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Martinez-Santiago v. Public Storage

United States District Court, D. New Jersey

August 14, 2014

JACKELINE MARTINEZ-SANTIAGO, on behalf of herself and other persons similarly situated, Plaintiff,
v.
PUBLIC STORAGE, Defendant

Page 501

For Plaintiff: Andrew P. Bell, Esq., LOCKS LAW FIRM LLC, Cherry Hill, N.J. - and - James A. Barry, Esq., Michael A. Galpern, Esq., LOCKS LAW FIRM, LLC, Cherry Hill, N.J. - and - Charles N. Riley, Esq., RILEY & SHAINE, Cherry Hill, NJ.

For Defendant: Joshua A. Zielinski, Esq., McELROY DEUTSCH MULVANEY & CARPENTER LLP, Morristown NJ; Jamie D. Taylor, Esq., Robert P. Donovan, Esq., McELROY DEUTSCH MULVANEY & CARPENTER LLP, Newark NJ.

OPINION

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HONORABLE JEROME B. SIMANDLE, Chief United States District Judge.

I. INTRODUCTION

Plaintiff Jackeline Martinez-Santiago brings this putative class action against

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Defendant Public Storage for violations of the New Jersey Truth in Consumer Contract, Warranty and Notice Act (" TCCWNA" ), N.J.S.A. 56:12-14, et seq., and the New Jersey Consumer Fraud Act (" CFA" ), N.J.S.A. 56:8-1, et seq. She claims tat the standard form contract used by Defendant for the lease of personal storage space is unconscionable and unenforceable because of its exculpatory and indemnification provisions, as well as a provision that limits the consumer's opportunity to challenge such provisions to one year after signing the lease. Before the Court is Defendant's motion to dismiss the First Amended Complaint. [Docket Item 13.]

As explained below, the Court finds that the one-year limit to bring claims arising from the lease, as written and as interpreted by Defendant, would be unreasonable, and that under a reasonable interpretation the Court finds that this action is timely. Substantively, Plaintiff states a claim under the TCCWNA and the CFA, and Defendant's motion to dismiss will accordingly be denied in large part and granted in part.

II. Background

On February 7, 2012, Plaintiff Jackeline Martinez-Santiago entered into a lease agreement with Defendant Public Storage for storage space at Defendant's Sicklerville, N.J., facility for $63 per month. (Am. Compl. [Docket Item 10] ¶ 19.) Plaintiff simultaneously elected to purchase $2,000 of insurance coverage for her property, for an additional premium of $9 per month. (Am. Compl. Ex. B [Docket Item 10-2].)

The lease agreement contains three provisions challenged in this litigation. The first (" Paragraph 4" ) limits the time in which Plaintiff may bring a claim arising out of the lease agreement to one year after " the date of the act, omission, inaction or other event that gave rise to such a claim . . . ." (Am. Compl. Ex. A (" Lease Agreement" ) [Docket Item 10-1] at 2.) This provision also purports to extend the one-year limit to any defenses Plaintiff may seek to raise in any suit against her arising out of the lease agreement. (Id.) The second provision (" Paragraph 7" ) caps Defendant's liability at $5,000[1] and disclaims all liability for property damage or injury to Plaintiff or other persons from any cause, including Defendant's own negligence, however the liability limitation does not extend to losses " directly caused by Owner's [Defendant's] fraud, willful injury or willful violation of law." (Id.) The third contested provision, also in Paragraph 7, requires Plaintiff to indemnify Defendant " from any loss incurred by Owner [Defendant] and Owner's Agents in any way arising out of Occupant's [Plaintiff's] use of the Premises or the Property, including, but not limited to, claims of injury or loss by Occupant's visitors or invitees." (Id.)

These provisions, in full, read as follows:

4. APPLICABLE LAW; JURISDICTION; VENUE; TIME TO BRING CLAIMS. This Lease/Rental Agreement shall be governed and construed in accordance with the laws of the state in which the Premises are located. If any provision of this Lease/Rental Agreement shall be invalid or prohibited under such law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of the Lease/Rental Agreement. The parties agree that in

