Mellet v. Aquaside, LLC

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-4438-15T1

ROBERT MELLET and BETTY EVANS,
on behalf of themselves and other
persons similarly situated,

Plaintiffs-Appellants,
APPROVED FOR PUBLICATION
v.
October 16, 2017
AQUASID, LLC, t/a FUTURE FITNESS
POWERED BY AFC, APPELLATE DIVISION

Defendant-Respondent.
________________________________

Argued May 4, 2017 – Decided June 21, 2017

Before Judges O'Connor, Whipple, and Mawla.

On appeal from Superior Court of New Jersey,
Law Division, Camden County, Docket No. L-516-
15.

Andrew P. Bell argued the cause for appellants
(Locks Law Firm, L.L.C. and the Law Office of
Charles N. Riley, L.L.C., attorneys; Michael
Galpern, James A. Barry, Charles N. Riley, and
Mr. Bell, on the brief).

Sean X. Kelly argued the cause for respondent
(Marks, O'Neill, O'Brien, Doherty & Kelly,
P.C., attorneys; Sean Robins and Mr. Kelly, on
the brief).

The opinion of the court was delivered by

MAWLA, J.S.C., t/a
 Plaintiffs Robert Mellet and Betty Evans appeal from an April

29, 2016 order denying class certification and granting defendant

summary judgment. We affirm.

We derive the following facts from the record. Defendant

Aquasid, LLC, is a health club operated at two locations in Cherry

Hill, New Jersey. Plaintiffs entered membership agreements with

defendant on February 21, 2014, and subsequently stopped paying

their memberships. Specifically, when Mellet sought to cancel his

membership in July 2014, defendant declined his request and charged

him $1,256.71, comprised of three months of late fees, a collection

fee, administrative fee, and fifteen months of dues. Defendant

attempted to collect these funds from Mellet. In September 2014,

Evans sought to cancel her membership, but defendant declined her

request. Evans' October 2014 payment was declined for insufficient

funds and she was charged a $25 fee. Defendant continued to charge

Evans, and sought to collect $198.34 from her.

Plaintiffs filed suit asserting the form of their membership

contracts and the fees defendant charged violate the Retail

Installment Sales Act (RISA), Consumer Fraud Act (CFA), Health

Club Services Act (HCSA), and the Truth in Consumer Contract,

Warranty, and Notice Act (TCCWNA). They allege at least one

hundred other similarly improper contracts were entered into by

other members. Plaintiffs sought class certification for all

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persons who entered into a membership agreement with defendant on

or after April 9, 2008. Defendant contested class certification

and moved for summary judgment.

After hearing oral argument, the trial judge denied

plaintiffs' motion for class certification and granted defendant's

request for summary judgment. Regarding plaintiffs' individual

claims, the trial judge concluded RISA did not apply to defendant's

installment contracts with plaintiffs because the contracts did

not afford them an ownership interest in either an object or

service at its conclusion. The trial judge also found Attorney

General review and approval of the membership forms containing the

contract fees, as required by the HCSA, barred any claim under

RISA, and concluded defendant's exculpatory clause was

enforceable.

The trial judge found plaintiffs did not have a clearly

established right under TCCWNA to assert their waiver claim. He

found no CFA claim because the fees plaintiffs sought to recover

under the CFA were RISA fees, which were barred because defendant's

membership agreements passed muster under the HCSA. The trial

judge did not make any findings as to the HCSA requirement that

the total fees charged appear on the front of the contract.

Class certification was denied for lack of the necessary

predominance on the issue of calculation of total fees and whether

3 A-4438-15T1
the total fees must appear on the front of every contract, as

required by the HCSA. The trial judge concluded HCSA claims are

individual in nature, not class based, because defendant's

contracts contained no common price. Finding no individual or

class claims, the trial judge entered summary judgment for

defendant. This appeal followed.

Plaintiffs contend the trial judge erred in granting summary

judgment because the membership agreements violate RISA, the HCSA,

TCCWNA, and CFA. They contend New Jersey favors class

certification, and all the prerequisites to certification under

Rule 4:32-1(a) were met, as well as the requirements of independent

justification for class certification required by Rule 4:32-1(b).

Plaintiffs further contend the trial judge erred in considering

defendant's cross motion for summary judgment on short notice.

We review the grant of summary judgment by a trial court de

novo. Templo Fuente De Vida Corp. v. Nat'l. Union Fire Ins. Co.

of Pittsburgh, 224 N.J. 189, 199 (2016). We apply the same

principles governing an adjudication of a motion for summary

judgment as the trial court. Atl. Mut. Ins. Co. v. Hillside

Bottling Co., 387 N.J. Super. 224, 230 (App. Div.), certif. denied,

189 N.J. 104 (2006). Rule 4:46-2(c) states an order granting

summary judgment shall be entered if "the pleadings, depositions,

answers to interrogatories and admissions on file, together with

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the affidavits, if any, show that there is no genuine issue as to

any material fact challenged and that the moving party is entitled

to a judgment or order as a matter of law." A fact is material

if it is substantial in nature. See Brill v. Guardian Life Ins.

