BRIAN GRIFFOUL v. NRG RESIDENTIAL SOLAR SOLUTIONS

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                                       SUPERIOR COURT OF NEW JERSEY
                                       APPELLATE DIVISION
                                       DOCKET NO. A-5535-16T1

BRIAN GRIFFOUL and ANANIS
GRIFFOUL,

        Plaintiffs-Respondents,

v.

NRG RESIDENTIAL SOLAR SOLUTIONS, LLC
d/b/a NRG HOME SOLAR and NRG ENERGY, INC.,

     Defendants-Appellants.
_______________________________________________

              Argued April 24, 2018 – Decided May 4, 2018

              Before Judges Yannotti and Mawla.

              On appeal from Superior Court of New Jersey,
              Law Division, Bergen County, Docket No.
              L-1503-17.

              Thomas J. O'Leary argued the cause for
              appellants (Connell Foley, LLP, attorneys;
              Thomas J. O'Leary, of counsel and on the
              briefs; Patricia A. Lee, on the briefs).

              Arthur M. Owens argued the cause for
              respondents (Lum, Drasco & Positan, LLC,
              attorneys; Arthur M. Owens, on the brief).

PER CURIAM
      Defendants NRG Residential Solar Solutions d/b/a NRG Home

Solar and NRG Energy, Inc. appeal from a July 14, 2017 order,

which denied their motion to compel arbitration.                  We reverse.

      Plaintiffs,     residents          of     Elmwood        Park    and        class

representatives Brian and Ananis Griffoul, and NRG Residential

entered into solar power system leases.                   The lease agreements

required NRG Residential to install solar systems on plaintiffs'

respective properties, which would provide electricity to their

homes, and also be interconnected with the utility's electrical

transmission grid.        In consideration, plaintiffs each made a down

payment of $51.55 followed by 239 monthly lease payments for a

total of $16,453.96.

      Plaintiffs filed a class action complaint against defendants

alleging violations of the New Jersey Consumer Fraud Act (CFA),


N.J.S.A.    56:8-1   to    -20,    and    the    Truth-in-Consumer           Contract

Warranty    and   Notice    Act   (TCCWNA),      
N.J.S.A.      56:12-14      to    -18.

Plaintiffs allege the lease agreement contained six provisions

that violated consumer rights: "¶ 4.2 Access Rights;" "¶ 10.2

Remedies;" "¶ 11.3 Indemnity;" "¶ 11.5 No Consequential Damages;"

"¶   11.4   Limitation     of     Liability;"     and     "¶    12.4   Statute       of

Limitations."     They also alleged "[d]efendants . . . made specific

and direct representations . . . that customers . . . could expect



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decreased monthly energy bills and would obtain certain benefits

by way of their receipt of solar renewable energy credits."

    Defendants   moved   to    compel   arbitration   pursuant     to    a

provision in the parties' lease agreement, which stated:

         Unless prohibited by State law, any dispute,
         disagreement or claim between you and NRG RSS
         arising out of or in connection with this
         Lease, or the Solar System, which cannot be
         amicably resolved by the parties shall be
         submitted to final and binding arbitration in
         a location that is a convenient distance from
         the Property for you, in accordance with
         Commercial Arbitration Rules of the American
         Arbitration    Association    including    the
         Supplementary Procedures for Consumer-Related
         Disputes, if applicable (the "AAA Commercial
         Rules"), except as provided in Section 12.7.
         This agreement to arbitrate is governed by the
         Federal Arbitration Act.     While a dispute,
         disagreement or claim is being resolved under
         this Section . . . both parties shall continue
         to perform their obligations under this Lease.
         The arbitration shall be conducted by one
         arbitrator appointed in accordance with the
         AAA Commercial Rules. YOU AND NRG RSS AGREE
         THAT BY ENTERING INTO THIS LEASE, YOU AND WE
         ARE WAIVING THE RIGHT TO A JURY TRIAL.      IN
         ADDITION, EACH PARTY MAY BRING CLAIMS AGAINST
         THE OTHER PARTY ONLY IN ITS INDIVIDUAL
         CAPACITY AND NOT AS A PLAINTIFF OR CLASS
         MEMBER    IN    ANY   PURPORTED    CLASS    OR
         REPRESENTATIVE PROCEEDING. OTHER RIGHTS THAT
         YOU OR NRG RSS WOULD HAVE IN COURT MAY ALSO
         NOT BE AVAILABLE TO YOU.

