accordance with this agreement. If either you or we file a lawsuit ... or other action in a court, the other party has the absolute right to demand arbitration following the filing of such action.
ARBITRATION: Arbitration is a method of resolving disputes between parties without filing a lawsuit in court....
DISPUTES COVERED: This agreement applies to all claims and disputes between you and us. This includes, without limitation, all claims and disputes arising out of, in connection with, or relating to:
• your purchase of any goods or services from us;• any previous purchase of goods or services from us;
....
• whether the claim or dispute must be arbitrated;
• the validity of this arbitration agreement;
• any negotiations between you and us;
• any claim or dispute based on an allegation of fraud or misrepresentation, including fraud in the inducement of this or any other agreement;
• any claim or dispute based on a federal or state statute including, but not limited to the N.J. Consumer Fraud Act, N.J.S.A. 56:8-1 et seq. and the Federal Truth in Lending Act;
....
WAIVER OF RIGHT TO JURY TRIAL: You and we expressly waive all right to pursue any legal action to seek damages or any other remedies in a court of law, including the right to a jury trial.
ARBITRATION RULES: Arbitration will be conducted under the ... protocol of the American Arbitration Association ....
....
OTHER IMPORTANT AGREEMENTS:
1. The Federal Arbitration Act applies to and governs this agreement ....
....
4. If any term of this agreement is unenforceable, the remaining terms of this agreement are severable and enforceable ....
....
10. CUSTOMER AGREES TO WAIVE THE APPLICABLE STATUTE OF LIMITATIONS AS FOLLOWS: CUSTOMER AGREES THAT IT WILL BRING ANY AND ALL CLAIMS CUSTOMER MAY HAVE AGAINST DEALER, EXCEPT FOR CLAIMS FOR BREACH OF CONTRACT UNDER THE NEW JERSEY UNIFORM COMMERCIAL CODE, BUT INCLUDING CLAIMS UNDER THE NEW JERSEY CONSUMER FRAUD ACT WITHIN 180 DAYS FROM THE DATE OF THIS AGREEMENT. IF CLAIMS ARE
...

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