MARCOS SOUZA-BASTOS v. FEDERAL AUTO BROKERS INC t/a BM MOTORCARS

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

MARCOS SOUZA-BASTOS,

Plaintiff-Respondent,

v.

FEDERAL AUTO BROKERS, INC.

t/a BM MOTORCARS,

Defendant-Appellant.

__________________________

June 10, 2016

Submitted May 24, 2016 - Decided

Before Judges Reisner and Leone.

On appeal from the Superior Court of New Jersey, Law Division, Ocean County, Docket No. L-1981-15.

Jardim, Meisner & Susser, P.C., attorneys for appellant (Thomas C. Jardim, of counsel and on the brief).

Lueddeke Law Firm, attorneys for respondent (Karri Lueddeke, on the brief).

PER CURIAM

Defendant appeals from a November 6, 2015 order denying its motion to dismiss plaintiff's complaint in favor of binding arbitration.1 Our review of the trial court's decision is de novo. Hirsch v. Amper Financial Servs., 215 N.J. 174, 186 (2013). Having engaged in that review, we conclude that the trial court reached the correct result, and we affirm.

In brief summary, plaintiff purchased a used car from defendant. In connection with the sale, plaintiff was required to sign three different documents, each of which contained an arbitration clause. However, the three clauses contained numerous contradictory provisions, rendering them hopelessly confusing to the average consumer. The clauses set forth different statutes of limitations applicable to the consumer's claims. They also included contradictory requirements as to whether the American Arbitration Association must be used as the arbitration forum, may not be used at all, or may be used subject to defendant's approval. The clauses conflicted on whether the dealership would pay the consumer's arbitration fees or whether the consumer must pay the fees. They also set forth three different geographic locations where the arbitration must be held. One clause required the consumer to provide written notice to the dealership and wait thirty days before filing for arbitration, while the other clauses had no notice requirement. One of the clauses did not waive the consumer's right to pursue statutory claims in court, while two of the clauses contained a waiver of statutory claims. Two clauses waived the right to file a class action, while the third did not.

One of the documents contained a supersession clause, providing that if a subsequent agreement contained a conflicting or inconsistent arbitration provision "the terms of such subsequent arbitration provision shall govern." However, all three documents, containing the conflicting arbitration clauses, were signed on the same day.

We conclude that this case falls squarely within the holding of NAACP of Camden County East v. Foulke Management Corp., 421 N.J. Super. 404 (App. Div. 2011), a case defendant's brief did not even mention much less attempt to distinguish.2 In Foulke Management, as in this case, a car dealer required a buyer to sign "a stack of form documents" before concluding her purchase. Id. at 410. Three of those documents contained arbitration clauses, which conflicted with one another. Id. at 411. We preliminarily noted the authority state courts retain in deciding whether to enforce arbitration clauses

[S]tate courts remain free to decline to enforce an arbitration provision by invoking traditional legal doctrines governing the formation of a contract and its interpretation. Applying such core principles of contract law here, we must decide whether there was mutual assent to the arbitration provisions in the dealership's contract documents. As part of that assessment, we must examine whether the terms of the provisions were stated with sufficient clarity and consistency to be reasonably understood by the consumer who is being charged with waiving her right to litigate a dispute in court.

[Id. at 428 (citing AT&T Mobility, L.L.C. v. Concepcion, 563 U.S. 333, 131 S. Ct. 1740, 179 L. Ed. 2d 742 (2011).]

We concluded that "the disparate arbitration provisions" contained in the assorted documents "were too confusing, too vague, and too inconsistent to be enforced." Id. at 410. We also concluded that

It is unreasonable to expect a layperson to pore through the many arbitration provisions scattered within these multiple documents and discern which provisions are operative and exactly what they mean. Material deficiencies in contract documents cannot be masked, to a consumer's disadvantage, with a boilerplate supersession clause.

[Id. at 437.]

We also declined the car dealer's invitation to sever one or more provisions in the clauses, finding that task impossible in light of the numerous contradictory provisions

Neither do we find that the ambiguities created by the contract documents can be cured by simply severing one or more provisions or clauses. Severability is only an option if striking the unenforceable portions of an agreement leaves behind a clear residue that is manifestly consistent with the "central purpose" of the contracting parties, and that is capable of enforcement.

Here, the conflicting and ambiguous aspects of material parts of the arbitration provisions i.e., those relative to venue, arbitrators' credentials, time limitations, costs, and class waivers cannot be excised without severely gutting those provisions and leaving uncertainty in their wake. Instead, we sever the arbitration provisions in their entirety, as neither party has argued that the "central purpose" of plaintiff's vehicle purchase hinged upon the presence or absence of an arbitration agreement.

[Id. at 437-38.]

We reach the same conclusion here, for essentially the same reasons. A consumer, poring through the fine print of defendant's conflicting arbitration clauses, would have no idea what essential terms he or she was agreeing to. A consumer would not understand how to file a demand for arbitration, within what time frame, where to file, or what it would cost. "In sum, the cumulative effect of the many inconsistencies and unclear passages in the arbitration terms within the [three documents] compel us to declare them unenforceable for lack of mutual assent." Id. at 438; see Rockel v. Cherry Hill Dodge, 368 N.J. Super. 577, 583 (App. Div.), certif. denied, 181 N.J. 545 (2004) (finding that "defendant's inclusion of two conflicting arbitration provisions in the contract documents confounds any clear understanding of the parties' undertaking" and renders the arbitration clauses unenforceable).

Affirmed.

1 Plaintiff sued defendant, asserting alleged violations of the Consumer Fraud Act, breach of warranty, and other claims. His factual assertions are not pertinent to this appeal.

2 Defendant's brief did concede that "contradictory contractual arbitration provisions either contained in the same or multiple, related contract documents may void an agreement to arbitrate."