October 7, 2013
RONALD MIRANDA, Plaintiff-Appellant,
MARINEMAX, INC., and BANK OF AMERICA, Defendants-Respondents.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued December 19, 2012.
On appeal from the Superior Court of New Jersey, Law Division, Ocean County, Docket No. L-933-10.
Karri Lueddeke argued the cause for appellant (Lueddeke Law Firm, attorneys; Ms. Lueddeke, on the brief).
Kevin M. McKeon argued the cause for respondent MarineMax, Inc. (Marshall, Dennehey, Warner, Coleman & Goggin, attorneys; Mr. McKeon, on the brief).
Paul J. Giordano, attorney for respondent Bank of America, joins in the brief of respondent MarineMax, Inc.
Before Judges Sapp-Peterson and Nugent.
Plaintiff, Ronald Miranda, appeals from the December 16, 2011 Law Division order that dismissed his consumer fraud and rescission claims against defendant, Marine Max, Inc., who had sold him a 1995 Chris Craft boat; and from the March 16, 2012 order denying his motions for reconsideration and to amend his complaint. Having considered his arguments in light of the record and controlling law, we affirm.
The parties' dispute stems from plaintiff's purchase on April 26, 2008, of a used 1995 Chris Craft 38 Continental boat (the boat) from defendant, MarineMax, Inc. Plaintiff, an engineer, first became interested in the boat when he saw an online ad. Responding to the ad, he traveled to MarineMax's yard in Lindenhurst, New York, and spoke with a salesman, Nick Ruiz.
Ruiz showed the boat to plaintiff and the two men discussed the boat's general condition. Plaintiff's "particular focus was on the engines, what was the condition of the engines, . . . was it a sound vessel, just general probing of the condition of the boat." Ruiz assured plaintiff that the boat was in good condition. He also said plaintiff could have a "sea trial" and do "whatever you want to ascertain the condition of the boat." Ruiz said that if plaintiff found anything wrong with the boat, "we'll discuss repairs."
During the next few weeks, the men had further discussions about the boat, and plaintiff said he wanted to have a "survey" of the boat. In early April, plaintiff and a representative of MarineMax signed an undated "Purchase Agreement." Under an entry entitled "Dealer Installed Options, " the agreement listed, one above the next, the following: Subject to Sea Trial; Subject to Survey; Wash/Wax/Detail; Replace Transom Door (Cracked); Fix Cockpit Upholstery Rip; Coast Guard Kit; Load Test Batteries. Plaintiff testified at his deposition he understood the "subject to sea trial" language to mean that he "would survey the boat, go to sea trial, review any issues with the boat for further discussion whether MarineMax was going to repair them or not. If they weren't going to repair them, I wasn't going to take the boat."
On April 3, 9, and 14, 2008, Kinsey Marine, LLC, a company whose services plaintiff had used previously, performed the survey and sea trial. Upon completion of the survey and sea trial, Kinsey prepared exclusively for plaintiff a "Report of Marine Survey, Pre-purchase condition & value." The report included a seven-page "Inspection Recommendations Summary, " which stated, among other things, that the boat's "port engine check engine light remained on during the course of the sea trial." The authors of the report recommended that "a mechanic trouble shoot and repair port engine 'check engine' light." The survey also recommended that a "qualified engine mechanic trouble shoot and repair [t]he cooling water temperature situation for both the port [and] starboard engines. Possible pump or impeller problems. Also verify calibration of engine gauges."
Plaintiff either emailed or handed a copy of the survey to Ruiz. On April 22, 2008, plaintiff sent an email to Ruiz with a six-page attachment, the first page containing a "Work Item List" with seven items, the remaining pages consisting of five pages of the "Inspection Recommendation Summary" section of the Kinsey Marine survey report. Nine of the recommendations were circled. Plaintiff testified that defendant agreed to fix the eight items on the first page of the attachment and the nine circled items on pages two through six of the attachment. Plaintiff's email to Mr. Ruiz stated:
As discussed on Saturday, attached please find my take on [MarineMax's] repair responsibility with respect to the sale of the 38 Chris Craft. Nothing new here. The list represents what we discussed in the past. I have included some items I'm thinking of contracting to [MarineMax] as well. I will call you later today to confirm.
