October 25, 2010
PARTHESH "DANNY" KALATHIA, PLAINTIFF-RESPONDENT,
PMM, INC. D/B/A TOGETHER, AND ARLENE HANSON, DEFENDANTS-APPELLANTS.
On appeal from the Superior Court of New Jersey, Law Division, Mercer County, Docket No. L-1766-07.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued September 15, 2010
Before Judges Fisher and Fasciale.
At the heart of this appeal is a contract expressing defendant PMM, Inc.'s promise to provide dating services to plaintiff in exchange for a fee. The contract, which plaintiff did not read before executing, did not memorialize the oral representation uttered by PMM's salesperson that plaintiff had three days to cancel if he changed his mind; in fact, unknown to plaintiff, the contract stated there was "no provision for . . . cancellation." When plaintiff attempted to cancel the next day, PMM relied on the contract and refused. At the conclusion of a bench trial, the judge found that the salesman's oral misrepresentation about the right to cancel violated the Consumer Fraud Act (CFA), N.J.S.A. 56:1-1 to --20, and awarded treble damages and counsel fees.
In appealing, defendants argue:
I. PLAINTIFF CANNOT AVOID HIS CONTRACTUAL OBLIGATION ON THE GROUND THAT, WHILE HE ADMITTEDLY SIGNED AND INIT[I]ALED THE AGREEMENT, HE FAILED TO READ THE NON-CANCELLATION PROVISION. THE COURT'S CONTRARY RULING CONSTITUTED PREJUDICIAL ERROR WARRANTING REVERSAL.
II. THE PAROL EVIDENCE ADOPTED BY THE COURT AND RELIED BY THE PLAINTIFF RESULTED IN PREJUDICIAL ERROR.
III. BECAUSE THERE WAS NO FRAUD IN THE EXECUTION, PLAINTIFF CANNOT MAKE A CLAIM FOR FRAUD UNDER THE [CFA] AND THE LOWER COURT'S JUDGMENT WAS THEREFORE PREJUDICIAL ERROR.
We find insufficient merit in Point II to warrant discussion in a written opinion.*fn1 R. 2:11-3(e)(1)(E). We also reject defendants' other arguments for the following reasons.
The facts that govern our disposition of this appeal may be briefly summarized. Plaintiff answered an advertisement and, on November 12, 2006, discussed with PMM's salesperson, Arlene Hanson, the purchase of a PMM membership that would provide him with dating services. Hanson advised that the cost was $6495 but, if plaintiff signed a contract that day, he would receive a $1000 discount. Hanson also told plaintiff he would have the right to cancel within three days; the contract expressly states otherwise.
The contract*fn2 consists of a single sheet of paper containing eighteen numbered paragraphs. The paragraphs are comprised of ninety-two lines containing nearly 1400 words, all in an area measuring only five-and-one-half inches by eight inches. The print size is therefore extremely small. The letters are approximately one-sixteenth of an inch high.
The first paragraph states that:
The Client, by executing this agreement, hereby acknowledges that Client is purchasing services of interviewing, testing, evaluating, processing, matching and marketing by [PMM]. It is hereby understood and agreed that PMM matches cost of 5495.00 upon joining; therefore, there is no provision for refunds, recisions [sic] or cancellations of any kind. Client agrees that PMM is an independently owned and operated business and that this agreement is exclusively between PMM and Client and with no other person.
Absent close scrutiny, the clause about cancellations may easily escape detection. It is not in a separate sentence or paragraph, nor placed under a separate heading that might grab attention during a cursory examination. Moreover, the clause is not underlined, highlighted, italicized or in bold print. It is, in fact, inconspicuous. Indeed, a reader's attention may be drawn away from the cancellation clause to the bold-printed sentence that follows. See, e.g., Silvestri v. Italia Societa Per Azioni Di Navigazione, 388 F.2d 11, 14 (2d Cir. 1968). It is true that plaintiff initialed directly below this paragraph, but that act does not suggest his attention was drawn to the cancellation clause, as he was also asked to initial seven of the other seventeen paragraphs of the contract.
Plaintiff was unaware of the cancellation clause because, as he acknowledged at trial, he did not read the contract prior to execution.*fn3 Although plaintiff never testified that Hanson told him not to read the contract, he did testify that her oral statements suggested a less than compelling need for plaintiff to read or study the contract at that time:
Q: What did she tell you, if anything, regarding the terms of the membership?
A: The terms of the membership, she said sign today, these are the papers. Go home, read it, if you have any questions get back to me later.*fn4
Plaintiff also testified to the comfort provided by the representation of a three-day cancellation period and what he referred to as "a prize" in the form of a $1000 discount; that is, plaintiff contemplated he had three days to think about it if I don't like I cancel the service. And that is what --within my mind that, yes, the price is $5,495, but it is not paid until I fully agree, which I don't need to agree at that point in time if I want to proceed, or I do not want to proceed.
There were -- the biggest factor was --there are two factors that drive this. The first thing was that whether I am signing on I have three days to review and see if I am comfortable or not comfortable, or if I have any other questions and concerns I can change my decision. And the second was the first time discount if I decide to proceed [with] this membership. . . .
In addition, by signing at that time, the parties were able to commence plaintiff's profile so as not to delay PMM's dating services.
