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Rockel v. Dodge

May 13, 2004


On appeal from Superior Court of New Jersey, Law Division, Camden County, Docket No. CAM L-8337-02.

Before Judges Skillman, Coburn and C.S. Fisher.

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


Submitted April 20, 2004

Plaintiffs commenced this action, claiming that the unconscionable sales practices of defendant Cherry Hill Dodge, in violation of the Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -106, induced them to purchase or lease motor vehicles. Defendant moved for dismissal, contending that plaintiffs agreed to arbitrate these disputes. The trial judge granted that motion and plaintiffs have appealed. We reverse.

We initially observe that plaintiffs argue for the first time on appeal that the arbitration provisions in question violate the Truth-in-Consumer Contract, Warranty and Notice Act (the Truth Act), N.J.S.A. 56:12-14 to -18. The Truth Act prohibits, among other things, a seller from entering into a contract with a consumer"which includes any provision that violates any clearly established legal right of a consumer or responsibility of a seller... as established by State or Federal law at the time... the consumer contract is signed...." N.J.S.A. 56:12-15. Plaintiffs question whether arbitration provisions -- which, when enforced, extinguish the right to trial by jury -- violate the intent of N.J.S.A. 56:12-15 when applied to a CFA claim. We decline to consider this contention due to plaintiffs' failure to raise it in the trial court. Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 234 (1973).

Nevertheless, we conclude that defendant may not compel arbitration of plaintiffs' claims for other reasons to which we now turn.

A consumer's claim that a contract was the product of unconscionable practices in violation of the CFA does not necessarily prohibit the enforcement of an arbitration clause contained in the contract under attack. In Gras v. Associates First Capital Corp., 346 N.J. Super. 42, 52 (App. Div. 2001), certif. denied, 171 N.J. 445 (2002), we declared there is"no inherent conflict between arbitration and the underlying purposes of the CFA." As explained:

[T]wo significant public policies must be harmonized. Plaintiffs identify the first and correctly assert that the policy behind the CFA is to"root out consumer fraud." However, that policy must be balanced by a competing and compelling public policy favoring arbitration as a means of dispute resolution and requiring liberal construction of contracts in favor of arbitration.

[Id. at 53-54 (citations omitted).]

These policies are in or near equipoise. Id. at 54. Finding that the tension between these policies precludes a brightline rule, Gras requires that arbitration provisions be examined on a case-by-case basis. Such provisions may be enforced if they contain the appropriate attributes or disregarded if they do not.

Unlike Gras, which found the terms of an arbitration provision sufficiently clear to permit enforcement, we conclude that the uncertain content of the parties' agreement to arbitrate, the contracts' conflicting descriptions of the manner and procedure which would govern the arbitration proceedings, the absence of a definitive waiver of plaintiffs' statutory claims, and the obscure appearance and location of the arbitration provisions, militate against the entry of an order requiring arbitration over plaintiffs' objection. Accordingly, unlike Gras, the arbitration provisions at hand significantly skew the balance between the purposes of the CFA and the policy in favor of the arbitration of disputes, thus requiring a rejection of defendant's attempts to compel arbitration.

In Gras, we held that an arbitration provision was"specific enough to inform plaintiffs that they were waiving their statutory rights to litigation in a court," id. at 57, and concluded that the policy in favor of the arbitration of disputes sufficiently outweighed the plaintiffs' statutory right to present their claims to a jury in a court of law. Here, the arbitration agreement is highly ambiguous because the parties executed two documents which contain separate and somewhat disparate arbitration clauses. This ambiguity, we conclude, is fatal to the compelling of the arbitration of plaintiffs' CFA claims. See Leodori v. Cigna Corp., 175 N.J. 293, 302 (2003) ("[A] waiver-of-rights provision must reflect that an employee has agreed clearly and unambiguously to arbitrate the disputed claim."); Martindale v. Sandvik, Inc., 173 N.J. 76, 96 (2002) (arbitration agreement enforced because, among other things, it"was clear and unambiguous."); Garfinkel v. Morristown Obstetrics & Gynecology Ass'n, 168 N.J. 124, 135 (2001) ("The Court will not assume that employees intend to waive [statutory] rights unless their agreements so provide in unambiguous terms.").

The ambiguity of the arbitration agreement is demonstrated by the presence of two unrelated arbitration clauses contained in the contract documents, as well as their somewhat conflicting terms. The first of these documents, entitled"Motor Vehicle Retail Order Agreement" (retail order agreement), contains, in a ...

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