PARTHESH KALATHIA v. PMM, INC.

 
(NOTE: The status of this decision is Published.)

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

 

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-1616-09T1

PARTHESH "DANNY" KALATHIA,

Plaintiff-Respondent,

v.

PMM, INC. d/b/a TOGETHER, and

ARLENE HANSON,

Defendants-Appellants.

_______________________________________________

October 25, 2010

 

Argued September 15, 2010 - Decided

 

Before Judges Fisher and Fasciale.

 

On appeal from the Superior Court of New Jersey, Law Division, Mercer County, Docket No. L-1766-07.

 

Vano Haroutunian argued the cause for appellants (Ballon, Stoll, Bader & Nadler, attorneys; Will Levins and Yasmin T. Gonzalez, of counsel and on the brief).

 

Carl J. Dallarda argued the cause for respondent (Indik & McNamara, attorneys; Mr. Dallarda, on the brief).

 

PER CURIAM

At the heart of this appeal is a contract expressing defendant PMM, Inc.'s promise to provide dating services to plaintiff in exchange for a fee. The contract, which plaintiff did not read before executing, did not memorialize the oral representation uttered by PMM's salesperson that plaintiff had three days to cancel if he changed his mind; in fact, unknown to plaintiff, the contract stated there was no provision for . . . cancellation. When plaintiff attempted to cancel the next day, PMM relied on the contract and refused. At the conclusion of a bench trial, the judge found that the salesman s oral misrepresentation about the right to cancel violated the Consumer Fraud Act (CFA), N.J.S.A. 56:1-1 to 20, and awarded treble damages and counsel fees.

In appealing, defendants argue:

I. PLAINTIFF CANNOT AVOID HIS CONTRACTUAL OBLIGATION ON THE GROUND THAT, WHILE HE ADMITTEDLY SIGNED AND INIT[I]ALED THE AGREEMENT, HE FAILED TO READ THE NON-CANCELLATION PROVISION. THE COURT'S CONTRARY RULING CONSTITUTED PREJUDICIAL ERROR WARRANTING REVERSAL.

 

II. THE PAROL EVIDENCE ADOPTED BY THE COURT AND RELIED BY THE PLAINTIFF RESULTED IN PREJUDICIAL ERROR.

 

III. BECAUSE THERE WAS NO FRAUD IN THE EXECUTION, PLAINTIFF CANNOT MAKE A CLAIM FOR FRAUD UNDER THE [CFA] AND THE LOWER COURT'S JUDGMENT WAS THEREFORE PREJUDICIAL ERROR.

 

We find insufficient merit in Point II to warrant discussion in a written opinion.1 R. 2:11-3(e)(1)(E). We also reject defendants' other arguments for the following reasons.

The facts that govern our disposition of this appeal may be briefly summarized. Plaintiff answered an advertisement and, on November 12, 2006, discussed with PMM's salesperson, Arlene Hanson, the purchase of a PMM membership that would provide him with dating services. Hanson advised that the cost was $6495 but, if plaintiff signed a contract that day, he would receive a $1000 discount. Hanson also told plaintiff he would have the right to cancel within three days; the contract expressly states otherwise.

The contract2 consists of a single sheet of paper containing eighteen numbered paragraphs. The paragraphs are comprised of ninety-two lines containing nearly 1400 words, all in an area measuring only five-and-one-half inches by eight inches. The print size is therefore extremely small. The letters are approximately one-sixteenth of an inch high.

The first paragraph states that:

The Client, by executing this agreement, hereby acknowledges that Client is pur-chasing services of interviewing, testing, evaluating, processing, matching and market-ing by [PMM]. It is hereby understood and agreed that PMM matches cost of 5495.00 upon joining; therefore, there is no provision for refunds, recisions [sic] or cancella-tions of any kind. Client agrees that PMM is an independently owned and operated business and that this agreement is exclusively between PMM and Client and with no other person.

Absent close scrutiny, the clause about cancellations may easily escape detection. It is not in a separate sentence or paragraph, nor placed under a separate heading that might grab attention during a cursory examination. Moreover, the clause is not underlined, highlighted, italicized or in bold print. It is, in fact, inconspicuous. Indeed, a reader s attention may be drawn away from the cancellation clause to the bold-printed sentence that follows. See, e.g., Silvestri v. Italia Societa Per Azioni Di Navigazione, 388 F.2d 11, 14 (2d Cir. 1968). It is true that plaintiff initialed directly below this paragraph, but that act does not suggest his attention was drawn to the cancellation clause, as he was also asked to initial seven of the other seventeen paragraphs of the contract.