The agreement also provided:

         Unless prohibited by State law, the parties
         agree that the award of the arbitrator (the
         "ARBITRARION AWARD"): (i) shall be conclusive,
         final, and binding upon all parties; and (ii)

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          shall be the sole and exclusive remedy between
          the parties regarding any and all claims and
          counterclaims presented to the arbitrator.
          The judgment on the Arbitration Award may be
          entered in any appropriate court as necessary
          to pursue judgment.

     NRG Energy also moved to dismiss count one of the complaint

without   prejudice   for   failure    to   plead   a   CFA    claim   with

particularity as required by Rule 4:5-8(a).         NRG Energy moved to

dismiss count two of the complaint with prejudice arguing a TCCWNA

claim could not be asserted against it because it was not a party

to the lease agreement.

     The motion judge denied defendants' motions.        The judge found

the arbitration clause in the lease agreement invalid, and denied

the motion to compel arbitration.      The judge ruled the arbitration

clause failed to state plaintiff's statutory claims were subject

to arbitration.    The judge found the class action waiver unclear

and contradicted the arbitration clause.        The judge also denied

NRG Energy's motion to dismiss, and its subsequent motion for

reconsideration of the denial of the motion to dismiss.                This

appeal followed.

                                  I.

     We begin by reciting our standard of review.             The validity

of an arbitration agreement is a question of law; therefore, we

review the trial court's order denying NRG Residential's motion


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to compel arbitration de novo.        Barr v. Bishop Rosen & Co., Inc.,


442 N.J. Super. 599, 605 (App. Div. 2015) (citing Hirsch v. Amper

Fin. Servs., LLC, 
215 N.J. 174, 186 (2013)); see Atalese v. U.S.

Legal Servs. Grp., L.P., 
219 N.J. 430, 445-46 (2014) ("Our review

of a contract, generally, is de novo, and therefore we owe no

special deference to the trial court's . . . interpretation.               Our

approach in construing an arbitration provision of a contract is

governed by the same de novo standard of review." (citations

omitted)).

      Defendants argue the Federal Arbitration Act (FAA), 9 U.S.C.

§§   1-14,   preempted    the   motion    judge's   invalidation     of    the

arbitration clause and required the arbitration agreement to be

enforced according to its terms.          Defendants argue there is no

requirement for an agreement to reference a specific statute in

order   to   encompass    statutory   claims.       Defendants    argue    the

arbitration   agreement    is   enforceable     pursuant   to    Atalese   and

Martindale v. Sandvik, Inc., 
173 N.J. 76 (2002).           They assert both

cases required the court to consider the parties' intent in

interpreting an arbitration agreement, which the motion judge

failed to do here.       Defendants also argue NRG Energy should have

been dismissed because it is not a party to the contract, and the

motion judge should have stayed the proceedings pending appeal.

We address these arguments in turn.

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                                     II.

     The    parties   dispute   whether    the   FAA   applies.     Although

defendants    contend   it   does,   plaintiffs    argue    the   New    Jersey

Arbitration Act (NJAA), 
N.J.S.A. 2A:23B-1 to -32, controls.

     An arbitration agreement reflects the parties' intention to

adhere to an orderly process of alternative dispute resolution.

Ortho Pharm. Corp. v. Amgen, Inc., 
882 F.2d 806, 812 (3d Cir.

