Stephanie Porter, Etc. v. Autobay LLC

• Court: New Jersey Superior Court Appellate Division
• Decided: March 26, 2026
• Docket: A-1528-24
• Status: Unpublished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NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court ."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-1528-24

STEPHANIE PORTER, Individually and On Behalf of All Others Similarly Situated,

Plaintiff-Respondent,

v.

AUTOBAY LLC and MAURICE RACHED,

Defendants-Appellants,

and

UNITED AUTO CREDIT CORPORATION,

Defendant. ___________________________

Argued October 1, 2025 – Decided March 26, 2026

Before Judges Currier and Jablonski.

On appeal from the Superior Court of New Jersey, Law Division, Gloucester County, Docket No. L-0994-24. Brian R. Griffin argued the cause for appellants (O'Toole Scrivo, LLC, attorneys; Kyle Vellutato, Deena M. Crimaldi and Brian R. Griffin, of counsel and on the briefs).

Lewis G. Adler argued the cause for respondent (Lewis G. Adler and Perlman-Depetris Consumer Law LLC, attorneys; Lewis G. Adler and Lee M. Perlman, of counsel; Paul DePetris, of counsel and on the brief).

PER CURIAM

Defendants Autobay LLC ("Autobay") and Maurice Rached ("Rached")

appeal from a January 13, 2025 order denying their motion to dismiss plaintiff

Stephanie Porter's complaint and to compel arbitration. We affirm.

I.

Plaintiff purchased a pre-owned 2011 Chevrolet Camaro from Autobay.

To complete the transaction, she executed several documents, including a

Buyer's Order, a Retail Installment Contract and Security Agreement

("RICS"), and a Vehicle Service Contract ("VSC").

The Buyer's Order served as the primary contract between Autobay and

plaintiff and outlined the material terms of the sale—such as the vehicle's

purchase price, administrative fees, costs of any "additional items," and the

remaining balance due. The Buyer's Order also declared that the entire

agreement between the parties was contained within that contract, stating

A-1528-24 2 explicitly: "There are no unwritten agreements regarding this Contract."

Importantly, and specifically pertinent to this appeal, the agreement did not

include an arbitration clause, and the box next to the statement reading "[a]

separate Arbitration Agreement is a part of this contract" was unchecked.

The RICS addressed the terms of plaintiff's financing of the vehicle's

purchase. In its "Additional Protections" section, plaintiff was informed that

she had the option to purchase voluntary protection plans, including a service

contract and gap waiver or coverage. The RICS emphasized that these plans

were not required to obtain credit, were not factors in the credit decision, and

would not affect the terms of credit or the sale itself. These protections would

only be provided if plaintiff agreed to pay the additional cost and signed

accordingly. The RICS also did not contain an arbitration clause.

The VSC provides additional service coverage for certain listed

components of the vehicle. The VSC was designated as a "Service Contract

and is separate and distinct from any product or service warranty which may

be provided by the manufacturer, importer, or SELLING DEALER, and does

not extend the term of any original product or service warranty that the

manufacturer, importer, or SELLING DEALER may have provided."

(emphasis in original). The contract identified the parties to the sale, with

A-1528-24 3 Autobay referenced once as the seller in the recitals section. The VSC

primarily outlined the obligations between Protective Administrative Services,

Inc., identified as the "Obligor," and the purchaser (plaintiff). Under this

agreement, rights and responsibilities were specifically limited to the Service

Contract Holder (plaintiff) and the Obligor.

Although pre-printed language appears at the top of the VSC indicating

the coverage must be purchased at the time of the vehicle sale, this language

appears immediately below the signature line:

Purchase of this [VSC] is not required in order to purchase or finance a motor vehicle.

