STATE OF NEW JERSEY VS. WILSON MORALES(05-04-1576, CAMDEN COUNTY AND STATEWIDE)
A-2515-15T4
| N.J. Super. Ct. App. Div. | Aug 25, 2017Background
- Regina M. Foti leased a 2014 Toyota Corolla from Classic Imports under a written lease that identified the lessor to include Classic, Toyota Lease Trust (TLT), and any assignee, and stated Toyota Motor Credit Corporation (TMCC) would service the lease.
- The lease contained a broad arbitration provision covering “any claims arising from or relating to this Lease or related agreements or relationships,” and expressly named TLT, TMCC, affiliates, successors and assigns as “Covered Parties.”
- The provision included a bolded class-action and private-attorney-general waiver and emphasized that arbitration precludes court litigation, jury trial, class participation, and certain discovery rights.
- Foti sued Toyota Motor Sales, U.S.A., Inc., alleging two violations of the Truth-in-Consumer Contract, Warranty and Notice Act (TCCWNA) based on alleged defects in the Lemon Law warranty notice and sought to proceed on behalf of similarly situated consumers.
- Toyota moved to compel arbitration; the trial court granted the motion, dismissed the complaint without prejudice, and required Foti to pursue claims individually in arbitration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a valid arbitration agreement exists between Foti and Toyota (a non-signatory) | Foti: No meeting of the minds; Toyota, as non-signatory, cannot enforce the lease arbitration clause | Toyota: Lease expressly includes affiliates, assignees, and covered parties (TLT, TMCC) so Toyota can enforce arbitration | Court: Agreement valid; non-signatory enforcement permitted under contract principles because lease included affiliates and covered parties |
| Whether Foti’s TCCWNA/Lemon Law-based claims fall within the arbitration clause | Foti: Claims concern manufacturer warranty notice and do not implicate the lease, so outside arbitration | Toyota: Lemon Law notice arises from and relates to the lease; arbitration clause covers related agreements/claims | Court: Claims fall within the broad scope of the arbitration provision and must be arbitrated |
| Whether the class-action/private-attorney-general waiver is unenforceable | Foti: Waiver prevents class relief and is unconscionable; class claims should be stayed pending individual arbitration | Toyota: FAA preempts state decisions invalidating class-waivers; Concepcion controls | Court: Waiver is enforceable under FAA; class claims are precluded and Foti must proceed individually |
| Whether "private attorney general" claims are exempt from arbitration | Foti: Complaint framed as private attorney general action beyond waiver | Toyota: Arbitration clause expressly waives private-attorney-general actions | Court: No support that such claims are exempt; arbitration waiver covers them |
Key Cases Cited
- Hirsch v. Amper Fin. Servs., LLC, 215 N.J. 174 (de novo review and two-pronged arbitration analysis)
- Hojnowski v. Vans Skate Park, 187 N.J. 323 (state contract-law principles determine arbitration validity)
- Arthur Andersen LLP v. Carlisle, 556 U.S. 624 (state-law principles allow enforcement of contracts by/against nonparties)
- AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (FAA preempts state rulings that invalidate class-action waivers)
- Litman v. Cellco P’ship, 655 F.3d 225 (Third Circuit: state rule requiring class arbitration preempted by FAA)
- Muhammad v. County Bank, 189 N.J. 1 (New Jersey Supreme Court decision on consumer class-waiver unconscionability discussed and preempted)
Affirmed.