TEOFILO GUZMAN VS. EAST COAST TOYOTA (DC-009113-19, BERGEN COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE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-0726-19T1

TEOFILO GUZMAN,

Plaintiff-Respondent,

v.

EAST COAST TOYOTA,

Defendant-Appellant.
__________________________

Submitted May 27, 2020 – Decided July 13, 2020

Before Judges Gilson and Rose.

On appeal from the Superior Court of New Jersey, Law
Division, Bergen County, Docket No. DC-009113-19.

Schiller, Pittenger & Galvin, PC, attorneys for
appellant (Perry A. Pittenger, of counsel; Jay B. Bohn,
Thomas J. Russomano and Kieran M. Dowling, on the
brief).

Respondent has not filed a brief.

PER CURIAM
 Defendant East Coast Toyota appeals from an October 17, 2019 order

denying its motion to compel arbitration and dismissing plaintiff's complaint

without prejudice.1 The trial court held that the arbitration provisions signed by

plaintiff were inconsistent, ambiguous, and unenforceable. We disagree,

reverse, and direct that the parties be compelled to arbitration and the action be

stayed pending arbitration.

I.

The facts relevant to the arbitration provisions are not in dispute. In

August 2018, plaintiff Teofilo Guzman purchased a 2018 Toyota Tacoma motor

vehicle from defendant. In connection with that purchase, plaintiff and

defendant signed a Motor Vehicle Retail Order (Retail Order), which contained

an arbitration provision. In bold capital letters, just above where plaintiff signed

the Retail Order, that contract states:

AGREEMENT TO ARBITRATE ALL CLAIMS. READ
THE FOLLOWING ARBITRATION PROVISION
CAREFULLY, IT LIMITS YOUR RIGHTS, AND
WAIVES THE RIGHT TO MAINTAIN A COURT
ACTION, OR TO PURSUE A CLASS ACTION IN
COURT AND IN ARBITRATION. . . . THIS
ARBITRATION PROVISION IS GOVERNED BY THE
FEDERAL ARBITRATION ACT.

1
The order was dated October 17, 2019, but was apparently filed the following
day on October 18, 2019.
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 The Retail Order also states:

The parties to this agreement agree to arbitrate all claims,
disputes, or controversies, including all statutory claims
and any state or federal claims . . . that may arise out of or
relating to this agreement and the sale or lease identified
in this agreement. By agreeing to arbitrate, the parties
understand and agree that they are giving up their
rights to use other available resolution processes, such
as a court action or administrative proceeding, to
resolve their disputes. . . . The arbitration shall be
administered by the American Arbitration Association
under its Commercial Arbitration Rules, and the
Consumer Related Disputes Supplementary Procedures to
the extent applicable, before a single arbitrator who shall
be a retired judge or an attorney. . . . The arbitration shall
take place in New Jersey at a mutually convenient place
agreed upon by the parties or selected by the arbitrator.
The decision of the arbitrator shall be binding upon the
parties. . . . In the event that any claims are based on a
lease, finance, or other agreement between the parties
related to this sale or lease as well as this agreement, and
if such lease, finance or other agreement contains a
provision for arbitration of claims which conflicts with or
is inconsistent with this arbitration provision, the terms of
such other arbitration provision shall govern and control.

Plaintiff financed the purchase of the Tacoma and, therefore, he also

signed a Retail Installment Sale Contract (Installment Contract). The

Installment Contract contained an arbitration provision, set forth on its own

page, which states in relevant part:

1. EITHER YOU OR WE MAY CHOOSE TO HAVE
ANY DISPUTE BETWEEN US DECIDED BY

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 ARBITRATION AND NOT IN COURT OR BY JURY
TRIAL.

2. IF A DISPUTE IS ARBITRATED, YOU WILL GIVE
UP YOUR RIGHT TO PARTICIPATE AS A CLASS
REPRESENTATIVE OR CLASS MEMBER ON ANY
CLASS CLAIM YOU MAY HAVE AGAINST US
INCLUDING ANY RIGHT TO CLASS ARBITRATION
OR ANY CONSOLIDATION OF INDIVIDUAL
ARBITRATIONS.

3. DISCOVERY AND RIGHTS TO APPEAL IN
ARBITRATION ARE GENERALLY MORE LIMITED
THAN IN A LAWSUIT, AND OTHER RIGHTS THAT
YOU AND WE WOULD HAVE IN COURT MAY NOT
BE AVAILABLE IN ARBITRATION.

Any claim or dispute, whether in contract, tort, statute or
otherwise (including the interpretation and scope of this
Arbitration Provision, and the arbitrability of the claim or
dispute), between you and us or our employees, agents,
successors or assigns, which arises out of or relates to your
credit application, purchase or condition of this vehicle,
this contract or any resulting transaction or relationship
(including any such relationship with third parties who do
not sign this contract) shall, at your or our election, be
resolved by neutral, binding arbitration and not by a court
action. . . . You may choose the American Arbitration
Association . . . or any other organization to conduct the
arbitration subject to our approval. . . . Any arbitration
under this Arbitration Provision shall be governed by the
Federal Arbitration Act [9 U.S.C. §§ 1 to 16] and not by
any state law concerning arbitration. . . .

In May 2019, plaintiff filed a complaint in the Special Civil Part of the Law

Division. Plaintiff is representing himself and his complaint alleges: "[The] [t]rade

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was not valued [p]roperly, [d]eceptive [p]ractices, [s]elling [a]bove MSRP."

