Ronald Coscia v. Chw Group, Inc.

• Court: New Jersey Superior Court Appellate Division
• Decided: July 2, 2024
• Docket: A-0677-23
• Status: Unpublished

Opinion

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court."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-0677-23

RONALD COSCIA,

Plaintiff-Appellant,

v.

CHW GROUP, INC.,

Defendant-Respondent. ________________________

Submitted March 13, 2024 – Decided July 2, 2024

Before Judges Accurso and Gummer.

On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket No. DC-004585-23.

McAndrew Vuotto, LLC, attorneys for appellant (Robert W. McAndrew, of counsel and on the briefs).

CHW Group, Inc., attorneys for respondent (Richard M. Grace, on the brief).

PER CURIAM Plaintiff Ronald Coscia appeals from an order dismissing his complaint

against defendant CHW Group, Inc., doing business as Choice Home

Warranty, based on an arbitration clause in an unsigned home warranty

contract and ordering the parties to arbitration. We reverse.

Coscia, who resides in Roanoke, Virginia, filed a Special Civil Part

complaint alleging he entered into a one-year home warranty contract "number

715799774" with Choice for an annual premium of $800, which he claims it

breached by failing to repair or replace his furnace. He alleged claims for

breach of contract and violation of the Consumer Fraud Act, N.J.S.A. 56:8-1 to

-20, seeking damages of $15,000, the former jurisdictional limit of the Special

Civil Part before the July 1, 2022 amendment of Rule 6:1-1(c), plus costs and

attorney's fees.

Choice filed an answer denying the allegations of the complaint and a

motion to dismiss based on the contract's mediation and arbitration clauses.

Attached to counsel's certification in support of the motion was a packet

mailed to Coscia on an unspecified date. The packet contained an unsigned

letter to "Ron" from "The Team @ CHOICE," welcoming and commending

him for choosing Choice, and advising him to "take a moment to read through

this booklet. Inside you will find your contract, selected coverage, and a

A-0677-23 2 variety of information that will help you get the most out of your new home

warranty. Your coverage is dependent on the plan you have selected." A

"Common Questions" section advised that "[c]overage begins 30 days after

enrollment and receipt of applicable contract fees and continues for 365 from

your start date." The welcome letter advised that plaintiff could "simply log

on to our website located at www.ChoiceHomeWarranty.com and file your

claim online." The contract enclosed included an arbitration clause but did not

reference the contract number, and although it contained a line for a buyer's

signature and date, both were blank. No application or enrollment form

completed by Coscia was included in the motion papers.

Coscia opposed the motion, contending Choice had failed to put forth

any document supporting its allegation that he had agreed to the arbitration

provision, noting the agreement Choice provided was unsigned and the packet

mailed to him after his purchase. The trial court granted Choice's motion to

dismiss without hearing argument and without a statement of reasons required

pursuant to Rule 1:7-4(a), notwithstanding it signed a dispositive order

dismissing the complaint with prejudice and ordering the parties to arbitration,

an order appealable as of right pursuant to Rule 2:2-3(b)(8), even if only

A-0677-23 3 staying the action as required by Rules 2:9-1(a)(3) and 2:9-5(c) and N.J.S.A.

2A:23B-7(g).

Because the enforceability of a contract, including an arbitration

agreement, is a question of law, Atalese v. U.S. Legal Servs. Grp., L.P., 219

N.J. 430, 446 (2014), our review is de novo. Goffe v. Foulke Mgmt. Corp.,

238 N.J. 191, 207 (2019).

On appeal, Coscia renews his argument to the trial court that he was

never asked to sign anything indicating his agreement to the arbitration

provision in the unsigned contract provided to him after he signed up with

Choice. He also adds that the trial court's failure to have explained its reasons

for the decision requires, at the very least, a remand. Choice fails to address

either argument. Instead, it points out that Coscia concedes both he and

Choice are parties to a home warranty contract, number 715799774, that

contains a mandatory arbitration clause governed by the Federal Arbitration

Act, 9 U.S.C. §§ 1-16, which it argues passes muster under Kernahan v. Home

Warranty Administrator of Florida, Inc., 236 N.J. 301, 319 (2019), requiring

we affirm the trial court's decision to send the case to arbitration.

The obvious factual issue in the case, unaddressed by both Choice and

the trial court, is whether Coscia agreed to arbitrate this dispute. Both federal

A-0677-23 4 and State law are unequivocally clear that "[a]n arbitration agreement is valid

only if the parties intended to arbitrate because parties are not required 'to

arbitrate when they have not agreed to do so.'" Id. at 317 (quoting Volt Info.

Scis., Inc. v. Bd. of Trs. of Leland Stanford Junior Univ., 489 U.S. 468, 478

(1989)). "[B]asic contract formation and interpretation principles still govern

[arbitration agreements], for there must be a validly formed agreement to

enforce." Id. at 307.

Coscia is not challenging the validity of the contract; he is trying to

enforce the contract. His claim, as we understand it based on the sketchy

record, is that he wasn't aware and did not understand the contract contained

an arbitration clause until he received the document in the mail, after he had

already enrolled in the warranty program and paid the fee. See Bernetich,

Hatzell & Pascu, LLC v. Med. Rec. Online, Inc., 445 N.J. Super. 173, 184

(App. Div. 2016) (holding "a party may not impose an arbitration clause after

the parties have already exchanged consideration and created an enforceable

contract"); Paul v. Timco, Inc., 356 N.J. Super. 180, 185-86 (App. Div. 2002)

(holding "the purchaser of a warranty may not be compelled to arbitrate

warranty claims where the only sales document the purchaser signed did not

require arbitration and she did not subsequently agree to arbitration ").

A-0677-23 5 Coscia's claim that Choice didn't make him aware of the arbitration

clause until after he had enrolled in the warranty program and paid the $800

fee must be decided by the court and not an arbitrator as it goes to whether he

agreed to arbitrate the underlying dispute over repair or replacement of the

furnace in the first place. See Goffe, 238 N.J. at 209 (explaining the rule of

Prima Paint Corp. v. Flood & Conklin Manufacturing Co., 388 U.S. 395, 403-

04 (1967), that a claim of "fraud in the inducement of the arbitration clause

itself — an issue which goes to the 'making' of the agreement to arbitrate" is

decided by the court, whereas "claims of fraud in the inducement of the

contract generally" must be decided by the arbitrator).

We reverse the order dismissing the complaint with prejudice and

remand for its reinstatement and further proceedings, including limited

discovery on the purported agreement to arbitrate before consideration of any

renewed motion to compel arbitration, which should be decided under the

standards of Rule 4:46-2 and Brill v. Guardian Life Insurance Co. of America,

142 N.J. 520, 523 (1995). In the event summary judgment cannot be granted

to either party, the court should resolve the issue through a summary trial

limited to "'the making of the arbitration agreement or the failure, neglect, or

refusal to perform the same,' as Section 4 of the [Federal Arbitration Act]

A-0677-23 6 envisions." Guidotti v. Legal Helpers Debt Resol., L.L.C., 716 F.3d

764, 776 (3d Cir. 2013) (quoting Somerset Consulting, LLC v. United Cap.

Lenders, LLC, 832 F. Supp. 2d 474, 482 (E.D. Pa. 2011) (quoting 9 U.S.C. §

4)).

Reversed and remanded. We do not retain jurisdiction.

A-0677-23 7