CASTRO v. SOVRAN SELF STORAGE, INC. et al
Filing
24
OPINION. Signed by Judge Joseph E. Irenas on 7/16/2015. (tf, )
enUNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
JUAN CASTRO, JR.,
HONORABLE JOSEPH E. IRENAS
Plaintiff,
CIVIL ACTION NO. 14-6446
(JEI)
v.
SOVRAN SELF STORAGE, INC. t/a
UNCLE BOB’S SELF STORAGE,
OPINION
Defendant.
APPEARANCES:
LOCKS LAW FIRM, LLC
By: Andrew P. Bell, Esq.
James A. Barry, Esq.
Michael A. Galpern, Esq.
801 N. Kings Highway
Cherry Hill, New Jersey 08034
Counsel for Plaintiff
RILEY & SHAINE
By: Charles N. Riley, Esq.
900 N. Kings Highway
Cherry Hill, New Jersey 08034-0379
Counsel for Plaintiff
J. STEWART GRAD, ESQ.
223 Main Street
Woodbridge, New Jersey 07095
Counsel for Plaintiff
PORZIO, BROMBERG & NEWMAN, PC
By: Steven P. Benenson, Esq.
John T. Chester, Esq.
100 Southgate Parkway
Morristown, New Jersey 07962-1997
Counsel for Defendant
1
IRENAS, Senior District Judge:
This putative consumer class action appears before the
Court on Defendant Sovran Self Storage’s Motion to Partially
Dismiss Plaintiff Juan Castro Jr.’s First Amended Complaint for
failure to state a claim upon which relief can be granted
pursuant to Fed. R. Civ. P. 12(b)(6).1
For the reasons below,
the Motion will be granted in part and denied in part.
I.
Relevant Facts
Plaintiff alleges the following facts in his First Amended
Complaint, Dkt. No. 9 (“Am. Compl.”).
Defendant operates more than two dozen storage facilities
in the State of New Jersey.
(Am. Compl. ¶ 20)
At these
facilities, Defendant “has offered, gave, displayed and entered
into” three types of agreements with thousands of consumers,
“which contain the same or substantially similar unenforceable
provisions[.]”
(Id. ¶¶ 20-21)
First, on January 11, 2013,
Defendant entered into a Rental Agreement (Am. Compl. Ex. A,
Dkt. No. 9-1 (“Rental Agreement”)) with Plaintiff agreeing to
lease to Plaintiff a storage space for personal property for a
monthly rent of $242.00.
(Am Compl. ¶ 23)
Second, also on
January 11, 2013, Defendant required Plaintiff to sign a Rental
1
No issues of class certification are addressed in this motion.
2
Insurance Addendum/Insurance Coverage Requirement (Am. Compl.
Ex. B, Dkt. No. 9-2 (“Insurance Addendum”)) to obtain insurance
as a prerequisite of leasing storage space.
(Id. ¶¶ 38, 40)
Third and finally, on July 2, 2014, Defendant required Plaintiff
to sign a Customer Vacate Notice (Am. Compl. Ex. C, Dkt. No. 9-3
(“Notice to Vacate”)) releasing Defendant from all liability
upon vacating the storage space.
(Id. ¶¶ 71-72, 74)
Plaintiff’s claims in this Complaint, a putative class action,
pertain to these three agreements.
The bulk of Plaintiff’s Complaint challenges six provisions
in the Rental Agreement:
(1) a Limitation of Value provision
capping the value of Plaintiff’s stored property at $5,000
without “printing such declaration in bold face or underlined”
pursuant to N.J.S.A. § 2A:44-193(a) (id. ¶¶ 28-29); (2) an
Invalidity provision stating that if one or more provisions of
the Rental Agreement is deemed illegal or unenforceable, the
remainder of the Agreement remains in effect without specifying
which provisions are void or unenforceable, pursuant to N.J.S.A.
§ 56:12-16 (id. ¶¶ 34-35); (3) a Lien Sale Preparation Fee
provision pursuant to N.J.S.A. §§ 2A:44-189 and 2A:44-191 (Am.
Compl. ¶¶ 24-25); (4) an Exculpatory Clause barring Plaintiff
and his guests from bringing any personal injury or property
damage claims against Defendant, even if caused by Defendant’s
“own negligence, gross negligence and/or intentional conduct”
3
(id. ¶¶ 26-27); (5) an Indemnification of Owner provision
requiring that Plaintiff “hold Defendant harmless and indemnify
Defendant for any personal injuries,” even if caused by
Defendant’s “own negligence, gross negligence and/or intentional
conduct” (id. ¶¶ 30-31); and (6) a Waiver of Jury Trial
provision requiring that Plaintiff waive any rights to a jury
trial on behalf of himself and third parties (id. ¶¶ 32-33).
With regard to the Insurance Addendum, Plaintiff makes
three additional allegations.
He alleges that though an entity
called Bader Insurance Company provided the actual insurance
coverage, Defendant received a portion of Plaintiff’s $21
monthly premium from January 2013 to July 2013, even though
Defendant is not licensed either to “sell, solicit, or negotiate
insurance” or to “accept a commission, service fee, brokerage or
other valuable consideration for selling, soliciting or
negotiating insurance” in New Jersey, in violation of N.J.S.A.
§§ 17:22A-29 and 17:22A-41(b).
(Am. Compl. ¶¶ 41-47, 49-52)
Plaintiff also alleges that Defendant failed to provide
Plaintiff with copies of the insurance contracts or with
Certificates of Insurance, in contradiction with a statement in
the Insurance Addendum that such documents will be provided and
in violation of N.J.S.A. § 56:8-2.22.
2
(Id. ¶¶ 56-58)2
Finally,
Plaintiff received a “Summary of Coverage” (Am. Compl. Ex. D, Dkt. No. 9-4)
only when he filed his a claim in July 2014.
