TD AUTO FINANCE LLC v. CINEMA CAR II, INC.
OPINION. Signed by Judge John Michael Vazquez on 12/14/16. (sr, )
Not for Publication
UNITED STATES DISTRICT COURT
DISTRICT OF NEV JERSEY
TD AUTO FINANCE LLC,
Civil Action No. 13-4230
CINEMA CAR II, INC.
John Michael Vazguez, U.S.D.J.
THIS MATTER comes before the Court by way of the Motion for Partial Summary’
Judgment filed by Plaintiff TD Auto Finance LLC (“TDAF”) and the Cross-Motion for Summary
Judgment filed by Defendant Cinema Car II, Incorporated (“Cinema”). D.E. 54, 61. The Court
reviewed all submissions made in support and in opposition to the motions,’ and considered the
motions without oral argument pursuant to Fed. R. Civ. P. 78(b) and L. Civ. R. 78.1(b). For the
reasons stated below, Plaintiffs motion is GRANTED and Defendant’s motion is DENIED.
FACTUAL AND PROCEDURAL BACKGROUND
Cinema’s original response to TDAF’s statement of material facts and Cinema’s statement of
material facts in support of its cross motion did not comply with the requirements of L. Civ. R.
56.1(a). D.E. 61-I. The Court provided Cinema with an opportunity to submit appropriate
documents. which Cinema filed on September 13, 2016. D.E. 69, 70. The Court also provided
TDAF with an opportunity to refile its response to Cinema’s revised statement of facts in support
of its cross-motion. TDAF filed its revised response (“Response to DSOMF”) on September 20,
2016. D.E. 75.
Plaintiff is an automobile finance company “that offers indirect new and used vehicle
financing through an extensive network of[dJealers.” Plaintiffs Statement of Undisputed Material
Facts (“PSOMF”) 91 [D.E. 55). Defendant is a New Jersey corporation located in Westwood,
New Jersey “that indirectly sells and leases automobiles” and was a dealer in TDAF’s network.
2-3. From approximately June 4, 2012 to January 2, 2013, Cinema “participated in the
TDAF Retail Installment Contract and Lease Program” which was governed by the Retail
Installment Contract and Lease Program Agreement (the “Program Agreement”). Id.
such, Cinema “odginate[d] motor vehicle retail installment contracts” (“RlCs”)2 through vehicle
sales to individual purchasers, and then sold “RlCs that complied with the express terms and
conditions of the Program Agreement” to TDAF. Id.
Some of the RICs TDAF purchased from Cinema indicated that individual purchasers
bought additional insurance coverages, including service contracts and GAP plans, at the time of
the vehicle purchase. Declaration of William L. Reid III in Support of Plaintiff [TDAF]’s Motion
for Partial Summary Judgment (“Reid Decl.”)
19-20 [D.E. 57]. A service contract is an extra
insurance or warranty that “covers the costs associated with vehicle repair, including parts, labor,
and/or sales tax, for certain repairs or replacements[.]” Id.
17. A GAP plan is another type of
insurance that “pay[s]-off any deficiency between amounts paid for collision coverage and owed
on financing in the event a vehicle is declared a total loss.” Id.
The Program Agreement, which was executed by the parties on June 4, 2012 and governed
by New Jersey law, set forth the terms under which TDAF would purchase RICS from Cinema.
Pursuant to the Program Agreement. Cinema agreed to a number of
A RIC is a “contract entered into between a consumer and a car dealer, whereby the consumer
agrees to purchase a vehicle and pay over time.” PSOMF ¶ 5 n.J.
representations and warranties regarding each RIC that was purchased by TDAF.
representations and warranties relevant to this motion include the following:
[Cinema) has furnished [TDAF] with credit information received by [Cinema]
with respect to the Customer and the [RIC], and such information is true, complete
The Customer, the Vehicle and the provisions of the [RIC] correspond in all
respects with the Customer, the Vehicle and the provisions of the proposed contract
for which approval was granted by [TDAF].