Co. of Am., 142 N.J. 520, 529 (1995).

"A court deciding a summary judgment motion does not draw

inferences from the factual record as does the factfinder in a

trial, 'who may pick and choose inferences from the evidence to

the extent that a miscarriage of justice under the law' is not

created." Globe Motor Co. v. Igdalev, 225 N.J. 469, 480 (2016)

(quoting Brill, supra, 142 N.J. at 536). Rather, in reviewing

summary judgment orders, the Court must look at the facts in a

light most favorable to the non-moving party and determine whether

a genuine issue of material fact exists sufficient to be tried.

See Brill, supra, 142 N.J. at 523.

I.

Plaintiffs argue RISA covers health club contracts because

the plain language of RISA specifically states it applies to

services, including health club services. They assert the trial

judge’s interpretation of RISA is contradictory to the finding of

our Supreme Court in Perez v. Rent-A-Center, 186 N.J. 188 (2006),

cert. denied, 549 U.S. 115, 127 S. Ct. 984, 166 L. Ed. 2d 710

(2007).

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 The health club contracts at issue here were twenty-month

membership contracts payable in monthly installments. Plaintiffs

state these contracts also included various administrative and

late fees charged month-to-month for the period of the contract.

They argue defendant committed several clear violations of RISA:

charging a late fee of more than $10, N.J.S.A. 17:16C-42(a);

charging more than $20 for a returned check for insufficient funds,

N.J.S.A. 17:16C-42(e); charging more than $10 for a collection

fee, N.J.S.A. 17:16C-42(b); and applying charges to customer

accounts, which were not court costs, attorney fees, or the expense

to retake goods authorized by law, N.J.S.A. 17:16C-50.

Defendant argues RISA does not apply to their membership

agreements and Perez controls because the entire premise of the

installment sales contract contemplated by RISA is possession and

eventual ownership of a specified good by a buyer. Defendant

argues plaintiffs were paying not to eventually own but rather to

utilize the gym's facilities and equipment, and, thus, the RISA

claim was properly dismissed. We agree.

RISA defines a retail installment contact as:

[A]ny contract, other than a retail charge
account or an instrument reflecting a sale
pursuant thereto, entered into in this State
between a retail seller and a retail buyer
evidencing an agreement to pay the retail
purchase price of goods or services, which are
primarily for personal, family or household

6 A-4438-15T1
 purposes, or any part thereof, in two or more
installments over a period of time. This term
includes a security agreement, chattel
mortgage, conditional sales contract, or other
similar instrument and any contract for the
bailment or leasing of goods by which the
bailee or lessee agrees to pay as compensation
a sum substantially equivalent to or in excess
of the value of the goods, and by which it is
agreed that the bailee or lessee is bound to
become, or has the option of becoming, the
owner of such goods upon full compliance with
the terms of such retail installment contract.

[N.J.S.A. 17:16C-1(b).]

The term "'[s]ervices' means and includes work, labor and

services, professional and otherwise which are primarily for

personal, family or household purposes but does not include

services which are subject to the 'Home Repair Financing Act,' and

insurance premiums financing which is subject to the 'Insurance

Premium Finance Company Act.'" N.J.S.A. 17:16C-1(s).

In Perez, the Court stated:

In enacting RISA, the stated legislative
purpose was protection of the public interest
through the regulation of the charges
associated with the time sale of goods. By
including conditional sales, chattel
mortgages, security interests, leases, and
similar instruments within RISA's protective
ambit, the Legislature signaled that it
intended to sweep into the Act as many cognate
agreements as possible, even those that did
not strictly fall within a denominated
category. That broad mandate, along with the
well-established notion that remedial
statutes like RISA should be liberally
construed to achieve their salutary aims,

7 A-4438-15T1
 require questions regarding the applicability
of the statute to be resolved in favor of
consumers for whose protection RISA was
enacted.

[Perez, supra, 186 N.J. at 209 (citations
omitted).]

The thrust of RISA is to "protect consumers from themselves

and rapacious sellers." See id. at 218. Thus, the Legislature

aimed to protect the public interest regarding the sale of goods.

See id. at 209.

