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Fedor v. Nissan of North America, Inc.

Superior Court of New Jersey, Appellate Division

August 23, 2013

GENE FEDOR, Plaintiff-Appellant,
v.
NISSAN OF NORTH AMERICA, INC., Defendant-Respondent. JINGESH GHANDI, Plaintiff-Appellant,
v.
NISSAN OF NORTH AMERICA, INC., Defendant-Respondent.

Argued April 30, 2013 [1]

On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-4420-11 (A-6034-11) and Morris County, Docket No. L-2206-11 (A-0116-12).

Carl D. Poplar argued the cause for appellants (Kimmel & Silverman and Carl D.

Poplar, attorneys; Fred Davis, on the brief).

Thomas J. Sateary argued the cause for respondent (Lindabury, McCormick, Estabrook & Cooper, PC, attorneys; Mr. Sateary, of counsel and on the brief; Joshua S. Sklarin, on the brief).

Before Judges Messano, [2] Lihotz and Ostrer.

OPINION

LIHOTZ, J.A.D.

These back-to-back appeals, filed by separate plaintiffs against the same defendant and consolidated for purposes of this opinion, present the same legal issue for review. Plaintiffs, as aggrieved consumers of new automobiles, successfully pursued relief and were granted repurchase of their vehicles through the manufacturer's informal dispute settlement mechanism, established pursuant to the Magnuson-Moss Warranty - Federal Trade Commission Improvement Act (Magnuson-Moss Act), 15 U.S.C.A. §§ 2301 to 2312. We are asked to determine whether plaintiffs retain the right to file a separate action for payment of attorney's fees under the Magnuson-Moss Act or the New Jersey Motor Vehicle Warranty Act (Lemon Law), N.J.S.A. 56:12-29 to -49, notwithstanding the informal dispute settlement mechanism expressly excluded attorney fee awards.

Plaintiffs Gene Fedor and Jingesh Ghandi appeal from the entry of summary judgment in favor of defendant Nissan of North America, Inc., dismissing plaintiffs' complaints. On appeal, plaintiffs raise this issue of first impression, arguing the judge erred because attorney's fees must be paid to a successful consumer as a matter of law. We disagree and affirm.

I.

A.

On January 10, 2009, Fedor purchased a new 2009 Nissan Quest from Windsor Nissan for $30, 289.00. The vehicle was manufactured, distributed, and warranted by defendant. The warranty required dissatisfied consumers to file claims with BBB Auto Line, "a special automotive complaint resolution program . . . independently operated by the Council of Better Business Bureaus, Inc. (BBB)." As described in the warranty booklet,

BBB AUTO LINE is an informal dispute settlement mechanism operated to comply with applicable Federal law and regulations. In states where BBB AUTO LINE is available, you are required to use BBB AUTO LINE before exercising rights or seeking remedies under [the Magnuson-Moss Act]. If you choose to seek remedies other than those created by [the Magnuson-Moss Act], (for example, under state law), that Federal Act does not require you to first use BBB AUTO LINE. The program is still available to you, however, and may be of considerable assistance. Some states specify that informal dispute settlement mechanisms such as BBB AUTO LINE must be used before you may use state-operated complaint resolution processes, before you may file a lawsuit under state law, and/or before you may have certain other rights or remedies available under state law. In accordance with those states' laws, Nissan requires the prior use of BBB AUTO LINE in good faith before you resort to such other processes, file a lawsuit, or seek other remedies provided by state law.

The 2009 New Vehicle Limited Warranty, located in the warranty booklet, contained almost identical language, and also stated: "Nissan makes available to you, and you are specifically required by Federal Law to use BBB AUTO LINE . . . before exercising rights or seeking remedies under the [Magnuson-Moss Act]." The warranty also makes clear that state law may not require consumers to first use Auto Line before pursuing state-created remedies. However, the warranty advised, "if you seek remedies created by state law, including your state's lemon law, if applicable state law provides for using a 703 compl[ai]nt or similar process before filing suit[, ]" then you must "first use BBB AUTO LINE in good faith[.]"[3]

Auto Line has its own set of rules and procedures, which are available on its website. The website explains Auto Line's "role . . . is to open communication between you and the manufacturer representative and to facilitate the speedy resolution of your auto warranty or lemon law dispute." BBB Auto Line's Process, Better Business Bureau, http://www.bbb.org/ us/auto-line-lemon-laws/process-information (last visited July 25, 2013). A consumer pays nothing to participate in the Auto Line program, which consists of mediation and arbitration. First, in mediation, Auto Line attempts to assist the consumer in resolving the claimed vehicle problems. Second, if mediation is unsuccessful, the consumer has the opportunity to present the claims to an impartial arbitrator or three-person panel. In its review of a dispute, Auto Line incorporates the manufacturer's Program Summary, which delineates those claims eligible and ineligible for arbitration, as well as the available remedies. Neither the consumer nor Nissan is legally bound by the arbitrator's written decision unless accepted by the consumer.

