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Maguire v. Freehold Subaru

July 22, 2008


On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-4190-06.

Per curiam.


Submitted July 8, 2008

Before Judges Parker and Gilroy.

Plaintiff Angela Maguire appeals from the September 28, 2007 order, which denied her motion seeking to vacate a private arbitration award entered on May 15, 2007. We affirm.

On July 23, 2005, plaintiff, in anticipation of entering into an agreement to lease a new 2005 Subaru automobile from defendant, signed a buyer's order form. The order form contained an arbitration provision that stated in pertinent part: 1) "[t]he parties to this agreement agree to arbitrate any claim, dispute or controversy, including all contractual statutory and common-law claims and any state or federal claims that may arise under this agreement"; 2) that "[w]ithout limitation, Consumer Fraud, Lemon Law, and Truth-in-Lending claims are just three examples of the various types of claims subject to arbitration under this agreement"; 3) "[t]he arbitration shall be conducted in accordance with the Rules of the American Arbitration Association before a single arbitrator"; 4) that "[e]ach party shall bear his or her own attorney's fees and costs associated with the arbitration"; and 5) "[t]he decision of the arbitrator shall be binding upon the parties."

On July 24, 2005, plaintiff entered into a written lease agreement with defendant, agreeing to lease the automobile for a term of forty-eight months. The lease also contained an arbitration provision, which provided in pertinent part: "[a]ny controversy or claim between or among you and me, including, but not limited to, those arising out of or relating [to] this lease or any related agreement or any claim based on or arising from an alleged tort, shall at the request of either party be determined by arbitration." The provision further provided: "[t]he arbitration shall be governed by the Federal Arbitration Act (Title 9, U.S. Code), notwithstanding any choice of law provision in this lease, and under the authority and the applicable consumer rules and procedures of the American Arbitration Association then in effect." Lastly, the provision also stated that the "[a]rbitrator(s) must be licensed attorneys with expertise in the substantive laws applicable to the subject matter of the dispute." The final invoice for the leased motor vehicle contained a description of the following optional services: an extended warranty service contract at the price of $2,000; and an "after sell" "ETCH 3000" insurance policy*fn1 for $6,250.

On September 14, 2006, plaintiff filed her complaint asserting various claims against defendant, including violations of the New Jersey Consumer Fraud Act (CFA), N.J.S.A. 56:8-12 to -20. On October 26, 2006, defendant filed a motion seeking to dismiss the complaint and compel arbitration, pursuant to the arbitration provision contained in the buyer's order form. On November 17, 2006, defendant's motion was granted.

On January 23, 2007, plaintiff initiated arbitration with the American Arbitration Association (AAA), contending that defendant had violated the CFA by, among other matters: 1) overcharging plaintiff for the lease of the motor vehicle; 2) charging plaintiff $6,250 for an "after sell" item, which plaintiff had not agreed to, in violation of the Automotive Pre-Delivery Services regulations;*fn2 and 3) unconscionably charging plaintiff $2,000 for an extended warranty service contract. Defendant responded, contesting each of plaintiff's claims.

On February 28, 2007, AAA sent the parties a letter informing them that John R. Holsinger was appointed as the arbitrator. The letter also provided Holsinger's biographical data and his required disclosures. Because Holsinger's résumé disclosed that he had previously represented "automobile rental companies" and "automobile manufacturers and dealers" among numerous private clients in his thirty-two years of experience as a general commercial litigator, plaintiff objected to his appointment as arbitrator. "I [plaintiff's attorney] feel that Mr. Holsinger's prior representation of auto dealerships may work to the disadvantage of my client." Accordingly, plaintiff requested that the AAA appoint another arbitrator who "has not previously represented automobile dealerships." On March 5, 2007, AAA denied plaintiff's request for the appointment of a new arbitrator.

The arbitration proceeding was conducted on April 20, 2007, with the parties submitting post-arbitration briefs. In addition to her brief, plaintiff also submitted a post-arbitration certification of counsel in support of her request for attorney fees under the CFA, N.J.S.A. 56:8-19. On May 15, 2007, Holsinger issued his final award, stating: 1) "Claimant's claims are dismissed with prejudice and Claimant shall take nothing from Respondent"; 2) "Claimant has not proven an ascertainable loss arising from any alleged violation of law"; and 3) "[t]he administrative fees of the [AAA] totaling $1,250.00 and the arbitrator compensation totaling $750.00 shall be borne as incurred." The award further provided: "[t]his award is in full settlement of all claims for relief and defenses submitted to this arbitration. All other claims and defenses, including attorney fees, not addressed in this award are hereby denied."

On August 15, 2007, plaintiff filed a notice of motion to vacate the arbitration award and to remand the matter back to arbitration before a different arbitrator. Plaintiff argued that the award should have been vacated because it was made in manifest disregard of the law, the arbitrator was not impartial, and the award was against public policy.

On September 28, 2007, Judge Terrence Flynn entered an order, supported by an oral decision, denying the motion. In rejecting plaintiff's argument that the arbitrator should have recused himself from hearing the matter because he had previously represented automobile manufacturers and dealerships in his private practice as a commercial litigator, the judge determined that the argument was based only on speculation, not "on evidence of interest or bias that [was] direct, definite, and capable of reasonable demonstration." The judge rejected plaintiff's contention that the award manifested a clear disregard of the law, determining that plaintiff had not proven that this was one of those "very rare circumstances where there's an egregious impropriety," warranting the court to vacate the arbitration award, even if he applied federal standards of review.

Lastly, the judge found that the heightened standard of review, permitting the vacation of an arbitration award for public policy reasons in public-sector arbitrations, was not applicable to this private arbitration proceeding award. On appeal, ...

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