JOHNSON v. WYNN'S EXTENDED CARE, INC. et al

Filing 25

OPINION. Signed by Judge Renee Marie Bumb on 11/20/2012. (TH, )

NOT FOR PUBLICATION

[Dkt. Ent. 13]

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
CAMDEN VICINAGE

TIJUANA JOHNSON,
Plaintiff,
Civil No. 12-0079 (RMB/KMW)
v.
OPINION
WYNN’S EXTENDED CARE, INC., and
NATIONAL CASUALTY COMPANY,
Defendants.

APPEARANCES:
Andrew P. Bell, Esq.
Michael A. Galpern, Esq.
Locks Law Firm LLC
457 Haddonfield Road, Suite 500
Cherry Hill, NJ 08002
Attorneys for Plaintiff
Kevin M. McKeon, Esq.
Marshall, Dennehey, Warner, Coleman & Goggin, PC
Woodland Falls Corporate Park
200 Lake Drive East, Suite 300
Cherry Hill, NJ 08002
Attorney for Defendants
BUMB, UNITED STATES DISTRICT JUDGE:
The defendants, Wynn’s Extended Care, Inc. (“Wynn”) and National
Casualty Company (collectively, the “Defendants”), have moved to
dismiss the Amended Complaint pursuant to Federal Rule of Civil
Procedure 12(b)(6).

[Dkt. Ent. 13.]
1

For the reasons that follow,

this motion is GRANTED IN PART and DENIED IN PART.
BACKGROUND
This is a putative class action brought by plaintiff Tijuana
Johnson (the “Plaintiff”) on behalf of herself and all others
similarly situated.
facts.

The Amended Complaint alleges the following

On February 12, 2011, Plaintiff purchased a used car from

Smitty’s Auto.

She also purchased, via Smitty’s Auto, a “Used

Vehicle Service Contract” (“UVSC” or “Contract”) from Defendants.
In May 2011, Plaintiff’s car stopped operating.

At the direction of

Defendant Wynn’s agent, Smitty’s Auto, Plaintiff had her vehicle
taken to Exclusive Auto in Burlington, New Jersey, to determine what
repairs were needed.
vehicle.
engine.

Wynn authorized Exclusive Auto to inspect the

Excusive Auto determined that the vehicle needed a new
Plaintiff asked Wynn to repair the vehicle.

Wynn initially

denied this request on the grounds that the UVSC did not provide
coverage for the engine, because it was covered under the
manufacturer’s warranty.

Plaintiff then contacted the car

manufacturer, General Motors, and requested a repair under the
warranty.

General Motors denied coverage because Exclusive Auto had

taken apart the engine.

Plaintiff again contacted Wynn and demanded

that it cover the cost of the engine repair under the UVSC.
denied coverage.

Wynn again

After Plaintiff commenced this action in state

court, however, Wynn agreed to pay for the repair, which was completed
in December 2011.

Plaintiff claims she lost the use of her car for

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at least six months and paid approximately $2,160 to the finance
company during this time in addition to the costs of automobile
insurance and towing.

On January 5, 2012, Defendants removed the

case to this Court alleging federal jurisdiction under the Class
Action Fairness Act, 28 U.S.C. § 1332(d).
LEGAL STANDARD
“To survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to state a claim to
relief that is plausible on its face.”

Sheridan v. NGK Metals Corp.,

609 F.3d 239, 263 n. 27 (3d Cir. 2010) (quoting Ashcroft v. Iqbal,
556 U.S. 662 (2009)).

“A claim has facial plausibility when the

plaintiff pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct
alleged.” Id. (quoting Iqbal, 556 U.S. at 678).
The Court conducts a three-part analysis when reviewing a claim:
First, the court must “tak[e] note of the elements a plaintiff
must plead to state a claim.” Iqbal, 129 S. Ct. at 1947. Second,
the court should identify allegations that, “because they are
no more than conclusions are not entitled to the assumption of
truth.” Id. at 1950. Finally, “where there are well-pleaded
factual allegations, a court should assume their veracity and
then determine whether they plausibly give rise to an
entitlement for relief.” Id.
Santiago v. Warminster Twp., 629 F.3d 121, 130 (3d Cir. 2010); see
also Fowler v. UPMC Shadyside, 578 F.3d 203, 211 (3d Cir. 2009) (“[A]
complaint must do more than allege the plaintiff’s entitlement to
relief.