4
Plaintiff alleges that his property suffered at least $5000 of
damage from water and mold while stored at Defendant’s facility,
which Defendant misrepresented his insurance would cover at the
time Plaintiff purchased the insurance.
(Id. ¶¶ 60-61)3
According to Defendant’s representations at the time of
purchase, the insurance “purported[] to provide coverage to
‘insure the Lessee’s property against fire, smoke, explosion[,]
windstorm and water damage,’” including mildew and mold.
Compl. ¶ 48 (quoting Insurance Addendum ¶ 1))
(Am.
However, when
Plaintiff filed a claim for his water and mold damages in July
2014, Bader Insurance denied the claim, informing him that his
insurance covered only “accidental discharge or leakage of water
or steam as the direct result of the breaking or cracking of any
part of a system or appliance containing water or steam.”
(Id.
¶¶ 63-65; see also Bader Denial Letter, Am. Compl. Ex. E, Dkt.
No. 9-5)
Because “Defendant knew that the storage space rented
to Plaintiff did not contain any water plumbing, systems or
appliances,” Plaintiff alleges that the protection Defendant
sold him was “meaningless” and “did not comport or match with”
3
Though Plaintiff asserts that his individual damage was caused in part by
Defendant’s negligence (id. ¶ 62), the instant Amended Complaint, a putative
class action, does not allege negligence against Defendant on behalf of the
Class, focusing instead on claims based on provisions in the Agreements.
5
the coverage Defendant represented was provided.
(Am. Compl. ¶¶
66-67)
Third and finally, Plaintiff challenges the Notice to
Vacate on grounds similar to the Rental Agreement, arguing that
the Notice to Vacate “unconscionably misrepresents” that
customers are barred from bringing a claim against Defendant for
any personal injuries or property damage sustained at the
storage facility; are required to hold Defendant harmless and
indemnify Defendant for any personal injuries resulting from
Defendant’s negligence; and have waived a right to a jury trial.
(Am. Compl. ¶ 75)
Plaintiff brings his claims on behalf of himself and all
members of a putative Class, which includes two Subclasses, and
one Sub-subclass.
The putative “Class” includes:
All persons, who since August 19, 2008 (or such
date as discovery may disclose) to whom form
contracts, the preprinted portions of which were
identical or substantially similar to the Agreement
attached hereto as Exhibit A [the “Rental
Agreement”], have been given, displayed, offered,
signed and/or entered into, in New Jersey presented
by or on behalf of Defendant or its agents.
(Am. Compl. ¶ 80)
The putative “Notice to Vacate Subclass,” which is
“subsumed within and/or a part of the Class” includes:
All Class members to whom form agreements, the
preprinted portions of which were identical or
substantially similar to the Notice to Vacate,
attached hereto as Exhibit C, have been given,
6
displayed, offered, signed and/or entered into, in
New Jersey presented by or on behalf of Defendant
or its agents.
(Id. ¶ 83)
The putative “TCCWNA Insurance Subclass,” which is also
“subsumed within and/or a part of the Class” includes:
All Class members to whom form agreements, the
preprinted portions of which were identical or
substantially similar to the Insurance Addendum,
attached hereto as Exhibit B, have been given,
displayed, offered, signed and/or entered into, in
New Jersey presented by or on behalf of Defendant
or its agents.
(Id. ¶ 81)
Furthermore, “subsumed within and/or a part of the TCCWNA
Insurance Subclass” is a further divided putative “Insurance
Subclass,” which consists of:
All Class members who signed form agreements, the
preprinted portions of which were identical or
substantially similar to the Insurance Addendum,
attached hereto as Exhibit B.
(Id. ¶ 82)
In addition to seeking monetary damages, Plaintiff seeks
declaratory and injunctive relief:
a)
Declaring that Defendant is estopped from
requiring Plaintiff to indemnify and hold
Defendant
harmless
(and
pay
Defendant’s
attorney’s fees and costs) for losses resulting
from the negligence of Defendant.
b)
Prohibiting Defendant from offering or issuing
contracts containing illegal provisions, in the
manner described herein.
7
c)
Requiring Defendant to provide notice to all
class members that the aforesaid clauses
contained in the Agreement, Insurance Addendum
and Notice to Vacate issued to the Class and/or
subclass members are void and unenforceable and
that class members who signed such forms may
still sue Defendant in Court and recover
statutory
attorneys
fees
and
costs
for
violations of consumer protection statutes.
d)
Requiring Defendant to provide notice to all
Class and subclass members who may have
indemnified Defendant or who may have had
judgment entered against them pursuant to the
aforesaid
contract
provisions
that
such
indemnification or judgment is illegal and will
be refunded or vacated.
(Id. ¶ 101)
II.
Legal Standard
Federal Rule of Civil Procedure 12(b)(6) provides that a
court may dismiss a complaint “for failure to state a claim upon
which relief can be granted.”
In order to survive a motion to
dismiss, a complaint must allege facts that raise a right to
relief above the speculative level.
Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 555 (2007); see also Fed. R. Civ. P.
8(a)(2).
When considering a Rule 12(b)(6) motion, the reviewing
court must accept as true all allegations in the complaint and
view them in the light most favorable to the plaintiff.
Phillips v. Cnty. of Allegheny, 515 F.3d 224, 231 (3d Cir.
2008).
In reviewing the allegations, a court is not required to
8
accept sweeping legal conclusions cast in the form of factual
allegations, unwarranted inferences, or unsupported conclusions.
Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir.
1997).
Instead, the complaint must state sufficient facts to
show that the legal allegations are not simply possible, but
plausible.
Phillips, 515 F.3d at 234.
“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.”
Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009).
Finally, the Court considers “only the allegations in the
complaint, exhibits attached to the complaint, matters of public
record, and documents that form the basis of a claim.”
Bank of Am., 361 F.3d 217, 221 n.3 (3d Cir. 2004).
