July 2, 2012
GERARDO GONZALEZ AND KLEVER BRAVO, PLAINTIFFS-APPELLANTS, AND PRISCILLA GARCIA, PLAINTIFF,
AUTO MALL 46, INC., A/K/A NISSAN 46, BOROUGH OF TOTOWA, TOTOWA POLICE DEPARTMENT, ROBERT COYLE, IN HIS OFFICIAL CAPACITY AS CHIEF OF POLICE OF THE TOTOWA POLICE DEPARTMENT, DENNIS BLAKELEY, INDIVIDUALLY AND IN HIS OFFICIAL CAPACITY AS A SERGEANT OF THE TOTOWA POLICE DEPARMENT, DEFENDANTS-RESPONDENTS, AND WILLIS OF MICHIGAN, INC., D/B/A DEALERGUARD INSURANCE PROGRAM, DEFENDANT.
MOHAMMAD KHAN AND MUNAZZA KHAN, PLAINTIFFS-APPELLANTS,
AUTO MALL 46, INC., A/K/A NISSAN 46, BOROUGH OF TOTOWA, TOTOWA POLICE DEPARTMENT, ROBERT COYLE, IN HIS OFFICIAL CAPACITY AS CHIEF OF POLICE OF THE TOTOWA POLICE DEPARTMENT, DENNIS BLAKELEY, INDIVIDUALLY AND IN HIS OFFICIAL CAPACITY AS A SERGEANT OF THE TOTOWA POLICE DEPARTMENT, DEFENDANTS-RESPONDENTS, AND WILLIS OF MICHIGAN, INC., D/B/A DEALERGUARD, DEFENDANT.
On appeal from Superior Court of New Jersey, Law Division, Hudson County, Docket Nos. L-2412-09 and L-216-10.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued May 23, 2012 -
Before Judges Fuentes, Graves and Koblitz.
Plaintiffs in these consolidated complaints,*fn1 Gerardo Gonzalez, Klever Bravo and Mohammad and Munazza Khan, appeal from a June 16, 2010 order dismissing their claims against the Borough of Totowa, Totowa Police Department, Robert Coyle, in his official capacity as Chief of Police of the Totowa Police Department, and Dennis Blakeley, individually and in his official capacity as a Sergeant of the Totowa Police Department (the Totowa defendants). The motion judge granted summary judgment, finding that the Totowa defendants did not deprive the plaintiffs of any constitutionally protected right. Plaintiffs also appeal from the August 6, 2010 order denying reconsideration. In addition, plaintiffs appeal from the January 21, 2011 order granting partial summary judgment to Auto Mall 46, Inc. (Auto Mall), dismissing the first three counts of Gonzalez et al.'s complaint against Auto Mall and all claims asserted by the Khans against Auto Mall.
Gonzalez and Bravo both filed an Acceptance of Offer of Judgment on April 4, 2011 and their complaint was dismissed by order of June 10, 2011, thereby terminating both complaints as to all parties.*fn2
At the end of July 2008, cars innocently purchased by plaintiffs from Elmazahy Auto Sales Corp. (Elmazahy) were reported stolen by defendant Auto Mall. Auto Mall claims that Elmazahy paid for the cars with bad checks. Totowa defendants disseminated a report that the cars were stolen,*fn3 noting that the drivers might be purchasers in good faith. Neighboring police departments subsequently recovered some of the stolen cars and returned them to Auto Mall.
Plaintiffs brought civil rights actions under both 42 U.S.C.A. § 1983 (§ 1983) and the New Jersey Civil Rights Act, N.J.S.A. 10:6-1 to -2 (NJCRA) against all defendants, claiming that their rights to procedural due process were violated when their cars were taken from them without prior notice and a hearing. Plaintiffs also allege that Auto Mall committed an "unconscionable commercial practice" under the Consumer Fraud Act, N.J.S.A. 56:8-1 to -20 (CFA), when it reported the cars as stolen. After reviewing the record in light of the contentions advanced on appeal, we affirm.
Auto Mall operates an automobile dealership called Nissan 46 in Totowa, New Jersey. In May 2008, Elmazahy purchased over thirty cars from Auto Mall in a wholesale transaction, paying by check. Auto Mall delivered the cars, but retained possession of the original title documents until the checks cleared. The checks were dishonored by Elmazahy's bank due to insufficient funds.
