NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court."
Although it is posted on the internet, this opinion is binding only on the
parties in the case and its use in other cases is limited. R.1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-4188-15T3
DEEDRA L. BOWEN,
Plaintiff-Appellant,
v.
HYUNDAI MOTOR AMERICA,
Defendant-Respondent.
______________________________
Argued April 24, 2017 – Decided June 1, 2017
Before Judges Currier and Geiger.
On appeal from the Superior Court of New
Jersey, Law Division, Atlantic County, Docket
No. L-6224-14.
Lewis G. Adler argued the cause for appellant
(Mr. Adler and Paul DePetris, attorneys; Mr.
Adler and Mr. DePetris, on the briefs).
David S. Haase argued the cause for respondent
(White and Williams LLP, attorneys; Mr. Haase
and Siobhan K. Cole, of counsel and on the
brief).
PER CURIAM
In this appeal, we address the issue of whether an aggrieved
consumer of a new automobile, who successfully pursued and was
granted a repurchase of her vehicle through a manufacturer's
informal dispute settlement mechanism, may reject that settlement
offer and file a court action for similar relief in order to pursue
an attorney's fee award not available to the consumer under the
manufacturer's settlement program. Because we find that the two
recourses of action are not mutually exclusive, and an award of
attorney's fees is mandatory under the New Jersey Motor Vehicle
Warranty Act (Lemon Law), N.J.S.A. 56:12-29 to -49, we reverse.
Plaintiff Deedra Bowen purchased a new Hyundai Sonata
manufactured by defendant Hyundai Motor America. The selling
dealer issued the manufacturer's warranty. During the warranty
period the vehicle experienced a recurring problem despite
multiple attempts at repairing the issue.
Through counsel, plaintiff served a notice of demand for
revocation of acceptance of the vehicle pursuant to the New Jersey
Uniform Commercial Code (UCC), N.J.S.A. 12A:2-608, and the
Magnuson-Moss Warranty-Federal Trade Commission Improvement Act
(Magnuson-Moss), 15 U.S.C.A. §§ 2301 to 2312. Plaintiff requested
that defendant accept the return of the car, refund all payments
made to date, including any down payment, and satisfy any
outstanding financing or loan obligations. The demand requested
attorney's fees of $1250. The letter concluded:
2 A-4188-15T3
If the aforesaid action proceeds, the
consumer(s) shall seek the remedy of
revocation and actual/incidental/consequen-
tial and statutory damages as well as
attorney's fees and court costs. While the
attorney's fees in this matter are currently
small, as the case progresses through
litigation, the attorney's fees and costs
shall continue to accrue.
After requesting further information, defendant responded
that its review of the repair history for the car did not warrant
a repurchase. However, "in the interest of goodwill," defendant
offered $2000 and a repair supervised by a Hyundai specialist if
the problem recurred. Defendant also advised that plaintiff could
participate in its alternative dispute program, BBB Auto Line
(BBB), provided by defendant at no cost to its consumers. A
decision rendered under the program was not binding on the
consumer; a consumer was not entitled to attorney's fees, civil
penalties or punitive damages.
Defendant's warranty, in fact, required plaintiff to submit
any disputes regarding warranty coverage to BBB prior to seeking
any Magnuson-Moss remedies in a court action. Although New
Jersey's Lemon Law does not require consumers to submit their
claims to an informal resolution program before instituting
litigation in court, the BBB program is available for the
resolution of Lemon Law claims. See N.J.S.A. 56:12-39.
3 A-4188-15T3
Plaintiff submitted a customer claim form to the BBB program
seeking revocation pursuant to Magnuson-Moss and the New Jersey
UCC but specifically withholding her Lemon Law claims. The
arbitrator rendered an award in favor of plaintiff, finding that
a repurchase of the vehicle was the fair resolution and remedy for
the dispute.
Plaintiff rejected the arbitration award and subsequently
filed an action in Superior Court asserting claims under Magnuson-
Moss, the New Jersey UCC and Lemon Law.
The parties engaged in discovery. Plaintiff answered
interrogatories, produced requested documents, gave a deposition
and retained an expert to provide a report. Plaintiff filed
several motions to procure discovery from defendant. On the eve
of arbitration, the parties entered into a stipulation of
settlement in which defendant agreed to a Lemon Law repurchase of
the vehicle, with the issue of plaintiff's entitlement to and
amount of counsel fees to be submitted to the court for its
determination.
Plaintiff argued before the trial judge that, as a prevailing
party, she was entitled to attorney's fees under the Lemon Law,
N.J.S.A. 56:12-42. Her counsel freely conceded that the only
objective of rejecting the BBB arbitration award in favor of court
litigation was the opportunity to recoup his attorney's fees. The
4 A-4188-15T3
judge denied plaintiff's fee application in an oral decision on
April 1, 2016, finding that plaintiff was not entitled to fees in
the court action filed solely for the purpose of recovering counsel
fees because such fees were not permitted in the BBB arbitration.
Plaintiff moved for reconsideration, and the judge issued a
written decision and order on May 20, 2016, denying the motion.