A complaint has to ‘show’ such an entitlement with its

facts.”).
3

ANALYSIS
The Amended Complaint alleges violations of the New Jersey
Consumer Fraud Act (“CFA”), N.J. Stat. Ann. § 56:8-1, et seq. (Count
One); the Truth in Consumer Contract, Warranty, and Notice Act
(“TCCWNA”), N.J. Stat. Ann. § 56:12-14, et seq. (Count Two); and the
Plain Language Act (“PLA”), N.J. Stat. Ann. § 56:12-1, et seq. (Count
Three).

Plaintiff also seeks declaratory and injunctive relief

(Count Four).

The crux of these claims is that the arbitration

provision in the UVSC violates Plaintiff’s rights under the
above-listed consumer protection statutes.

Am. Compl. ¶ 35(a-f).

Defendants moved to dismiss the Amended Complaint, arguing the
validity of the arbitration provision, but also waiving their right
to compel arbitration.

[Dkt. Ents. 13, 17.]

Since the putative class has not been certified, the Court
evaluates the Amended Complaint as to the particular plaintiff.
Green v. Green Mountain Coffee Roasters, 279 F.R.D. 275, 281 (D.N.J.
2011) (citing Rolo v. City of Investing Co. Liquidating Trust, 155
F.3d 644, 659 (3d Cir. 1998), abrogation on other grounds recognized,
Forbes v. Eagleson, 228 F.3d 471 (3d Cir. 2000); Luppino v.
Mercedes-Benz USA, LLC, Civ. No. 09-5582, 2010 WL 3258259, *4 (D.N.J.
Aug. 13, 2010)).

The Court addresses Plaintiff’s individual claims

in turn.
1.

CFA Claim (Count One)

To state a cause of action under the CFA, a plaintiff must allege:

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(1) an unlawful practice by the defendant; (2) an ascertainable loss
by the plaintiff; and (3) a causal nexus between the defendant’s
unlawful practice and the plaintiff’s ascertainable loss.

Int’l

Union of Operating Eng’rs Local No. 68 Welfare Fund, 929 A.2d 1076,
1086 (N.J. 2007) (citation omitted); Arcand v. Brother Intern. Corp.,
673 F. Supp. 2d 282, 296 (D.N.J. Nov. 30, 2009) (citations omitted).1
New Jersey courts have recognized that the CFA is remedial legislation
and should be liberally construed in favor of consumers.

Cox v. Sears

Roebuck & Co., 647 A.2d 454, 461 (N.J. 1994).
While not a model of clarity, it appears Plaintiff attempts to
assert two “unlawful practices” to support her CFA claim.2
First, she points to Defendants’ affirmative act in denying
coverage:
The aforesaid misrepresentations, deceptive and
unconscionable practices of Defendants in denying warranty
coverage and/or payments to Plaintiff and members of the
Damage Subclass constitute violations of the New Jersey
Consumer Fraud Act.
1

The CFA provides in relevant part:
Any person who suffers any ascertainable loss of moneys or
property, real or personal, as a result of the use or employment
by another person of any method, act, or practice declared
unlawful under this act or the act hereby amended and
supplemented may bring an action or assert a counterclaim
therefor in any court of competent jurisdiction.
N.J. Stat. Ann. § 56:8-19.
2
The CFA defines an “unlawful practice” as “any unconscionable
commercial practice, deception, fraud, false pretense, false
promise, or misrepresentation, or the knowing, concealment,
suppression, or omission of any material fact . . . .”. N.J. Stat.
Ann. § 56:8-2. “Unlawful practices” fall into three general
categories: affirmative acts, knowing omissions, and regulatory
violations. Cox, 647 A.2d at 462.
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. . .
The conduct and actions of Defendants, as set forth above,
have directly, foreseeably, and proximately caused
ascertainable damages in amounts Plaintiff and each member
of the Damage Subclass paid for the costs incurred, due
and/or otherwise suffered because to [sic] Defendants’
conduct in denying coverage and not paying for “Covered
Breakdowns”, either in whole or in part, as defined in the
UVSCs.
Am. Compl. ¶¶ 59, 62.

Notably, Plaintiff has not adduced any facts

to permit the inference that Defendants’ denial of coverage was
unconscionable, deceptive, or fraudulent in violation of the CFA.

In

fact, Plaintiff has not even alleged entitlement to repairs under the
Contract.3

Nor has she alleged that Defendant’s conduct in denying

coverage after the manufacturer refused to cover the repairs somehow
violated the CFA.

Since Plaintiff’s allegations amount to mere

conclusions, they fall short of federal pleading standards.
Santiago, 629 F.3d at 130 (quoting Iqbal, 556 U.S. at 678); Fowler,
578 F.3d at 211 (“. . . [A] complaint must do more than allege the
plaintiff’s entitlement to relief. A complaint has to ‘show’ such an
entitlement with its facts.”).