Two of the items circled on page five of the attachment were the recommendations that a mechanic troubleshoot and repair the port engine "check engine light" and the cooling water temperature for both the port and starboard engines. According to plaintiff, Ruiz assured him that MarineMax would fix the "check engine" light problem. Had MarineMax refused to repair the problem, plaintiff would not have purchased the boat.
Plaintiff purchased the boat four days later, on April 26, 2008, when he signed a second "Purchase Agreement, " a "Retail Installment Contract and Security Agreement, " and a document entitled "Acceptance of Vessel." The first page of the purchase agreement identified the boat, listed optional equipment, and itemized the purchase price. Like the first purchase agreement, itemized beneath the heading "Dealer Installed Options" were the following: Wash/Wax/Detail; Replace Transom Door (Cracked); Fix Cockpit Upholstery Rip; Coast Guard Kit; Load Test Batteries. Unlike the first purchase agreement, the "Dealer Installed Options" did not include the statements, "Subject To Sea Trial" and "Subject to Survey"; but included the additional statements, "Used Boat Sold As Is" and "Boat Sold As Is No Warranty."
Immediately above plaintiff's signature, in capital letters and bold font, appeared the following:
BUYER ACKNOWLEDGES RECEIVING A FULLY COMPLETED COPY OF THIS AGREEMENT. BUYER ACKNOWLEDGES READING AND UNDERSTANDING ALL OF THE TERMS AND CONDITIONS IN THIS AGREEMENT, INCLUDING THE TERMS AND CONDITIONS ON THE REVERSE SIDE OF THIS AGREEMENT.
SEE THE REVERSE SIDE OF THIS AGREEMENT FOR IMPORTANT INFORMATION REGARDING LIMITATIONS OF WARRANTIES.
Page two of the purchase agreement contained in capital letters and bold font the following disclaimer of warranty:
THE BOAT, MOTOR AND ACCESSORIES BEING PURCHASED PURSUANT TO THIS AGREEMENT ARE SOLD BY SELLER "AS IS" AND SELLER MAKES NO WARRANTIES ON ITS OWN BEHALF, EXPRESS OR IMPLIED, INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE . . . .
Additionally, paragraphs eight and ten state:
8. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between the parties and no other verbal, written or printed representations, claims or inducements are incorporated into this Agreement, unless in writing and signed by both parties. This Agreement supersedes any prior Purchase Agreement between Buyer and Seller for the purchase of a boat, motor and/or accessories that had not been consummated. Except as specifically set forth in this Agreement, Seller disclaims any representations or statements by any agents, employees or representatives, whether verbal or in writing, in advertisements or brochures, and Buyer has not relied upon any such representations or statements.
10. GOVERNING LAW. THE PARTIES AGREE THAT THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE IN WHICH SELLER'S LOCATION DESIGNATED ON THE FRONT SIDE OF THIS ORDER IS SITUATED.
When asked at his deposition about the "as is" language, plaintiff said that when he questioned the language before signing the agreement, "they said this is a standard thing that we put on all used boats." He was assured that MarineMax was "going to repair all the things we agreed to repair, and as we move forward into the future we're not going to warranty any other failures to the vessel . . . ."
The Retail Installment Contract and Security Agreement plaintiff signed on the same day provided, among other things: "The Goods are sold in their present condition, together with the usual accessories and attachments." This document defined the goods as "Used 1995 Chris Craft 38" and "1995 Crusader 454 XL."
Lastly, plaintiff signed a third document entitled "Acceptance of Vessel, " which provided:
I have received a copy of this form and copies of all paperwork requested. I understand that no verbal agreements will be honored by MarineMax and that anything due to me must be listed below (except when covered by the Manufacturer's Warranty).