Lum v.
A document
forms the basis of a claim when it is “integral to or explicitly
relied upon in the complaint.”
Id. (citing In re Burlington
Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997)).
III. Jurisdiction
Plaintiff brings his Complaint as a putative class action.
For such claims, this Court has jurisdiction over “any civil
action in which the matter in controversy exceeds the sum or
value of $5,000,000, exclusive of interest and costs” and where
“any member of a class of plaintiffs is a citizen of a State
9
different from any defendant.”
Fed. R. Civ. P. 1332(d)(2).
Here, Plaintiff, a citizen of New Jersey, alleges against
Defendant, a real estate investment trust incorporated under the
laws of Maryland with its principal place of business in New
York, an amount in controversy exceeding $5 million.
(Am.
Compl. ¶¶ 2-5)
IV.
Discussion
Plaintiff brings his Amended Complaint pursuant to the
Truth in Consumer Contract, Warranty and Notice Act (N.J.S.A. §§
56:12-13, et seq., (“TCCWNA”)) and the New Jersey Consumer Fraud
Act (N.J.S.A. §§ 56:8-1, et seq., (“CFA”)).
99)
(Am. Compl. ¶¶ 91-
Defendant moves to partially dismiss for failure to state a
claim under these statutes.
A. Truth in Consumer Contract, Warranty and Notice Act Claims
The TCCWNA provides in relevant part:
No seller, lessor, creditor, lender or bailee shall
in the course of his business offer to any consumer
or prospective consumer or enter into any written
consumer contract or give or display any written
consumer warranty, notice or sign after the
effective date of this act which includes any
provision that violates any clearly established
legal right of a consumer or responsibility of a
seller, lessor, creditor, lender or bailee as
established by State or Federal law at the time the
offer is made or the consumer contract is signed or
the warranty, notice or sign is given or displayed.
§ 56:12-15.
10
Plaintiff alleges that Defendant’s Rental Agreement,
Insurance Addendum, and Notice to Vacate violate the TCCWNA.
a. Rental Agreement
Plaintiff’s TCCWNA allegations regarding the Rental
Agreement pertain to six provisions: the “Limitation of Value”
provision, the “Invalidity” provision, the “Lien Sale
Preparation Fee” provision, the “Indemnification of Owner”
provision, the “Exculpatory Clause” of the Insurance provision,
and the “Waiver of Jury Trial” provision.
i. Limitation of Value Provision
N.J.S.A. § 2A:44-193(a) entitled “Rental agreements with
limits upon value of stored property; remedies” provides in
relevant part:
If a rental agreement . . . contains a provision
placing a limit on the value of property that may
be stored in the occupant's space, this limit shall
be deemed to be the maximum value of the stored
property, provided that the provision is printed in
bold type or underlined in the rental agreement.
Defendant’s Limitation of Value provision states that
“Customer agrees that the maximum value of all contents in the
Space shall be $5,000.00.”
(Rental Agreement ¶ 6)
Plaintiff
alleges that Defendant improperly places this cap without
“printing such declaration in bold face or underlined” in
violation of § 2A:44-193(a).
(Am. Compl. ¶¶ 28-29)
11
However, as Defendant points out, 2A:44-193(a) did not take
effect until August 9, 2013, nearly seven months after Plaintiff
executed his Rental Agreement with Defendant on January 11,
2013.
On the facts, Defendant also argues that though the
relevant sentence, including the $5,000.00 total, is not
emphasized in any way, “[t]he title of the short provision
[‘Limitation of Value’] is in bold, underlined text.”
(Def.’s
Br. Supp. Mot. to Dismiss, Dkt. No. 13-1 (“DMTD”) at 15)
Plaintiff does not revisit this argument in his Opposition Brief
and offers no alternate basis for a TCCWNA violation.
Defendant’s motion to dismiss Plaintiff’s TCCWNA claim regarding
the Limitation of Value provision will therefore be granted.
ii. Invalidity Provision
Plaintiff alleges that Defendant’s Invalidity provision
improperly states that the finding of one or more provisions of
the Rental Agreement illegal or unenforceable does not affect
the remainder of the Agreement without specifying which
provisions are void or unenforceable, in violation of N.J.S.A.
§ 56:12-16.
(Am. Compl. ¶¶ 34-35).
The TCCWNA states:
No consumer contract, notice or sign shall state
that any of its provisions is or may be void,
unenforceable or inapplicable in some jurisdictions
without specifying which provisions are or are not
void, unenforceable or inapplicable within the
State of New Jersey[.]
12
§ 56:12-16 (emphasis added).
“In other words, a contract or notice cannot simply state
in a general, nonparticularized fashion that some of the
provisions of the contract or notice may be void, inapplicable,
or unenforceable in some states.”
Shelton v. Restaurant.com,
Inc., 214 N.J. 419, 427-28, 70 A.3d 544, 549 (2013).
See also
Venditto v. Vivint, Inc., No. CIV.A. 14-4357 JLL, 2014 WL
5702901, at *9 (D.N.J. Nov. 5, 2014)(denying a motion to dismiss
where clause at issue stated that “[s]ome states do not allow”
certain limitations and exclusions, “so the above limitations or
exclusions may not apply to you” without specifying which ones
did or did not apply in New Jersey).
As Defendant argues, “[t]he reasonable interpretation of
[§ 56:12-16] is that if a consumer contract, notice or sign is
or may be used in multiple jurisdictions and expressly states
that any of its provisions are or may be void, unenforceable or
inapplicable in certain of those jurisdictions, it must specify
where such provisions are or are not void, unenforceable or
inapplicable in New Jersey.”
(Def.’s Reply Br. at 29)(emphasis
omitted)
Here, Defendant’s Invalidity provision reads as follows:
If one or more of the provisions of this Rental
Agreement are deemed to be illegal or unenforceable
the remainder of this Rental Agreement shall be
unaffected and shall continue to be fully valid,
binding and enforceable.