The VSC also contains an arbitration provision and "limits certain of

YOUR rights including YOUR right to obtain relief or damages through court

action." (emphasis in original). It states:

READ THE FOLLOWING ARIBITRATION PROVISION ("PROVISION") CAREFULLY. IT LIMITS CERTAIN OF YOUR RIGHTS, INCLUDING YOUR RIGHT TO GO TO COURT. THIS PROVISION DOES NOT APPLY TO A COVERED BORROWER. THIS PROVISION DOES NOT APPLY TO A COVERED BORROWER AS DEFINED BY FEDERAL MILITARY ENDING ACT REGULATIONS.

Except for matters that may be taken to small claims court or as otherwise provided in this [VSC], any controversy or CLAIM arising out of or relating to it,

A-1528-24 4 or to its breach shall be settled by binding arbitration administered by the American Arbitration Association (the "AAA") in accordance with the rules and provisions of its appropriate dispute resolution program then in effect. Judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction to enter such judgment. YOU and WE acknowledge that this [VSC] evidences a transaction involving interstate commerce. The Federal Arbitration Act will govern the interpretation, enforcement, and proceedings pursuant to this [VSC]'s arbitration provisions.

In no event will YOU have the right to file or participate in a class action or any other collective proceeding against us. Only a court, and not arbitrators, can determine the validity of this class action waiver.

Subject to the preceding paragraph, YOU and WE consent to have arbitration under this [VSC] joined with any other arbitration between YOU, on the one hand, and us, our agent, our administrator and/or the insurer backing our obligations under this [VSC], on the other hand, to the extent the disputes are related and joinder is reasonably feasible. The combined arbitration will be governed by this [VSC]'s arbitration provisions unless that is not practical. In that case, it will be governed by the other arbitration provisions.

If the AAA is not available to administer this [VSC]'s arbitration, WE will select another generally recognized arbitration administrator, reasonable acceptable to YOU. The arbitration will be under that administrator's rules, subject to any contrary provisions of this [VSC].

....

A-1528-24 5 [4]. . . a CLAIM determination under this [VSC], YOU must initiate arbitration or, when applicable, a court proceeding within sixty (60) calendar days following the determination. If YOU have exercised YOUR right to seek satisfaction from an insurer backing our obligations under the [VSC], the sixty (60) days will be measured from the insurer's determination. YOUR failure to meet this requirement will deny YOU the right to dispute the determination. In no event may arbitration or a court proceeding arising out of or relating to this [VSC], or to its breach, be brought more than two (2) years after this [VSC] has expired.

5. The PROVISIONS will survive the termination of this [VSC] and apply to cover any controversy, CLAIM, or dispute YOU may have with an insurer backing OUR obligations under this [VSC].

If this [VSC] is found not to be subject to arbitration, any legal proceeding with respect to a dispute will be tried before a judge in a court of competent jurisdiction. YOU and WE waive the right to a jury trial in any such proceeding.

[Emphasis in original.]

After plaintiff purchased the car, she experienced immediate mechanical

problems. Plaintiff took the car to a Chevrolet dealership for further

inspection. Its evaluation revealed numerous issues that required extensive

work to rehabilitate the car at substantial expense.

A-1528-24 6 Plaintiff filed an eleven-count putative class action lawsuit alleging,

among other things, Autobay violated her rights under the Truth-In-Consumer

Contract, Warranty And Notice Act, N.J.S.A. 56:12-14 to –18; the Uniform

Commercial Code, N.J.S.A. 12A:1-101 to -12-26; the Consumer Fraud Act,

N.J.S.A. 56:8-1 to -233; the Used Car Lemon Law, N.J.S.A. 56:8-67 to -80;

the New Jersey Motor Vehicle Advertising Practices Regulations, N.J.A.C.

13:45A-26A.1 to -26A.10; the Motor Vehicle Information and Cost Savings

Act, 49 U.S.C. § 32701; the Service Contracts Act, N.J.S.A. 56:12-87 to -96;

the Automotive Repair Regulations, N.J.S.A. 13:45A-26C.1 to -26C.2; and the

Motor Vehicle Inspection Law, N.J.S.A. 39:10-26 to -30. Notably, the

complaint did not name any service contract businesses as defendants.

Defendants moved to dismiss the complaint and to compel arbitration.