Initially, defendant did not respond, and a default judgment was entered, but that

default was later vacated. Thereafter, defendant filed an answer asserting that the

dispute was subject to arbitration. Shortly thereafter defendant moved to compel

arbitration. Plaintiff did not oppose that motion and he has not filed a brief for this

appeal.

The trial court denied the motion to compel arbitration in an order dated

October 17, 2019. The order stated that the language "in the arbitration clause" is

not clear because in one place it uses the word "may" and in another place it uses the

word "shall." After defendant appealed, the trial court issued a written amplification.

In the amplification, the court pointed out that defendant did not support its motion

with a brief. The court then reasoned that there were inconsistencies between the

arbitration provisions in the Retail Order and the Installment Contract. In addition,

the court held that the arbitration provision in the Installment Contract was

ambiguous because in one place it states that the parties "may" choose to arbitrate

and in another place it uses the word "shall."

II.

On appeal, defendant makes two arguments contending (1) the arbitration

provisions in the Retail Order and the Installment Contract are clear and

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unambiguous and there are no inconsistencies; and (2) because the motion to compel

arbitration was unopposed, the trial court should have given defendant the

opportunity to address the court's questions before issuing its order.

We initially address defendant's procedural argument. The trial court

correctly points out that defendant failed to support its motion by submitting a brief.

We agree with the trial court that that failure was inconsistent with the rules. See R.

1:6-5. Nevertheless, because the issues have now been clearly defined, we will

address the merits.

Appellate courts use a de novo standard of review when determining the

enforceability of arbitration agreements. Goffe v. Foulke Mgmt. Corp., 238 N.J.

191, 207 (2019) (citing Hirsch v. Amper Fin. Servs., LLC, 215 N.J. 174, 186 (2013)).

The validity of an arbitration agreement is a question of law, and such legal issues

are reviewed on a plenary basis. Atalese v. U.S. Legal Servs. Grp., L.P., 219 N.J.

430, 446 (2014) (citing Hirsch, 215 N.J. at 186).

The arbitration provisions in both the Retail Order and the Installment

Contract state that they are governed by the FAA. Under the FAA, arbitration

is a creature of contract. 9 U.S.C. § 2; Rent-A-Ctr., W., Inc. v. Jackson, 561

U.S. 63, 67 (2010); see also Hirsch, 215 N.J. at 187 (explaining that under New

Jersey law, arbitration is also a creature of contract). "[T]he FAA 'permits states

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to regulate . . . arbitration agreements under general contract principles,' and a

court may invalidate an arbitration clause 'upon such grounds as exist at law or

in equity for the revocation of any contract.'" Atalese, 219 N.J. at 441 (certain

citations omitted) (quoting Martindale v. Sandvik, Inc., 173 N.J. 76, 85 (2002)).

In determining whether a matter should be submitted to arbitration, a court must

evaluate (1) whether a valid agreement to arbitrate exists, and (2) whether the

dispute falls within the scope of the agreement. Mitsubishi Motors Corp. v.

Soler Chrysler-Plymouth, 473 U.S. 614, 626 (1985); Martindale, 173 N.J. at 92.

The arbitration provisions signed by plaintiff in both the Retail Order and

the Installment Contract were valid and enforceable. They were the product of

mutual assent and they clearly state that the parties were giving up their right to

pursue all claims in court and, instead, agreed to arbitrate those claims before

an arbitrator. See Atalese, 219 N.J. at 442 (quoting NAACP of Camden Cty. E.

v. Foulke Mgmt. Corp., 421 N.J. Super. 404, 424 (App. Div. 2011)) ("An

agreement to arbitrate, like any other contract, 'must be the product of mutual

assent, as determined under customary principles of contract law.'").

We discern nothing inconsistent between the arbitration provisions in the

Retail Order and the Installment Contract. While the Retail Order provides for

arbitration without condition, the Installment Contract allows either party to

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"choose" arbitration. Such a difference is not an inconsistency that makes either

agreement invalid, ambiguous, or unenforceable.

Moreover, the Retail Order clearly states that if plaintiff signed another

arbitration agreement in connection with financing the vehicle, the other arbitration

agreement (that is the Installment Contract) would govern if it had conflicting or

inconsistent language. Accordingly, even if there were inconsistencies or conflicts

between the Retail Order and the Installment Contract, the Installment Contract

governs.

The Installment Contract's use of the words "may" and "shall" is not

inconsistent and does not create any ambiguity. The Installment Contract states that

"EITHER YOU OR WE MAY CHOOSE" arbitration and if arbitration is elected,

any dispute "shall" be subject to binding arbitration. In other words, either party has

the right to choose arbitration, but once one of the parties makes that election, that

choice is binding on the other party and any dispute "shall" be arbitrated.

In summary, we hold that the arbitration provisions plaintiff signed in the

Retail Order and the Installment Contract are valid and enforceable. The FAA

provides that a party may request a stay if a court action has been commenced and

the action involves "any issue referable to arbitration under an agreement in writing

for such arbitration." 9 U.S.C. § 3. Accordingly, we remand with directions that the

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trial court enter an order compelling the matter to arbitration and staying the action

pending arbitration.

Reversed and remanded. We do not retain jurisdiction.

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