Although the court "[a]ssum[ed] that plaintiff's counsel is
entitled to an award of fees by virtue of the fee shifting
provision in the Lemon Law," he found that the level of success
achieved in the litigation was a factor to be considered in
determining an award of counsel fees under the Lemon Law. He
reasoned that both the arbitration and the settlement of the court
litigation had resulted in an award to plaintiff of the repurchase
of her vehicle. "Therefore, there was no level of success achieved
in the litigation, with the exception of generating an attorney's
fee."
On appeal, plaintiff argues that she was a prevailing party
in the Lemon Law litigation, and therefore, is entitled to
attorney's fees, notwithstanding the results achieved in the BBB
arbitration. We agree.
We review a trial judge's decision on an application for
counsel fees and costs for an abuse of discretion. "[F]ee
determinations by trial courts will be disturbed only on the rarest
5 A-4188-15T3
of occasions, and then only because of a clear abuse of
discretion." Packard-Bamberger & Co. v. Collier, 167 N.J. 427,
444 (2001) (citing Rendine v. Pantzer, 141 N.J. 292, 317 (1995)).
We apply a similar standard to the court's denial of a motion for
reconsideration. Cummings v. Bahr, 295 N.J. Super. 374, 389 (App.
Div. 1996). However, we owe no deference to an exercise of the
trial court's discretion that is based on that court's
misapprehension of the applicable law. Myron Corp. v. Atlantic
Mut. Ins., 407 N.J. Super. 302, 309 (App. Div. 2009)
The Magnuson–Moss Act was enacted in 1975 "to aid consumers
by ensuring significant guarantees of quality and performance of
warranty provisions for purchased consumer goods, and 'to improve
the adequacy of information available to consumers, prevent
deception, and improve competition in the marketing of consumer
products.'" Fedor v. Nissan, 432 N.J. Super. 303, 311-12 (App.
Div. 2013) (quoting 15 U.S.C.A. § 2302(a)). The Act also sought
to advance the intent of Congress that warrantors "establish
procedures whereby consumer disputes [could be] fairly and
expeditiously settled through informal dispute settlement
mechanisms." Id. at 312 (alteration in original) (quoting 15
U.S.C.A. § 2310(a)(1)). The Federal Trade Commission (FTC) was
directed by Congress to "prescribe rules setting forth minimum
requirements for any informal dispute settlement procedure which
6 A-4188-15T3
is incorporated into the terms of a written warranty." Id. (citing
15 U.S.C.A. § 2301(a)(2)).
The FTC Informal Dispute Settlement Procedures Rule, 16
C.F.R. § 703 (2015), governs the mechanism procedures to be
followed in an informal dispute proceeding. The decision of an
arbitrator is not binding, id. § 703.5(j), and a dissatisfied
consumer may pursue all available state and federal legal remedies.
Id. § 703.5(g)(1).
In addressing the issue of whether the informal dispute
settlement mechanisms were required to include attorney's fees as
a remedy, the FTC issued an advisory opinion in 2005. The FTC
informed that: "Rule 703 does not require that all remedies that
a court might award a plaintiff who prevails in a warranty lawsuit
must be within the power of an [informal dispute settlement
mechanism] decision maker." Fedor, supra, 432 N.J. Super. at 319
(alteration in original) (citing Unpublished Informal Advisory
Opinion of Federal Trade Commission Staff re: Informal Dispute
Settlement Procedure in 16 C.F.R. 703, Letter from FTC Acting
Associate Director (October 25, 2005)). Specifically,
[t]he FTC emphasized that an informal dispute
settlement mechanism, "operating as a
prerequisite to (but not a substitute for)
legal action[,]" does not need to award
attorney's fees to be fully compliant with the
Magnuson-Moss Act and Rule 703, as the
objective is informal settlement of the
7 A-4188-15T3
dispute. "Congress envisioned [the informal
dispute settlement mechanisms] as a
warrantor's opportunity to cure a possible
breach of warranty" and avoid litigation.
Accordingly, the FTC concluded the Magnuson-
Moss Act "does [n]ot [c]ontemplate the [a]ward
of [a]ttorneys' [f]ees or [c]osts" by informal
dispute settlement mechanisms; such remedies
are only available to consumers who prevail
in an action before the court.
[Id. at 319-20 (alterations in original)
(citations omitted).]
New Jersey also established its Lemon Law statute in an effort
to simplify consumer efforts to remedy new automobile defects. A
consumer may present a dispute for resolution to three forums: (1)
a summary dispute resolution procedure established within the
Division of Consumer Affairs (Division), N.J.S.A. 56:12-37; (2) a
Superior Court action, N.J.S.A. 56:12-39; or (3) a manufacturer's
informal dispute resolution procedure, N.J.S.A. 56:12-36. "A
consumer 'shall be awarded reasonable attorney's fees' under the
Lemon Law if he or she is successful in an action brought in the
Superior Court or a summary proceeding before the Division."
Fedor, supra, 432 N.J. Super. at 318 (emphasis added) (quoting
N.J.S.A. 56:12-42).
