NOT FOR PUBLICATION WITHOUT THE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-3028-17T4
EVELYN GUZMAN, ALYSSA
CAPALDI, AMBER CARFAGNO,
KAMEISHA JOHNSON, KAREEMA
JOHNSON, I'YAHNA LEWIS,
SHEMAIAH PRICE, KIARA BROOKS,
JESSICA SILVA, NACHALEE
ANDUJAR, KIANNA MARQUEZ,
and EUGENIA SANTIAGO,
Plaintiffs-Appellants,
v.
SC ACADEMY HOLDINGS, INC.,
STAR CAREER ACADEMY,
QUAD PARTNERS, CULINARY
ACADEMY OF LONG ISLAND,
INC., CULINARY ACADEMY OF
NEW YORK, INC., MICHAEL
IANNACONE, MICHAEL S.
LEVITT, TIM JAMES, ROBERT
EMME, COLEEN LEARD,
MCHELLE MUMMA, RICHARD
LINCOLN, CAROL HANNON,
JENNIFER DIMEDIO, RHONDA
TERWILLIGER, RON PINO,
SHEILA STOKES, CHERYL
ACKEY, and AMY TORRES,
Defendants-Respondents.
_____________________________
Submitted March 19, 2019 – Decided April 18, 2019
Before Judges Fisher and Geiger.
On appeal from Superior Court of New Jersey, Law
Division, Camden County, Docket No. L-0780-15.
Robert J. O'Shea, Jr., attorney for appellants.
Greenberg Traurig, LLP, attorneys for respondents
SC Academy Holdings, Inc., Star Career Academy,
Culinary Academy of Long Island, Inc., Culinary
Academy of New York, Inc., Michael Iannacone,
Michael S. Levitt, Tim James, Robert Emme, Colleen
Leard, Michele Mumma, Richard Lincoln, Jennifer
DiMedio, Rhonda Terwilliger, Ron Pino, Sheila Stokes,
Cheryl Ackey, and Amy Torres (David Jay, Jason H.
Kislin and Paige S. Nestel, on the brief).
Orloff, Lowenbach, Stifelman & Siegel, PA and Arthur
H. Aufses, III (Kramer Levin Naftalis & Frankel LLP)
of the New York Bar, admitted pro hac vice, attorneys
for respondent Quad Partners, LLC (Laurence B.
Orloff, on the brief).
PER CURIAM
Plaintiffs appeal from several Law Division orders dismissing their claims
against defendants Star Career Academy, SC Academy Holdings, Inc., Culinary
Academy of Long Island, Inc., Culinary Academy of New York, Inc.
(collectively Star), fourteen individual Star employees (collectively the Star
A-3028-17T4
2
individual defendants), and Quad Partners, LLC (Quad), for violation of the
Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -20, breach of contract, breach
of warranty, misrepresentation, and strict liability. All claims relate to plaintiffs'
enrollment in Star's surgical technician (ST) program. For the following
reasons, we affirm in part and vacate and remand in part.
Star and its affiliates own and operate for-profit schools, including the
institution at issue that trains students to become employed as STs. In 2011, the
Legislature enacted N.J.S.A. 26:2H-12.63 (the ST law), addressing five paths
for employment as an ST by a health care facility in New Jersey. One path is
successful completion of a "nationally or regionally accredited educational
program for surgical technologists." N.J.S.A. 26:2H-12.63(a). Another path is
to obtain a "certified surgical technologist credential administered by the
National Board of Surgical Technology and Surgical Assisting or its successor,
or other nationally recognized credentialing organization." N.J.S.A. 26:2H -
12.63(b).
There are two types of higher education accreditation: programmatic and
institutional. The Commission on Accreditation of Allied Health Education
Programs (CAAHEP) and the Accrediting Bureau of Health Education Schools
(ABHES) are the only nationally recognized accreditors of ST programs. Star
A-3028-17T4
3
did not receive programmatic accreditation from either CAAHEP or ABHES.
The Accrediting Commission of Career Schools and Colleges (ACCSC) is
approved by the United States Department of Education (USDOE) to give
institutional accreditation, but is not authorized to give programmatic
accreditation to an ST program. In August 2010, the ACCSC recognized Star
as an accredited institution.
The Polonco Class Action.
Because our recent ruling in a related class action impacts the decisions
rendered by the trial court in this matter, we briefly discuss the pertinent facts
and procedural history in that separate class action, Polonco v. Star Career
Academy, No. A-3756-15 (App. Div. July 26, 2018).1 Shirley Polonco enrolled
in Star's ST program before the ST law was enacted. Id. at 7. After the law was
enacted, Polonco asked the director of the program if the ST law would affect
her ability to gain employment as a ST. Ibid. The director assured her
graduating from Star's program would qualify her under the ST law. Ibid. The
director of externships also told Polonco that Star's ST program was accredited.