The CFA claim is therefore DISMISSED

WITHOUT PREJUDICE to the extent that it relies on Defendants’ denial
of coverage as an “unlawful practice”.
Second, Plaintiff claims that the arbitration provision
itself amounts to an “unlawful practice” because it precludes the type

3

Indeed, based on the Court’s own review of the contract, it appears
Defendants were not liable for repairs that “would normally be covered
by . . . a dealer warranty required under state law.” UVSC Part A,
¶ 8.
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of statutory relief guaranteed by the CFA, TCCWNA, and PLA.
Compl. ¶¶ 2, 35(a-d).

Am.

In other words, Plaintiff contends that if she

were to bring such a consumer protection claim under the Contract,
the arbitration provision would bar her recovery of certain statutory
remedies to which she might be entitled, such as attorney’s fees and
treble damages, thereby violating the CFA.

Defendants argue that

this claim fails because the harm alleged is purely theoretical;
Plaintiff has not suffered any ascertainable losses stemming from the
arbitration provision, and she therefore has not established the
second and third elements of a CFA claim.4
An “ascertainable loss” for purposes of the CFA refers to an
actual loss, one that is definite, certain, and measurable.

Bosland

v. Warnock Dodge, Inc., 964 A.2d 741, 749 (N.J. 2009); Thiedemann v.
Mercedes-Benz USA, LLC, 872 A.2d 783, 792-93 (N.J. 2005)).

It is

“equivalent to any lost benefit of the bargain”; for example, any
out-of-pocket loss or loss in value.
Thiedemann, 872 A.2d at 792-93.

Bosland, 964 A.2d at 750;

While a plaintiff who has suffered

a loss in value need not incur an actual financial loss prior to filing
suit, her loss may not be theoretical or illusory.

Bosland, 964 A.2d

at 750; Thiedemann, 872 A.2d at 792-93; Cox v. Sears Roebuck & Co.,
647 A.2d 454 (N.J. 1994) (plaintiff whose contractor failed to comply
with applicable regulations, thus necessitating further repairs,

4

Defendants also dispute that the arbitration provision violates the
CFA. Since the Court dismisses this claim on other grounds, it need
not reach this issue.
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suffered “ascertainable loss” even though he had not yet paid for
repairs, where he submitted proofs as to reasonable cost of repair).
To satisfy the third element – causation – a consumer must
“demonstrate that he or she suffered an ascertainable loss ‘as a
result of’ the unlawful practice.”

Lee v. Carter-Reed Co., LLC, 4

A.3d 561, 576 (N.J. 2010) (quoting N.J. Stat. Ann. § 56:8-19 and citing
Meshinsky v. Nichols Yacht Sales, Inc., 541 A.2d 1063 (N.J. 1988)).
Here, Plaintiff has not alleged facts showing that she has a
claim, which must be arbitrated pursuant to the UVSC.

Absent a

showing that an underlying dispute exists to trigger the allegedly
unlawful arbitration provision, the harm Plaintiff complains of is
theoretical at best.

It certainly is not definite, certain, or

measurable, as required by the CFA.

See, e.g., Bosland, 964 A.2d at

749 (noting that a CFA plaintiff must have suffered “a definite,
certain and measurable loss, rather than one that is merely
theoretical”).5

Since the parties have agreed to waive the

5

Plaintiff cites to numerous cases to support her position, none of
which are analogous. For example, her reliance on Bosland is
misplaced. There, the plaintiff was “the victim of an overcharge”;
the defendant car dealer charged her a registration fee, which was
at least $20 greater than the maximum cost of registering her car.
964 A.2d at 744, 750. The New Jersey Supreme Court stressed that this
overcharge could be “readily quantified” and was thus ascertainable
within the meaning of the CFA. Id. at 750. Similarly, the Appellate
Division’s decision in Cowger v. Cherry Hill Mitsubishi, Inc., 2011
WL 848133, *1 (N.J. Super. Ct. App. Div. Mar. 14, 2011), is inapposite.
There, the plaintiff paid a $500 deposit for the privilege of driving
a vehicle for a few days. Id. at *1. After the plaintiff returned
the car, the defendant used car dealer failed to return the $500. The
plaintiff commenced suit under the CFA, and the defendant then
returned the money. The New Jersey Superior Court Appellate Division
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arbitration provision going forward, it appears that Plaintiff will
not suffer such harm in the future.

Accordingly, Defendants’ motion

to dismiss is granted, and this claim is DISMISSED WITHOUT PREJUDICE.
2.