The use of the word "shall" in the statute mandates an
attorney fee award, see Aponte-Correa v. Allstate Ins. Co., 162
N.J. 318, 325 (2000); it is not optional. However defendant
argues, and the trial judge agreed, that plaintiff was not a
8 A-4188-15T3
prevailing party because she obtained the same relief in the Lemon
Law action as she did in the Magnuson-Moss BBB arbitration, and
therefore, she is not entitled to counsel fees. We discern no
support for this argument.
The parties agree that the repurchase value under the Lemon
Law suit is greater than the BBB's repurchase award. That fact,
however, is not the only determinant to our discussion of whether
plaintiff achieved the status of a prevailing party. Under
defendant's warranty, plaintiff was required to first pursue
relief through the BBB program, which she did. The arbitrator's
decision was not legally binding upon her. Plaintiff chose to
reject the decision and pursue her state remedies under the New
Jersey Lemon Law.
After full discovery between the parties and just prior to
an arbitration proceeding, the parties entered into a stipulation
of settlement. Defendant agreed to a Lemon Law repurchase of the
vehicle and plaintiff was granted the relief she sought in her
complaint. We have stated that a "plaintiff is considered a
prevailing party when 'actual relief on the merits of [the] claim
materially alters the relationship between the parties by
modifying the defendant's behavior in a way that directly benefits
the plaintiff." Warrington v. Village Supermarket, Inc., 328 N.J.
Super. 410, 420 (App. Div. 2000) (alteration in original)
9 A-4188-15T3
(citations omitted). "'[T]he magnitude of the relief obtained is
irrelevant'; an award of nominal damages is sufficient to
constitute a party as prevailing." Id. at 421. "When an action
ends in settlement conferring relief sought, a prevailing
plaintiff's claim for attorneys' fees is not relinquished." Id.
at 422 (citations omitted).
When plaintiff achieved a favorable settlement in the court
action, she was entitled to an award of counsel fees. As we have
previously stated: "A consumer should be able to resolve his claim
with the manufacturer without counsel fees, but where counsel is
needed, the consumer is entitled to an award of reasonable counsel
fees to obtain full relief under the statute." Casal v. Hyundai
Motor America, 436 N.J. Super. 296, 303 (App. Div. 2014).
Defendant argues that if consumers are able to "exploit a
loophole in the interplay between the Magnusson-Moss Act and the
New Jersey Lemon Law," the informal dispute resolution mechanisms
will cease to exist to the detriment of consumers and contrary to
the intent of Congress and this State Legislature. We have been
provided no evidence of that dire prediction in the decades that
have passed since these laws were enacted.1
1
Defendant described the informal dispute resolution program in
its brief as "enormously successful."
10 A-4188-15T3
To the contrary, we lauded the benefits provided by
alternative dispute resolutions mechanisms in Fedor, supra, where
we noted that:
there are no filing fees or costs for the
consumer to initiate use of the mechanism, 16
C.F.R. § 703.3(a); legal representation is not
required and the proceedings are tailored to
self-represented consumers; an independent
expert inspects the vehicle and all records
of complaints, at no cost to the consumer;
decisions are swiftly made, unburdened by the
formality of court process, id. § 703.5(d);
and the result is non-binding, thus ensuring
a dissatisfied consumer retains the ability
to initiate full judicial review, id. §
703.5(g)(1), (j).
[432 N.J. Super. at 320-21.]
A consumer is free to reject the BBB award and proceed with
a cause of action for breach of warranty under the Lemon Law with
the hope of achieving additional relief, including attorney's
fees.
We, therefore, remand to the trial court for a determination
of the appropriate counsel fee and litigation costs award.
Although the amount of fees is not an issue for us to resolve,
we note, and agree with, defendant's argument that plaintiff is
not entitled to an award of counsel fees for counsel's time and
participation pertaining to the BBB arbitration. Attorney's fees
are not a permissible remedy in the dispute resolution process.
As we have stated, plaintiff was entitled to reject the
11 A-4188-15T3
arbitrator's award and pursue her Lemon Law claims, including
counsel fees, in state court. It would be inappropriate for a
plaintiff, however, to be permitted to assert as part of her claim,
fees that were incurred in the dispute resolution proceeding. To
allow otherwise would be contrary to the plain language of the
Magnuson-Moss statute. Plaintiff and her counsel were fully aware
that the BBB program did not permit an award of counsel fees.
We leave the appropriate determination of counsel fees to the
trial court to be considered within the guidelines established by
our Supreme Court. See Rendine, supra, 141 N.J. at 335. The
court shall exercise its discretion to set a fair and reasonable
fee for the work required in pursuing plaintiff's remedy under the
New Jersey Lemon Law statute, other than the services related to
the dispute resolution proceeding.
Reversed and remanded. We do not retain jurisdiction.
12 A-4188-15T3
DEEDRA L. BOWEN VS. HYUNDAI MOTOR AMERICAÂ Â (L-6224-14, ATLANTIC COUNTY AND STATEWIDE)
Combined Opinion