1989).     The FAA is implicated when

            [a] written provision in . . . a contract
            evidencing a transaction involving commerce to
            settle by arbitration a controversy thereafter
            arising out of such contract or transaction
            . . . shall   be   valid,   irrevocable,   and
            enforceable, save upon such grounds as exist
            at law or in equity for the revocation of any
            contract.

            [9 U.S.C. § 2.]

     In order for the FAA to apply, the contract containing the

arbitration provision must "evidence[] a transaction involving

commerce . . . ."       Ibid.; see also Goodwin v. Elkins & Co., 
730 F.2d 99, 108-09 (3d Cir. 1984); Gras v. Assocs. First Capital

Corp., 
346 N.J. Super. 42, 47 (App. Div. 2001).            The United States

Supreme Court has held the FAA's definition of contracts "involving

commerce" should be construed broadly to "extend[] the Act's reach

to the limits of the Congress' Commerce Clause power[.]"                Allied-

Bruce Terminix Cos. v. Dobson, 
513 U.S. 265, 268 (1995); see also


                                      6                                 A-5535-16T1
Allen v. World Inspection Network Int'l, Inc., 
389 N.J. Super.
 115, 126 (App. Div. 2006).

     A nexus to interstate commerce is found when citizens of

different     states   engage    in    the   performance    of    contractual

obligations    in   one   of   those   states   because    such   a   contract

necessitates interstate travel of both personnel and payments.

See Roadway Package Sys., Inc. v. Kayser, 
257 F.3d 287, 292 (3d

Cir. 2001); see also Crawford v. W. Jersey Health Sys., 
847 F. Supp. 1232, 1240 (D.N.J. 1994).

     Here, plaintiffs are New Jersey residents and NRG Residential

is a Delaware limited liability company, with headquarters located

in Houston, Texas.        The lease agreement required plaintiffs to:

(1) mail their down payments to NRG Residential's Houston address;

(2) set up monthly payments by submitting a voided check to NRG

Residential's accounts in Houston; (3) direct their claims to the

Houston office; and (4) maintain a persistent internet connection

through which NRG Residential could monitor the solar system and

provide plaintiffs with a performance guarantee.           Furthermore, the

agreement provided "the [s]olar system [would be] interconnected

with the utility's electrical transmission grid."

     In New York v. FERC, the United States Supreme Court stated:

            [U]nlike the local power networks of the past,
            electricity is now delivered over three major
            networks, or "grids" in the continental United

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           States.   Two of these grids - the "Eastern
           Interconnect" and the "Western Interconnect"
           - are connected to each other. It is only in
           Hawaii   and  Alaska   and   on  the   "Texas
           Interconnect" - which covers most of that
           State - that electricity is distributed
           entirely within a single State. In the rest
           of the country, any electricity that enters
           the grid immediately becomes a part of a vast
           pool of energy that is constantly moving in
           interstate commerce.

           [
535 U.S. 1, 17 (2002) (emphasis added).]

     Here,   the   lease   agreement   clearly   manifested      a    form    of

interstate commerce.       Therefore, it was governed by the FAA,

notwithstanding the filing of the action in state court.                Alfano

v. BDO Seidman, LLP, 
393 N.J. Super. 560, 574 (App. Div. 2007);

see also Hojnowski v. Vans Skate Park, 
187 N.J. 323, 341-42 (2006);

Liberty Mut. Ins. Co. v. Open MRI of Morris & Essex, L.P., 
356 N.J. Super. 567, 581-82 (Law Div. 2002).

     Regardless, we need not further address whether the FAA

preempts the NJAA because the policies animating each statute

share the same aims.       Indeed, the Atalese Court stated "[t]he

[FAA] and the nearly identical [NJAA] enunciate federal and state

policies   favoring   arbitration"     as   a   mechanism   of       resolving

disputes that otherwise would be litigated.         Atalese, 
219 N.J. at
 440 (citations omitted).