1
While unpublished opinions do not constitute precedent and are not binding
on any court, Rule 1:36-3, we cite our unpublished opinion in Polonco because
it vacated the trial court's order certifying the class in that action. The class
certification in Polonco was the basis for the dismissal of the majority of the
claims raised in the Guzman and Silva actions.
A-3028-17T4
4
Ibid. Other students also questioned Star admissions officers regarding how the
ST law would affect them. Ibid. The admissions officers discussed the
accreditation issues with their subordinates and "instructed them to 'sell the
program as best as [they] could.'" Ibid. (alteration in original).
As we described in Polonco:
A year after the ST law was enacted, an entire
class of ST students withdrew from the program "in
protest" because the Association of Surgical
Technologists (AST), a national organization
representing the profession, told them that the program
was worthless. According to a Star administrator,
admissions officers gave inaccurate information to
students on the ST law and accreditation requirements.
In August 2012, John A. Calabria of the New
Jersey Department of Health (DOH) issued a
memorandum addressing programmatic accreditation
under the ST law that stated, "If a[n] [ST] program is
listed as accredited [by the USDOE] . . . , then it is
compliant with [the ST law]." Two months after
Calabria's memorandum, an AST representative
emailed Star that, to comply with the ST law,
programmatic accreditation was necessary and that an
ST program should only be considered regionally or
nationally accredited for purposes of the ST law if it
was accredited by CAAHEP or ABHES. Star's CEO
and president disagreed with AST's understanding of
the ST law, explaining that it was sufficient if a school
had institutional accreditation rather than
programmatic accreditation and that accreditation by
ABHES or CAAHEP was unnecessary.
A-3028-17T4
5
According to plaintiff, the National Center for
Competency Testing (NCCT) administered testing to
graduates of ST programs, but was not nationally
recognized as required by N.J.S.A. 26:2H-12.63(b).
NCCT recognized Star's ST program as approved for
the "tech in surgery-certified" certification exam; in
other words, graduates of the Star ST program were
eligible for the exam. However, because NCCT was
not nationally recognized under the ST law, they added
a disclaimer to their website indicating that their exam
was not accepted in New Jersey. . . .
. . . [Calabria] later recognized that institutional
accreditation was not sufficient and programmatic
accreditation was necessary. A supplemental
memorandum reflecting Calabria's change in
knowledge was never issued.
[(Id. at 7-9).]
Three years after enrolling, Polonco filed a class action complaint against
Star alleging Star violated the CFA by misrepresenting information about the
accreditation of its ST program. Id. at 9-10. The proposed class was comprised
of "all individuals who were enrolled in [Star's ST program] for surgical
technician training to take place in the State of New Jersey as of June 29, 2011
and thereafter." Id. at 10. The trial court certified the proposed class over Star's
objection, and appointed Polonco class representative. Id. at 11. The court
denied Star's subsequent motion to decertify the class. Ibid.
A-3028-17T4
6
The case proceeded to trial and the jury returned a verdict in favor of the
class. Ibid. Star appealed, arguing the trial court improperly certified the class
because common issues did not predominate over issues affecting individual
class members as required by Rule 4:32-1(b)(3). Id. at 18. We agreed,
concluding "the individualized factual inquiries surrounding Star's
misrepresentations and the nexus between those misrepresentations and
omissions and the class members' ascertainable loss compels decertification."
Id. at 22. We decertified the class, vacated the final judgment and remanded for
retrial. Id. at 27, 31.
The Guzman and Silva Actions.
Evelyn Guzman, Alyssa Capaldi, Amber Carfagno, Kameisha Johnson,
Kareema Johnson, I'Yahna Lewis, Shemaiah Price, and Kiara Brooks filed their
action against defendants on February 25, 2015 (the Guzman Action). On March
17, 2015, additional former Star students Jessica Silva, Nachalee Andujar,
Kianna Marquez, and Eugenia Santiago filed a similar complaint against
defendants and Quad (the Silva Action).
The trial court consolidated the Guzman and Silva Actions. Star and the
Star individual defendants filed several rounds of Rule 4:6-2(e) dismissal
motions before any discovery was undertaken.
A-3028-17T4
7
Star moved to dismiss the Guzman Action under Rule 4:6-2(e); it argued
plaintiffs were part of the Polanco class and could not file a separate action.