Weeks later, a representative from Auto Mall contacted the Totowa Police Department and reported the cars as stolen.*fn4 Upon receiving the complaint, Sgt. Dennis Blakeley undertook a two-week investigation to determine where the reported cars were, how to recover them, and whether any third parties were involved. Sgt. Blakeley determined that the only way to locate the cars would be to file a stolen vehicle report. The report contained the following language:
This authority has entered 33 stolen vehicles, that are a result of a fraud by a used car dealer in Jersey City, New Jersey. The dealer is Elmazahy Auto Corp. . . . Elmazahy purchased these vehicles from  Auto Mall in Totowa, New Jersey with bad checks in the amount of $257,000.00. All these vehicles that were entered had a memo in the OAN*fn5 area that states "Driver Fraud Victim." At this time[,] one person[,] Julio Luna, the general manager[,] has been arrested, and there still is a[n] active warrant for his partner/owner Sonya D. DelRosario. Any questions, please contact
D. Sgt. Dennis Blakeley. . . .
This language was intended to apprise surrounding police departments that the current drivers of the cars were likely not involved in the theft.
The vehicles reported stolen included the cars purchased by Gonzalez and Bravo. Gonzalez paid $2190 for a 2000 Hyundai Elantra and Bravo paid $6500 for a 2001 Honda Accord.
Gonzalez claims that Elmazahy provided a series of temporary registrations, but went out of business before providing a permanent registration or title. When Gonzalez and his wife went to the New Jersey Motor Vehicle Commission (NJMVC) to register the car, the clerk noted that the car had been reported stolen, and the Jersey City Police escorted Gonzalez and his wife back to their home, where the police seized the car. Bravo reported that his car was seized by the New York City Police Department while he was at work. After the seizure of these cars, the police returned them to Auto Mall.
The Khans paid $3479 for a 1995 Toyota Four Runner. The Khans' car remains in their possession, but they claimed to be unable to register it because they could not obtain title to the automobile.*fn6
The owners of Elmazahy, Julio Luna and Sonia DelRosario, were arrested around the time the stolen vehicle report was filed. They were subsequently indicted for second-degree theft, N.J.S.A. 2C:20-4, and second-degree bad checks, N.J.S.A. 2C:21-5. Luna pled guilty to second-degree bad checks and was sentenced to four years in prison on December 10, 2009.
A court's grant of summary judgment, or dismissal for failure to state a claim, is reviewed under a de novo standard. Trinity Church v. Lawson-Bell, 394 N.J. Super. 159, 166 (App. Div. 2007). We thus use the same standard that governs trial courts under Rule 4:46-2(c) when assessing an award of summary judgment. Prudential Prop. & Cas. Ins. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.), cert. denied, 154 N.J. 608 (1998). Summary judgment will be granted when the moving party shows that "there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law." R. 4:46-2(c); see also Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 523 (1995). "An issue of fact is genuine only if, considering the burden of persuasion at trial, the evidence submitted by the parties on the motion, together with all legitimate inferences therefrom favoring the non-moving party, would require submission of the issue to the trier of fact." R. 4:46-2(c).
The CFA states that:
The act, use or employment by any person of any unconscionable commercial practice . . . in connection with the sale or advertisement of any merchandise or real estate, or with the subsequent performance of such person as aforesaid . . . is declared to be an unlawful practice[.] [N.J.S.A. 56:8-2.]
An action for a violation of the CFA may be maintained by "[a]ny person who suffers any ascertainable loss of moneys or property, real or personal, as a result of the use or employment by another person of any method, act, or practice declared unlawful under this act . . ." N.J.S.A. 56:8-19.
The CFA may apply to sales that affect consumers downstream in the chain of commerce. In Perth Amboy Iron Works, Inc. v. American Home Assurance, Co., 226 N.J. Super. 200, 211 (App. Div. 1988), aff'd, 118 N.J. 249 (1990), we held that ultimate consumers can bring a CFA claim against the wholesaler where the wholesaler's "products are passed on to a buyer and [the wholesaler's] representations are made to or intended to be conveyed to the buyer." See also Katz v. Schachter, 251 N.J. Super. 467, 474 (App. Div. 1991) (stating that "privity is not a condition precedent to recovery under the New Jersey [CFA]"), certif. denied, 130 N.J. 6 (1992). This is supported by the language of the CFA, which defines "sale" as "any sale, rental or distribution, offer for sale, rental or distribution or attempt directly or indirectly to sell, rent or distribute[.]" N.J.S.A. 56:8-1(e).
