VINCENT C. MAISANO VS. LVNV FUNDING, LLC (L-2258-18, HUDSON COUNTY AND STATEWIDE)

• Court: New Jersey Superior Court Appellate Division
• Decided: November 27, 2019
• Docket: A-1775-18T2
• Status: Unpublished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NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court."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-1775-18T2

VINCENT C. MAISANO, on behalf of himself and those similarly situated,

Plaintiff-Appellant,

v.

LVNV FUNDING, LLC,

Defendant-Respondent. ____________________________

Argued November 14, 2019 – Decided November 27, 2019

Before Judges Haas and Mayer.

On appeal from the Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-2258-18.

Scott C. Borison (Legg Law Firm, LLP) of the District of Columbia, Maryland, and California bars, admitted pro hac vice, argued the cause for appellant (Kim Law Firm LLC, and Scott C. Borison, attorneys; Yongmoon Kim, Scott C. Borison, and Catherine Rhy, of counsel and on the briefs). Michael A. Iannucci argued the cause for respondent (Blank Rome LLP, attorneys; Michael A. Iannucci, on the brief).

PER CURIAM

Plaintiff Vincent C. Maisano appeals from a November 9, 2018 order

compelling arbitration and dismissing his complaint with prejudice. We affirm

the order compelling arbitration. However, we remand the matter to the trial

court to issue an amended order staying the case pending arbitration.

Plaintiff entered into a credit card agreement (Agreement) with Credit

One. The six-page Agreement included an "Important Notice" prominently

placed on the first page of the document, directing the cardholder to "read the

Arbitration Agreement portion of this document for important information about

your and our legal rights under this Agreement."

The Agreement's arbitration provision (Arbitration Agreement or

Arbitration Clause) contains a notice in bolded capital letters, explaining the

nature of arbitration and warning the cardholder that the Arbitration Agreement

"replaces the right to go to court, including the right to a jury and the right to

participate in a class action or similar proceeding" regarding "any controversy

or dispute." The Arbitration Agreement identifies the covered claims, including

disputes related to the "application, enforceability or interpretation of this

A-1775-18T2 2 Agreement," and "any claim for injunctive or declaratory relief." The

Arbitration Clause also prohibits the cardholder from participating in class

actions if one of the parties elects arbitration. Further, the Arbitration

Agreement "survive[s] . . . any transfer or assignment of [the] [a]ccount." The

cardholder accepts the terms of the Agreement by "requesting and receiving,

signing or using [the] Card."

Plaintiff used the credit card to make purchases. Plaintiff defaulted by

failing to tender the required credit card payment. Credit One subsequently

wrote off plaintiff's account in December 2012 with an unpaid balance of

$826.13.

Defendant LVNV Funding, LLC acquires unpaid credit card accounts and

pursues collection of those accounts. In January 2013, after plaintiff's debt was

deemed uncollectible, Credit One assigned "[a]ll rights, title and interest" in the

account to Sherman Originator III, LLC. The account was assigned from

Sherman Originator III, LLC to Sherman Originator, LLC, and then to

defendant.

Defendant filed an action in the Special Civil Part to recover the unpaid

credit card debt from plaintiff. The documents evidencing assignment of

plaintiff's account to defendant were annexed to the Special Civil Part

A-1775-18T2 3 complaint. As a result of that lawsuit, plaintiff made payments to satisfy the

outstanding debt.

In June 2018, plaintiff filed a putative class action for declaratory

judgment, injunctive relief, and damages against defendant. In lieu of filing an

answer, defendant filed a motion to dismiss and compel arbitration pursuant to

the Agreement. In support of its motion, defendant submitted the affidavits of

Adele Burton, Vice President of Credit One, and Amanda Hammond, a records

custodian employed by defendant's corporate affiliate.

After hearing the arguments of counsel, the motion judge explained she

was "obligated to compel arbitration" because she determined "there's a valid

agreement . . . and secondly, that the dispute falls within the scope of the

agreement." The judge noted the Agreement provided "any question[s]

regarding the enforceability or interpretation of the agreement are to be decided

by an arbitrator." In defining the covered claims under the Agreement, the judge

cited the following language from the document:

claims based on any theory of law, any contract; statute; regulation; ordinance; tort, including fraud or intentional tort; common law, constitutional provision; respondeat superior; agency, or other doctrine concerning liability for other persons, customs, course of dealing, or any other legal entity or equitable ground, including any claim for injunctive or declaratory relief are covered.