Although the Perez Court stated RISA should be construed

broadly, the statute itself refers to the following categories:

"security agreement, chattel mortgage, conditional sales contract

or other similar instrument." N.J.S.A. 17:16C-1(b). We fail to

see how a health club membership agreement is similar to any of

the enumerated instruments. Health club members are not in the

category of consumers RISA is designed to protect, because these

contracts do not involve the sale of goods. For these reasons,

we agree with the trial judge RISA does not apply and affirm

dismissal of that count of plaintiffs' complaint. Also, because

it is undisputed plaintiffs' CFA claim is dependent upon their

RISA claim, we affirm the judge’s summary judgment dismissal of

the CFA claim as well.

II.

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 Plaintiffs assert defendant's exculpatory clause is the type

of overly broad contract barred by TCCWNA. Plaintiffs argue their

TCCWNA claims should have survived summary judgment because in

Bosland v. Warnock Dodge, Inc., 197 N.J. 543, (2009), the Supreme

Court held TCCWNA "prohibits any provision in a consumer contract

requiring a customer to waive his or her rights under the Act."

They assert the Bosland Court stated TCCWNA "should be broadly

construed in favor of consumers," and, thus, TCCWNA prohibits

broad exculpatory clauses of the type found in defendant's

membership contract.

Plaintiffs assert the trial judge incorrectly applied

Stelluti v. Casapenn Enterprises, LLC, 203 N.J. 286 (2010), where

the Supreme Court upheld the validity of limited liability waivers

for injuries suffered while exercising at a health club. They

argue the holding in Stelluti was narrow and specific to "injuries

sustained as a matter of negligence that result from a patron's

voluntary use of equipment and participation in instructed

activity." See id. at 313. Plaintiffs cite Walters v. YMCA, 437

N.J. Super. 111, 120 (App. Div. 2014), where we considered a waiver

in the context of a slip and fall case at a gym, and held when a

"defendant seeks to shield itself from all civil liability, based

on a one-sided contractual arrangement that offers no

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countervailing or redeeming societal value[,] [s]uch a contract

must be declared unenforceable as against public policy."

Defendant refutes plaintiffs' broad reading of Walters.

Rather, defendant contends the court in Walters stated the

enforceability of an exculpatory clause in a health club membership

contract must be decided on a case-by-case basis.

Our review begins with the statute itself. TCCWNA states:

No consumer contract, warranty, notice or
sign, as provided for in this act, shall
contain any provision by which the consumer
waives his rights under this act. Any such
provision shall be null and void. No consumer
contract, notice or sign shall state that any
of its provisions is or may be void,
unenforceable or inapplicable in some
jurisdictions without specifying which
provisions are or are not void, unenforceable
or inapplicable within the State of New
Jersey; provided, however, that this shall not
apply to warranties.

[N.J.S.A. 56:12-16.]

Stelluti and Walters address the validity of exculpatory

clauses in health club contracts. In Stelluti, the Court stated:

In sum, the standard we apply here places in
fair and proper balance the respective public-
policy interests in permitting parties to
freely contract in this context (i.e. private
fitness center memberships) and requires
private gyms and fitness centers to adhere to
a standard of conduct in respect of their
business. Specifically, we hold such business
owners to a standard of care congruent with
the nature of their business, which is to make
available the specialized equipment and

10 A-4438-15T1
 facility to their invitees who are there to
exercise, train, and to push their physical
limits. That is, we impose a duty not to
engage in reckless or gross negligence. We
glean such prohibition as a fair sharing of
risk in this setting, which is also consistent
with the analogous assumption-of-risk
approach used by the Legislature to allocate
risks in other recreational settings with
limited retained-liability imposed on
operators.

[Stelluti, supra, 203 N.J. at 312-13.]

The ruling in Stelluti was expressly premised on the fact the

plaintiff there was engaging in the type of strenuous physical

activity normally undertaken at a gym, creating an inherent risk

of injury.

In Walters, we addressed whether an exculpatory clause was

proper where an injury at a health club facility occurred not as

a result of engaging in the type of strenuous activity creating

an inherent risk, but as the result of ordinary negligence.

Walters, supra, 437 N.J. Super. at 111. We applied the same

standard as the Supreme Court in Stelluti, noting an exculpatory

agreement:

[I]s enforceable only if: (1) it does not
adversely affect the public interest; (2) the
exculpated party is not under a legal duty to
perform; (3) it does not involve a public
utility or common carrier; or (4) the contract
does not grow out of unequal bargaining power
or is otherwise unconscionable.

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 [Id. at 117-18 (quoting Stelluti, supra, 203
N.J. at 298).]

We held the exculpatory clause at issue was unenforceable as

against public policy because it "eviscerated" the health club's

ordinary duty of care by shielding it from injuries occurring

while patrons utilize its equipment and also immunized the health

club from liability for any injury occurring on its premises, even

those having nothing to do with exercise. Id. at 118-20.