The Customer has accurately represented his or her identity and all other relevant
information on the [RIC], the credit application and all other documents and the
Customer has not misappropriated the identity or information of another
Any extended warranty insurance or service contract that may have been purchased
from or through [Cinema], and included in the [RIC], is in MI force and effect.
[Cinema] properly completed the [RIC], and the [RIC] contains all required
information, which is correct and accurate in all respects.
In the event a [RIC] includes a charge for any type of standardized plan or
insurance policy for ancillary products, plans or services approved by [TDAF]
[Cinema] represents and warrants that Customers charged for Coverage received
PSOMF ¶96-9. The Purchase Agreement also set forth the remedies available to TDAF if Cinema
breached the contract. The parties agreed that in the event of a material breach, Cinema must
immediately satisfy its guaranty and indemnity obligation, or alternatively, repurchase each
affected RIC. Id.fl 11-12. The Purchase Agreement also establishes that TDAF is entitled to
recover reasonable attorneys’ fees and costs associated with enforcing the terms of the Program
Six months after the parties executed the Program Agreement, “the New York Department
of Motor Vehicles notified TDAF that an individual attempted to use fraudulent documents to
register and obtain a license plate for a vehicle relating to a RIC that Cinema
sold to TDAF.”3
17. Because of this incident, “TDAF initiated an audit of the RICs that Cinema
under the Program Agreement.” Id.
sold to it
18. This audit revealed a number of issues with the RICs,
and ultimately resulted in this litigation. The RICs that were identified as problematic through
TDAF’s investigation fall into three categories: Schedule A Contracts, Schedule B Contracts, and
Schedule C Contracts.
Schedule A Contracts: The TDAF investigation revealed that twenty-five RICs “did not
have the necessary [s]ervice [c]ontracts and/or GAP [p]lans in place as required by the Program
23. TDAF alleges that each of the RICs at issue represents that a service
contract and/or GAP plan was in place when, in fact, there was no such coverage. Specifically,
TDAF alleges that fourteen RICS do not have service contracts in place, three are missing GAP
plans, and eight are missing both GAP coverage and a service contract. Reid Decl. Ex. C. TDAF
provided documentation to demonstrate that the outstanding amount of financing due and owing
for the Schedule A RICs is S75 1,629.46. PSOMF ¶ 54.
Cinema contends that all of the Schedule A RICs had the required service contracts and
GAP plans in place. Although Cinema did not provide TDAF with the underlying service contracts
or GAP plan agreements, it did give TDAF “warranty declaration pages” for each of the service
contracts and GAP plans at issue in Schedule A. Cinema alleges that these declaration pages
demonstrate that the coverages were actually in place. Statement of Undisputed Facts of [Cinema]
The vehicle at issue, a Porsche Panamera, was recovered by law enforcement in Texas and was
taken into possession by Hartford Insurance Company. Declaration of Guy J. Carnazza (“Camazza
DecI.”) ¶J 16, 19-20. Cinema denies that it was aware of the identify theft when the vehicle
purchase occurred. Cinema, however, fired the employee who was involved in the sale because it
was concerned that the employee’s carelessness “would harm the relationship between TDAF and
Cinema.” Camazza Dccl. ¶ 18.
in Support of Cross-Motion for Partial Summary Judgment (“DSOMF”)
5, 10 [D.E. 69]. In
addition, Cinema alleges that TDAF has not suffered any damages relating to the Schedule A RICs
because the vehicles are either paid in full or the purchaser is making timely payments. Id.
Schedule B Contracts: TDAF’s investigation also revealed that two RICs it purchased
from Cinema “did not have the required GAP [p]lans in place and the vehicles in question were
totaled leaving a deficiency between the available automobile collision coverage and the amounts
due and owing to TDAF under the RICs.” PSOMP
is $9,492.24. Id.
The deficiency for the Schedule B RICs
Cinema also denies that the Schedule B RICs did not have GAP coverage
and states that the warranty declaration pages it produced establish that GAP coverage existed.
Moreover, Cinema alleges that four vehicles have been paid in full after the
insurance company declared the vehicle a total loss and “a GAP coverage claim was pending” as
to one of the RICs at issue. Id.