     Arbitration is fundamentally a matter of contract.               NAACP of

Camden Cty. E. v. Foulke Mgmt. Corp., 
421 N.J. Super. 404, 424

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(App. Div. 2011).         However, "[a]rbitration's favored status does

not mean that every arbitration clause, however phrased, will be

enforceable."       Atalese,       
219 N.J.   at     441.     "An   agreement    to

arbitrate 'must be the product of mutual assent, as determined

under customary principles of contract law.'"                     Barr, 
442 N.J.

Super. at 605-06 (quoting Atalese, 
219 N.J. at 442).

      "Mutual assent requires that the parties understand the terms

of their agreement," and where the "agreement includes a waiver

of a party's right to pursue a case in a judicial forum, 'clarity

is required.'"          Id. at 606 (quoting Moore v. Woman to Woman

Obstetrics & Gynecology, L.L.C., 
416 N.J. Super. 30, 37 (App. Div.

2010)).        "[T]he    waiver     'must     be     clearly    and   unmistakably

established,' and 'should clearly state its purpose,' . . . [a]nd

the parties must have full knowledge of the legal rights they

intend to surrender."           Ibid. (citations omitted).

      The FAA permits states to invalidate arbitration clauses

"upon such grounds as exist at law or in equity for the revocation

of any contract."         Atalese, 
219 N.J. at 441 (quoting 9 U.S.C. §

2).       An   arbitration       agreement      that    fails    to   clearly     and

unambiguously signal to parties that they are surrendering their

right to pursue a judicial remedy renders such an agreement

unenforceable.          Ibid.     "An arbitration provision - like any

comparable      contractual        provision       that       provides   for      the

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surrendering of a constitutional or statutory right - must be

sufficiently clear to a reasonable consumer."                     Id. at 436.

     Here, the motion judge concluded "[l]ike the arbitration

provision     in    Atalese,    the    [l]ease        [a]greement      lack[ed]        an

explanation that [plaintiffs were waiving their] right to seek

relief   in    court    for     breach        of    [their]   statutory     rights,

specifically       violations   of    the     CFA    and   TCCWNA."       The     judge

explained     the      "[l]ease       [a]greement          does     not   encompass

[plaintiffs'] statutory consumer claims under the CFA and TCCWNA,

as the [l]ease [a]greement fails to mention that [plaintiffs were]

agreeing to submit [their] statutory causes of action to binding

arbitration."

     We disagree the arbitration clause here can be likened to the

one in Atalese. The arbitration clause in Atalese read as follows:

            Arbitration: In the event of any claim or
            dispute between Client and the USLSG related
            to   this   Agreement   or  related   to   any
            performance of any services related to this
            Agreement, the claim or dispute shall be
            submitted to binding arbitration upon the
            request of either party upon the service of
            that request on the other party. The parties
            shall agree on a single arbitrator to resolve
            the dispute.    The matter may be arbitrated
            either by the Judicial Arbitration Mediation
            Service or American Arbitration Association,
            as mutually agreed upon by the parties or
            selected by the party filing the claim. The
            arbitration shall be conducted in either the
            county in which Client resides, or the closest
            metropolitan county.     Any decision of the

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          arbitrator shall be final and may be entered
          into any judgment in any court of competent
          jurisdiction. The conduct of the arbitration
          shall be subject to the then current rules of
          the arbitration service.       The costs of
          arbitration, excluding legal fees, will be
          split equally or be born[e] by the losing
          party, as determined by the arbitrator. The
          parties shall bear their own legal fees.

          [
219 N.J. at 437.]

     In Atalese the Court held:

          Consumers can choose to pursue arbitration and
          waive their right to sue in court, but should
          know that they are making that choice.      An
          arbitration clause, like any contractual
          clause providing for the waiver of a
          constitutional or statutory right, must state
          its purpose clearly and unambiguously.      In
          choosing arbitration, consumers must have a
          basic understanding that they are giving up
          their right to seek relief in a judicial
          forum.