Immediately below that paragraph was written, "As Is."
When plaintiff returned to pick up the boat, the MarineMax Captain took him on a sea trial during which the "check engine" light remained on. Plaintiff said he was not interested in taking the boat because of the issue involving the engine light. The Captain called a mechanic. The mechanic, who went through a sea trial, said the engines were fine, but the transmission was causing the engine light to remain on. The mechanic told plaintiff to have the filters and oil changed, and he was sure the light would go off, because the engine was in perfect working order. Plaintiff believed the mechanic.
Plaintiff had the transmission maintenance work completed, but the engine light remained on. According to plaintiff, MarineMax then "embarked on a long, arduous task . . . to find the cause of the engine trouble light." In 2009, MarineMax engaged a company plaintiff thought was an engine manufacturer's representative to trouble-shoot the problem. The company, Monmouth Marine Engines, Inc., determined the likely cause of the boat's engine problem to be "cylinder head gasket failure and a high probability of degradation of the mating surfaces of the cylinder heads and engine blocks." In a report dated November 6, 2009, Monmouth Marine discussed "the viability of simple cylinder head gasket replacement and sustainability of this corrective action on a long[-]term solution basis." On November 11, 2009, Monmouth Marine submitted a proposal "to install a pair of Marine Power engine assemblies" for $36, 166. Plaintiff had paid $57, 009.60 for the boat, including taxes, and had financed $50, 000 through defendant Bank of America.MarineMax refused to pay for the new engines. This lawsuit ensued.
On March 5, 2010, plaintiff filed a complaint that included six causes of action against MarineMax: breach of contract, including breach of the implied covenant of good faith and fair dealing; breach of warranty; negligence; breach of express warranty; breach of implied warranty; and consumer fraud. Defendants filed responsive pleadings in May. The parties exchanged discovery and MarineMax filed a summary judgment motion on August 18, 2011.
In November 2011, following oral argument on the motion, the court granted partial summary judgment to MarineMax and dismissed plaintiff's claims alleging breach of contract and breach of warranty, as well as his claims seeking compensatory damages. The court denied summary judgment as to plaintiff's claim for rescission and requested additional briefs addressing the consumer fraud claim. The parties submitted supplemental briefs. In addition, MarineMax filed a motion for reconsideration of the denial of its summary judgment as to plaintiff's claim for rescission, and plaintiff filed a motion to amend his complaint.
The court granted summary judgment to MarineMax following oral argument on December 16, 2001. Concluding that the parol evidence rule precluded plaintiff from introducing extrinsic evidence to contradict the express "as is" language of both the second purchase agreement and "Acceptance of Vessel" document, even to show that MarineMax fraudulently induced plaintiff to enter into the purchase agreement, the court dismissed plaintiff's consumer fraud claim. The court also granted MarineMax's motion to reconsider the denial of its summary judgment motion as to plaintiff's claim for rescission, dismissed plaintiff's rescission claim, and denied plaintiff's motion to amend the complaint. The court entered a memorializing order that dismissed plaintiff's consumer fraud and rescission claims, as well as "plaintiff's remaining claims, " and also dismissed the complaint with prejudice. Plaintiff filed a motion for reconsideration, which the court denied. This appeal followed.
Plaintiff submits the trial court correctly applied the summary judgment standard by accepting as true his testimony that he bought the boat only because MarineMax personnel assured him they would correct the "engine issue identified by the marine survey"; but misapplied the parol evidence rule by prohibiting him from using that same evidence, as well as MarineMax's post-sale conduct, to demonstrate he was fraudulently induced to enter into the "as is" purchase agreement. From the premise that the trial court's decision concerning the parol evidence rule should be reversed, plaintiff reasons that the court's dismissal of his consumer fraud and rescission claims should also be reversed. Lastly, plaintiff contends the trial court wrongly denied his motion to amend his complaint to assert a common law action for fraud under New York law.