Schedule C Contracts: Through its investigation, TDAF also ascertained that some RICs,
two of which are at issue in this litigation, involved incidents of alleged identity fraud or contained
misrepresentations from customers. One of the RICs included in Schedule C is associated with
the Porsche Panamera referenced in note 3. PSOMF ¶ 52; Reid DecI. Exs. M-N. As for the second
RIC, TDAF alleges that, first, different employers and income were listed on the RIC and a related
application and, second, that a vehicle trade-in was listed on the RIC but trade-in money was never
Reid DecI. Ex. N. In total, TDAF alleges that it lost $154,093.81 from
the Schedule C RICs. PSOMF
through identify theft (DSOMF
56. Cinema acknowledges that the Panamera was purchased
15), but otherwise denies that it “facilitated the financing of any
motor vehicle knowing that the information
provide[d] by the customer was not truthful,
accurate, and complete.” Del s Br. at 4-5 [D.E. 62].
TDAF and Cinema had multiple meetings to discuss the audit findings. On March 27,
2013, TDAF requested that Cinema provide evidence of the service contract and GAP coverage at
issue “in a form satisfactory to [TDAF] in [TDAF’s] sole discretion,” or repurchase all the RICs
at issue. PSOMF
29-30, 32, 35. Cinema did not repurchase any of the RICs and failed to
provide evidence that was satisfactory to TDAF. Id.
TDAF subsequently filed this lawsuit on July 10, 2013. TDAF’s complaint asserts two
breach of contract claims for the Schedule A and B RICs, due to Cinema’s failure to obtain the
service contract and GAP plan coverage as represented in the RICs, as well as a third breach of
contract claim for the Schedule C RlCs due to the false or misleading information contained in the
RICs. TDAF also asserted claims for promissory estoppel and unjust enrichment. See Complaint
[D.E. 1]. During discovery, Cinema failed to produce any underlying contracts for the allegedly
missing coverages. Cinema did, however, produce service contract and GAP plan “declaration
5-6, 10. Cinema contends that these declaration pages establish that the
additional coverages existed for the Schedule A and B RICs. Id. Cinema also contends that it
“self-insured” the service contracts and a company called After Market Sales Are Profitable
(“After Market”) was the warranty administrator. DSOMF
Declaration of Joe F. Irizary
15 [D.E. 6 1-4]. Cinema insists that GAP coverage was provided by one of
four unnamed coverage providers. ldzarry Decl.
Cinema’s current representation that it self-insured the service contracts and used four
unnamed companies to provide the GAP plans, however, is not the first or even second explanation
as to how it provided the coverage. On April 12, 2013, Cinema represented that the required
service contracts were provided by Auto Source of Toms River and that the GAP plans were
provided by GMACI Advantage Programs.
Instead of providing TDAF with
documentation to confirm this statement, Cinema “suggest[ed] that a representative of [TDAF]
contact the representative
for each of the entities” to confirm that the required coverages exist.
Reid Deci. Ex. J. When TDAF contacted the two entities, it was unable to ascertain whether the
coverage was in place. PSOMF
Cinema continued to provide inconsistent infom-jation and limited documentary support
during discovery. In response to TDAF’s first set of interrogatories, Cinema stated that coverage
was provided by entirely different entities than it had first represented: the service contracts were
provided by After Market and Auto Source of America, while the GAP policies were purchased
through Gap Care Advantage and American Heritage Insurance Services. Id.
During his deposition, Guy J. Camazza, the president of Cinema, testified that Cinema
provides and self-insures the service contracts
which is Cinema’s current position. Camazza
further testified that despite self-insuring the service contracts, Cinema does not keep reserves for
service contract costs. Camazza testified that instead Cinema draws from its operating budget for
service contract costs. Camazza Dep. 80:1-15 [RE. 66]. But again, Cinema failed to provide any
evidence to substantiate its claim of self-insurance or, for that matter, to explain why it had made
two different representations in the past. As for the GAP plans, Cinema’s current position is that
“coverage was placed through one of four coverage providers that [Cinema] used at the time.”
