Jasphy v. Osinsky

• Decision Date: 05 November 2003
• Citation: 364 N.J. Super. 13,834 A.2d 426
• Parties: Felice C. JASPHY, a/k/a Ztzipi Jasphy, Plaintiff-Respondent, v. Elana OSINSKY, a/k/a Ilana Shomrony, Ernest Osinsky and Cedar Lane Furs, Defendants-Appellants.
• Court: New Jersey Superior Court

834 A.2d 426

364 N.J. Super. 13

Felice C. JASPHY, a/k/a Ztzipi Jasphy, Plaintiff-Respondent, v. Elana OSINSKY, a/k/a Ilana Shomrony, Ernest Osinsky and Cedar Lane Furs, Defendants-Appellants.

Superior Court of New Jersey, Appellate Division.

Argued October 14, 2003.

Decided November 5, 2003.

Brian J. Bolan, Parsippany, argued the cause for appellants (Gennet, Kallmann, Antin & Robinson, attorneys; Mr. Bolan, on the brief).

Jill S. Taylor, argued the cause for respondent (Leonard S. Miller, attorney, Fair Lawn; Ms. Taylor, on the brief).

Before Judges NEWMAN, FALL and PARRILLO.

The opinion of the court was delivered by NEWMAN, J.A.D.

The limitation of liability clause in a fur storage agreement, limiting the liability of the furrier to $1 per garment, was struck down by the trial court as unconscionable. We agree and affirm.

The relevant facts which are not disputed may be summarized as follows. On March 27, 2001, plaintiff Felice Jasphy brought three fur coats to defendant Ilana Shomrony's (initially misidentified as Elana Osinsky) establishment trading as Cedar Lane Furs in Teaneck for storage and cleaning. The three coats included a ranch mink coat, a Shearling, and a blush mink. In addition to the storage of the three coats, plaintiff also sought cleaning of the ranch mink. In 1997, the ranch mink had been appraised for $11,500; the Shearling for $3500; and the blush mink for $3995.

Plaintiff signed a written agreement, labeled "fur storage sales receipt," which included plaintiff's name and address, and the price of the storage and cleaning. On the back of the receipt, the following pre-printed provision limiting defendant's liability read:

[t]his receipt is a storage contract, articles listed are accepted for storage until December 31, of dated year, subject to the terms and conditions hereof, in accepting this receipt, the depositor agrees to be bound by all its terms and conditions and acknowledges that this receipt is the entire agreement with the furrier, which cannot be changed except by endorsement herein signed by the furrier. If no value is specified, or if no separate insurance covering the garment is declared at the time of issuance of this receipt, insurance in the amount of $1.00 will be placed on the garment....

Immediately above the location on the receipt for a customer's signature, the following was printed: "I understand and agree that Cedar Lane Furs' liability for loss or damage from any cause whatsoever, including their own negligence or that of employees and others, is limited to the declared valuation." Plaintiff signed and dated this receipt on March 27, 2001.

Plaintiff did not state the value of the coats or declare whether she had separate insurance coverage when the receipt was issued. There is no identifiable room provided on the receipt to specify such information. The limitation of the furrier's liability was not brought to plaintiff's attention, nor was she asked to furnish the value of her coats for storage.

The following day, March 28, 2001, a fire swept through Cedar Lane Furs, causing plaintiff's three furs to be completely destroyed. A hot iron, which defendant apparently failed to unplug overnight, caused the fire. Plaintiff claims she subsequently had a conversation with defendant during which defendant informed plaintiff that her furs had not been in the fur vault on the night of the fire. According to plaintiff, defendant initially told her that the furs were safe and would be returned to her. By letter to defendant dated April 27, 2001, after learning the furs were a complete loss, plaintiff demanded full replacement value and expressed her desire for an amicable settlement.

Plaintiff received no response to this letter. On May 23, 2001, plaintiff's counsel sent a letter to defendant seeking an amicable resolution of the issue, but advising that legal action would be taken if the parties did not resolve the problem. Defendant responded by letter dated July 16, 2001, and enclosed a "Bailee's Customer's Affidavit Claim Form" for plaintiff to fill out and send to defendant's insurance company for reimbursement.

This letter to plaintiff stated in part "[c]ustomers who have purchased insurance through us will be compensated for the declared amount. Customers who carry insurance on their Home Owners policy or a "floater" policy covering the garment(s) are required to submit a claim to their insurance for reimbursement." In cases where customers separately insured their furs, defendant's insurance apparently served as a secondary or excess policy. Plaintiff submitted a claim form for each of her destroyed furs and returned the forms to defendant. Plaintiff never received any reimbursement from defendant's insurance company. Thereafter, plaintiff brought this action.