TCCWNA Claim (Count Two)

Defendants also move to dismiss Plaintiff’s claim under the
TCCWNA, which prohibits contract provisions that violate clearly
established rights under federal or state law.6

Bosland v. Warnock

Dodge, Inc., 933 A.2d 942, 949 (N.J. App. Div. 2007), aff’d, 964 A.2d
741 (2009).

In passing this statute, the New Jersey Legislature

sought to prevent contracts from including “illegal provisions
intended to deceive a consumer into thinking that [such provisions]
are enforceable and to result in the consumer failing to enforce his

found that Plaintiff had suffered an “ascertainable loss” because the
CFA merely requires a loss at the time suit was filed. Id. at *5.
Here, it is immaterial that Defendants provided the requested repairs
after Plaintiff filed suit, because the denial of coverage did not
result from the arbitration provision, which is the allegedly
unlawful practice. Similarly, Plaintiff’s comparison to the New
Jersey Supreme Court’s decision in Lee v. Carter-Reed Co., 203 N.J.
496 (2010), is inapt. There, the court considered claims of false
advertising against a weight loss drug. The court concluded that it
could reasonably infer a causal relationship between the deceptive
marketing scheme and the purchase of the product, which constituted
an “out-of-pocket loss” and therefore an “ascertainable loss” under
the CFA. Id. at 580. Here, Plaintiff has not alleged a deceptive
marketing claim, so the analysis in Lee does not apply.
6
The TCCWNA provides in relevant part:
No seller . . . shall . . . enter into any written consumer
contract . . . which includes any provision that violates
any clearly established legal right of a consumer or
responsibility of a seller, . . . established by State or
Federal law at the time the offer is made or the consumer
contract is signed . . . .
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rights.”

Watkins v. DineEquity, Inc., Civ. No. 11-7182, 2012 WL

3776350, *6 (D.N.J. Aug. 29, 2012) (quoting L.1981, c. 454, Sponsor’s
Statement to Assembly Bill No. 1660 (N.J. 1981)) (internal quotations
omitted).

Unlike the CFA, a plaintiff asserting a claim under the

TCCWNA need not have suffered any actual damages.

Id. at *6.

The parties here dispute whether the arbitration provision
violates any clearly established legal right.

According to

Plaintiff, the arbitration provision’s bar on recovery of attorney’s
fees and costs violates the CFA and therefore violates the TCCWNA.7
Pl.’s Opp. Br. 29.

Defendants argue that the arbitration provision

constitutes a valid waiver of Plaintiff’s rights.

The Court agrees

with Plaintiff.
A successful CFA claimant is entitled to recover “reasonable
attorneys’ fees, filing fees and reasonable costs of suit.”

N.J.

Stat. Ann. § 56:8-19; Delta Funding Corp. v. Harris, 912 A.2d 104,
114 (N.J. 2006) (noting that the CFA provides “mandatory attorney’s
fees and costs to prevailing parties”).

When such statutory remedies

N.J. Stat. Ann. § 56:12-15.
7
The arbitration provision provides in relevant part:
Any dispute arising out of or relating to this Contract
shall be settled by final and binding arbitration. . . .
Costs. Each party shall pay the fees of its own attorneys,
the expenses of its witnesses, and all other expenses
connected with the presentation of its case. The parties
shall share equally the cost of arbitration and the fees
charged by the arbitrators.
(UVSC, Dkt. Ent. 9-1 (emphasis in original).)
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are available to prevailing parties, a defendant “may not limit a
consumer’s ability to pursue [them].”

Delta, 912 A.2d at 113-114

(citing Muhammad v. Cnty. Bank of Rehoboth Beach, 912 A.2d 88, 99 (N.J.
2006)); Mullin v. Automobile Protection Corp., Civ. No. 07-3327, 2008
WL 4509612, *4 (D.N.J. Sept. 29, 2008).
At this stage of the proceedings, the Court must view the facts
presented in the pleadings and the inferences to be drawn therefrom
in the light most favorable to Plaintiff.
n.25 (citation omitted).

Sheridan, 609 F.3d at 260

Given the strict language of the

arbitration clause - which mandates that each party “shall” pay its
own attorneys’ fees and share the costs of arbitration, see supra n.8
- an arbitrator might interpret this to bar a successful CFA claimant
from recovering attorney’s fees and costs.

This result would violate

Plaintiff’s clearly established rights under the CFA and therefore
violate the TCCWNA.

Mullin, 2008 WL 4509612, *4 (contract provision

requiring each party to bear its own attorney’s fees and costs
violated CFA and therefore violated TCCWNA).
Defendants’ argument that Plaintiff waived her rights by signing
the UVSC is unpersuasive.

