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Kent Motor Cars, Inc. v. Reynolds and Reynolds Co.

February 9, 2010

KENT MOTOR CARS, INC., D/B/A HONDA OF PRINCETON, SPORTS AND SPECIALIST CARS, INC. AND ROBERT BURT, PLAINTIFFS-APPELLANTS,
v.
REYNOLDS AND REYNOLDS CO., AND UNIVERSAL UNDERWRITERS GROUP, DEFENDANTS-RESPONDENTS, AND NEW JERSEY COALITION OF AUTOMOTIVE RETAILERS, INC., AND AUTOMATIC DATA PROCESSING, INC., DEFENDANTS.



On appeal from Superior Court of New Jersey, Law Division, Mercer County, Docket No. L-2463-05.

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

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

APPROVED FOR PUBLICATION

Argued October 6, 2009

Before Judges Skillman, Gilroy and Simonelli.

In 1998, the Supreme Court adopted a series of rule amendments that eliminated the former party joinder requirements of the entire controversy doctrine and instead imposed a new requirement that a party provide notice in its first pleading of the names of other potentially liable parties. See R. 4:5-1(b)(2); R. 4:29-1(b); R. 4:30A. If a party fails to comply with this notice requirement, one of the amended rules authorizes a court to impose an appropriate sanction, including dismissal of a subsequent action against a party whose existence was not disclosed. The primary issue presented by this appeal is whether the trial court properly invoked the sanction of dismissal under the circumstances of this case. This appeal also involves an insurance coverage issue, which is discussed in section III of the opinion.

I.

Plaintiffs Kent Motor Cars d/b/a Honda of Princeton (Honda of Princeton) and Sports and Specialist Cars (Sports) (hereinafter sometimes referred to collectively as the Burt companies) are automobile dealers. Plaintiff Robert Burt is the principal in both automobile dealerships. Defendant Reynolds and Reynolds sells business forms. In 2002, the Burt companies used forms printed by Reynolds in connection with their sale of cars.

On June 6, 2002, Henry Wilson signed a purchase order form printed by Reynolds for the purchase of a 2002 car from Honda of Princeton. This form provided for imposition of charges for registration and title and a "documentary fee" consisting of an "M.V. Messenger Service" charge, a "Clerical Fee," and an "Admin. Fee." Typed within a box at the bottom of the form were eight lines of small print, which included the following statement:

YOU HAVE THE RIGHT TO A WRITTEN ITEMIZED PRICE FOR EACH SPECIFIC DOCUMENTARY AND PRE-DELIVERY SERVICE WHICH IS TO BE PERFORMED.

THE AUTOMOTIVE DEALER MAY NOT CHARGE FOR PRE-DELIVERY SERVICES FOR WHICH THE AUTOMOTIVE DEALER IS REIMBURSED BY THE MANUFACTURER. . . .

On July 25, 2003, Wilson filed a putative class action against Burt individually and the Burt companies. Wilson's complaint claimed that the Burt companies had violated the Consumer Fraud Act, N.J.S.A. 56:8-1 to -20, and the Truth-in-Consumer Contract, Warranty and Notice Act, N.J.S.A. 56:12-14 to -18, by overcharging for title and registration fees and charging "documentary fees" for services that were not performed. The Wilson complaint also claimed that the previously quoted statement at the bottom of the purchase order violated a subsection of the Automotive Sales Practice regulations adopted by the Division of Consumer Affairs, which prescribes a minimum ten-point font size for such provisions.

N.J.A.C. 13:45A-26B.2(a)(2).

Although the purchase order form signed by Wilson indicated that it had been printed by Reynolds, Wilson did not join Reynolds as a defendant in the putative class action. The answer filed on behalf of the Burt companies also did not include a third-party complaint against Reynolds, and the Burt companies' accompanying case information statement indicated that they did not anticipate joining any additional parties.

In late 2003, after the Wilson action was filed, the sales manager at Honda of Princeton communicated with the New Jersey Coalition of Automotive Retailers (NJCAR), of which the Burt companies are members, regarding the Reynolds forms. In response, NJCAR informed the sales manager that the forms the Burt companies had been using contained language that was not in ten-point font, as required by the Automotive Sales Practice regulation. Based on this advice, the Burt companies began using a different purchase order form prepared by NJCAR that satisfies the ten-point font requirement.

The trial court certified the Wilson action as a class action, and in June 2005, the court granted plaintiffs' motion for a partial summary judgment on liability, which ruled that the Burt companies had overcharged members of the Wilson class for registration and title fees, in violation of the Consumer Fraud Act, and failed to provide required disclosures on purchase order forms in the ten-point font size required by N.J.A.C. 13:45A-26B.2(a)(2).

Shortly thereafter, the Burt companies substituted new counsel, who submitted a settlement proposal to counsel for the Wilson class on August 25, 2005. The issue of Reynolds's joinder in the action was raised for the first time ...


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