MARTHA FORDE v. V. PATRICIA TERRELONGUE

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-3528-04T23528-04T2

MARTHA FORDE,

Plaintiff,

V.

PATRICIA TERRELONGUE,

Defendant,

and

PATRICIA TERRELONGUE,

Third-Party

Plaintiff-Appellant,

v.

CENTENNIAL MORTGAGE GROUP, INC.

and IRWIN MORTGAGE CORPORATION,

Third-Party Defendants/

Respondents.

________________________________________________________________

 

Submitted November 2, 2005 - Decided February 10, 2006

Before Judges Fall and Parker.

On appeal from the Superior Court of New

Jersey, Law Division, Essex County, L-1343-03.

George R. Wiggs, attorney for third-party

plaintiff/appellant Patricia Terrelongue.

Faugno & Associates, attorneys for third-party

defendant/respondent Centennial Mortgage Group,

Inc. (Lisa G. Mayer, on the brief).

Pluese, Becker & Saltzman, attorneys for

third-party defendant/respondent Irwin Mortgage

Corporation (Rob Saltzman, on the brief).

PER CURIAM

The issue before us in this appeal is whether a mediation/arbitration agreement entered into by defendant/third-party plaintiff in conjunction with her refinancing a mortgage is binding. We find that it is.

Defendant/third-party plaintiff Patricia Terrelongue appeals from three orders: the order entered on June 29, 2004 compelling arbitration between defendant and third-party defendant Centennial Mortgage Group, Inc. (Centennial); and two orders entered on February 18, 2005, one granting summary judgment in favor of third-party defendant, Irwin Mortgage Corporation (Irwin), dismissing the third-party complaint; and the other denying defendant's motion for summary judgment against third-party defendants.

The third-party complaint arose out of a mortgage granted by defendant for a refinancing loan from Centennial in the amount of $75,934. The mortgage was subsequently assigned to Irwin. Pursuant to the terms of the loan agreement, defendant was required to provide homeowner's insurance on the property. She failed to do so and Irwin obtained coverage for its interest in the property and so informed defendant. That policy, however, contained no liability coverage.

Thereafter, on August 21, 2001, plaintiff Martha Forde fell and sustained injuries on defendant's property. When plaintiff filed her complaint, defendant discovered that she did not have liability coverage under the policy obtained by Irwin. She filed a third-party complaint alleging that (1) Centennial "breached the contract of insurance by not having insurance coverage at the time plaintiff claims she [was] injured;" (2) Centennial was negligent in failing to obtain liability insurance for defendant; and (3) Centennial committed common law and consumer fraud. Defendant made the same allegations against Irwin by virtue of its assignment from Centennial.

Centennial moved to dismiss the third-party complaint on the ground that the refinancing mortgage was subject to an arbitration agreement in which defendant surrendered her rights to any court proceedings arising out of the refinancing.

The Mediation and Arbitration Agreement (Agreement) entered into by the parties on November 9, 2001 - twenty-eight days before the mortgage papers were signed - states in its entirety:

MEDIATION and ARBITRATION AGREEMENT

BETWEEN

CENTENNIAL MORTGAGE GROUP, INC. and BORROWER

MUTUAL AGREEMENT TO RESOLVE

IT IS HEREBY AGREED that any Dispute arising out of this Agreement, or any other agreement with Centennial Mortgage Group Inc. ("CMG"), its assigns, agents or employees (together, "CMG") concerning the loan, loan documents, disclosure, the relationship between the parties or their performance shall be resolved exclusively by the terms of this Agreement.

"Dispute" shall include:

1. Any claimed wrongdoing, claim, cause of action, debt, liability, tort, statutory claims or contract.

2. Any claimed violation of state or federal laws, including, but not limited to state and federal laws and regulations governing consumer credit, disclosure, civil rights, equal opportunity and settlement procedures.

"Dispute" shall not include:

Actions by CMG to judicially or non-judicially foreclose on the note and deed or trust (or any other Security instrument) for the loan, to enjoin waste, to collect rents, interpleader actions or actions for receiver, for unlawful _______ or relief from the automatic stay in bankruptcy.