13
(Rental Agreement ¶ 24)
Plaintiff contends that the conditional phrase “If one or
more of the provisions of this Rental Agreement are deemed to be
illegal or unenforceable . . . ” necessarily admits that
provisions of the agreement “may be void, unenforceable or
inapplicable.”
(Pl.’s Opp. at 25)
Therefore, Plaintiff alleges
that this language triggers the requirement to specify which
portions may be void or unenforceable under New Jersey law.
(Am. Compl. ¶ 16.g)
Since the Rental Agreement fails to do so,
Plaintiff asserts that it violates the TCCWNA.
Plaintiff relies for this reading on Martinez-Santiago v.
Public Storage, 38 F.Supp.3d 500 (D.N.J. 2014).
However, the
provision at issue in Martinez-Santiago clearly implicated
§ 56:12-16, because it referenced the agreement’s application in
multiple jurisdictions:
Lease/Rental Agreements shall be governed and
construed in accordance with the laws of the state
in which the Premises are located. If any provision
of this Lease/Rental Agreement shall be invalid or
prohibited under such law, such provision shall be
ineffective only to the extent of such prohibition
or invalidity, without invalidating the remainder
of such provision or the remaining provisions of
the Lease/Rental Agreement.
Id. at 511.
The facts here are readily distinguished.
Defendant’s
Rental Agreement is specific to New Jersey, and there is no
14
indication that the provision at issue contemplates the
contract’s application in multiple jurisdictions such that its
enforceability in New Jersey must be clarified.
Rather, this
Invalidity provision operates as a severability clause,
protecting the remainder of the contract should some portion of
it be declared void or unenforceable.
As Defendant points out,
Plaintiff’s interpretation of § 56:12-16 suggests that any
standard severability clause implicates the statute.
Reply Br. at 30-31)
(Def.’s
This reading ignores the context the phrase
“in some jurisdictions” creates for the application of the
statute and cannot be correct.
The Court therefore finds that
§ 56:12-16 does not govern the Invalidity provision of the
Rental Agreement and will grant Defendant’s motion to dismiss
Plaintiff’s TCCWNA claim as it relates to that provision.
iii. Lien Sale Preparation Fee Provision
Next, Plaintiff alleges that Defendant’s Lien Sale
Preparation Fee provision imposes an improper fee to cover the
costs of selling a customer’s stored property to recover unpaid
rent (or other expenses due), in violation of N.J.S.A. §§ 2A:44189 and 2A:44-191.
(Am. Compl. ¶¶ 24-25)
The first of these statutes, entitled “Lien on personal
property; priority” provides in relevant part:
Except as specified in this subsection, the owner
of a self-service storage facility . . . shall have
a lien upon all personal property located at a self15
service storage facility for rent, labor, or other
reasonable charges due as specified in the rental
agreement in relation to the personal property, and
for expenses necessary for its preservation, or
expenses reasonably incurred in its sale under this
act.
§ 2A:44-189.
The second statute, § 2A:44-191, entitled “Satisfaction of
lien,” “sets out a notice-and-wait procedure, with which a selfstorage facility must comply with [sic] before selling a
tenant's property for the nonpayment of rent.”
Gomes v. Extra
Space Storage, Inc., No. CIV. 13-0929 KSH CLW, 2015 WL 1472263,
at *7 (D.N.J. Mar. 31, 2015).
The detailed procedure for
satisfying “[a]n owner's lien for a claim which is more than 30
days overdue” requires that owners such as Defendant give notice
to occupants such as Plaintiff prior to attempting to sell the
property in satisfaction of the lien.
§ 2A:44-191(a)-(e).
The
procedure also governs the manner in which the sale will take
place and provides that an occupant may recover the property,
free of all liability, “[b]efore a sale of personal property” if
he or she “pay[s] the amount necessary to satisfy the lien, and
the reasonable expenses incurred by the owner to redeem the
personal property.”
§ 2A:44-191(i).
Neither statute forbids a lien sale preparation fee.
Rather, § 2A:44-189 specifically authorizes a self-service
storage facility owner to retain a lien upon stored property for
16
“reasonable charges due as specified in the rental agreement”
and for “expenses reasonably incurred in its sale under this
act.”
Moreover, § 2A:44-191 explicitly recognizes that an owner
may incur expenses even before a sale or redemption, because it
provides that “[b]efore a sale of personal property the occupant
may pay the amount necessary to satisfy the lien, and the
reasonable expenses incurred by the owner to redeem the personal
property.”
(Def.’s Reply Br., Dkt. No. 19 at 11)
Here, however, Defendant’s Lien Sale Preparation Fee
provision states that “Customer shall pay a $115.00 lien sale
preparation fee to Owner any time Customer’s account is in
continuous default for a period of THIRTY (30) days.”
Agreement ¶ 3)
(Rental
Plaintiff has not argued that this amount is not
“reasonable” but objects that it is a flat “arbitrary” fee
incurred as soon as a Customer is in default for 30 days, even
before any lien-related expenses have actually occurred.
Opp. Br. at 13)
(Pl.’s
Defendant acknowledged during oral argument
that a customer who pays on Day 35, for example, before
Defendant incurs any expenses, would nonetheless be responsible
for the fee.
(DMTD Hr’g Tr. 12, June 25, 2015, Dkt No. 23)
Section 2A:44-191 lays out a “strict” and unambiguous
procedure by which an owner can secure satisfaction of a lien
when an occupant’s payment is more than 30 days overdue.
2015 WL 1472263 at *11.
Gomes,
Detailed instructions, which an Owner
17
must follow, govern the notice-and-wait period and any attempts
to sell or redeem property in satisfaction of the lien.
