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Hard Grove Cafe and Alexandra Bonilla v. Domestic Linen Supply Co.

November 21, 2011


On appeal from the Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-6389-10.

Per curiam.


Argued November 7, 2011

Before Judges A. A. Rodriguez and Sabatino.

Plaintiffs, Hard Grove Cafe ("Hard Grove") and Alexandra Bonilla ("Bonilla"), appeal the trial court's order of January 21, 2011 dismissing their lawsuit without prejudice and referring this business dispute to commercial arbitration. Plaintiffs also appeal the trial court's order dated March 18, 2011, denying their motion for reconsideration. For the reasons that follow, we affirm those orders in part, and remand in part concerning the discrete issue of the alleged unconscionability of the arbitration clause in the parties' contract.

Hard Grove is a cafe in Jersey City. Bonilla is an employee of Hard Grove. Domestic Linen Supply Co., Inc. ("Domestic Linen"), doing business as Domestic Uniform Rental, is a linen and uniform supplier, and one of several defendants named in plaintiffs' complaint. The individual co-defendants were Richard Then, a district sales manager of Domestic Linen who dealt with Bonilla; John Lachawiez, another manager of Domestic Linen; and Mark Colton, a Michigan attorney for Domestic Linen.*fn1

The parties' dispute arises from an agreement dated May 12, 2010. On that day, Then went to Hard Grove and solicited the cafe's uniform rental business during a conversation with Bonilla. As a result of that meeting, Bonilla and Then both signed a three-page form contract that Then had presented to her. Among other things, the contract obligated Hard Grove to rent a variety of items from Domestic Linen, including cook shirts, pants, and aprons. The contract specified that Hard Grove would pay Domestic Linen a minimum weekly delivery charge of $146.10.

The contract contained several other noteworthy provisions. In particular, it stated that Hard Grove "warrants that [it] is not under contract with any other party for the furnishing of the items which are the subject matter hereof." Additionally, Hard Grove "also warrant[ed] that [its representative] has read the entire contract, front and back, and has received a copy of this Agreement." Further, "[t]he signatory for the Customer warrant[ed] that [s]he is authorized on behalf of the Customer to execute this Agreement."

Most importantly, for purposes of the forum issues now before us, the contract contained the following arbitration clause:

In the event of any controversy or claim in excess of $10,000.00 arising out of or relating to this agreement, including but not limited to questions regarding the authority of the persons who have executed this agreement, the question, controversy or dispute shall be submitted to and settled by arbitration to be held in the city closest to the city in which the branch office of the Company which serves the Customer is located. Said arbitration shall be held in accordance with the then prevailing commercial arbitration rules of the American Arbitration Association except any rules which require the parties to use the American Arbitration Association as their sole Arbitration Administrator. Judgment upon and award rendered by the arbitrator may be entered in any court having jurisdiction thereof. The filing party may use either court or arbitration where the claim is less than $10,000.00. Venue for any court proceeding shall be in the county of the company's branch office servicing the Customer. The judge or arbitrator shall include as part of the award all costs including reasonable attorney fees and arbitration fees of the non-breaching party where it is determined that one of the parties has breached the agreement. [Emphasis added.]

Apparently, despite Bonilla's execution of what is styled as a requirements contract obligating Hard Grove to obtain certain supplies only from Domestic Linen, Hard Grove continued to use a different uniform supply company. Hard Grove also apparently did not pay the amounts billed under the contract by Domestic Linen. As a result, Colton, Domestic Linen's counsel in Michigan, wrote Hard Grove a letter in June 2010 demanding $18,993 in liquidated damages. Colton's letter alluded to the fact that Hard Grove could be responsible to reimburse Domestic Linen for its "legal fees and arbitration fees." In August 2010, a different law firm representing Domestic Linen, located in Ohio, transmitted a demand letter to Hard Grove for an even higher sum, $28,517.13, in allegedly accrued charges.

Hard Grove has refused to make payments to Domestic Linen, arguing that the May 12, 2010 form contract, as well as the arbitration provisions within it, are unenforceable for numerous reasons. Several of those arguments are factually supported, at least on their face, by a certification from Bonilla dated November 5, 2010. In particular, Hard Grove maintains that:

(1) Bonilla lacked the authority to bind the company to the agreement; (2) Bonilla, whose native language is Spanish,*fn2 was fraudulently induced by Then to sign the agreement, and he made several misrepresentations to Bonilla; (3) the agreement is a contract of adhesion, and the arbitration clause within it contains numerous unconscionable provisions that are unenforceable; and (4) there was no meeting of the minds by which Hard Grove agreed to waive its rights to litigate and subject itself to binding arbitration.

According to the narrative in Bonilla's certification, she spoke with Then for approximately ten minutes, at which point he asked her to sign the pre-printed document. Although Bonilla does not deny that she provided her signature, she claims that Then "repeatedly" told her that the document was not a contract, and that it contained "no commitments." She further claims that she told Then that the cafe was already renting uniforms through another supplier. Bonilla also states that she advised Then that the owners were not on the premises, and ...

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