Plaintiffs asserted they were not Polanco class members because they did not
receive notice of the class action and, thus, were not advised of their right to opt
out of the class. The trial court denied the motion to dismiss without prejudice.2
One month later, Star again moved to dismiss plaintiff's claims in the
Guzman and Silva Actions under Rule 4:6-2(e). On September 18, 2015, the
trial court granted the motion in part, dismissing the claims against Star with
prejudice as to all plaintiffs – except Guzman – because they were members of
the class in Polanco, and their claims were deemed duplicative.3 Plaintiffs'
motion for reconsideration was denied on December 4, 2015.
In January 2016, Star again moved for dismissal of the Guzman and Silva
Actions.4 The motion also sought dismissal of plaintiffs' claims against certain
sales representatives. On March 11, 2016, the trial court entered a handwritten
order addressing various motions. Despite its prior dismissal order, the trial
2
The record does not include a copy of the order.
3
The parties acknowledge Evelyn Guzman was not a member of the Polanco
class.
4
The record does not include the moving papers.
A-3028-17T4
8
court dismissed the claims brought by Capaldi, Carfagno, both Johnsons, Lewis,
Price, Brooke, Silva, Andujar, Marquez, and Santiago against Star; the contract
claims brought by Guzman and others against the Star individual defendants;
and all strict liability and educational malpractice claims. With respect to the
breach of contract claims against the Star individual defendants, the trial court
found the contracts were with "SC Academy or Star Academy or some corporate
entity," rather than with the individual employees. Next, the court dismissed
any claims based upon strict liability and educational malpractice, explaining
that such causes of action were not recognized under New Jersey law.
The court denied the motion to dismiss the CFA and common law fraud
claims against the Star individual defendants. The trial court also denied
dismissal of the breach of contract and fraud claims brought against Star by the
remaining plaintiffs, finding it inappropriate to decide the breach of contract
claim because it was "necessarily interwoven with the fraud claim." The trial
court stated it would allow discovery to proceed after which Star could renew
its application as a summary judgment motion.
The court carried the following aspects of the motions to April 8, 2016:
the CFA claims, the common law fraud claims, the vicarious liability claims
against Quad, and the exceptions to administrative dismissals due to service of
A-3028-17T4
9
process issues. The record does not contain a transcript of any proceedings on
April 8, 2016.
On May 13, 2016, the court entered a five-part order. In pertinent part,
the order: (1) dismissed with prejudice all breach of contract and warranty
claims against the Star individual defendants; (2) dismissed without prejudice
all CFA and common law fraud claims against the Star individual defendants
and Quad; (3) dismissed with prejudice all claims brought by plaintiffs included
in the Polanco class list except the claims against Quad; (4) confirmed the
plaintiffs in the Guzman and Silva Actions voluntarily dismissed with prejudice
all claims against Quad except the CFA and common law fraud claims; and (5)
continued Quad's motion to dismiss claims brought by plaintiffs who were
Polanco class members to May 23, 2016. While the order states the court placed
it reasons on the record on May 13, 2016, the transcript consists of a brief
colloquy and does not contain any factual findings or conclusions of law by the
trial court.
On May 23, 2016, the trial court granted Quad's motion to dismiss based
on res judicata, connecting Quad to the Polanco class action. The court found:
(1) the judgment in the Polanco action was valid, final, and on the merits; (2)
A-3028-17T4
10
plaintiffs' complaint alleged Quad was in privity with the Polanco defendants;
and (3) the current action arose from the same transaction and occurrence.
A subsequent June 3, 2016 order dismissed the claims of all plaintiffs in
the Guzman and Silva Actions against Quad with prejudice, except the claims
made by Guzman, which had been previously dismissed on May 13, 2016.
On January 23, 2018, Guzman executed a stipulation of dismissal,
dismissing all of her claims with prejudice.
This appeal followed. Plaintiffs challenge the March 11 and June 3, 2016
orders and the January 23, 2018 stipulation of dismissal.
Plaintiffs argue: (1) defendants misled the trial court regarding
dissimilarities between the Guzman and Silva complaints and the Polonco class
action complaint; (2) the Polonco class action did not divest the trial court of
jurisdiction over the Guzman Action as to Star; (3) the Polonco class action did
not divest the trial court of jurisdiction over the Guzman Action as to Quad and
the Star individual defendants who were not named defendants in the class
action; (4) defendants did not meet their burden of proving the Polonco trial
court had exclusive jurisdiction over the Guzman and Silva Actions or that the
Polonco opt out notice complied with due process by providing the best
practicable notice; (5) the trial court erred by considering unverified evidence
A-3028-17T4
11
submitted by Star in deciding Star's Rule 4:6-2(e) motion to dismiss; (6) the trial
court's ruling overlooked New Jersey's strong policy interest in eradicating
fraud; and (7) the trial court erred by dismissing all claims brought by the
Guzman Action plaintiffs other than those brought by Evelyn Guzman.