MEDIATION AND ARBITRATION OF DISPUTES:

If Borrower(s) has a Dispute with CMG, such dispute shall be resolved by taking these steps in _______:

Step 1. Notice. Borrower(s) must give CMG written notice that a Dispute may exist so that CMG may enter into and hopefully resolve the Dispute.

Step 2. Arbitration with Mandatory Mediation. If Step 1 has not resolved the matter to Borrower(s) or CMG's satisfaction, the party wishing to pursue the matter shall initiate binding arbitration under the rules of the American Arbitration Association ("AAA"). The parties hereby stipulate to pre-arbitration mediation under the rules of the AAA.

Arbitration shall be filed in and held at the office of the AAA nearest to the real property securing the loan. Discovery shall be at the discretion of the arbitrator(s). Each party shall bear their own arbitration and attorney's fees for mediation and arbitration of Disputes regardless of what is said in any other agreement between Borrower(s) and CMG. Judgement on the award may be entered in any court of competent jurisdiction.

WAIVER(S)

BORROWER(S) AND CMG HEREBY FREELY WAIVE THE RIGHT TO TRIAL BY JUDGE OR JURY, THE RIGHT TO APPEAL, PRETRIAL DISCOVERY AND APPLICATION OF THE RULES OF EVIDENCE.

I agree.

(SIGNATURE) 11/9 -- ______________

PATRICIA TERRELONGUE DATE DATE

CENTENNIAL MORTGAGE GROUP,

By: (SIGNATURE)

MARIO SASACIS

On June 29, 2004, Judge Rachel N. Davidson heard oral argument. She rejected defendant's argument that the agreement was not binding because it was entered into prior to her signing the mortgage papers. The judge noted, "[i]f anything, I find that to make the arbitration agreement more enforceable . . . as opposed to less enforceable. Because it indicates that before the relationship was even starting that Centennial Mortgage wanted to make it clear to the borrower that . . . any disputes arising out of their relationship from its inception had to be subject to arbitration. I find that this is not some clause that was stuck somewhere in mortgage documents. It is a separate and independent document. . . . entitled 'Mediation and Arbitration Agreement.'"

Judge Davidson further found:

There was nothing in Miss Terrelongue's certification that indicated that she did not understand the plain meaning of these words. For her to now say after having previously gone through a closing with an attorney, well, if I had an attorney I might not have signed it[,] is not a reason not to enforce this clause.

It is a specific clause. It particularly addresses which arbitrator is going to be used in the case. And how it's going to be used. And at the very bottom it says, "Borrower and CM[G] hereby freely waive the right to trial, et cetera," and she did sign it. And accordingly, I don't find any reason not to enforce the arbitration agreement in this case. I do find that the opinion in Gras v. Associates [First Capital Corp.,] 346 N.J. Super. 42 [(App. Div. 2001), certif. denied, 171 N.J. 445 (2002)] supports this conclusion.

I do not agree that the appropriate proceeding is to stay the case [pending arbitration]. My experience with arbitration agreements is that if you're required to submit the dispute to arbitration and the other side wants a dismissal, [they're] entitled to a dismissal because there's nothing legally cognizable in this court if the jurisdiction of the dispute really belongs with the arbitrator.

After granting the motion to enforce the arbitration agreement, Judge Davidson bifurcated plaintiff's claim against defendant and after a trial in November 2004 the jury returned a verdict of no cause for action.

After the jury verdict, Irwin moved for summary judgment and defendant cross-moved for partial summary judgment. In two orders entered on February 18, 2005, Judge Davidson granted Irwin's motion for summary judgment and denied plaintiff's.

In this appeal, plaintiff argues:

POINT ONE

IRWIN MORTGAGE CORPORATION, THIRD PARTY DEFENDANT/RESPONDENT, WAS FROM THE VERY INCEPTION, ONE OF THE RESPONSIBLE PARTIES TO PATRICIA TERRELONGUE, THIRD PARTY PLAINTIFF/APPELLANT

POINT TWO

THE NEW JERSEY CONSUMER FRAUD ACT IS REMEDIAL IN PURPOSE AND SHOULD BE APPLIED LIBERALLY TO AFFECT THAT PURPOSE

POINT THREE

A CLAIM ARISES UNDER THE CONSUMER FRAUD ACT FROM A FAILURE TO ACT, ARISING FROM A KNOWING OMISSION OF WHICH A LOSS IS ASCERTAINABLE