TDAF now seeks summary judgment pursuant to Federal Rule of Civil Procedure 56 for
its three breach of contract claims. D.E. 54. In terms of relief. TDAF wants Cinema to repurchase
the Schedule A RICs for the outstanding amount due as well as pay monetary damages regarding
the Schedule B and C RICs. Sec PIP s Br at 21-22 [D.E. 56]. TDAF also seeks attorneys’ fees and
costs pursuant to the Purchase Agreement. Id. at 34-35. Cinema filed a brief opposing TDAF’s
motion and also filed a cross-motion for summary judgment. Cinema. however, does not seek
summary judgment as to any of TDAF’s counts. Instead, Cinema requests summary judgement
as to vehicles relevant to TDAF’s claims. [D.E. 6 1-62]. Through its cross-motion, Cinema “seeks
an Order dismissing the vehicLes which have been paid in Ml and an Order dismiss[ing] the
vehicles which are.
in a current [payment] status.” DePs Br. at 6. Cinema also seeks an order
dismissing the vehicles that TDAF alleges are missing service contracts or GAP coverage because
it provided evidence of the applicable coverage. Id. at 5-6.
SUMMARY JUDGMENT STANDARD
A moving party is entitled to summary judgment where “the movant shows that there is no
genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”
Fed. R. Civ. P. 56(a). A fact in dispute is material when it “might affect the outcome of the suit
under the governing law” and is genuine “if the evidence is such that a reasonablejury could return
a verdict for the non-moving party.” Anderson v. Liberty Lobby,
U.S. 242, 248 (1986).
Disputes over irrelevant or unnecessary facts will not preclude granting a motion for summary
judgment. Id. “In considering a motion for summary judgment, a district court may not make
credibility determinations or engage in any weighing of the evidence; instead, the non-moving
party’s evidence ‘is to be believed and all justifiable inferences are to be drawn in his favor.”
Marina v. Inc/us. Crating Co.. 358 F.3d 241, 247 (3d Cir. 2004) (quoting Anderson, 477 U.S. at
255)). A court’s role in deciding a motion for summary judgment is not to evaluate the evidence
and decide the truth of the matter but rather “to determine whether there is a genuine issue for
trial.” Anderson, 477 U.S. at 249.
A party moving for summary judgment has the initial burden of showing the basis for its
motion and must demonstrate that there is an absence of a genuine issue of material fact. Celotex
Catrett, 477 U.S. 317, 323 (1986). After the moving party adequately supports its motion,
the burden shifts to the nonmoving party to “go beyond the pleadings and by her own affidavits,
or by the depositions, answers to interrogatodes, and admissions on file, designate specific facts
showing that there is a genuine issue for trial.” Id. at 324 (internal quotation marks omitted). To
withstand a properly supported motion for summary judgment, the nonmoving party must identify
specific facts and affirmative evidence that contradict the moving party. Anderson, 477 U.S. at
250. “[hf the non-movant’s evidence is merely ‘colorable’ or is ‘not significantly probative,’ the
court may grant summary judgment.” Messa
Omaha Prop. & Cas. Ins. Co., 122 F. Supp. 2d
523, 528 (D.N.J. 2000) (quoting Anderson, 477 U.S. at 249-50)).
Ultimately, there is “no genuine issue as to any material fact” if a party “fails to make a
showing sufficient to establish the existence of an element essential to that party’s case.” Celotex
Corp., 477 U.S. at 322. “If reasonable minds could differ as to the import of the evidence,”
however, summary judgment is not appropriate. SeeAnderson, 477 U.S. at 250-51.
The parties agree that the Program Agreement is governed by New Jersey law. See PSOMF
13. To establish a breach of contract under New Jersey law, “a plaintiff has the burden to show
that the parties entered into a valid contract, that the defendant failed to perform his obligations
under the contract and that the plaintiff sustained damages as a result.” Murphy v. hnplicito, 392
N.J. Super. 245, 265 (App. Div. 2007). There is no dispute that the parties entered into the Program
Agreement, a valid and unambiguous contract.4 PSOMF
The dispute is whether Cinema
properly performed its contractual duties and if TDAF incurred damages.