               . . . .

          The absence of any language in the arbitration
          provision that plaintiff was waiving her
          statutory right to seek relief in a court of
          law renders the provision unenforceable.

          [Id. at 435-36.]

     Here,   the   arbitration   clause   announced   "any    dispute,

disagreement or claim between you and NRG [Residential] arising

out of or in connection with this [l]ease or [s]olar system" would

be subject to arbitration.   The agreement also clearly stated the

parties were "WAIVING THE RIGHT TO A JURY TRIAL."            The lease


                                 11                            A-5535-16T1
agreement further provided arbitration would be the "sole and

exclusive remedy between the parties regarding any and all claims

and counterclaims presented to the arbitrator."          We are satisfied

this wording clearly and unambiguously signaled plaintiffs could

not pursue their claims in court.

      Indeed, the arbitration clause language here is similar to

language the Supreme Court upheld in Martindale v. Sandvik, Inc.,


173 N.J.   76   (2002).      In   Martindale   a   plaintiff   challenged

arbitration language contained in her employment agreement, which

stated:

             AS A CONDITION OF MY EMPLOYMENT, I AGREE TO
             WAIVE MY RIGHT TO A JURY TRIAL IN ANY ACTION
             OR PROCEEDING RELATED TO MY EMPLOYMENT WITH
             SANDVIK.

             I UNDERSTAND THAT I AM WAIVING MY RIGHT TO A
             JURY TRIAL VOLUNTARILY AND KNOWINGLY, AND FREE
             FROM DURESS OR COERCION.

             I UNDERSTAND THAT I HAVE A RIGHT TO CONSULT
             WITH A PERSON OF MY CHOOSING, INCLUDING AN
             ATTORNEY, BEFORE SIGNING THIS DOCUMENT.

             I AGREE THAT ALL DISPUTES RELATING TO MY
             EMPLOYMENT WITH SANDVIK OR TERMINATION THEREOF
             SHALL BE DECIDED BY AN ARBITRATOR THROUGH THE
             LABOR RELATIONS SECTION OF THE AMERICAN
             ARBITRATION ASSOCIATION.

             [Id. at 81-82.]

      The Martindale court concluded:

             In the circumstances of this case, the
             language in the arbitration agreement not only

                                     12                             A-5535-16T1
           was clear and unambiguous, it was also
           sufficiently broad to encompass reasonably
           plaintiff's statutory causes of action. The
           arbitration agreement provides that plaintiff
           agreed to waive her right to a jury trial "in
           any action or proceeding relating to my
           employment with Sandvik" and that "all
           disputes relating to my employment with
           Sandvik or termination thereof" shall be
           subject to arbitration. . . .            [T]he
           arbitration provision here does not contain
           any limiting references. Its wording provided
           plaintiff with sufficient notice at the time
           she signed the agreement that all claims
           relating to employment with and termination
           from Sandvik would be resolved through
           arbitration. It also addressed specifically
           a waiver of the right to a jury trial,
           augmenting the notice to all parties to the
           agreement that claims involving jury trials
           would    be    resolved     instead    through
           arbitration. . . .     Compelling arbitration
           under   these   circumstances   is  fair   and
           equitable.

           [Id. at 96.]

    The arbitration clause here bears the same characteristics

as the agreement in Martindale.            It clearly and unambiguously

waived   plaintiffs'   rights   to   a    jury   trial.   It   clearly   and

unambiguously required arbitration of all disputes between the

parties.   As in Martindale, we hold compelling arbitration under

these circumstances is fair and equitable.

    NRG residential also challenges the motion judge's finding

the class action waiver of the arbitration clause of the lease

agreement was invalid.     NRG residential argues the class action


                                     13                            A-5535-16T1
waiver is clear, and the FAA mandates plaintiffs to arbitrate

their claims on an individual basis.        We agree.