Defendants argue that the judge's finding of an oral representation of a three-day cancellation period is irrelevant because the contract clearly and unambiguously precluded any cancellations.*fn5 They contend that an intelligent, educated contracting party, as a matter of law, has no right to rely on an oral representation at the time of formation about the contents of a written contract. Certainly, factors regarding a contracting party's intelligence and sophistication are relevant, but only to the extent they shed light on whether the party was justified in relying on an oral representation. We reject defendants' contention that oral misrepresentations at the time of formation are always inessential when in conflict with the written contract imposed on the recipient of the misrepresentation. The question that must be answered is whether a contracting party, when presented with a written contract prepared by the other party, may be justified in relying on a misrepresentation that conflicts with the written contract in light of the attending circumstances.
In explaining the principle that guides the disposition of this appeal, we held in Nappe v. Anschelewitz, Barr, Ansell, 189 N.J. Super. 347, 355-56 (App. Div. 1983), aff'd in part, rev'd in part, 97 N.J. 37 (1984), that a party's reliance on a misrepresentation is justifiable "when facts to the contrary were not obvious or did not provide a warning making it patently unreasonable that plaintiff not pursue further investigation, under the circumstances that the means for such further investigation were readily apparent and, if pursued, would reveal the falsity of the representation." Nappe, supra, 189 N.J. Super. at 355; see also Davis v. Magee, 128 N.J.L. 137, 139 (Sup. Ct. 1942); Toker v. Perl, 103 N.J. Super. 500, 503 (Law Div. 1968), aff'd, 108 N.J. Super. 129 (App. Div. 1970). In short, defendants are mistaken in arguing there is an immutable law that precludes a finding of justifiable reliance on an oral representation that conflicts with a written contract. Instead, "[i]n the absence of obvious falsity or reason to know of facts making reliance unreasonable, there is no requirement that the recipient investigate the truth of the statements made to him." Restatement (Second) of Torts, § 541A comment a (1977).
Instead, in the totality of the circumstances, a factfinder may look to the nature of the misrepresentation and whether its falsity would be made obvious or apparent to "one of [the recipient's] knowledge and intelligence from a cursory glance." Prosser & Keeton on Torts § 108, at 752 (5th ed. 1984).
Certainly the context and attending circumstances may permit a factfinder to conclude -- despite the purported clarity of the writing -- that the recipient was justified in relying upon statements that would dissuade the recipient from investigating further. Here, as we have observed, plaintiff was influenced by the availability of a one-time only $1000 discount -- a considerable carrot that Hanson dangled before him. Moreover, the assurance of a three-day cancellation period provided, as plaintiff said, a degree of "comfort" that reduced his need to read the contract before signing. In addition, although the first paragraph of the contract states there is no provision for cancellation, another provision, which sets forth the circumstances that may permit PMM to cancel, somewhat conflicts. And other provisions set forth numerous disclaimers and conditions applicable to the parties' obligations. As a result, even if it could be said that a cursory examination of the contract would have caused plaintiff to notice the cancellation language of the first paragraph, further study of the contract suggests the possibility of other conditions that qualify the scope of that stipulation. Under all these circumstances, there was ample factual support for the judge's finding that the misrepresentation was actionable.
In short, we conclude that the law does not preclude a finding of justifiable reliance in these circumstances. The factfinder here was convinced, after hearing the witnesses and judging their credibility, that the representation was actually made and was of sufficient influence to justify plaintiff's reliance. We defer to those findings, Rova Farms, supra, 65 N.J. at 483-84, and, as a result, reject the arguments contained in defendants' Point I.
We also reject defendants' remaining arguments. In their Point III, defendants argue that Hanson made no misrepresentation about the contents of the written agreement. As observed, plaintiff testified to the contrary and the judge found plaintiff more credible than Hanson. The standard we apply in reviewing such a finding compels our deference to the judge's finding. To the extent Point III of defendants' brief is based on a different set of facts than those found by the trial judge, we reject it.
At oral argument, however, defendants seem to have taken a different tack than pursued in their brief. That is, defendants seem to argue that Hanson did not speak with the intention to mislead or deceive plaintiff and, as a result, should not be held liable. First, if we are to assume, as defendants now argue, that Hanson possessed good intentions and merely misspoke about a right to cancel, then one must question why defendants failed and refused to consent to cancellation of the contract and the return to plaintiff of the funds he paid. Second, plaintiff was not obligated to prove an intention to deceive. Gennari v. Weichert Co. Realtors, 148 N.J. 582, 605 (1997). The CFA "is intended to protect consumers from deception and fraud, 'even when committed in good faith.'" Ji v. Palmer, 333 N.J. Super. 451, 461 (App. Div. 2000) (quoting Gennari, supra, 148 N.J. at 604).
In short, it is not relevant whether Hanson's statements were comparable to the unconscionable tactics and bald-faced lies utilized by the fictional salesmen of Glengarry Glen Ross,*fn6 or, as may be the case here, whether Hanson simply misspoke when advising plaintiff he had a three-day right to cancel. Indeed, the subtlety of the latter approach may often prove more influential than the many "hard sell" tactics employed by unscrupulous salespersons due to its tendency to engender greater trust in the accuracy of the representations. In any event, the core question was whether plaintiff reasonably relied on the misrepresentation; the judge found he did and we have been presented with no legitimate reason for second-guessing the judge's finding.