A-1775-18T2 4 Based on the foregoing language, the judge explained the covered claims

included plaintiff's allegations against defendant under the Consumer Fraud Act

and the Consumer Financing Licensing Act.

The judge also determined the Agreement applied to Credit One and its

successors and assigns, including defendant, based on the language in the

document. The motion judge expressly found the Arbitration Agreement had

"different fonts, . . . different italicizing, . . . bold face [and] capitals[;] these

variations in the print are supposed to be visual cues . . . to take note . . . that

this is important." She did not find "the substance or content to be misleading

or unable to be understood or in any way equivocal." The judge concluded the

Arbitration Agreement was "valid, clear, and not in violation of . . . either of the

two statutes or the case law . . . ." Having determined the Arbitration Agreement

was valid, the judge granted defendant's motion to compel arbitration and

dismissed the matter with prejudice.

On appeal, plaintiff argues the motion judge erred by (1) deeming it was

for the arbitrator to decide whether the assignment of plaintiff's credit card debt

to defendant was void; (2) concluding the Arbitration Agreement did not violate

the plain language requirements; and (3) relying on inadmissible hearsay in

defendant's affidavits.

A-1775-18T2 5 "The existence of a valid and enforceable arbitration agreement poses a

question of law" requiring our de novo review. Barr v. Bishop Rosen & Co.,

Inc., 442 N.J. Super. 599, 605 (App. Div. 2015) (citing Hirsch v. Amper Fin.

Servs., LLC, 215 N.J. 174, 186 (2013)). We are "mindful of the strong

preference to enforce arbitration agreements." Hirsch, 215 N.J. at 186.

However, the preference for arbitration is not unbounded, and a trial court must

first determine if a valid arbitration agreement exists under state law. Id. at 187.

We first consider plaintiff's argument that the judge erred in deeming the

validity of the Agreement's assignment to defendant was arbitrable. Because

defendant was not licensed under the New Jersey Consumer Finance Licensing

Act (NJCFLA), N.J.S.A. 17:11C-3, at the time Credit One assigned the

Agreement, plaintiff claimed the Agreement was invalid and therefore the

Arbitration Clause was void.

The United States Supreme Court recently held "a court may not decide

an arbitrability question that the parties have delegated to an arbitrator." Henry

Schein, Inc. v. Archer & White Sales, Inc., 586 U.S. ___, 139 S. Ct. 524, 530

(2019); see also Amalgamated Transit Union, Local 880 v. N.J. Transit Bus

Operations, Inc., 200 N.J. 105, 118 (2009) (holding "[a] court's duty is to refrain

from adjudicating the merits of a dispute that properly belongs to an arbitrator").

A-1775-18T2 6 The first question in a motion to compel arbitration is whether there was

an arbitration agreement. Henry Schein, Inc., 139 S. Ct. at 530 (citing 9 U.S.C.

§ 2). If that question is answered in the affirmative, threshold question s of

arbitrability must be referred to an arbitrator if the agreement so stipulates by

"clear and unmistakable" evidence. Ibid. (quoting First Options of Chicago, Inc.

v. Kaplan, 514 U.S. 938, 944 (1995)).

Because Henry Schein was decided after the motion judge rendered her

ruling, she made a threshold determination on arbitrability. Since the United

States Supreme Court issued its decision in Henry Schein, such a threshold

determination by a court is not required. Where specified disputes are properly

delegated, the disputes are within the exclusive determination of the arbitrator.

139 S. Ct. at 529. Here, the Arbitration Agreement clearly and expressly stated

claims relating to the "application, enforceability or interpretation of this

Agreement, including this arbitration provision" are subject to arbitration.

Therefore, the threshold issue of arbitrability is to be determined by the

arbitrator.