Significantly, “[t]he owner may satisfy his lien from the
proceeds of the sale, but shall deposit the balance, if any, in
an interest-bearing account with notice given to the occupant of
the amount and place of the deposit and of his right to secure
the funds[.]”
2A:44-191(k).
The precision of these
instructions suggest that the Owner is entitled to recover only
its actual expenses and nothing more, weighing against assuming
that the statute authorizes Defendant to collect a flat
reimbursement fee where that fee exceeds the actual expenses
incurred.
Defendant’s motion to dismiss Plaintiff’s TCCWNA claim
based on Defendant’s Lien Sale Preparation Fee provision will
therefore be denied.
iv. Indemnification Provision and Exculpatory Clause
Plaintiff alleges that Defendant’s Indemnification of Owner
provision improperly requires Plaintiff to “hold Defendant
harmless and indemnify Defendant for any personal injuries,”
even if caused by Defendant’s “own negligence, gross negligence
and/or intentional conduct.”
(Am. Compl. ¶¶ 30-31)
In
addition, Plaintiff alleges that the Exculpatory Clause of
Defendant’s Insurance provision improperly bars Plaintiff and
his guests from bringing any personal injury or property damage
18
claims against Defendant, even if caused by Defendant’s “own
negligence, gross negligence and/or intentional conduct.”
(Id.
¶¶ 26-27)
These allegations go to the heart of the TCCWNA.
The
Third Circuit has cited to “the Assembly Statement in support of
the [TCCWNA’s] passage” for a “list[ of] provisions that the
Legislature considered to ‘clearly violate the rights of
consumers.’”
McGarvey v. Penske Auto Grp., Inc., 486 F. App'x
276, 280 (3d Cir. 2012) (quoting Statement, Bill No. A1660, 1981
N.J. Laws, Chapter 454, Assembly No. 1660, page 2–3).
Examples of such provisions are those that
deceptively claim that a seller or lessor is not
responsible for any damages caused to a consumer,
even when such damages are the result of the
seller's or lessor's negligence. These provisions
provide that the consumer assumes all risks and
responsibilities, and even agrees to defend,
indemnify and hold harmless the seller from all
liability.
Id. at 280 n. 5.
Defendant’s Indemnity provision here states in relevant
part:
Customer will defend, indemnify and hold the Owner
harmless from and against any and all manner of
claims for damages or lost property or personal
injury and costs including attorney’s fees arising
from Customer’s lease of the Space on the premises
or from any activity work or thing done, permitted
or suffered by Customer in or on the Space or about
the premises.
(Rental Agreement ¶ 20)
19
The Insurance provision states:
Customer expressly releases Owner from any losses,
claims,
suits
and/or
damages
or
right
of
subrogation caused by fire, theft, burglary, water,
rain storms, tornado, explosion, riot, rodents,
civil disturbance, government action, insects,
mildew, mold, black mold, dust, sonic boom,
vehicles, unlawful entry or any other cause
whatsoever whether property is stored in an
enclosed or open storage Space, nor shall Owner be
liable to Customer and/or Customer’s guests for any
personal injuries or property damage sustained by
Customer and/or Customer’s guests while on or about
the Space or the self storage facility at the Store
Location.
(Id. ¶ 4)
Defendant argues that these provisions do not violate the
TCCWNA, because they do not state a violation of a clearly
established right and because, in any case, to whatever extent
they overstate Defendant’s release from liability, no court
would enforce them so broadly.
Neither argument is persuasive.
First, Chief Judge Simandle found in Martinez-Santiago,
cited supra at 14, that plaintiff adequately stated a violation
of a clearly established right on the basis of provisions
similar to Defendant’s:
at the time plaintiff signed her
agreement with defendant storage facility, it was clearly
established “under the common law,” that defendant “has a duty
to guard against any known dangerous conditions on its property
20
or conditions that should have been discovered.”
38 F.Supp.3d
at 514.4
In reaching this conclusion, the Martinez-Santiago Court
distinguished its facts from those in Kane v. U-Haul Int’l,
Inc., 218 Fed. App’x 163 (3d Cir. 2007).
Kane noted that
exculpatory clauses are disfavored but upheld the one at issue,
because although the clause released defendant from liability
for property damage, plaintiff Kane was given “the opportunity
to elect [property] insurance for an additional reasonable fee,”
thereby mitigating any negative effect on the public interest.
218 Fed. App’x at 166.
As Martinez-Santiago distinguished,
“Kane concerned damage to property, not personal injury on the
business premises.
No insurance was offered to [Martinez-
Santiago] for personal injury in this case, and therefore Kane
is inapposite on these facts.”
38 F.Supp.3d at 513.5
Here, as in Martinez-Santiago, Defendant’s provisions
broadly release Defendant from liability “for any personal
injuries or property damage sustained by Customer and/or
4
“Businesses are in the best position to maintain their premises for the safe
use of customers, and enforcing the exculpatory provision would give Public
Storage permission to be careless — negligent, reckless — in the maintenance
of its property.” Id.
5 In Martinez-Santiago, plaintiff’s guest had slipped on a patch of ice in
front of the defendant storage facility and injured himself. Id. at 504.
When plaintiff’s guest brought suit against the defendant storage facility,
defendant sought indemnification from plaintiff. Id.
21
Customer’s guests while on” Defendant’s property and provide for
indemnification for “any and all manner of claims for damages or
lost property or personal injury[.]”
20)6
(Rental Agreement ¶¶ 4,
Moreover, Plaintiff was given no opportunity to elect
insurance for personal injuries.
Consequently, Kane is
inapposite on the facts, and Plaintiff has stated a violation of
a clearly established legal right.7
Second, Defendant argues essentially that a provision that
would not be enforced by a court cannot form the basis for a
TCCWNA violation.