Although Auto Mall's action of reporting the theft to law enforcement produced a downstream impact on plaintiffs as consumers, this is not the sort of activity the CFA was intended to regulate. The purpose of this legislation was to permit the Attorney General to combat the increasingly widespread practice of defrauding the consumer. The authority conferred will provide effective machinery to investigate and prohibit deceptive and fraudulent advertising and selling practices which have caused extensive damage to the public. [DiBernardo v. Mosley, 206 N.J. Super. 371, 374-75 (App. Div.) (emphasis added), certif. denied, 103 N.J. 503 (1986).]
Not every commercial practice, then, was meant to fit within the CFA's ambit, as only selling practices were targeted. See Daaleman v. Elizabethtown Gas Co., 77 N.J. 267, 271 (1978) (holding that fraudulent billing practices were not "selling or advertising" practices within the meaning of the CFA and thus were not subject to the CFA).
Auto Mall's attempt to reclaim its stolen cars does not constitute a "selling or advertising practice" under the CFA. No claim was made that Auto Mall conspired with or was negligent in its dealings with Elmazahy. Auto Mall was truthful in their report to the police, and one owner of Elmazahy subsequently pled guilty to the serious second-degree crime of bad checks and was sentenced to prison.
Furthermore, Auto Mall was aware that the stolen cars might have been in the possession of innocent purchasers. It was equally possible, however, that the stolen cars were being driven by friends or family of the thieves, or might have been shipped overseas. Auto Mall's attempt to reclaim its cars was a one-time occurrence, not a "practice." Plaintiffs' claim of a superior claim to the cars in question under the Uniform Commercial Code, N.J.S.A. 12A:2-403, does not demonstrate that Auto Mall engaged in a "deceptive and fraudulent . . . selling practice." Mosley, supra, 206 N.J. Super. at 374-75. Plaintiffs' claims of consumer fraud against Auto Mall were properly dismissed by the motion judge.
Plaintiffs also allege that Auto Mall violated their civil rights under § 1983 and the NJCRA. For an entity to be liable under either the federal or state statute, it is necessary for a plaintiff to show that a defendant acted under the color of law. Wilson v. County of Gloucester, 256 F.R.D. 479, 488 n.13 (D.N.J. 2009). See also Parratt v. Taylor, 451 U.S. 527, 535, 101 S. Ct. 1908, 1913, 68 L. Ed. 2d 420, 428 (1981) (explaining that the threshold inquiry in a § 1983 action "must focus" on "(1) whether the conduct complained of was committed by a person acting under color of state law; and (2) whether this conduct deprived a person of rights, privileges, or immunities secured by the Constitution or laws of the United States."), overruled on other grounds by Daniels v. Williams, 474 U.S. 327, 106 S. Ct. 662, 88 L. Ed. 2d 662 (1986).
When interpreting the NJCRA, courts have consistently looked to federal § 1983 jurisprudence for guidance. See, e.g., Trafton v. City of Woodbury, 799 F. Supp. 2d 417, 443 (D.N.J. 2011) (NJCRA "was modeled after  § 1983, and creates a private cause of action for violations of civil rights secured under the New Jersey Constitution . . . This district has repeatedly interpreted NJCRA analogously to § 1983"); Rezem Family Assocs., LP v. Borough of Millstone, 423 N.J. Super. 103, 115 (App. Div.) ("The [NJCRA} was modeled after § 1983"), certif. denied, 208 N.J. 366 (2011).
The United States Supreme Court has explained that:
[p]rivate persons, jointly engaged with state officials in the prohibited action, are acting "under color" of law for purposes of the statute. To act "under color" of law does not require that the accused be an officer of the State. It is enough that he is a willful participant in joint activity with the State or its agents. [United States v. Price, 383 U.S. 787, 794, 86 S. Ct. 1152, 1157, 16 L. Ed. 2d 267, 272 (1966).]