We next consider whether the Arbitration Agreement violated the New

Jersey Plain Language Act (NJPLA), N.J.S.A. 56:12-1 to 12-13, and rendered

the Agreement void. The NJPLA requires contractual clauses to be "written in

A-1775-18T2 7 a simple, clear, understandable and easily readable way as a whole." N.J.S.A.

56:12-2. Courts have held arbitration agreements valid under the NJPLA where

the agreements are "sufficiently clear, unambiguously worded, satisfactorily

distinguished from the other [a]greement terms, and drawn in suitably broad

language to provide a consumer with reasonable notice of the requirement to

arbitrate all possible claims arising under the contract." Curtis v. Cellco P'ship,

413 N.J. Super. 26, 33 (App. Div. 2010); see also Atalese v. U.S. Legal Servs.

Grp., L.P., 219 N.J. 430, 444-45 (2014) (discussing cases upholding arbitration

clauses). Waiver of rights language must clearly and unambiguously inform the

parties of the "distinction between resolving a dispute in arbitration and in a

judicial forum." Atalese, 219 N.J. at 445.

Here, the Agreement provides the cardholder with notice of the types of

claims subject to arbitration, and plainly outlines the difference between

arbitration and judicial proceedings. The Arbitration Agreement clearly

explains arbitration "replaces the right to go to court, including the right to a

jury and the right to participate in a class action" and expressly states, "[i]n

arbitration, a dispute is resolved by a neutral arbitrator instead of a judge or jury.

Arbitration procedures are simpler and more limited than rules applicable in

A-1775-18T2 8 court. In arbitration, you may choose to have a hearing and be represented by

counsel."

Having reviewed the record, particularly the language of the Arbitration

Agreement, we are satisfied the document clearly and explicitly articulated the

waiver of the right to proceed to court and unambiguously required the parties

to submit all disputes relating to the Agreement to arbitration.

We next consider plaintiff's contention that the affidavits in support of

defendant's motion were deficient because the affidavits included inadmissible

hearsay, lacked personal knowledge, and contained other evidentiary defects.

We review a trial court's evidentiary rulings for abuse of discretion. State v.

Kuropchak, 221 N.J. 368, 385-86 (2015).

We are satisfied the judge did not abuse her discretion in considering the

affidavits in support of defendant's motion. In her affidavit, Burton averred she

reviewed the Credit One records pertinent to the Agreement, and certified that

she was familiar with the "manner in which Credit One's credit account records

. . . are maintained . . . and the contents of the agreements." The Burton affidavit

was sufficient to support the judge's finding that the Agreement was made in the

regular course of Credit One's business, was an authentic business record, and

A-1775-18T2 9 therefore fell within an exception to the hearsay rule. See Hahnemann Univ.

Hosp. v. Dudnick, 292 N.J. Super. 11, 17-18 (App. Div. 1996).

Further, admission of the affidavits by the motion judge was proper

because the statements were based on personal knowledge. Evidence of

personal knowledge gleaned from business records need only be "sufficient to

support a finding that the witness has personal knowledge." N.J.R.E. 602, see

also New Century Fin. Servs., Inc. v. Oughla, 437 N.J. Super. 299, 326-27 (App.

Div. 2014) (affirming admission of foundation witness certifications based on

review of business records). Burton certified that she was a current employee

of Credit One and therefore had personal knowledge of the Agreement.

Hammond was the records custodian of defendant's corporate affiliate and

reviewed the regularly maintained business records regarding the Agreement .

Because we discern no abuse of discretion in the judge's admission of the

affidavits, we are satisfied that the remainder of plaintiff's arguments are without

sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).

For these reasons, we affirm the order compelling arbitration of plaintiff's

claims. However, the judge improvidently dismissed plaintiff's complaint with

prejudice. See GMAC v. Pittella, 205 N.J. 572, 582 n.6 (2011) (citing N.J.S.A.

2A:23B-7(g)). The Uniform Arbitration Act provides for stays, rather than

A-1775-18T2 10 dismissals, of matters pending arbitration. Ibid. Therefore, we remand the

matter to the trial court to enter an amended order staying the action pending

arbitration.

Affirmed as to compelling arbitration. Remanded for the entry of an

amended order consistent with this opinion. We do not retain jurisdiction.

A-1775-18T2 11