In a written opinion, the motion judge denied their application, concluding that

plaintiff never consented to arbitration and, consequently, the purported

compulsory provision to submit it to this alternative dispute resolution was not

enforceable. The motion judge expressly rejected defendants' "unconvincing"

argument that the arbitration provision in the VSC should also apply to two

additional documents since all were signed at the same time and, therefore,

ought to be treated as a single, comprehensive sales document:

A-1528-24 7 Each of the three . . . documents possesses its own headings that include the parties' names, as well as a definition section, and label the provisions from "1." This indicates that each agreement, each having its own signatures from the parties are all separate agreements. Although [d]efendant Autobay may have been the party that handed over the Service Contract, that is not indicative that [d]efendant Autobay is part of that contract. Rather from the plain reading of the contract, it is clear that [d]efendant Autobay was not part of the service contract. Nor is there anything in the agreements showing an express intent to incorporate all of each other's terms into the other agreements.

Defendants appealed.

II.

Defendants' threshold argument is that the Buyer's Order, the RISC, and

the VSC "collectively constitute one, integrated contract" and, therefore, the

VSC's arbitration provision in the VSC requires the suit against Autobay be

resolved through arbitration rather than in Superior Court. We disagree.

The enforceability of an arbitration agreement is a question of law which

we review de novo. Skuse v. Pfizer, Inc., 244 N.J. 30, 46 (2020). "Similarly,

the issue of whether parties have agreed to arbitrate is a question of law that is

reviewed de novo." Jaworski v. Ernst & Young U.S. LLP, 441 N.J. Super.

464, 472 (App. Div. 2015). The Federal Arbitration Act, 9 U.S.C. §§ 1-16

("FAA"), and the New Jersey Arbitration Act, N.J.S.A. 2A:23B-1 to -36, both

A-1528-24 8 express a general policy favoring arbitration "as a means of settling disputes

that otherwise would be litigated in court." Bataldi v. N.J. Mfrs. Ins. Grp., 220

N.J. 544, 556 (2015). Under both the FAA and New Jersey law, arbitration is

fundamentally a matter of contract. Rent-A-Center W., Inc. v. Jackson, 561

U.S. 63, 67 (2010); NAACP of Camden Cnty. E. v. Foulke Mgmt. Corp., 421

N.J. Super. 404, 424 (App. Div. 2011).

Whether multiple documents constitute a single integrated contract

depends on the intent of the parties as expressed in their agreement. Alpert,

Goldberg, Butler, Norton & Weiss, P.C. v. Quinn, 410 N.J. Super. 510, 533

(App. Div. 2009). There are two requirements for a proper and enforceable

incorporation by reference of a separate document into a contract: (1) the

separate document must be described in such terms that its identity may be

ascertained beyond doubt, and (2) the party to be bound by the terms must

have knowledge of and assent to the incorporated terms. Ibid. (quoting 4

Williston on Contracts § 30:25 (Lord ed. 1999)).

In this case, by the plain terms of the VSC, the mutual assent necessary

to compel arbitration was lacking between plaintiff and defendants, because

only plaintiff and Protective Administrative Services, Inc. were parties to the

agreement containing the arbitration clause. Furthermore, the Buyer's Order

A-1528-24 9 expressly states that the entire agreement is contained within its four corners,

and there is no indication of a separate arbitration agreement, as the relevant

box remains unchecked. Given this express language and specific

circumstances, the VSC cannot be considered interwoven with the other

documents related to the vehicle purchase. Additionally, although the VSC

had to be purchased at the same time as the vehicle, it was specifically

described as separate and independent from the vehicle purchase, with no

contractual provision making the VSC a condition of the sale. Accordingly,

we conclude that the documents were not so interrelated as to constitute a

single unified agreement.

III.

Further, we agree with the motion judge's conclusion that plaintiff is not

bound to the arbitration clause because Autobay is not a third-party beneficiary

of the VSC despite the fact that Autobay might, if certain conditions were

present, receive a consequent benefit under that agreement.