MarineMax contends the trial court correctly applied the parol evidence rule to prohibit plaintiff from introducing extrinsic evidence to contradict the express, unambiguous terms of the integrated purchase agreement. MarineMax also contends plaintiff belatedly attempted to argue for the first time when he moved for reconsideration that MarineMax's post-sale conduct was evidence that supported his fraudulent inducement claim. Lastly, MarineMax contends the trial court properly denied plaintiff's attempt to amend his complaint because the proposed amended complaint had no merit.
We review summary judgment decisions de novo, applying the same standard as the trial court under Rule 4:46-2. Liberty Surplus Ins. Corp. v. Nowell Amoroso, P.A., 189 N.J. 436, 445-46 (2007); Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J.Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608 (1998). First, we determine whether the moving party has demonstrated there were no genuine disputes as to material facts, and then we decide whether the motion judge's application of the law was correct. Atl. Mut. Ins. Co. v. Hillside Bottling Co., 387 N.J.Super. 224, 230-31 (App. Div.), certif. denied, 189 N.J. 104 (2006). In doing so, we view the evidence in the light most favorable to the non-moving party, Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995) and review the legal conclusions of the trial court de novo, without any special deference. Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995).
Central to the parties' dispute is the parol evidence rule. "In general, the parol evidence rule prohibits the introduction of evidence that tends to alter an integrated written document." Conway v. 287 Corporate Ctr. Assoc., 187 N.J. 259, 268 (2006) (citing Restatement (Second) of Contracts § 213 (1981)). A party cannot, however, "simply by means of a provision in the written instrument, create an absolute defense or prevent the introduction of parol evidence in an action based on fraud in the inducement to contract." Bilotti v. Accurate Forming Corp., 39 N.J. 184, 204 (1963) (quoting Ocean Cape Hotel Corp. v. Masefield Corp., 63 N.J.Super. 369, 377-78 (App. Div. 1960)). "[P]arol proof of fraud in the inducement is not considered as either additional or substitutionary but rather as indicating that the instrument is, by reason of the fraud, void or voidable." Ocean Cape Hotel Corp., supra, 63 N.J.Super. at 378. Thus, fraud in the inducement is an exception to the general rule that parol evidence prohibits the introduction of extrinsic evidence that tends to alter an integrated written document. Filmlife, Inc. v. Mal "Z" Ena, Inc., 251 N.J.Super. 570, 573 (App. Div. 1991).
The exception is not, however, without limits. Id. at 574. "There is a distinction between fraud regarding matters expressly addressed in the integrated writing and fraud regarding matters wholly extraneous to the writing." Ibid. Even when a party asserts fraudulent inducement, the parol evidence rule precludes the party from introducing extrinsic evidence that contradicts the express terms in an integrated agreement. See id. at 574-75; see also, Winoka Village v. Tate, 16 N.J.Super. 330, 333-34 (App. Div. 1951); cf., Walid v. Yoland for Irene Couture, Inc., 425 N.J.Super. 171, 185-86 (App. Div. 2012) (holding that, unlike Filmlife, the matters misrepresented were not expressly addressed in the integrated contract, were peculiarly within the misrepresenting party's knowledge, and were, in fact, intentionally misrepresented).
Here, the fact allegedly misrepresented — that MarineMax would repair the problem causing the "check engine" light to activate — was addressed in the second purchase agreement, which stated the boat was being sold "as is." The agreement also stated it constituted the entire agreement between the parties, that no other verbal, written, or printed representations were incorporated into the agreement, unless in writing signed by both parties, and except as specifically set forth in the agreement, MarineMax disclaimed any representations or statements made by its agents, employees, or representatives.