Plaintiff was unaware of the cancellation clause because, as he acknowledged at trial, he did not read the contract prior to execution.3 Although plaintiff never testified that Hanson told him not to read the contract, he did testify that her oral statements suggested a less than compelling need for plaintiff to read or study the contract at that time:

Q. What did she tell you, if anything, regarding the terms of the membership?

 

A. The terms of the membership, she said sign today, these are the papers. Go home, read it, if you have any questions get back to me later.[4]

 

Plaintiff also testified to the comfort provided by the representation of a three-day cancellation period and what he referred to as "a prize" in the form of a $1000 discount; that is, plaintiff contemplated he had

three days to think about it if I don't like I cancel the service. And that is what -- within my mind that, yes, the price is $5,495, but it is not paid until I fully agree, which I don't need to agree at that point in time if I want to proceed, or I do not want to proceed.

 

. . . .

 

There were -- the biggest factor was -- there are two factors that drive this. The first thing was that whether I am signing on I have three days to review and see if I am comfortable or not comfortable, or if I have any other questions and concerns I can change my decision. And the second was the first time discount if I decide to proceed [with] this membership. . . .

 

In addition, by signing at that time, the parties were able to commence plaintiff's profile so as not to delay PMM's dating services.

Defendants argue that the judge's finding of an oral representation of a three-day cancellation period is irrelevant because the contract clearly and unambiguously precluded any cancellations.5 They contend that an intelligent, educated contracting party, as a matter of law, has no right to rely on an oral representation at the time of formation about the contents of a written contract. Certainly, factors regarding a contracting party s intelligence and sophistication are relevant, but only to the extent they shed light on whether the party was justified in relying on an oral representation. We reject defendants' contention that oral misrepresentations at the time of formation are always inessential when in conflict with the written contract imposed on the recipient of the misrepresentation. The question that must be answered is whether a contracting party, when presented with a written contract prepared by the other party, may be justified in relying on a misrepresentation that conflicts with the written contract in light of the attending circumstances.

In explaining the principle that guides the disposition of this appeal, we held in Nappe v. Anschelewitz, Barr, Ansell, 189 N.J. Super. 347, 355-56 (App. Div. 1983), aff'd in part, rev'd in part, 97 N.J. 37 (1984), that a party s reliance on a misrepresentation is justifiable "when facts to the contrary were not obvious or did not provide a warning making it patently unreasonable that plaintiff not pursue further investigation, under the circumstances that the means for such further investigation were readily apparent and, if pursued, would reveal the falsity of the representation." Nappe, supra, 189 N.J. Super. at 355; see also Davis v. Magee, 128 N.J.L. 137, 139 (Sup. Ct. 1942); Toker v. Perl, 103 N.J. Super. 500, 503 (Law Div. 1968), aff'd, 108 N.J. Super. 129 (App. Div. 1970). In short, defendants are mistaken in arguing there is an immutable law that precludes a finding of justifiable reliance on an oral representation that conflicts with a written contract. Instead, "[i]n the absence of obvious falsity or reason to know of facts making reliance unreasonable, there is no requirement that the recipient investigate the truth of the statements made to him." Restatement (Second) of Torts, 541A comment a (1977).

Instead, in the totality of the circumstances, a factfinder may look to the nature of the misrepresentation and whether its falsity would be made obvious or apparent to "one of [the recipient's] knowledge and intelligence from a cursory glance." Prosser & Keeton on Torts 108, at 752 (5th ed. 1984). Certainly the context and attending circumstances may permit a factfinder to conclude -- despite the purported clarity of the writing -- that the recipient was justified in relying upon statements that would dissuade the recipient from investigating further. Here, as we have observed, plaintiff was influenced by the availability of a one-time only $1000 discount -- a considerable carrot that Hanson dangled before him. Moreover, the assurance of a three-day cancellation period provided, as plaintiff said, a degree of "comfort" that reduced his need to read the contract before signing. In addition, although the first paragraph of the contract states there is no provision for cancellation, another provision, which sets forth the circumstances that may permit PMM to cancel, somewhat conflicts. And other provisions set forth numerous disclaimers and conditions applicable to the parties' obligations. As a result, even if it could be said that a cursory examination of the contract would have caused plaintiff to notice the cancellation language of the first paragraph, further study of the contract suggests the possibility of other conditions that qualify the scope of that stipulation. Under all these circumstances, there was ample factual support for the judge's finding that the misrepresentation was actionable.