(DMTD at 16)
In New Jersey, “a contract will
not be construed to indemnify the indemnitee against losses
resulting from its own negligence unless such an intention is
6
It is of no importance to Plaintiff’s TCCWNA claim that his actual damages
relate to his property and not to any claims of personal injury. A plaintiff
“sufficiently state[s] a [TCCWNA] claim, even in the absence of actual
damages” where he is “able to show that [the provision at issue] violated a
clearly established legal right[.]” McGarvey, 486 Fed.Appx. at 278.
7
The broadness of the language in Defendant’s exculpatory clause also
distinguishes this case from two others that upheld exculpatory clauses:
Stelluti v. Casapenn Enterprises, LLC, 203 N.J. 286 (2010) and Sauro v. L.A.
Fitness Int’l, LLC, No. CIV. 12-3682 JBS/AMD, 2013 WL 978807 (D.N.J. Feb. 13,
2013). In Stelluti, the New Jersey Supreme Court upheld an exculpatory
clause on the grounds that participants in sports activity “assume some risk
because injury is a common and inherent aspect of the activity.” Stelluti,
203 N.J. at 307. In Sauro, the district court upheld an exculpatory clause
because the waiver of liability released defendant “from liability ‘for any
loss or damage . . . to the fullest extent by law,’” permitting the agreement
to be only ‘as broad and inclusive as is permitted by the law of the State of
New Jersey.’” Sauro, 2013 WL 978807 at *7. Here, the use of a storage
facility is not an inherently dangerous activity in which a customer assumes
risk of personal injury, nor does Defendant’s exculpatory clause contain any
language limiting a customer’s waiver of liability to only the extent
permitted by law. See Martinez-Santiago, 38 F.Supp.3d at 514-15. Instead,
the language is broad, precluding liability “for any personal injuries or
property damage sustained by Customer and/or Customer’s guests” while on
Defendant’s premises (emphasis added).
22
expressed in unequivocal terms,” Ramos v. Browning Ferris Indus.
of S. Jersey, Inc., 103 N.J. 177, 191 (1986)(citations omitted),
and Defendant’s provisions here express no such intention.
Consequently, Defendant’s Indemnity and Insurance provisions
would likely not be construed to preclude a personal injury
negligence claim.
However, TCCWNA claims are not directed toward the actual
construction or enforceability of a given provision but rather
the misleading effect such a provision may have on a potential
plaintiff prior to litigation, discouraging otherwise viable
suits by falsely suggesting the law precludes them.
Accordingly, Martinez-Santiago rejected an argument similar to
Defendant’s, emphasizing that “[a]lthough . . . [the] broad
exculpatory provision [at issue] is not permitted under New
Jersey law, it purports to be enforceable in the lease
agreement” and therefore is “the kind of provision that TCCWNA
was designed to address.”
38 F. Supp. 3d at 515.
Here,
Defendant’s Indemnity of Owner provision and Exculpatory Clause
discourage suits, whether or not the provisions are enforceable,
and therefore fall directly within the TCCWNA’s ambit.
Because a plaintiff’s right to bring a personal injury suit
based on premises liability is clearly established, and
Defendant’s Indemnification and Insurance provisions purport to
preclude such a suit in violation of that right, Defendant’s
23
motion to dismiss Plaintiff’s TCCWNA claim will be denied as it
pertains to these two provisions.
v. Waiver of Jury Trial Provision
Finally, Plaintiff alleges that Defendant’s Waiver of Jury
Trial provision improperly requires Plaintiff, on behalf of
himself and third parties, to waive any rights to a jury trial.
(Id. ¶¶ 32-33)
The provision reads:
Owner and Customer waive their respective rights to
trial by jury of any action at law or equity brought
by either Owner against Customer or Customer
against Owner or Owner’s agents or employees,
arising out of, or in any way connected to, this
Rental Agreement, Customer’s use of the Space or
premises.
The waiver applies to any claim for
bodily injury, loss of or damage to property, or
the enforcement of any remedy under any law,
statute or regulation. This jury trial waiver is
also made by Customer on behalf of any of Customer’s
agents, guests or invitees.
(Rental Agreement ¶ 21)
Plaintiff brings his TCCWNA claim with regard to the last
sentence of the Waiver of Jury Trial provision in particular,
which waives a jury trial “on behalf of any of Customer’s
agents, guests or invitees.”
A right to a trial by jury is
clearly established, but it is equally established that
Plaintiff may waive that right for himself by agreement.
Johnson v. Wynn’s Extended Care, Inc., 2014 WL 5292318, at *6
(D.N.J. Oct. 15, 2014)(rejecting Consumer Fraud Act claim based
on consumer contract provision extinguishing right to jury trial
24
because “a party can voluntarily waive its rights to a jury
trial”)(citation omitted).
It is less clear when Plaintiff may
waive a jury right on behalf of third parties.
See Tracinda
Corp. v. DaimlerChrysler AG, 502 F.3d 212, 225 (3d Cir.
2007)(finding that contracting party did waive jury trial rights
for third party agents but distinguishing Paracor Fin. Inc. v.
Gen. Elec. Capital Corp., 96 F.3d 1151 (9th Cir. 1996) in which
third parties were not agents of the contracting party).
In any case, there is no clearly established right that is
violated by the waiver of a jury trial on behalf of third
parties.8
Defendant’s provision therefore does not implicate the
TCCWNA, and the Court will grant its motion to dismiss
Plaintiff’s TCCWNA claim based on this provision.
b. Insurance Addendum
On January 11, 2013, in addition to the Rental Agreement,
Defendant allegedly required Plaintiff to sign an Insurance
Addendum to obtain insurance as a prerequisite of leasing
storage space.