     The motion judge found the class action waiver provision in

the lease agreement was "invalid due to its lack of consistency

and clarity, which is required in these provisions."               The judge

also found the class action waiver contradictory to the arbitration

provision    because    it    allowed    plaintiffs   to   bring     actions

individually.    The judge also explained:

            given that 'purported' is used to modify the
            allegedly waived right to a class action, it
            is unclear whether [plaintiffs are] being
            instructed that class action claims can only
            be brought through the courts, or that the
            preclusive effect of this provision only
            applies to reputed class claims and not
            meritorious class claims.

     As we noted, the arbitration clause of the lease agreement

clearly and unambiguously waived plaintiff's right to a proceeding

in court.    Having done so, the clause then defined the capacity

in which claims could be brought in arbitration and clearly limited

those claims to individual claims, thereby barring a class action

in arbitration.

     Furthermore,      the   arbitration   clause's   usage   of   the   word

"purported" preceding the class action waiver did not signal an

invitation to assert only meritorious class action claims in

arbitration.    Indeed, "[t]he 'purport' of an instrument means the


                                    14                               A-5535-16T1
substance of it as it appears on the face of the instrument[.]"

What is PURPORT?, Black's Law Dictionary, https://thelawdictiona

ry.org/purport/ (last visited Apr. 6, 2018).          Therefore, that the

arbitration clause identified "purported" class actions as having

been waived was not a qualitative assessment of the merits of the

class action claim, but rather language crafted broadly enough to

exclude from arbitration those claims that appeared to be class

action based.

     For   these   reasons,    we     uphold    the   arbitration    clause

provisions of the lease agreement.             The motion judge's order

denying the motion to compel arbitration is reversed.

                                    III.

     Finally, we decline to address NRG Energy's argument relating

to the denial of its motion to dismiss it as a party from the

case.   We also do not address defendants' request for a stay.

     Pursuant to Rule 2:2-3(a)(1), an appeal as of right may be

taken only from a final order.       A final order must "dispose of all

claims against all parties."        S.N. Golden Estates, Inc. v. Cont'l

Cas. Co., 
317 N.J. Super. 82, 87 (App. Div. 1998).             Rule 2:2-

3(a)(3) treats limited categories of orders, which do not dispose

of all claims against all parties as final, including orders

denying arbitration.   Ibid.    However,



                                     15                             A-5535-16T1
             [a]lthough the Rule [2:2-3(a)(3)] permits an
             appeal as of right of "any order either
             compelling . . . or denying arbitration," it
             does not follow that other aspects of the
             order    unrelated   to   the    arbitrability
             determination, or other interlocutory orders
             entered in the action, are also appealable as
             of right.     To the contrary, even when an
             interlocutory order is appealable as of right
             or is before [this court] by leave, some other
             interlocutory order in the case does not
             become appealable as of right and is
             reviewable only in the exercise of [this
             court's] sole discretion.

             [Barr, 
442 N.J. Super. at 605.]

      Accordingly, the only issue before us is whether plaintiffs

were required to arbitrate their claims against defendant.               NRG

Energy's motion to dismiss is not reviewable as of right in this

appeal and should be addressed in arbitration.

      We also do not address defendants' request for a stay.             The

record lacks evidence defendants sought a stay from the motion

judge.     Rule 2:9-5(b) mandates the stay application first be made

to   the   trial   court   before   such   relief   is   sought   from   us.

Furthermore, "[w]e consider an issue moot when 'the decision sought

in a matter, when rendered, can have no practical effect on the

existing controversy.'"      State v. Davila, 
443 N.J. Super. 577, 584

(App. Div. 2016) (quoting Greenfield v. N.J. Dep't of Corr., 
382 N.J. Super. 254, 258 (App. Div. 2006)).        As the claim will now be




                                    16                              A-5535-16T1
handled through arbitration, defendant's request for a stay is

moot.

    Reversed.




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