1. Breach of Contract for Counts I and II (Schedule A and B RICs)
a. Breach of the Program Agreement
TDAF argues that through the Program Agreement, Cinema “represented and warranted
that customers charged for coverages
under the RICs being sold, actually received the
coverages.” PIP s Br. at 24-25. TDAF asserts that Cinema breached the Program Agreement
because it sold RICs that indicated that a service contract and:or GAP plan was in place when, in
fact there was no such coverage. PIP s Br at 24-25, 31. Cinema counters that TDAF’s allegation
“is contrary to the evidence contained in the record.” Del’s Br. at 9. Specifically. Cinema argues
that “the warranty declaration pages
the declaration of Joe F. Irizarry, and the testimony of
establish that the service warranties were in place,” and GAP coverage
existed. Id. at 10. This evidence, however, fails to establish or create a genuine issue of material
fact that Cinema provided the service contracts or GAP coverage as represented.
Irizarry, the Business Manager at Cinema, first states that the service warranties were
provided by After Market.
Marchionni, the owner of After Market,
however, testified that After Market does not provide service contracts for vehicles purchased
through Cinema. Marchionni testified that After Market is only involved after a claim for service
is made and that its sole role is to adjudicate claims. DSOMF
¶ 7; see also
the event of a mechanical problem with a covered vehicle, Mr. Marchionni as the warranty
administrator makes the determination if the repair is a covered item. If the determination is made
Cinema makes no challenge as to the meaning or import of the pertinent language found in the
that the repair is covered, [Cinema] is then obligated to have the repair made at its own cost.”).
lrizarv claims that Cinema is self-insured and After Market is the warranty administrator. Idzary
Decl. 115; sec also Carnazza Dep. 80:1-15 (stating that Cinema self-insures the service contracts).
this statement is internally inconsistent with the prior paragraph in lrizary’s declaration, and
Cinema fails to produce any evidence to substantiate its assertion that it self-insures the service
contracts. As for the alleged lapse in GAP coverage, Irizarry states that “GAP coverage was placed
through one of four coverage providers that [Cinema] used at the time.” lHzary Deci.
Neither ldzarry nor Cinema, however, provide any other information, such as the names of the
four coverage providers, much less documents reflecting the coverage.
Irizary also states that the warranty declaration pages correspond with each of the vehicles
at issue in Schedule A, B, and C. Id.
¶1 14, 18. As discussed, Cinema contends that these
declaration pages establish that the coverages existed. DSOMF ¶15, 10. The warranty declaration
pages, however, fail to substantiate Cinema’s assertion that it actually provided service contracts
and GAP coverage.5 First, the vehicles listed in the declaration pages do not correspond with the
Schedules A and B RICs. TDAF alleges that twenty-three RICs in Schedule A and B are missing
service contracts. Reid Decl. Exs. C, D (listing missing coverages in Schedule A and B). Cinema,
however, provided service contract warranty declaration pages for twenty-seven vehicles. lrizarry
TDAF also argues that Cinema cannot rely on the declaration pages to prove the existence of the
service contracts and GAP plans because doing so violates Federal Rules of Evidence 100 1-1002,
or the “best evidence rule.” PIP s Reply at 9-10 [D.E. 66]. TDAF asserts that the best evidence
rule requires a party to produce the original, underlying document to prove its contents, and that
the failure to produce the underlying document results in inadmissibility. Id. But Cinema
apparently does not attempt to use the declaration pages to demonstrate the contents of the
underlying service contracts or GAP plans. Instead, Cinema states that the declaration pages
themselves establish that the coverage existed. Del’s Br. at 10. Consequently, TDAF’s argument
is inapplicable in light of Cinema’s claim.
Dccl. Exs. A-B. In addition, TDAF alleges that nine RIGs in Schedule A and B are missing both
a service contract and GAP coverage. Reid Deci. Ex. C, D. But, of the information produced by
Cinema, only five service contract warranty declaration pages and GAP coverage warranty
declaration pages have matching VIN numbers. Irizarry DecI. Exs. A-B. Consequently, the Court
is unable to determine whether and how the warranty declaration pages correspond with the
vehicles listed in Schedule A and B.