Defendants moved to dismiss the complaint under Rule 4:6-2(e) for
"failure to state a claim upon which relief may be granted." "In considering a
motion to dismiss under Rule 4:6-2(e), courts search the allegations of the
pleading in depth and with liberality to determine whether a cause of action is
'"suggested" by the facts.'" Rezem Family Assoc., LP v. Borough of Millstone,
423 N.J. Super. 103, 113 (App. Div. 2011) (quoting Printing Mart-Morristown
v. Sharp Elecs. Corp., 116 N.J. 739, 746 (1989)). The court should "ascertain
whether the fundament of a cause of action may be gleaned even from an obscure
statement of claim, opportunity being given to amend if necessary." Ibid.
(quoting Printing Mart-Morristown, 116 N.J. at 746). "For this purpose, 'all
facts alleged in the complaint and legitimate inferences drawn therefrom are
deemed admitted.'" Rieder v. State, 221 N.J. Super. 547, 552 (App. Div. 1987)
(quoting Smith v. City of Newark, 136 N.J. Super. 107, 112 (App. Div. 1975)).
"On appeal, we engage in a de novo review from a trial court's decision to
grant or deny a motion to dismiss filed pursuant to Rule 4:6-2(e)." Smith v.
A-3028-17T4
12
Datla, 451 N.J. Super. 82, 88 (App. Div. 2017) (citing Rezem, 423 N.J. Super.
at 114). "We owe no deference to the trial court's conclusions." Rezem, 423
N.J. Super. at 114. We will uphold the dismissal if "the factual allegations are
palpably insufficient to support a claim upon which relief can be granted."
Rieder, 221 N.J. Super. at 552.
The issues presented in this matter do not require extended discussion.
The trial court dismissed the majority of plaintiff's claims based solely on the
class certification in Polonco, concluding the class certification divested it of
jurisdiction. We subsequently decertified the class. Polonco, slip op. at 25. In
light of our ruling, defendants do not dispute that plaintiffs can pursue their
claims individually.
Assuming the facts alleged by plaintiffs in their complaints are true, and
affording them all reasonable inferences, plaintiffs adequately pleaded causes of
action for violation of the CFA, common law fraud, and misrepresentation
against Star. The trial court erred by dismissing those claims against Star.5 We
vacate the dismissal of those claims and remand this matter for the parties to
engage in discovery.
5
We further note that the record before us does not contain any factual findings,
analysis, or legal conclusions by the trial court on May 13, 2016. This too was
error. R. 1:7-4(a).
A-3028-17T4
13
Paragraphs two and five of the May 13, 2016 order State:
#2 – All NJCFA and common law fraud claims by all
plaintiffs in these consolidated cases asserted against
all individual defendants and Quad Partners, LLC are
dismissed without prejudice.
#5 – Plaintiffs in Guzman and Silva voluntarily dismiss
with prejudice [p]laintiffs' claims against Quad other
than the NJCRA and common law fraud claim, i.e.,
breach of contract, breach of warranty and strict
liability.
The order does not state it is a consent order. On this record, we are unable to
determine if the order was consented to by counsel as to just form or also as to
entry. We vacate the dismissal of plaintiffs' CFA and common law fraud claims
against the Star individual defendants and Quad and remand those claims.
Plaintiffs shall be afforded a reasonable period to amend their complaint as to
those claims and to engage in discovery.
Plaintiffs have not briefed the dismissal of their claims for breach of
contract and breach of warranty. Nor have they briefed the dismissal of their
claims for strict liability and educational malpractice. We deem those issues
waived. See Sklodowsky v. Lushis, 417 N.J. Super. 648, 657 (App. Div. 2011)
("An issue not briefed on appeal is deemed waived."). We affirm the dismissal
of the breach of contract, breach of warranty claims, strict liability, and
educational malpractice claims.
A-3028-17T4
14
Guzman was not a member of the Polonco class. We affirm the dismissal
of her claims against Star and the Star individual defendants with prejudice
pursuant to the stipulation of dismissal she executed. We discern no basis to
overturn the dismissal of those claims as a result of the resolution of h er claims
against defendants. Guzman does not argue otherwise.
Guzman seeks a remand of her claims against Quad. We find no basis to
do so. The stipulation of dismissal states "the claims brought by Evelyn Guzman
. . . in the actions consolidated under docket number CAM-L-780-15, are
dismissed with prejudice." The stipulation of dismissal encompasses all of
Guzman's claims in the Guzman Action; it does not preserve Guzman's claims
against Quad. The stipulation of dismissal is binding and enforceable. The
dismissed claims cannot be resurrected or pursued.
In light of these rulings, we do not reach the other issues raised by
plaintiffs.
Affirmed in part and vacated and remanded in part. We do not retain
jurisdiction.
A-3028-17T4
15