Liability under § 1983 will attach to a private actor if he "'conspires with a state official to violate plaintiff's constitutional rights. . . .'" Young v. Suffolk Cnty., 705 F. Supp. 2d 183, 195-96 (E.D.N.Y. 2010) (quoting Fisk v. Letterman, 401 F. Supp. 2d 362, 378 (S.D.N.Y. 2005)). Merely invoking the aid of the State is not sufficient to give rise to liability. Auster Oil & Gas, Inc. v. Stream, 764 F. 2d 381, 388 (5th Cir. 1985) ("[A] private party does not act under color of state law when she merely elicits but does not join in an exercise of official state authority."), cert. denied, 488 U.S. 848, 109 S.Ct. 129, 102 L.Ed. 2d 102 (1988). This is so even if the information provided to the police "results in the officers taking affirmative action." Young, supra, 705 F. Supp. 2d at 196 (citing Ginsberg v. Healey Car & Truck Leasing, Inc., 189 F. 3d 268, 272 (2d Cir. 1999)). "Similarly, 'the execution by a private party of a sworn complaint, which forms the basis for an arrest, is, without more, not sufficient to make that party's acts state action.'" Serbalik v. Gray, 27 F. Supp. 2d 127, 132 (N.D.N.Y. 1998) (quoting Daniel v. Ferguson, 839 F. 2d 1124, 1130 (5th Cir. 1988)), aff'd, 199 F. 3d 1323 (2d Cir. 1999).
Plaintiffs' base their allegation that Auto Mall and the Totowa Police Department worked "in concert" on the facts that Auto Mall personnel provided information to the police, "prepared vehicle lists and provided VIN numbers to the Totowa Police at the Department's direction," and communicated with the police department throughout the investigation. Plaintiffs fail to identify any evidence supporting joint action between Auto Mall and either the Jersey City or New York City Police Departments, which were the law enforcement entities that seized the cars.
The decision to issue the stolen vehicle report was made not at the direction of Auto Mall, but by Sgt. Blakely after completing his own independent investigation. Auto Mall did not pay the Totowa Police Department to retrieve the stolen cars and did not instruct it to immediately repossess the cars. There was also no specific target, as Auto Mall did not know where the cars were or who possessed them at the time of the report.
While plaintiffs' claims may have survived a motion to dismiss, they have failed to uncover any evidence after conducting discovery to support their contentions. See Ginsberg, supra, 189 F. 3d at 271 n.1 (supporting the grant of summary judgment on the issue of whether a private party acts under color of law when, after "sifting [the] facts," a court finds "no evidence supporting an allegation that a private party acted under color of law for purposes of Section 1983" (citations omitted)). Auto Mall was not a state actor and did not act under color of law for purposes of § 1983 or the NJCRA.
Plaintiffs further allege that the motion judge improperly dismissed the claims against the Totowa defendants prior to discovery because he imposed too high a burden on plaintiffs at the pleadings stage. "[T]he test for determining the adequacy of a pleading [is] whether a cause of action is 'suggested' by the facts." Printing Mart-Morristown v. Sharp Elecs. Corp., 116 N.J. 739, 746 (1989) (quoting Velantzas v. Colgate-Palmolive Co., 109 N.J. 189, 192 (1988)). In ruling on a motion to dismiss under Rule 4:6-2(e), the court is "limited to examining the legal sufficiency of the facts alleged on the face of the complaint." Ibid. (citing Rieder v. Department of Transp., 221 N.J. Super. 547, 552 (App. Div. 1987)). Nevertheless, the court should search the pleadings "'with liberality to ascertain whether the fundament of a cause of action may be gleaned even from an obscure statement of claim,'" and should give the plaintiffs "every reasonable inference of fact." Ibid. (citations omitted). "Bare conclusions in the pleadings, without factual support in tendered affidavits, will not defeat a meritorous application for summary judgment." United States Pipe & Foundry Co. v. American Arbitration Ass'n., 67 N.J. Super. 384, 399-400 (App. Div. 1961) (citing Gherardi v. Trenton Bd. of Educ., 53 N.J. Super. 349, 358 (App. Div. 1958)). Plaintiffs here failed to assert anything more than "bare conclusions."
With regard to the Borough of Totowa and the Totowa Police Department, [a]lthough local governments are "persons" for purposes of § 1983, a municipality generally cannot be held liable in a § 1983 action for the acts of employees under the principle of respondeat superior. An exception exists when an official municipal "policy or custom, whether made by its lawmakers or by those whose edicts or acts may fairly be said to represent official policy," is the cause of the constitutional deprivation. [Stomel v. City of Camden, 192 N.J. 137, 145 (2007) (quoting Monell v. Dep't of Soc. Servs., 436 U.S. 658, 694, 98 S. Ct. 2018, 2037-38, 56 L. Ed. 2d 611, 638 (1978)).]