Moreover, the warranty declaration pages do not establish that Cinema self-insured the
service contracts or that GAP coverage was provided by four (unidentified) providers. First, one
of the warranty declaration pages is titled “Contract Application” and is from GWC Warranty, a
company that Cinema has never mentioned before. See Irizarry Dccl. at 15. Cinema fails to
provide any additional evidence to establish whether the application was approved or even
submitted. In addition, three of the warranty declaration pages that allegedly demonstrate that
GAP coverage existed discuss an extended service plan and do not mention GAP coverage. Id. at
54-57. Moreover, these three declaration pages are from Autosource, a company that Cinema
previously told TDAF it used for service contracts before Cinema took its current position, i.e. that
it self-insures. PSOMF
Cinema also provided two Autosource declaration pages and one
from AUL Administrators6 to demonstrate that service contracts existed, despite its most recent
contention that it actually self-insures the service contracts. ldzarry Deci. at 14, 26, 31. Finally,
the majority of the declaration pages that allegedly establish that service contracts existed appear
to be contracts between After Market and the vehicle purchaser. These declaration pages provide
that “the dealer is entitled to receive compensation from [After Market] for services rendered in
The declaration page from AUL is entirely blank except for the vehicle purchaser’s signature
block. Irizarry DecI. at 14.
the sale of this [contract],” and “[After Market’s] performance under this [contract] is insured
separately...” See, e.g., Id. at 9. This language apparently indicates that After Market had some
contractual relationship with the vehicle purchasers. Cinema, however, appears to contend that
After Market is merely a claims administrator. ldzary DecI.
¶ 19; Reply Br. Ex.
B, Camazza Dep.
Consequently, the Court concludes that Cinema fails to present a genuine issue of material
fact contradicting TDAF’s proof that Cinema failed to provide the service contracts and GAP
coverage as was represented in the RICs. Because Cinema represented in the Program Agreement
that it would provide such coverage (PSOMF
6, 9), this failure constitutes a breach of the
Program Agreement and no genuine issue of material facts exists to the contrary. Thus, as to
Counts I and 11, TDAF is entitled to summary judgment regarding liability.
b. TDAF’s Damages as a Result of the Breach
TDAF argues that it “bargained to receive RICs that were complete, accurate and not
misleading.” P1? s Br. at 25. When TDAF purchased RlCs that did not actually have the service
contracts and/or GAP plans as indicated, TDAF did not receive the benefit of its bargain. RI. As
a result, TDAF argues that pursuant to the plain terms of the Purchase Agreement, Cinema must
repurchase the Schedule A RICs and indemnify it for losses related to the Schedule B RICs. Id. at
Count I Damages (Schedule A RICs)
Cinema argues that TDAF did not incur any damages because fifteen vehicles are ftilly
paid off and twelve vehicles are in current payment status. Def’s Br. at 6. At the outset, TDAF is
not seeking to recover damages for vehicles that have been paid in Ml and did not include any
such vehicles in Schedule A.
Response to DSOMF
11; compare Lodato Deci. Ex. A-V
(deposition excerpts addressing accounts that are paid in full), wit/i Reid Dee!. Exs. C (providing
list of Schedule A account numbers).
In addition, whether vehicle purchasers are in current
payment status does not impact TDAF’s claim for relief Service contracts and GAP plans affect
the overall purchase price of a RIC and increase the amount of financing that TDAF indirectly
provided. PIt’s Br. at 25. In other words, TDAF paid more to purchase RICs that included a
service contract and/or GAP coverage. Consequently, “TDAF suffered damages as a result of
breach of the Program Agreement because it was providing financing for [sjervice
[ejontracts and GAP [p]lans that did not exist.” Response to DSOMF ¶ 17. Cinema fails to provide
any evidence that genuinely and materially counters TDAF’s argument that it was damaged when
it paid a premium for the RICs that supposedly contained the additional coverage.