In moving for summary judgment, defendant sought enforcement of the contractual provision limiting liability to $1 per garment, and dismissal of the consumer fraud allegation. Judge Doyne denied summary judgment and held the limitation of liability clause in this bailment contract to be unenforceable. He made the following findings:

Nowhere on the form is there a space provided for a customer to fill in value. Defendants do not allege that their representative in any way highlighted these provisions, discussed these provisions with the customer, or in any way alerted the customer to the same.

....

Defendants move for summary judgment on the ground that there was no value specified, and the insurance for each item is limited to one dollar per garment. It asserts the position that this is a bailment situation, and as such, general rules of contractual interpretation are applicable.

....

Continuing, the court shall address the propriety and legal effect of the limitation of liability clause....

Further, such limitations are read strictly with every doubt resolved against the party seeking their protection[.]... Liability limitations upheld by the [c]ourts have usually been the subject of extensive negotiations between the parties[.] ...

In the instant matter based on the circumstances under which plaintiff executed the contact which are not disputed in the papers submitted before the court, the [c]ourt finds the limitation of liability clause invalid and orders the same stricken.

The record before the [c]ourt is devoid of any evidence that the limitation of liability clause at issue was part of the parties' agreement.

Defendants ... [do] not dispute plaintiff's allegation that she was unaware the agreement contained a blanket disclaimer clause. As it appears, the clause was not part of the bargain. It is therefore stricken from the agreement....

[Citations omitted.]

Relying on Henningsen v. Bloomfield Motors, Inc., 32 N.J. 358, 161 A.2d 69 (1960), and noting that limitations on liability are frowned upon and generally unenforceable unless bargained for, Judge Doyne struck down the furrier's liability limitation clause.

On December 10, 2002, a consent judgment was entered against defendants in favor of plaintiff in the amount of $16,000, subject to the disposition of defendants' appeal from the June 17, 2002 order denying summary judgment to defendants.

On appeal, the following issues are presented for our consideration:

POINT I

THE EXPRESS TERMS OF THE CONTRACT FOR STORAGE LIMIT DEFENDANTS' LIABILITY TO NOT MORE THAN $1.00 PER GARMENT, AND JUDGE DOYNE'S ORDER INVALIDATING AND STRIKING THE LIMITATION OF LIABILITY PROVISION OF THE CONTRACT, SHOULD BE REVERSED, LEAVING THE TERMS IN FORCE.

POINT II

THE ORDER INVALIDATING THE LIMITATION OF LIABILITY CLAUSE CONTAINED IN THE FUR STORAGE AGREEMENT SHOULD BE REVERSED BECAUSE SUCH

CLAUSES ARE SANCTIONED BY N.J.S.A. 12A:7-204(2).

We address the issues in the order just recited.

I.

Defendant argues that the trial court erroneously struck the clause limiting their liability to plaintiff to no more than $1 per garment.

Both parties agree that the storage receipt was a bailment contract. Indeed, a bailment is established when property is turned over into the possession and control of the bailee. McFarland v. C.A.R. Corp., 58 N.J.Super. 449, 452, 156 A.2d 488, 489 (App.Div.1959). When a bailment has mutual benefit for the bailor and bailee, the bailee has a duty to "exercise reasonable care for the safekeeping of the chattel bailed." Parnell v. Rohrer Chevrolet Co. Inc., 95 N.J.Super. 471, 477, 231 A.2d 824, 827 (App.Div.1967). Once a bailment exists and the loss of the goods while in the bailee's possession is established, a presumption of negligence arises, requiring the bailee to come forward with evidence to show that the loss did not occur through its negligence or that it exercised due care. Clark v. Nat'l Movers Co., Inc., 53 N.J.Super. 325, 330, 147 A.2d 298, 301 (App.Div.1959). Secondly, there is no dispute that the contract in the present case is a contract of adhesion. Defendant conceded this point at argument.

Defendant first argues that the order striking the limitation of liability clause constitutes reversible error because Judge Doyne incorrectly relied on Henningsen, supra.

Defendant argues the facts in Henningsen differ materially from the present case because, unlike the limited warranty in Henningsen, which was the uniform warranty of the Automobile Manufacturers Association, the limitation of liability clause here was a product of defendant's "mom and pop" fur store. Furthermore, defendant contends that a car has become a necessity, as Henningsen noted, while fur storage is not. Henningsen, supra, 32 N.J. at 387,

161 A.2d at 85. In response, plaintiff contends Henningsen is analogous to the present case because both cases involved a consumer with unequal bargaining power. Likewise, plaintiff disputes the implication arising from the defendant's characterization of the store as a "mom and pop" operation, observing that defendants were sophisticated enough to include limitation of liability provisions in all their contracts. Ibid....