Auto Leasing Companies Can Enforce Arbitration Agreements From The Dealership's Retail Order Forms
Published date | 03 June 2020 |
Author | Mr David G. Murphy, Todd S. Kim, John O. Lukanski and Abraham J. Colman |
Subject Matter | Finance and Banking, Litigation, Mediation & Arbitration, Real Estate and Construction, Financial Services, Arbitration & Dispute Resolution, Class Actions, Trials & Appeals & Compensation, Landlord & Tenant - Leases |
Law Firm | Reed Smith |
In Curiale v. Hyundai Capital America, Inc., No. A-5565-18T3 (N.J. Sup. Ct. App. Div. Apr. 27, 2020), a two-judge panel of the New Jersey Superior Court, Appellate Division, reversed a trial court order denying Defendant Hyundai Capital America, Inc.'s ("Defendant") application to compel arbitration against Plaintiffs Christopher D. Curiale and Jerome C. Curiale ("Plaintiffs"). The Appellate Division held that the Defendant, as an assignee of a lease, could enforce an arbitration provision and class-action waiver contained in the motor vehicle retail order that was executed by Plaintiffs and the dealership. The Appellate Division further held that the arbitration provision and class waiver were not ambiguous.
In 2014, the Plaintiffs executed a lease at a dealership and the lease was assigned to Defendant. In 2018, the Plaintiffs brought a putative class action against the Defendant under the New Jersey Consumer Fraud Act and Truth-in-Consumer Contract, Warranty, and Notice Act. Plaintiffs alleged that Defendant engaged in deceptive and unlawful business practices for charging extraneous and duplicative fees that violated the clear terms of the lease, including a fraudulent title fee and repossession fees. Plaintiffs also lodged an individual claim against Defendant for an allegedly fraudulent excessive wear charge. The Appellate Division ruled that Plaintiffs must individually arbitrate their claims, and may not bring their claims on a class-wide basis.
The lease did not contain an arbitration provision. However, in connection with the lease, Plaintiffs executed a series of related documents, including a gap waiver addendum and a motor vehicle retail order ("MVRO"). The MVRO contained an arbitration provision and waiver of class actions. In compelling Plaintiffs to arbitrate their claims on an individual basis, the Appellate Division held that although Defendant was not a signatory to the MVRO, it could enforce the arbitration provision because Plaintiffs, by signing the lease and gap waiver addendum, agreed that the dealership assigned "all right, title and interest in the Lease and the Vehicle," which included the right to arbitrate Plaintiffs' claims. The panel held that the MVRO, which explicitly referenced the lease, along with the other documents executed by Plaintiff in connection with the lease "constitute[d] a single, integrated contract."
The Appellate Division further held that the arbitration provision in the MVRO was not ambiguous. The...
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