On appeal from Superior Court of New Jersey, Law Division, Atlantic County, L-3974-99.
Before Judges Skillman, Wallace, Jr., and Carchman.
The opinion of the court was delivered by: Carchman, J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Plaintiffs Robert E. Gras, Sr. and Evelyn L. Gras entered into a series of five secured loan transactions with defendants Associates First Capital Corp., Associates Corp. of North America, and Associates Financial Services Co., Inc. (collectively "Associates"). Each loan transaction was accompanied by the purchase of credit life insurance provided by defendant Union Security Life Insurance Co. (Union). The loan documents further included an agreement whereby plaintiffs consented to arbitrate any dispute or claim in connection with the loans, including within its terms "any claim or dispute based on a federal or state statute." Finally, the arbitration agreement prohibited plaintiffs from pursuing a class action in arbitration.
Plaintiffs brought an action in the Law Division alleging, among other claims, that the credit life insurance provisions of the loan agreements violated the Consumer Fraud Act, N.J.S.A. 56:8-1 to -106. Defendants filed a Demand for Arbitration with the American Arbitration Association (AAA), plaintiffs moved to stay the arbitration, and defendants cross-moved for a stay pending arbitration. The motion judge granted defendants' motion and dismissed plaintiffs' complaint. Plaintiffs appealed, and we stayed the arbitration pending appeal.
We reject plaintiffs' claim on appeal that the arbitration agreement is void because it contravenes public policy by precluding class actions and, if not void, the agreement cannot be enforced since plaintiffs did not knowingly waive their rights to pursue such action. We conclude that the arbitration agreement is valid even though it does preclude class actions as plaintiffs can maintain their statutory claims in the arbitration proceeding. We also conclude that the agreement adequately notifies plaintiffs as to the limitation of their rights. We affirm.
Over a period of four years, plaintiffs secured five loans from Associates and, as part of each loan transaction, purchased credit life insurance from Union. Each loan was used to pay the prior loan, and the principal amount of each loan ranged from approximately $27,000 to $68,000. The credit life premiums ranged from $2,948.46 to $3,585. Although the record on appeal does not reflect signatures as to each insurance agreement, plaintiffs were required to acknowledge purchase of the insurance in each instance.
Each loan agreement was accompanied by a separate arbitration agreement. Each agreement was separately executed by plaintiffs and carried a legend at the beginning of the agreement stating:
READ THIS ARBITRATION AGREEMENT CAREFULLY. IT LIMITS CERTAIN OF YOUR RIGHTS, INCLUDING YOUR RIGHT TO MAINTAIN A COURT ACTION.
The arbitration agreement also described the costs of arbitration, the selection of arbitrators, the method of initiating arbitration, the location of the arbitration, and the enforcement of the arbitration decision.
The agreement specifically described the disputes covered by arbitration and stated in pertinent part:
[t]his agreement applies to all claims and disputes between [plaintiffs] and [Associates]. This includes, without limitation, all claims and disputes arising out of, in connection with, or relating to:
ù your loan with us today;
ù any previous loan from us and any previous retail installment sales contract or loan assigned to us;
ù all the documents relating to this or any previous loan or retail installment sales contract;
ù any insurance purchased in connection with this or any previous loan or retail ...