Under Section Three of the VSC, titled "How to Obtain Repairs," "if a

[vehicle] is within sixty [] miles of the SELLING DEALER, [the owner] must

deliver the [car] to the SELLING DEALER at the address shown on the

DECLARATIONS PAGE of [the VSC]." The owner must pay a deductible per

A-1528-24 10 repair visit, and the obligor must reimburse either the repair facility or the

owner for any covered repair services less the deductible. Autobay is

designated as the "Selling Dealer" under the VSC. As a result, plaintiff might

confer a benefit to Autobay under the VSC, namely the opportunity to perform

covered repairs on the car and receive payment for them. We do not find that

the possibility of receiving a benefit under the VSC establishes an agency

relationship sufficient to render the defendants' third-party beneficiaries to the

agreement, nor does it subject them to the arbitration clause contained within

the VSC contract.

"An agency relationship is created when one person (a principal)

manifests assent to another person (an agent) and that agent shall act on the

principal's behalf and subject to the principal's control, and the agent manifests

assent or otherwise consents to so act." N.J. Lawyers' Fund for Client Prot. v.

Stewart Title Guar. Co., 203 N.J. 208, 220 (2010) (internal citation omitted).

"[A]rbitration may be compelled by a non-signatory to a contract on the basis

of agency principles." Hirsch v. Amper Fin. Servs., L.L.C., 215 N.J. 174, 192

(2013). The scope of an agent's authority is limited to the actual, implied, and

apparent authority it had been granted. See Gayles v. Sky Zone Trampoline

Park, 468 N.J. Super. 17, 27 (App. Div. 2021) (noting that an agent may only

A-1528-24 11 bind their principal for such acts that are within their actual or apparent

authority). When deciding the enforceability of an arbitration provision,

"traditional principles of state law allow a contract to be enforced by or against

nonparties to the contract through assumption, piercing the corporate veil, alter

ego, incorporation by reference, third[-]party beneficiary theories, waiver and

estoppel." Hirsch, 215 N.J. at 188 (2013) (internal emphasis omitted) (quoting

Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 631 (2009)). The standard

applied by courts in determining third[-]party beneficiary status is "whether

the contracting parties intended that a third[-]party should receive a benefit

which might be enforced in the courts . . . ." Reider Cmtys., Inc. v. Twp. of N.

Brunswick, 227 N.J. Super. 214, 222 (App. Div. 1988) (quoting Brooklawn v.

Brooklawn Hous. Corp., 124 N.J.L. 73, 77 (E & A 1940)). "[T]he intention of

contracting parties to unnamed third[-]party must be garnered from an

examination of the contract and a consideration of the circumstances attendant

to its execution." Ibid.

The VSC does not expressly appoint Autobay as its agent, nor does it

confer to Autobay any affirmative or specific benefit. Rather, Autobay as the

Selling Dealer only serves as a conduit to facilitate repairs under the contract.

This is in contrast to receiving a direct and calculable benefit from the VSC.

A-1528-24 12 We acknowledge that Autobay may become involved under certain predicate

conditions, limited solely to the physical location of the vehicle when a

triggering event occurs. However, aside from listing the obligations of

defendants under the agreement, the record does not indicate any specific

benefit defendants are intended to receive should these conditions be met.

Although defendants contend that they have responsibilities under the

VSC—such as accepting returns of covered vehicles, reporting incorrect

information, inspecting vehicles prior to repairs, and accepting cancellation

requests that affect the effective date and refund date—these obligations are

tangential to the primary purpose of the VSC. The obligor functions merely as

one component of the overall services provided to the policy holder, rather

than as a party intended to directly benefit from the agreement. See Broadway

Maint. Corp. v. Rutgers State Univ., 90 N.J. 253, 259 (1982).

To the extent we have not specifically addressed any other contentions

raised by defendants, we determine they lack sufficient merit to warrant

discussion in this opinion. R. 2:11-3(e)(1)(E).

Affirmed.

A-1528-24 13