TDAF seeks specific performance requiring that Cinema repurchase the Schedule A RICs
because the parties expressly agreed to the right of repurchase if a material breach occurred. As a
result, TDAF argues that Cinema should be ordered to repurchase the RICs for $751,629.46, which
is the outstanding amount due and owing to TDAF. PIt’s Br. at 26-30. Cinema argues that specific
performance is not appropriate and compelling it to repurchase the RICs at issue “would result in
extreme prejudice.” Det’s Br. at 12.
Under New Jersey law, “[sjpecific performance is not an automatic remedy for a breach of
contract, but rather a matter within the trial court’s discretion which must be exercised on the basis
of equitable considerations.” Ballantvne House Assocs. v. City of Newark. 269 N.J. Super. 322,
334 (App. Div. 1993) (citing Barn’ Al. Dechtman, Inc.
Sic/paul Corp., 89 N.J. 547. 551-52
(1963)). A party seeking specific performance must establish the legal right to such relief by
showing that: (I) the contract at issue is valid and enforceable; (2) the terms of the contract are
clear, such that the court can determine with reasonable certainty, “the duties of each party and the
conditions under which performance is due;” and (3) an order compelling performance would not
be “harsh or oppressive.” Marioni v. 94 Broathivv, Inc., 374 NJ. Super. 588, 598-99 (App. Div.
2005) (internal citations omitted).
A court should not award specific performance based on the mere showing of the right to
Instead, it must “examine the facts, circumstances, and incidents underlying the
parties’ dispute to determine whether and how to fashion relief that serves the equities.” Tartron
Fin-N.J Inc. v. Herring Land Grp., LLC, No. 06-2585, 2012 WL 1079613, at *19 (D.N.J. Mar.
30, 2012). This consideration “may modify the relief sought or, perhaps, entirely prevent its
exercise.” Id. (quoting Marioni, 374 N.J. Super. at 599). Consequently, when considering these
equitable factors, the court must also (1) “appraise the respective conduct and situation of the
parties;” (2) consider the clarity of the agreement; and (3) determine “the impact of an order
compelling performance, that is, whether such an order is harsh or oppressive to the defendant or
whether a denial of specific performance leaves plaintiff with an adequate remedy.” Marioni, 374
N.J. Super. at 600 (internal citations omitted). In short, there must be “a conscious attempt on the
part of the court of equity to render complete justice to both parties.” i’d. Further, a court “will
often direct performance of such a contract because, when there is no excuse for the failure to
perform, equity regards and treats as done what, in good conscience, ought to be done.” Id. at 60001.
The Program Agreement provides that “should any representation or warranty made
prove to be false or incorrect in any material respect, [TDAF] shall have the right to
insist that [Cinema] immediately pay and satisfy [TDAF’s] guaranty and indemnity obligations
under this Agreement, or alternatively to repurchase each affected [RIC].” PSOMF
addition, “[Cinema] agrees to guarantee payment in fill of, or alternatively to repurchase, each
[RIC] that is affected or may be affected by [TDAF’Sj failure to perform its obligations under this
Agreement, or by a material breach of any of[TDAF’S] representations or warranties as provided
herein.” Reid DecI. Ex. A at 6. As discussed, there is no dispute that the Program Agreement is
valid, enforceable and clear. In addition, the Program Agreement provides TDAF with alternatives
as to the form of relief available to it upon a breach. “Alternative” is defined as “offering or
webster.comldictionary/altemative (last visited December 13, 2016). Thus, TDAF has the clear
right to choose between enforcing Cinema’s indemnity obligations and the repurchase option.
Consequently, TDAF’s request that Cinema should be ordered to repurchase the Schedule A RlCs
is consistent with its rights under the Program Agreement.
Cinema argues that repurchase is not an appropriate remedy because the additional
coverages it failed to provide “are not essential to the contract.”7 Defs Br. at 11-12. Cinema
further contends that The BliJfs at Ballyowen, LLC
Toll Brothers, Incorporated, a case that
allegedly supports TDAF’s position, is distinguishable. Sec No. A-3285-09T3, 2010 WL 4823819
(N.J. App. Div. Nov. 30, 2010). The Court disagrees. In Toll Brothers the court determined that
the contract at issue “careffihly crafted what would happen if Toll defaulted” and provided plaintiff
with an “unambiguous choice of a single equitable remedy” of specific performance. Id. at 9.