Here, defendant's exculpatory clause states:

I/we accept full responsibility for my/our use
of any and all apparatus, appliance, facility,
privilege, or service, whatsoever, owned and
operated by FF/AFC, or while engaging in any
contest, games function, exercise, either on
or off the FF/AFC premises, and shall do so
at my/out own risk and shall hold FF/AFC, it’s
owners, partners, shareholders, directors,
officers, employees, representatives, agents
and/or affiliated companies, harmless from any
and all loss, claim, injury, damage or
liability sustained or incurred by me/us,
resulting from any act or omission of any
owner, partner, shareholder, directors,
officers, employees, representatives, agents
and/or affiliated companies hereunder in
respect of any such loss, cost, claim injury,
damage or liability sustained or incurred by
using FF/AFC’s services and facilitates.

Plaintiffs' challenges to this exculpatory clause are not for

injuries suffered at a health club as in Stelluti and Walters.

Rather, plaintiffs argue the mere existence of the clause violates

TCCWNA because it exculpates defendant from the type of liability

12 A-4438-15T1
barred in Walters and Stelluti. TCCWNA mandates no "business

offer to any consumer or prospective consumer or enter into any

written consumer contract or give or display any written consumer

warranty, notice or sign after the effective date of this act

which includes any provision that violates any clearly established

legal right. . . ." N.J.S.A. 56:12-15. TCCWNA prohibits any

contract from requiring a party to sign away a clearly established

right. See N.J.S.A. 56:12-16.

The language in defendant's exculpatory clause is more

analogous to the exculpatory clause in Stelluti. However, unlike

Stelluti, it does not contain any waiver for slip and fall type

incidents, which we barred in Walters. See Walters, supra, 437

N.J. Super. at 115. Therefore, defendant's exculpatory clause is

facially enforceable, because it neither broadly waives exercise-

related injuries, nor negates defendant’s ordinary duty of care,

which may not be waived as contrary to public policy. See id. at

113. For these reasons, the trial judge's determination of the

waiver issue is affirmed.

III.

Plaintiffs contend the trial judge did not state his reasoning

for dismissal of the HCSA claims. They state the membership

agreements at issue did not include the total payment obligation

on the first page of the membership agreement as required by the

13 A-4438-15T1
HCSA. See N.J.S.A. 56:8-42(b). Thus, plaintiffs argue dismissal

of this claim was improper.

In opposition, defendant points out the form of the contracts

at issue was subject to review by the Attorney General, who did

not find any violations. Defendant also notes plaintiffs'

contracts contained the total payment information on the first

page of the document.

The HCSA states,

A health club services contract shall
specifically set forth in a conspicuous manner
on the first page of the contract the buyer's
total payment obligation for health club
services to be received pursuant to the
contract.

[N.J.S.A. 56:8-42.]

The record reveals the trial judge did not make any findings

about the display of the total membership cost on the front page

of the agreement as required by N.J.S.A. 56:8-42. Therefore,

pursuant to Rule 2:10-5 we elect to exercise original jurisdiction

to adjudicate this issue. As stated by our Supreme Court,

[r]esort to original jurisdiction is
particularly appropriate to avoid unnecessary
further litigation, as where the record is
adequate to terminate the dispute and no
further fact-finding or administrative
expertise or discretion is involved, and thus
a remand would be pointless because the issue
to be decided is one of law and implicates the
public interest.

14 A-4438-15T1
 [Price v. Himeji, LLC, 214 N.J. 263, 294
(2013) (citing Vas v. Roberts, 418 N.J. Super.
509, 523-24 (App. Div. 2011) (alteration in
original)).]

Here, the record reveals plaintiffs' health membership

agreements contained the total amount owed on a monthly basis on

the first page of their contracts. For these reasons, summary

judgment as to this issue is proper.1

Because we have found plaintiffs do not have any viable

claims, we do not reach the issue of the denial of class

certification. We also decline to address plaintiffs' claim the

trial judge improperly considered defendant's cross-motion on

short notice. The transcript demonstrates, by virtue of an

adjournment the trial judge granted, plaintiffs had sufficient

time to respond and did not seek permission to file a sur-reply.

Furthermore, the record reveals at oral argument plaintiffs

requested more time to file a statement of material facts, but

failed to argue which facts were in dispute beyond the facts

already before the trial judge to necessitate an additional filing.

Likewise, we do not address plaintiffs' TCCWNA claims derived from

RISA, the CFA, and HCSA, because we have found these claims are

not independently viable.

1
We note here appellants' motion to supplement the record on
appeal is denied.

15 A-4438-15T1
Affirmed.

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