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view of the limitations of value of the stored goods as provided in paragraph 5 below and the limitations as to Owner's liability as provided in paragraph 7 below, the value of any claim hereunder is limited to $5000 and, accordingly, any action for adjudication of a claim shall be heard in a court of limited jurisdiction such as a small claims court. Any claim, demand, or right of Occupant, and any defense to a suit against Occupant, that arises out of this Lease/Rental Agreement, or the storage of property hereunder (including, without limitation, claims for loss or damage to stored property) shall be barred unless Occupant commences an action (or, in the case of a defense, interposes such defense in a legal proceeding) within twelve (12) months after the date of the act, omission, inaction or other event that gave rise to such claim, demand, right or defense. By INITIALING HERE , Occupant acknowledges that he understands and agrees to the provisions of this paragraph.
. . . 7. LIMITATION OF OWNER'S LIABILITY; INDEMNITY. Owner and Owner's Agents will have no responsibility to Occupant or to any other person for any loss, liability, claim, expense, damage to property or injury to persons (" Loss" ) from any cause, including without limitation, Owner's and Owner's Agents active or passive acts, omissions, negligence or conversion, unless the Loss is directly caused by Owner's fraud, willful injury or willful violation of law. Occupant shall indemnify and hold Owner and Owner's Agents harmless from any loss incurred by Owner and Owner's Agents in any way arising out of Occupant's use of the Premises or the Property including, but not limited to, claims of injury or loss by Occupant's visitors or invitees. Occupant agrees that Owner's and Owner's Agents' total responsibility for any Loss from any cause whatsoever will not exceed a total of $5,000. By INITIALING HERE , Occupant acknowledges that he understands and agrees to the provisions of this paragraph.

(Id.)

Plaintiff listed Mr. Orlando Colon as an " Alternate Contact Name" on her lease agreement. (Id. at 1.) On February 12, 2012, Colon slipped on a patch of ice on a walkway directly in front of Plaintiff's storage unit. (Am. Compl. ¶ 23; Lease Agreement at 1 (listing Plaintiff's unit as No. B034); Ex. C [Docket Item 10-3] ¶ 8 (asserting that Colon fell on the walkway in front of unit No. B034).) Colon sued Public Storage for his injuries in New Jersey Superior Court, alleging negligence. (Am. Compl. ¶ 24.) On October 1, 2012, Public Storage filed an amended answer and third-party complaint naming Martinez-Santiago as a third-party defendant in Colon's lawsuit. (Id. ¶ 26.) Public Storage sought indemnification from Martinez-Santiago because Public Storage's potential liability arose from Colon's use of the premises, which brought the matter within the scope of the indemnification provision in Martinez-Santiago's lease agreement. (Id. ¶ 27.) Martinez-Santiago did not respond to the lawsuit, and no attorney entered an appearance on her behalf. Public Storage obtained a default judgment against her on February 8, 2013. [Docket Item 10-7 (Am. Compl. Ex. G) at 40-41.] On September 24, 2013, Martinez-Santiago, with the aid of counsel, filed a motion to vacate default judgment and sought permission to file a third-party answer and class-action counterclaim out of time, along with a proposed third-party answer and class-action counterclaim. [Id. at 3.] In the supporting brief, Martinez-Santiago argued:

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[T]here is a meritorious defense in this case, as alleged in the proposed Third Party Answer and Class-Action Counterclaim. (See Proposed Answer and Class-Action Counterclaim, attached as Exhibit E.) As alleged in the attached pleading, the contractual language relied upon by the Defendant as forming the basis for its Third-Party Complaint, and the practices utilized in selling consumer contracts containing said clauses violates the New Jersey Truth in Consumer Contract, Warranty and Notice Act (" TCCWNA" ), N.J.S.A. § 56:12-14, et seq. and is therefore unenforceable. Specifically, the clause violates the TCCWNA in that it (1) impermissibly shortens the Statute of Limitations for actions under the N.J. Consumer Fraud Act; (2) fails to disclose to consumers that specific portions of the contract are not enforceable under New Jersey law; and (3) wrongfully disclaims liability for Third Party Plaintiff's own negligence, and requiring consumers to hold harmless and indemnify Third Party Plaintiff for losses resulting from Third Party Plaintiff's own negligence.

[Id. at 8-9.] The class-action counterclaim [id. at 54-64], sets forth the same causes of action in the Amended Complaint here. Some passages of the Amended Complaint are identical to the proposed class-action counterclaim submitted to the state court.

Public Storage settled Colon's suit and, before the Superior Court could rule on Martinez-Santiago's motion to vacate the default judgment against her, on September 27, 2013, Public Storage voluntarily dismissed the third-party complaint against Martinez-Santiago. (Am. Compl. ¶ ¶ 28, 30, 32-33.) The Amended Complaint does not state whether Martinez-Santiago ever indemnified Public Storage for any loss.