(Am. Compl. ¶¶ 38, 40)
8
Plaintiff raises several
The Court also recognizes that while the TCCWNA seeks to counter misleading
provisions that discourage plaintiffs from bringing suits that would
otherwise raise viable complaints, there is no indication that an
unenforceable waiver of a jury trial would have that effect. Unlike
Defendant’s Indemnification and Insurance provisions, which may lead
plaintiffs to erroneously believe they are barred from bringing suit
altogether, Defendant’s Waiver of Jury Trial provision is unlikely to
preclude potential plaintiffs from consulting with an attorney. Such
plaintiffs may then either challenge the waiver’s enforceability or proceed
with their suit without a jury.
25
allegations with regard to this agreement, but Defendant moves
to dismiss only the claim that Defendant received a portion of
Plaintiff’s monthly premium without proper licensing, in
violation of the Insurance Producer Licensing Act (“IPLA”),
codified in relevant part at §§ 17:22A-299 and 17:22A-41(b).10
Plaintiff asserts that Defendant is not licensed to “sell,
solicit, or negotiate insurance” or to “accept a commission,
service fee, brokerage or other valuable consideration for
selling, soliciting or negotiating insurance” in New Jersey, as
IPLA requires.
(Id. ¶¶ 41-47, 49-52)
Defendant moves to
dismiss on the grounds that Defendant is in fact properly
licensed, and even if it were not, that IPLA provides Plaintiff
no private right of action.
(DMTD at 32-33)
Defendant’s first argument rests on a factual question.
Defendant asserts that Sovran Acquisition LP, the manager and
owner of the entity that owns the facility used by Plaintiff,
“holds a limited lines license to sell, solicit or negotiate
insurance for personal property in self-storage facilities from
New Jersey’s Department of Banking and Insurance.”
(DMTD at 32)
9
N.J.S.A. § 17:22A-29 provides: “A person shall not sell, solicit or
negotiate insurance in this State unless the person is licensed for that line
of authority in accordance with this act.”
10
N.J.S.A. § 17:22A-41(b)
service fee, brokerage or
soliciting or negotiating
to be licensed under this
provides: “A person shall not accept a commission,
other valuable consideration for selling,
insurance in this State if that person is required
act and is not so licensed.”
26
However, Plaintiff questions the relationship between Sovran
Acquisition LP and Defendant as well as whether the scope of
that entity’s “limited lines license” covers the type of premium
Defendant allegedly collected from Plaintiff.
at 26-27 (emphasis in original))
(Pl.’s Opp. Br.
These factual questions are
inappropriate at this stage of litigation.11
The Court therefore
limits its analysis of this claim to Defendant’s second argument
only.
In its second argument, Defendant asserts that IPLA affords
Plaintiff no private right of action.
(DMTD at 33)
“The New
Jersey Supreme Court has concluded that there is no private
right of action under IPLA.”
Ensey v. Gov't Employers Ins. Co.,
No. CIV.A. 12-07669 JEI, 2013 WL 5963113, at *4 (D.N.J. Nov. 7,
2013) reconsideration denied, No. CIV.A. 12-07669 JEI, 2014 WL
941359 (D.N.J. Mar. 11, 2014)(citing Lemelledo v. Beneficial
Management Corp. of America, 150 N.J. 255, 272 (1997) (“The IPLA
concerns the licensing of insurance agents.
It vests the
Department of Banking and Insurance with power to revoke or to
refuse to renew a license and to impose civil penalties on
licensees who violate any provision of the statute or who engage
11
Defendant suggests that the question of Sovran Acquisition LP’s
relationship with Defendant may be resolved by examining the exhibits to
Plaintiff’s Complaint but does not address the scope of the limited lines
license. (DMTD at 33-34)
27
in any type of fraudulent activity in the sale of insurance.
It
does not create a private cause of action.”)).
Plaintiff argues that the TCCWNA allows a plaintiff to
bring suit against a seller for a contractual “provision that
violates any clearly established legal right of a consumer or
responsibility of a seller.”
N.J.S.A. § 56:12-15.
Specifically, § 56:12-17 provides:
Any person who violates the provisions of this act
shall be liable to the aggrieved consumer for a
civil penalty of not less than $100.00 or for actual
damages, or both at the election of the consumer,
together with reasonable attorney's fees and court
costs.
Plaintiff alleges that Defendant’s contractual provision
requiring a portion of Plaintiff’s insurance premium without the
appropriate license violates the TCCWNA, because it violates the
responsibility of a seller – specifically, Defendant’s
responsibility to comply with IPLA’s licensing requirements.
However, as Defendant replies, “courts have prohibited the use
of New Jersey’s consumer protection statutes to pursue the
backdoor enforcement of IPLA.”
(DMTD at 34 (citing Henderson v.
Hertz Corp., 2005 WL 4127090, at *5 (N.J. Super. App. Div. June
22, 2006)(dismissing CFA claim based on IPLA violation since
IPLA enforcement is “for the Commissioner”)).
28
Defendant’s motion to dismiss Plaintiff’s TCCWNA claim
relating to the Insurance Addendum, insofar as it is premised on
an IPLA violation, will therefore be granted.
c. Notice to Vacate
Finally, on July 2, 2014, Plaintiff asserts that Defendant
required Plaintiff to sign a Notice to Vacate releasing
Defendant from all liability upon vacating the storage space.
(Am. Compl. ¶¶ 71-72, 74-75)
The Notice to Vacate also
“unconscionably misrepresents” that Plaintiff is barred from
bringing a claim against Defendant for any personal injuries or
property damage sustained at the storage facility, that
Plaintiff is required to hold Defendant harmless and indemnify
Defendant for any personal injuries resulting from Defendant’s
negligence, and that Plaintiff has waived a right to a jury
trial on behalf of himself and third parties who never signed
the agreement.
(Id. ¶ 75)
For the same reasons that apply to the Exculpatory Clause
and the Indemnity of Owner provision of the Rental Agreement,
the Court will deny Defendant’s motion to dismiss Plaintiff’s
claims regarding the provisions that attempt to bar Plaintiff
from bringing personal injury or property damage suits or to
require Plaintiff to indemnify Defendant for suits resulting
from Defendant’s negligence.