POINT FOUR

THE CONSUMER FRAUD ACT IS DESIGNED TO PREVENT UNCONSCIONABLE COMMERCIAL PRACTICES IN CONNECTION WITH THE SALE OR ADVERTISEMENT OF ANY MERCHANDISE OR REAL ESTATE TRANSACTION

POINT FIVE

THE STANDARD OF CONDUCT CONTEMPLATED BY THE UNCONSCIONABILITY CLAUSE OF THE CONSUMER FRAUD ACT IS GOOD FAITH, HONESTY, IN FACT, AND OBSERVANCE OF FAIR DEALING

POINT SIX

UNLIKE COMMON LAW FRAUD, AN INTENT TO DECEIVE IS NOT A PREREQUISITE TO THE IMPOSITION OF LIABILITY UNDER THE CONSUMER FRAUD ACT

POINT SEVEN

THE FEDERAL REAL ESTATE SETTLEMENT ACT WAS ENACTED WITH GREATER INFORMATION AS TO SETTLEMENT COSTS AND TO PROTECT ONE FROM ABUSIVE SETTLEMENT PRACTICES

POINT EIGHT

WAIVER OF STATUTORY RIGHTS PROVISION IN ARBITRATION AGREEMENT MUST BE CLEAR AND EXPLICIT TO BE ENFORCEABLE

Notwithstanding defendant's extensive arguments, her principal point is that the arbitration agreement should not be enforced and she should be permitted to pursue her claims, including the consumer fraud claims, in court. Defendant argues that the mortgage companies should have advised her of the need to renew her homeowner's liability insurance, notwithstanding the mortgagee's obtaining insurance to protect its interest. She maintains that she was misled by the payment letter dated December 6, 2001, noting a $55.50 charge for hazard insurance included in her monthly payments.

She argues that the mortgagees, particularly Irwin, violated the Consumer Fraud Act by obtaining an insurance policy with an annual premium of $4,956, which did not include liability coverage, after her homeowner's policy that had included liability coverage, expired on February 12, 2002. She maintains that Irwin's failure to notify her that the new policy did not include liability insurance constituted fraud and misrepresentation. Defendant maintains that the fraud claims should not be subject to the arbitration agreement because the agreement is "vague" in that it "defines a dispute as 'any claim' and without any other specificity."

Defendant's argument does not accurately represent the language in the Agreement. The Agreement clearly includes arbitration relating to "disclosure," "debt, liability, tort, statutory claims or contract," and "[a]ny claimed violation of state or federal laws, including, but not limited to state and federal laws and regulations governing consumer credit, disclosure, civil rights, equal opportunity and settlement procedures."

Defendant's reliance on Gras is misplaced. There, in the context of secured loan transactions, we stated the undisputed proposition that "[w]aiver of statutory rights provisions in arbitration agreements must be clear and explicit." 346 N.J. Super. at 54. We "rejected statutory waiver provisions where the language of such waiver simply made reference to a waiver of any claims." Ibid. Although less expansive than the language in the Agreement at issue here, we found the agreement in Gras sufficient to constitute a waiver. Id. at 57. Moreover, in Gras we rejected plaintiffs' argument that there is an "inherent conflict between arbitration and the underlying purpose of New Jersey's Consumer Fraud Act (CFA)," and found CFA claims arbitrable. Id. at 52-53.

There is a strong public policy in New Jersey favoring arbitration to resolve disputes. Marchak v. Claridge Commons, Inc., 134 N.J. 275, 281 (1993). An agreement to arbitrate should be liberally construed in favor of arbitration. Id. at 282.

We have carefully considered the record before us in light of defendant's arguments and the applicable law. We are satisfied that Judge Davidson's decision and order enforcing the arbitration agreement is supported by sufficient credible evidence in the record and that summary judgment was properly granted. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995).

 
We need not address defendant's remaining arguments because the consumer fraud claims are clearly included in the arbitration agreement and must be addressed in that forum. R. 2:11-3(e)(1)(E).

Affirmed.

Some words in the copy of the Agreement in defendant's appendix are not legible as indicated by the [blank] spaces. We do not consider the illegible words critical to our decision. The format and language shown in capital letters is the same as the copy in the appendix.

(continued)

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A-3528-04T2

February 10, 2006