On December 3, 2013, Plaintiff filed this action in the Superior Court of New Jersey, Camden County, and Defendants removed the action to this Court.[2] [Docket Items 1 & 1-2.] Count One of the Amended Complaint alleges a violation of the TCCWNA. (Am. Compl. ¶ ¶ 57-61.) Count Two alleges a violation of the CFA. (Id. ¶ ¶ 62-70.) Count Three requests declaratory and injunctive relief, specifically an order: (1) declaring that Defendant " is estopped from requiring Plaintiff and class members to bring claims or defenses within twelve mo[n]ths of an event giving rise to such claim or defense," (2) declaring that Defendant " is estopped from requiring Plaintiff and class members to indemnify and hold Defendant harmless . . . for losses resulting from the negligence of Defendant and/or its agents," (3) prohibiting Defendant from offering or entering into contracts with illegal provisions, (4) requiring Defendant to provide notice to all class members that certain clauses in the

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lease agreements are " void and unenforceable" and that class members may sue Defendant on or before the statutory limitations period, and (5) requiring Defendant to notify all class members who may have indemnified Defendant that such indemnification is illegal. (Id. ¶ 72.) Plaintiff defines the putative class as:

All persons, since September 7, 2007 (or such date as discovery may disclose), to whom form contracts, the preprinted portions of which were identical or substantially similar to the Agreement (Exhibit A), have been given, displayed, offered, signed and/or entered into, in New Jersey presented by or on behalf of Defendant or its agents.

(Id. ¶ 45.)

Defendant now moves to dismiss all claims. No issues of class certification are addressed in this motion.

III. Standard of review

Under Fed.R.Civ.P. 12(b)(6), the court must " accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief." Fleisher v. Standard Ins. Co., 679 F.3d 116, 120 (3d Cir. 2012).

IV. Discussion

Defendant seeks dismissal of this action on the grounds that (1) the provisions of the lease agreement are lawful and enforceable and (2) Plaintiff has failed to allege that Defendant engaged in unlawful conduct under the CFA and, even if she did, she fails to allege a causal link between the unlawful conduct and her alleged injury. Defendant also argues that Plaintiff's claims are time-barred under the lease agreement, because they were filed more than one year after she entered into the agreement.

A. Timeliness of the action

The Court begins with the contention that Plaintiff's claims are untimely. Defendant contends that the terms of the lease agreement require Plaintiff to bring all claims arising from the contract within one year of " the act, omission, inaction or other event that gave rise to such a claim . . . ." (Def. Mot. at 24, citing Docket Item 10-1 ¶ 4.) Defendant argues that because Plaintiff's claims arise from the language of the contract itself, the claims arose " when she signed and initialed the Contract on February 7, 2012." (Id.) Because Plaintiff did not file this lawsuit until December 3, 2013, or 22 months after the she signed the agreement, Defendant concludes that the action is time-barred. (Id.)

Defendant acknowledges that N.J.S.A. 2A:14-1 establishes a default six-year statute of limitations for these TCCWNA and CFA claims, but argues that nothing in those statutes prohibits parties from contracting for a shorter limitations period, provided that the shorter period is reasonable. (Id. at 19-20.) Indeed, New Jersey courts, including courts in this District, have upheld reasonable contractual limitations provisions of one year or less when the applicable statutes of limitations exceeded those time frames. See Eagle Fire Protection Corp. v. First Indem. of Am. Ins. Co., 145 N.J. 345, 354, 678 A.2d 699 (1996) (upholding a one-year limitation provision in a surety bond when the claim otherwise would have been subject to a six-year statute of limitations); A.J. Tenwood Assocs. v. Orange Sr. Citizens Hous. Co., 200 N.J.Super. 515, 523-25, 491 A.2d 1280 (App.Div. 1985) (stating that the six-year limitations period in N.J.S.A. 2A:14-1 " may be waived by express agreement of the parties," and upholding a one-year limitation provision); Winograd v. Carnival Corp., No. L-3690-08, 2011 WL 9318, at

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*2-*3 (N.J. S.Ct. App.Div. May 28, 2010) (upholding a one-year limitations provision in a ticket contract and affirming the grant of summary judgment in favor of the defendant); Mirra v. Holland Am. Line, 331 N.J.Super. 86, 90, 92, 751 A.2d 138 (App.Div. 2000) (stating that N.J.S.A. 2A:14-1 " does not prohibit parties to a contract from stipulating to a shorter time period" and upholding a limitations provision of 180 days); see also New Skies Satellites, B.V. v. Home2US Commc'ns, Inc., __ F.Supp.2d __, No. 13-200, 9 F.Supp.3d 459, 2014 WL 1292218, at *4 (D.N.J. Mar. 28, 2014) (" It is well settled that parties may contractually limit the time for bringing claims, despite a statute of limitations to ...


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