In this matter, defendant's informal dispute resolution Program Summary states the arbitrator may award all available state lemon law remedies in the arbitration of a warranty claim seeking relief under a state's lemon law, "excluding attorney's fees, any penalties or multiple damages." A separate section of the manufacturer's program description, entitled "CLAIMS THAT WILL NOT BE ARBITRATED[, ]" states "[c]laims seeking punitive damages or compensation for legal fees, loss of wages, personal injury or mental anguish" are not subject to Auto Line arbitration. The Program Summary further describes available relief and includes a detailed statement of each alternative remedy.

As a result of various, recurring problems encountered with his vehicle, all of which remained unresolved despite multiple warranty repair attempts, Fedor filed a three-count Law Division complaint against defendant on June 15, 2011. Fedor alleged violations of the Lemon Law, the Magnuson-Moss Act, and the Uniform Commercial Code (UCC). Following discovery, defendant moved to dismiss the Magnuson-Moss Act count based on Fedor's failure to utilize defendant's informal dispute settlement procedure through Auto Line, as required by the warranty.

Fedor objected, asserting the Auto Line program mandated by defendant's warranty did not comply with state and federal law because it failed to include an award of attorney's fees to a successful consumer. He maintained the court should deny defendant's motion. Alternatively, plaintiff suggested the Magnuson-Moss Act count of his complaint could be dismissed without prejudice, pending remand to defendant's informal dispute settlement procedure via Auto Line and, if plaintiff prevailed in that proceeding, the issue of counsel fees would be preserved for future review by the court.

Defendant's motion was supported by the certification of Valerie Smith, an Arbitration Specialist I employed by defendant. Addressing prior matters filed with Auto Line in New Jersey over the previous twelve months, Smith averred: "In every claim where a prevailing consumer was represented by counsel, resolution of the claim included a payment of attorney's fees by Nissan." Further, in its supporting brief, defendant insisted it in fact has paid and will continue to pay attorney's fees to successful plaintiffs utilizing the BBB Auto Line program. Prior to the court's ruling, the parties agreed to proceed before Auto Line and defendant withdrew its motion.

Fedor's warranty claims were submitted to Auto Line and arbitration was conducted on December 21, 2011. The arbitrator concluded Fedor was entitled to a repurchase of his vehicle. Fedor executed the "Acceptance or Rejection of decision" form, accepting the arbitrator's decision awarding a repurchase by checking the provision of the agreement that states: "I ACCEPT THE ARBITRATION DECISION. I understand this means . . . I . . . will be legally bound, which means I give up any right to sue the business in court on any claim that has been resolved at the arbitration hearing, . . . unless otherwise provided by state or federal law."

Notwithstanding his acceptance of the arbitration decision and its accompanying terms, Fedor insisted he remained statutorily entitled to an award of attorney's fees. First he requested a fee-shifting hearing through defendant's Auto Line program, but defendant declined to participate. Next, he sought judicial redress under his previously-filed complaint and the matter proceeded through non-binding, court-ordered arbitration, pursuant to Rule 4:21A-1. The arbitrator ruled in favor of defendant, finding fees were neither authorized under the informal dispute resolution program nor mandated as a matter of law. Fedor filed a demand for trial de novo.

Defendant moved for summary judgment, which was met by Fedor's cross-motion for statutory fees and costs pursuant to N.J.S.A. 56:12-36(d)(4) and 15 U.S.C.A. § 2310(d)(2). Following oral argument, the judge granted defendant's motion and denied Fedor's cross-motion. Fedor's subsequent request for reconsideration was denied. This appeal followed.

B.

The facts surrounding Ghandi's appeal are similar to those described with respect to Fedor's action. Ghandi purchased a new 2011 Infiniti EX-35 from Salerno Duane Infiniti for $35, 550.00. The vehicle was manufactured, distributed, and warranted by defendant. The warranty was identical to the warranty discussed above, including the provisions directing consumers to file claims with Auto Line. After he encountered various and recurring problems, which were not effectively repaired by defendant's authorized dealer, Ghandi filed a three-count Law Division complaint, raising the same causes of action asserted by Fedor.

Arbitration was conducted by Auto Line, and the arbitrator concluded Ghandi was entitled to a repurchase of his vehicle. Ghandi executed an acceptance of the arbitrator's award, acknowledging he would be "legally bound, [thereby] giv[ing] up any right to sue the business in court on any claim that has been resolved at the arbitration hearing, . . . unless otherwise provided by state or federal law."

Thereafter, Ghandi requested a fee-shifting hearing before the Auto Line arbitrator, which was declined. The matter returned to the Law Division and proceeded to non-binding court-ordered arbitration, pursuant to Rule 4:21A-1.[4] Unlike Fedor's case, the arbitrator ruled in favor of Ghandi, awarding fees. Defendant timely demanded a trial de novo, and subsequently moved for summary judgment. Ghandi opposed the motion and filed a cross-motion for statutory fees and costs pursuant to N.J.S.A. 56:12-36(d)(4) and 15 U.S.C.A. § 2310(d)(2). A different Law Division judge considered the arguments, granting defendant's motion and denying Ghandi's cross-motion. Ghandi's timely appeal ensued.

Although Fedor's and Ghandi's actions are separate, they raise the same legal issues for our consideration. For ease in our discussion, we will refer to ...


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