On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, DC-7016-02.
Before Judges Conley, Braithwaite and Lisa.
The opinion of the court was delivered by: Lisa, J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
In 1995, the Legislature enacted the Consumer Protection Leasing Act (CPLA), N.J.S.A. 56:12-60 to -70, establishing requirements and standards for motor vehicle leases. The CPLA contains a one-business-day review provision as follows:
(1) No lease shall bind a lessee or lessor unless both the lessee and lessor have had one business day to review the lease contract before the signing of the contract.
(2) No leasing dealer may permit a prospective lessee to take possession of a motor vehicle subject to a lease unless the lessee is provided with a conspicuous notice which provides substantially the following:
NOTICE: THE LESSEE AND THE LESSOR SHALL BE ENTITLED TO REVIEW THE CONTRACT FOR ONE BUSINESS DAY BEFORE SIGNING THE CONTRACT immediately adjacent to the signature line of the contract.*fn1
[N.J.S.A. 56:12-67b(1), (2).]
The CPLA authorizes the Director of the Division of Consumer Affairs (Division) to promulgate rules and regulations"as may be needed to effectuate the purposes of this act." N.J.S.A. 56:12-69. Within several months of the CPLA's effective date, the Division adopted a new regulation, N.J.A.C. 13:45A-28.8(d), effective January 24, 1996, see 28 N.J.R. 1394(b) (March 4, 1996), authorizing waiver of the one-business day review provision, subject to certain conditions and requiring the use of a prescribed written waiver form containing certain information about the lease.
At issue in this case is the validity of the waiver regulation. The issue is of significant public importance because of the many vehicle lease transactions entered into on a regular basis. The amicus parties have informed us that one third (estimated by Legal Services of New Jersey) to 40% (estimated by New Jersey Coalition of Automotive Retailers, Inc.) of all new-vehicle transactions in New Jersey are accomplished by lease.
Dianne and Richard Cahill leased a vehicle from Future Chevrolet, Inc. (Future), taking delivery of the vehicle on the same day they signed the lease. The lease contained the review period notice as required by N.J.S.A. 56:12-67b(2), and the Cahills signed a waiver form that fully complied with N.J.A.C. 13:45A-28.8(d). They never contended that they did not understand their one-day review right or that their waiver of the right was not voluntary. Nor do they contend that they did not understand any provision of the lease.
After making several payments, the Cahills defaulted, the vehicle was repossessed and sold, and the assignee of the lease, General Motors Acceptance Corporation (GMAC), sued them for a deficiency. They settled their dispute with GMAC but, in a third-party complaint against Future, sought to declare the lease void because of non-compliance with the statutory one-day review requirement. Because N.J.S.A. 56:12-70 provides that a violation of the CPLA constitutes an unlawful practice under the Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -135, they sought treble damages, costs and attorney's fees against Future.
The Cahills argued that the waiver regulation is invalid because it is inconsistent with the CPLA and thus its promulgation exceeded the Division's authority. Therefore, they argued the lease is void because, pursuant to N.J.S.A. 56:12-67(b)(1),"[n]o lease shall bind a lessee" unless the lessee has first had one business day to review it. The trial judge rejected this argument and dismissed the third-party complaint. We agree and affirm.
The stipulated facts reveal that the Cahills went to Future on October 18, 2000 and agreed to lease a new 2001 Chevrolet Blazer. On that day, they signed an order form, specifying the vehicle to be leased and key terms of the lease. They paid a deposit of $1,846.10.*fn2 Two days later, on October 20, 2000, the Cahills returned to Future and were presented with a completed lease agreement. The lease contained a conspicuous boldface notice next to the signature line, as required by N.J.S.A. 56:12-67b(2), that the lessee had the right to review the contract for one business day before signing it. The Cahills were also presented with a completed"Lease Waiver" in the form prescribed by N.J.A.C. 13:45A-28.8(d). They initialed and signed the form in all of the appropriate places, thus acknowledging that the specific lease terms had been explained to them, that they were aware of their right to review the lease for one business day before signing it, and that they chose to waive that right and sign the lease immediately. They then signed the lease and took delivery of the vehicle.*fn3
Resolution of the issue before us requires a review of the essential provisions of the CPLA, ascertainment of the purpose of the one-business-day review provision, and evaluation of the entirety of the waiver regulation. The CPLA requires inclusion of detailed information in the lease, including, for example, whether the lessee has a purchase option at the end of the lease term, and, if so, the purchase price or method for determining it, and the total cost of the lease if the purchase option is exercised. N.J.S.A. 56:12-62. It is also required that the lease contain a description of the standards to determine excessive wear and tear, the formula for calculation of liability if the lessee terminates the lease, the residual value of the vehicle, the mileage allowable, the payments required at the inception of the lease, the gross capitalized cost of the vehicle, and other like information. Ibid.
The scant legislative history accompanying the CPLA includes this comment by a sponsor:"Automobile leasing agreements vary a great amount in their terms. People who lease automobiles often don't have a clear picture of all the terms and requirements, and this can lead to real trouble.... Our aim is to take the confusion and risk out of leasing a vehicle." Art Weissman,'Vicious' dog reform, car-leasing standards approved by governor, ASBURY PARK PRESS, December 25, 1994. The CPLA requires motor vehicle leases to be in writing and contain all terms and conditions of the lease. N.J.S.A. 56:12-62a. The legislation requires inclusion of many items in the lease to afford full disclosure of the lease terms to consumers. But the Legislature was also concerned that the lease terms might be confusing.
It is thus apparent that the Legislature's purpose in including the one-business-day review provision was to enable consumers to review the lease and become familiar with its terms before signing it without being confronted by a dealer's"now or never" demand. By this requirement, the Legislature assured that a consumer would be presented with a fully-completed written lease containing all details of the intended lease transaction, with an opportunity to study it and without being pressured to sign it immediately or lose the deal.
Recognizing this purpose, we consider the waiver. The Division did not merely authorize a simple unqualified waiver by a prospective lessee. It conditioned the waiver upon a clear disclosure and explanation of key terms of the lease and acknowledgement of that information by the consumer. It required completion in full, with no blank spaces, of this form:
WAIVER I HAVE BEEN ADVISED THAT UNDER THE NEW JERSEY CONSUMER PROTECTION LEASING ACT, N.J.S.A. 56:12-60 et seq., I AM ENTITLED TO REVIEW THE LEASE CONTRACT FOR ONE 24-HOUR BUSINESS DAY BEFORE SIGNING. I CHOOSE TO WAIVE THAT RIGHT AND SIGN THE LEASE NOW.
LESSEE'S (CONSUMER'S) LESSOR'S (DEALER'S)