Dispenziere v. Kushner Companies, 438 N.J. Super. 11 (App. Div. 2014). In Atalese v. United States Legal Services Group, L.P., 219 N.J. 430 (2014), discussed here, the Supreme Court ruled that an arbitration clause that does not contain “clear and unambiguous language that the plaintiff is waiving her right to sue or go to court to secure relief” is not enforceable. In today’s opinion, by Judge Carroll, the Appellate Division reversed a Law Division decision that had been issued before Atalese was decided. The ruling applies Atalese in two respects that the Supreme Court did not address.
Plaintiffs here were buyers of units in a Perth Amboy condominium development. They alleged that the defendant developer represented that their units would be part of “a large waterfront community, which was to include diverse amenities, including a Community Center, a Health Club, a waterfront esplanade, [three] parks, and other recreational improvements.” After plaintiffs had purchased, however, defendant changed the nature of the development in various ways, including the elimination of “nearly all of the proposed amenities.”
Plaintiffs brought suit for consumer fraud and on numerous common law fraud, negligence, contract, and warranty theories. Defendants, however, moved to compel arbitration, relying on an arbitration clause contained in the Public Offering Statement that they had given to plaintiffs. The Law Division granted the motion to compel arbitration. On plaintiffs’ appeal, the Appellate Division reversed.
Judge Carroll recounted at length the procedural history of Atalese and quoted the key parts of the Supreme Court’s opinion in that case. He then ruled that, as in Atalese, “the arbitration provision in the purchase agreements is similarly devoid of any language that would inform unit buyers such as plaintiffs that they were waiving their right to seek relief in a court of law.”
The panel noted, however, that Atalese had involved only claims under two New Jersey consumer fraud statutes, while the present case implicated both a Consumer Fraud Act and common law claims. Judge Carroll found that not “a meaningful distinction,” since Atalese did not restrict its holding to statutory claims. “Rather, the Court was careful to mention both statutory rights granting citizens access to the courts and the more expansive right to a jury trial guaranteed by the New Jersey Constitution.”
Nor did the fact that some buyers had been represented by counsel permit defendants to get around Atalese. Not all of the buyers had counsel, and the idea that representation by counsel cures an unenforceable arbitration clause ran against two Supreme Court cases that Judge Carroll found “persuasive, if not binding.” Those cases were Marchak v. Claridge Commons, Inc., 134 N.J. 275 (1993) (though plaintiff was represented by counsel, arbitration clause that “does not state that the buyer elects arbitration as the sole remedy” would not be enforced), and Garfinkel v. Morristown Obstetrics & Gynecology Assocs., P.A., 168 N.J. 124 (2001) (“Irrespective of plaintiff’s status or the quality of his counsel, the Court must be convinced that he actually intended to waive his statutory rights.”).
The two ways that Judge Carroll applied Atalese here were correct. The central premise of that case was the need for persons to be informed, unequivocally, that they are giving up their right to seek relief in court. That premise applies equally to statutory and common law claims, and to persons represented by counsel and those who are not.