This argument was considered and rejected

in Mullin, 2008 WL 4509612, *5, where, like here, the arbitration
provision provided that each party must bear its own attorneys’ fees
and costs but did not disclose that the consumer was waiving her
statutory right to such remedies.

11

Id. at *1.

In New Jersey, the

“waiver of statutory rights provisions in arbitration agreements must
be clear and explicit.”

Mullin, 2008 WL 4509612, *5 (quoting Gras

v. Associates First Capital Corp., 786 A.2d 886, 893 (N.J. Super. Ct.
App. Div. 2001)) (internal quotations omitted); see also Garfinkel
v. Morristown Obstetrics & Gynecology Assocs., 773 A.2d 665, 670 (N.J.
2001) (“As we have stressed in other contexts, a party’s waiver of
statutory rights ‘must be clearly and unmistakably established, and
contractual language alleged to constitute a waiver will not be read
expansively.’”) (quoting Red Bank Reg’l Educ. Ass’n, 393 A.2d 267
(N.J. 1978)).

Thus, because the arbitration clause here failed to

inform Plaintiff that she was waiving her rights under the CFA, such
a waiver did not occur.

Mullin, 2008 WL 4509612, *5; cf. Kuhn v.

Terminix, Civ. No. L-2834-07, 2008 WL 1987432, *2 (N.J. Super. Ct.
App. Div. May 9, 2008) (arbitration provision, which provided that
“any controversy or claim between the [parties] arising out of . .
. this agreement shall be settled exclusively by arbitration” did not
clearly state that consumers were waiving their rights to pursue
statutory claims in court).
Defendants’ reliance on Salvadori v. Option One Mortg. Corp.,
420 F. Supp. 2d 349 (D.N.J. 2006), is misplaced.

There, the court

enforced an arbitration provision, finding that the consumer had
waived his right to a jury trial, where the contract explicitly
provided:

“both of us are waiving our rights to have disputes

resolved in court by a judge or jury”.

12

Id. at 352 (emphasis added).

The contract also stated that the arbitration provision applied to
statutory claims.

Id.

Here, as discussed above, the Contract did

not inform Plaintiff that she was waiving her statutory right to
attorney’s fees and costs.

See supra n.8; Mullin, 2008 WL 4509612

*5 (distinguishing Salvadori where the arbitration provision at issue
did not explicitly waive statutory rights).
Defendants also argue that the arbitration provision
constitutes a valid waiver of Plaintiff’s rights under the TCCWNA.
The Court rejects this argument, because a consumer’s rights under
the TCCWNA may not be waived.

N.J. Stat. Ann. § 56:12-16 (“No

consumer contract, warranty, notice or sign, as provided for in this
act, shall contain any provision by which the consumer waives his
rights under this act.”).
Accordingly, Defendants’ motion to dismiss is DENIED as to this
claim.
3.

PLA Claim (Count Three)

Defendants move to dismiss Plaintiff’s PLA claim on the grounds
that they performed their obligations under the Contract.

The PLA

requires consumer contracts to be written in a “simple, clear,
understandable and easily readable way.”

N.J. Stat. Ann. § 56:12-2.

A defendant may not be liable under the PLA, however, where “both
parties to the contract . . . have performed their obligations under
the contract.”

N.J. Stat. Ann. § 56:12-5.

Here, Plaintiff argues

that Defendants gave her the “run around” by initially refusing to

13

pay for the repair.

Pl.’s Br. 30.

She does not, however, allege

facts showing that the Defendants breached the Contract.

See supra.

Moreover, Plaintiff has not persuaded the Court that the language here
is in fact confusing.

Accordingly, Defendants’ motion is GRANTED,

and this claim is DISMISSED WITHOUT PREJUDICE.
4.

Declaratory and Injunctive Relief (Count Four)

Defendants also move for dismissal of Plaintiff’s individual
claim for declaratory and injunctive relief.

Since the parties have

waived enforcement of the arbitration provision, Plaintiff’s claims
to preclude Defendants from requiring compliance with the arbitration
provision are rendered moot.

Accordingly, Defendants’ motion is

GRANTED.
CONCLUSION
For the foregoing reasons, Defendants’ motion is GRANTED with
respect to Counts 1, 3, and 4, and DENIED with respect to Count 2.
The Court will permit Plaintiff to file a second amended complaint,
consistent with this Opinion, on or before December 19, 2012.
Defendants may file a responsive pleading on or before January 18,
2013.

An appropriate Order will issue herewith.

s/Renée Marie Bumb
RENÉE MARIE BUMB
UNITED STATES DISTRICT JUDGE
Date: November 20, 2012

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