Plaintiffs failed to allege any facts that would support a claim of a "policy or custom" maintained by either the Borough or the police department that violated plaintiffs' rights. The complaint simply states that "[t]he actions of [t]he [m]unicipal
[d]efendants constituted a policy, practice, procedure or custom, in that they were undertaken in furtherance of a decision to tolerate the improper and unconstitutional conduct of defendants' officers and employees."
Plaintiffs also alleged that the police department "failed to train and/or supervise their officers and employees regarding the proper reporting of stolen vehicles. . . ." However, plaintiffs fail to identify any particular policy of the department other than the incident in question, and do not point to any regulations establishing the "proper reporting of stolen vehicles."
Furthermore, even if Sgt. Blakeley's conduct in disseminating the stolen vehicle report was the result of a "policy or custom," such a policy was not the "cause of [a] constitutional deprivation." Stomel, supra, 192 N.J. at 145 (quoting Monell, supra, 436 U.S. at 694, 98 S. Ct. at 2037-38, 56 L. Ed. 2d at 638). Plaintiffs' rights were not violated by the filing of the stolen vehicle report. It is the duty of the police to investigate such crimes.
"'[G]overnment officials performing discretionary functions generally are shielded from liability for civil damages insofar as their conduct does not violate clearly established statutory or constitutional rights of which a reasonable person would have known.'" Schneider v. Simonini, 163 N.J. 336, 353-54 (2000) (quoting Harlow v. Fitzgerald, 457 U.S. 800, 818, 102 S. Ct. 2727, 2738, 73 L. Ed. 2d 396, 410 (1982)). "Until a particular constitutional right has been stated so that reasonably competent officers would agree on its application to a given set of facts, it has not been 'clearly established' . . . " Powers v. Lightner, 820 F. 2d 818, 821 (7th Cir. 1987), cert. denied, 484 U.S. 1078, 108 S. Ct. 1057, 98 L. Ed. 2d 1019 (1988).
Here, plaintiffs claim that the "clearly-established right" violated by defendant officers was plaintiffs' right to procedural due process - namely, the right to receive "prior notice and an opportunity to be heard before their property were seized."
The right to procedural due process can be triggered by a simple "possessory interest in property," even if the possessor does not have full ownership of the property in question. Abbott, supra, 164 F. 3d at 146. Thus, even "a good faith purchaser by his purchase acquires a property right in stolen goods which is constitutionally protected." Kutner Buick, Inc. v. Strelecki, 111 N.J. Super. 89, 98 (Ch. Div. 1970). This is so because
[t]here are certain defenses that a bona fide purchaser would have against the true owner which would extinguish the latter's rights in the vehicle. For example, N.J.S.A. 12A:2-403(2) gives a bona fide purchaser superior title over an owner who entrusted his goods to a merchant who deals in goods of that kind. . . . The purchaser's right to these defenses which might establish his interest to be superior to the original owner are sufficient to vest him with a constitutionally protected property interest in the vehicle. [Ibid.]
Accordingly, "[p]rocedural due process would seem to require notice to those interested in the property that there has been a seizure and to offer them an opportunity to be heard at a hearing." Id. at 102 (holding that when the State seizes a purportedly stolen vehicle under N.J.S.A. 39:5-47, the State must give notice to the parties interested in the seized vehicle and "[a] hearing must then be held by the Commissioner or in the courts, at which time the State must prove that the vehicle in question has been stolen, with interested parties having the opportunity to present opposing evidence and cross-examine the State's witnesses"). Kutner Buick did not hold, however, that a hearing was required prior to the seizure of a car reported stolen, as plaintiffs claim.
None of the measures used by the Totowa defendants in issuing the stolen vehicle report violated plaintiffs' due process rights. N.J.S.A. 39:5-47 allows the NJMVC to authorize the seizure of a motor vehicle operated over the highways of this state when [it] has reason to believe that the motor vehicle has been stolen or is otherwise being operated under suspicious circumstances and may retain it in the name of the [commission] until such time as the identity of ownership is established, whereupon [it] shall order the release of the motor vehicle to its owner.
Furthermore, "it is not for law enforcement officers to decide who is entitled to possession of property." Abbott, supra, 164 F. 3d at 149. Thus, a reasonable police officer should not adjudicate the ownership of the vehicle before acting upon a stolen vehicle report. We are in agreement with the motion judge that both the civil rights and CFA claims against defendants should be dismissed.