In short, we conclude that the law does not preclude a finding of justifiable reliance in these circumstances. The factfinder here was convinced, after hearing the witnesses and judging their credibility, that the representation was actually made and was of sufficient influence to justify plaintiff's reliance. We defer to those findings, Rova Farms, supra, 65 N.J. at 483-84, and, as a result, reject the arguments contained in defendants' Point I.

We also reject defendants' remaining arguments. In their Point III, defendants argue that Hanson made no misrepresentation about the contents of the written agreement. As observed, plaintiff testified to the contrary and the judge found plaintiff more credible than Hanson. The standard we apply in reviewing such a finding compels our deference to the judge's finding. To the extent Point III of defendants' brief is based on a different set of facts than those found by the trial judge, we reject it.

At oral argument, however, defendants seem to have taken a different tack than pursued in their brief. That is, defendants seem to argue that Hanson did not speak with the intention to mislead or deceive plaintiff and, as a result, should not be held liable. First, if we are to assume, as defendants now argue, that Hanson possessed good intentions and merely misspoke about a right to cancel, then one must question why defendants failed and refused to consent to cancellation of the contract and the return to plaintiff of the funds he paid. Second, plaintiff was not obligated to prove an intention to deceive. Gennari v. Weichert Co. Realtors, 148 N.J. 582, 605 (1997). The CFA "is intended to protect consumers from deception and fraud, 'even when committed in good faith.'" Ji v. Palmer, 333 N.J. Super. 451, 461 (App. Div. 2000) (quoting Gennari, supra, 148 N.J. at 604).

In short, it is not relevant whether Hanson's statements were comparable to the unconscionable tactics and bald-faced lies utilized by the fictional salesmen of Glengarry Glen Ross,6 or, as may be the case here, whether Hanson simply misspoke when advising plaintiff he had a three-day right to cancel. Indeed, the subtlety of the latter approach may often prove more influential than the many "hard sell" tactics employed by unscrupulous salespersons due to its tendency to engender greater trust in the accuracy of the representations. In any event, the core question was whether plaintiff reasonably relied on the misrepresentation; the judge found he did and we have been presented with no legitimate reason for second-guessing the judge s finding.

Affirmed.

1Defendants never objected to plaintiff's testimony regarding the salesperson's statements at the time of formation. Accordingly, defendants' argument for the first time on appeal that evidence of the misrepresentation was inadmissible has not been preserved for appeal. State v. Robinson, 200 N.J. 1, 20 (2009).

2Despite the obvious relevance of the parties' contract to the issues on appeal, defendants inexplicably failed to include a copy in their appendix, contrary to the requirements of Rule 2:6-1(a)(1). Approximately one month before the argument of this appeal, we asked defense counsel to provide the contract. We received a document by facsimile but, as confirmed at oral argument, the faxed document was not the contract in question; moreover, the faxed copy -- perhaps due to the small size of the contract's print -- proved to be illegible. We requested a true and clear copy of the correct contract at the conclusion of oral argument, which was finally emailed six days later. Defendants' failure to comply with Rule 2:6-1(a)(1) has disserved our ability to more timely dispose of this appeal and diverted our attention from more fruitful pursuits.

3Interestingly, the provision in question does not expressly bar cancellations; it only states that the contract contains no provision for cancellations.

4Although some testimony elicited by defendants might suggest a dispute about whether Hanson made the representation regarding cancellation, a tape recording of a message Hanson left on plaintiff's answering machine after he sought cancellation leaves little doubt and fully justified, as did other evidence, the judge s finding that Hanson misrepresented the existence of a three-day cancellation period. In the recorded message, Hanson suggested any confusion about a cancellation period might have resulted from her having been a salesperson of such products in Pennsylvania, where a three-day cancellation period is required by law. In short, although Hanson was not entirely consistent about whether she made the misrepresentation, the judge found from this recorded message and other inconsistent aspects of Hanson's testimony that plaintiff's version was more credible. That finding is entitled to our deference. Rova Farms Resort v. Investors Ins. Co., 65 N.J. 474, 483-84 (1974).

5We will assume without deciding that the written provision declaring that the contract contains "no provision for . . . cancellations of any kind," coupled with another provision in the same small print that PMM or its representatives "have made no implied or expressed warranties, representations, promises or agreements other than its agreement to provide referrals as specifically set out in this written agreement," bars the supplementation or modification of the writing by way of an oral representation at the time of formation.

6David Mamet, Glengarry Glen Ross (1982).