More significantly, the second purchase agreement superseded the first purchase agreement, which was expressly subject to a sea trial and survey. The superseding second purchase agreement was not subject to either a sea trial or a survey. Rather, it stated explicitly the boat was sold "as is, " without any warranty. Nor did the second purchase agreement require MarineMax to repair the problem that was causing the "check engine" light to activate. And when plaintiff signed the second purchase agreement, he also signed both a retail installment agreement stating the boat was being sold in its present condition, and the "Acceptance of Vessel" form which stated "that no verbal agreements will be honored by MarineMax" and that anything due plaintiff from MarineMax had to be listed in the form. In the place where such obligations were to be itemized, the form read, "As Is."
Thus, to establish his fraud claim, plaintiff had to introduce parol evidence to contradict the express terms of a fully integrated contract. The trial court correctly concluded that he could not do so. See Film Life, Inc., supra, 251 N.J.Super. at 573-575.
Plaintiff relies on McDonald v. Central R.R. Co., 89 N.J.L. 251 (E. & A. 1916), for the proposition that an exception to the parol evidence rule exists when the signature is obtained by fraud or imposition in the execution of the contract, as by reason of a willful misrepresentation to its purpose or contents. The facts of McDonald are significantly different from the facts here. In McDonald, plaintiff alleged that he signed a release based upon the representation of the defendant's agent "that the paper to be signed provided for the plaintiff's future employment." Id. at 252. The court explained that "[a] misrepresentation of the contents of a document by which one is induced to sign a paper thinking it is other than it really is, is the typical case of fraud in the execution[.]" Id. at 254.
In the case before us, plaintiff was not mislead by representatives of MarineMax to believe the purchase agreement was some document other than a purchase agreement. Moreover, plaintiff signed the purchase agreement immediately below an acknowledgment, appearing in capital letters and bold font, that he received a copy of the agreement, read it, and understood its terms and conditions. He also signed two other documents stating the boat was being sold in its present condition with nothing from due from MarineMax.
Plaintiff also argues the trial court erred by barring evidence of MarineMax's post-sale conduct and communications. Plaintiff asserts a jury could have inferred from MarineMax's post-sale conduct and statements "that Marine[M]ax represented to plaintiff that it would repair the engines and that Marine[M]ax breached its promise to do so." Defendant responds that plaintiff did not raise his argument about MarineMax's post-sale conduct until he filed his motion for reconsideration, and then only in the context of a new equitable estoppel claim.
Based on the record before us, it appears plaintiff did not raise his argument about MarineMax's post-sale conduct until he filed his motion for reconsideration. The argument appears in point II in the brief he filed in support of his motion for reconsideration. Plaintiff did not argue the point at oral argument in opposition to MarineMax's original summary judgment motion. A party may not offer for the first time on a motion for reconsideration a new theory of liability premised on either a new characterization of old evidence, or factual predicates that were available to that party when he or she responded to an opponent's summary judgment motion. See Cummings v. Bahr, 295 N.J.Super. 374, 384 (App. Div. 1996). Moreover, MarineMax never acknowledged in post-sale communications that it had previously agreed to repair or replace the engines. Absent introduction of the pre-sale parol evidence, no factfinder could have reasonably inferred that MarineMax's post-trial conduct and communications contradicted its "as is" sale of the boat.
Plaintiff submits that if the trial court's decision concerning the parol evidence rule is reversed, his rescission claim should be reinstated. The trial court correctly applied the parol evidence rule. "Since plaintiff cannot introduce extrinsic evidence to contradict the express terms of the [purchase] agreement, [he is] also precluded from proving the claimed unconscionable commercial practice" underlying his claim that MarineMax violated the Consumer Fraud Act, N.J.S.A. 56:8-1 to -20. Film Life, Inc., supra, 251 N.J.Super. at 576. And because plaintiff is unable to prove his claims of fraudulent inducement and consumer fraud, the remedy of rescission is unavailable to him.
Plaintiff's final argument, that the trial court abused its discretion when it denied his motion to amend the complaint to assert a cause of action for fraud under New York law, is without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).