For the same reasons that apply to
the Waiver of Jury Trial provision of the Rental Agreement, the
29
Court will grant Defendant’s motion to dismiss Plaintiff’s
claims regarding the waiver of a right to a jury in the
Insurance Addendum.
B. New Jersey Consumer Fraud Act Claims
The CFA provides:
The act, use or employment by any person of any
unconscionable commercial practice, deception,
fraud,
false
pretense,
false
promise,
misrepresentation, or the knowing, concealment,
suppression, or omission of any material fact with
intent that others rely upon such concealment,
suppression or omission, in connection with the
sale or advertisement of any merchandise or real
estate, or with the subsequent performance of such
person as aforesaid, whether or not any person has
in fact been misled, deceived or damaged thereby,
is declared to be an unlawful practice
N.J.S.A. § 56:8-2.
The CFA “has been repeatedly recognized to be remedial
legislation which should be construed liberally.”
International
Union of Operating Engineers Local No. 68 Welfare Fund v. Merck
& Co., 192 N.J. 372, 377 (2007).
To state a claim under the
CFA, plaintiff must allege sufficient facts to demonstrate: (1)
unlawful conduct; (2) an ascertainable loss; and (3) a causal
relationship between the unlawful conduct and the ascertainable
loss.
Id. at 389–391.
“[The] CFA does not require proof that a
consumer has actually relied on a prohibited act in order to
recover.
In place of the traditional reliance element of fraud
and misrepresentation, we have required that plaintiffs
30
demonstrate that they have sustained an ascertainable loss.”
Id. at 391.12
Here, Plaintiff states that Defendant violated the CFA when
Defendant allegedly received insurance premiums without proper
licensing; sold insurance that purported to cover losses that
were actually excluded; and failed to provide insurance
contracts or Certificates of Insurance as required by § 56:82.22.
(Am. Compl. ¶ 17)
Defendant moves to dismiss Plaintiff’s
CFA count on the same grounds it moves to dismiss Plaintiff’s
TCCWNA claims, addressed above, but also because Plaintiff
“cannot show any ascertainable loss” as the CFA requires.
at 36)
(DMTD
Moreover, Defendant argues that Plaintiff cannot show
that his alleged loss — property damage of at least $5,000 and
insurance premium payments of at least $126 (Am. Compl. ¶¶ 75-
12
Fed. R. Civ. P. 9(b), which “imposes a heightened pleading requirement for
allegations of fraud, including CFA claims, over and above that required by
Rule 8(a),” does require that “in all averments of fraud or mistake, the
circumstances constituting the fraud or mistake shall be stated with
particularity.” Mickens v. Ford Motor Co., 900 F. Supp. 2d 427, 435 (D.N.J.
2012) Plaintiff must “state the circumstances of the alleged fraud with
sufficient particularity to place the defendant on notice of the precise
misconduct with which it is charged,” meaning that plaintiff must “plead or
allege the date, time, and place of the alleged fraud or otherwise inject
precision or some measure of substantiation into a fraud allegation.”
Frederico v. Home Depot, 507 F.3d 188, 200 (3d Cir. 2007)(internal quotation
and citation omitted). “Plaintiff must also allege who made the
misrepresentation to whom and the general content of the misrepresentation.”
Lum v. Bank of Am., 361 F.3d 217, 224 (3d Cir. 2004) (internal citation
omitted). Here, Plaintiff has satisfied this heightened pleading standard by
precisely identifying which provisions of which agreements contain the
misrepresentations he alleges caused his harm.
31
79) — “were or could have been caused by the subject provisions
in the documents.”
(DMTD at 36)
The “low threshold for determining the existence of an
ascertainable loss” is “broadly defined as embracing more than a
monetary loss.
An ascertainable loss occurs when a consumer
receives less than what was promised.”
Thiedemann v. Mercedes-
Benz USA, LLC, 183 N.J. 234, 244 (2005)(internal quotation marks
and citations omitted).
Here, Plaintiff alleges that he paid
$126 of premiums for insurance that promised to cover water
damage, including the kind of mold and mildew that ultimately
damaged his property.
(Id. ¶¶ 61, 64, 78)
Instead of such
coverage, however, he received coverage so limited as to be
“meaningless” given the purpose for which he purchased it.
¶¶ 65-66)
(Id.
Further, Plaintiff alleges that the agreements at
issue contain the misrepresentations that induced him to make
this purchase, and if he had “been provided with copies of the
insurance contracts and/or Certificate of Insurance as
represented would be done in the Insurance Addendum,” he “would
not have purchased such insurance or paid the premiums list
[sic] on the Insurance Addendum.”
(Id. ¶ 59)
Based on these allegations, Plaintiff has stated an
ascertainable loss caused by Defendant’s alleged unlawful
conduct.
Defendant’s motion to dismiss Plaintiff’s CFA claim
based on the alleged misrepresentations regarding the scope of
32
insurance coverage and the failure to provide insurance
contracts or a Certificate of Insurance will therefore be
denied.
Defendant also moves to dismiss Plaintiff’s CFA claim
insofar as it is premised on Defendant’s alleged IPLA violation.
As already discussed with regard to Plaintiff’s TCCWNA claims
(supra, at 28-29), IPLA provides no private cause of action and
the consumer fraud statutes cannot provide a “backdoor” to do
so.
Accordingly, Defendant’s motion to dismiss Plaintiff’s CFA
claims based on an IPLA violation will be granted.
VI. Conclusion
For the reasons set forth above, Defendant’s motion will be
granted in part and denied in part.
An appropriate Order
accompanies this Opinion.
Date: July 16, 2015
s/ Joseph E. Irenas
_
JOSEPH E. IRENAS, S.U.S.D.J.
33
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