Consequently, the Appellate Division concluded that the trial court erred when it created a new
remedy by providing monetary damages to plaintiff The court stated that because the contract
explicitly defined the sole available remedy, plaintiff “was contractually bound
This argument essentially addresses liability, rather than remedy, because it concerns the
materiality of contract terms. Other than its bare assertion, Cinema provides no authority or
analysis supporting its position that the additional coverage was not material to the Program
performance in the first instance.” Id. at *10. Here, the Program Agreement “carefully crafied”
TDAF’s remedies if Cinema breached any of the representations or warranties. PSOMF
Cinema also appears to argue that specific performance is unequitaNe under the facts at
hand. DePs Br. at 12. Cinema alleges that specific performance would be oppressive because
TDAF failed to commence actions against defaulting customers to collect any deficiencies. DePs
Br. at 12. This approach however, does not take into account the premiums paid by TDAF when
purchasing RICs that it believed had the necessary coverage for the additional insurance.
Moreover, there is nothing in the Purchase Agreement indicating that TDAF should or must seek
relief from the customers. To the contrary, the Purchase Agreement makes clear that TDAF’s
remedy lies with Cinema. Finally, the suggested approach fails to account for the additional costs
TDAF would have to incur, including potential litigation, if TDAF chose to seek relief from the
customers. In fact, the customers may have a valid defense to any such action if he/she could show
that they never sought or purchased the additional coverage or if they paid for an additional
coverage that was never actually provided.
Further, it is unlikely that Cinema will suffer any material damage or harm in repurchasing
the Schedule A RICs. Cinema can continue to collect payments from vehicle purchasers; Cinema
itself even admits that tweLve vehicles at issue are in current payment status. DSOMF
these purchasers continue to make timely payments, the only risk Cinema faces is if a situation
arises in which service and/or GAP coverage is needed. This risk, however, is entirely of Cinema’s
own doing because it falsely represented that such coverage existed so it should be forced to bear
the risk itself. In addition, as it alleges TDAF should have done, Cinema can commence actions
against defaulting customers if it so chooses. Consequently, the Court concludes that requiring
Cinema to repurchase the Schedule A RICs is not harsh or oppressive.
As a result, the Court will order Cinema to repurchase the Schedule A RICs at their current
value, i.e. the value in light of the payments TDAF has received to date.
Count IL Damages (Schedule B RICs)
Schedule B includes two RICS that did not have the represented GAP coverage. After the
vehicles were declared totaled, the insurance payments were insufficient to cover the amount still
owed to TDAF. PSOMF
“As a result, and in absence of the valid GAP [pjlans that were
represented to be in place, TDAF was unable to collect the balance due on its financing after
insurance covered the losses.” PlIs Br. at 31. TDAF claims that the Program Agreement requires
Cinema to indemnifSi TDAF for its losses, that is, 59,434.52.
Although Cinema denies that TDAF suffered damages as a result of the missing GAP
coverage, it does not provide any genuine and material evidence contradicting TDAF’s statement
that there are outstanding balances for the Schedule B RICs.
Cinema alleges that TDAF
representative William Butterfield testified that a GAP coverage payment was pending for one
12. But Butterfield did not actually state that a GAP payment was pending.
Rather, he testified that primary insurance was paid on the account but that “we’re waiting on
confirmation of GAP.” Lodato DecI. Ex. 0.. Butterfield Dep. 41:10-24. Cinema does not provide
any additional evidence to demonstrate that GAP coverage was confirmed or that a payment was
Cinema also argues that Butterfield testified that four vehicles were paid off by insurance
proceeds, which demonstrates that GAP coverage existed. Del s Br. at 10. This argument is
misplaced because the vehicles Butterfield was discussing are not included in Schedule B.
Compare Reid DecI. Ex. D (listing the account number contained in Schedule B), with Lodato
DecI. Exs. F, I, K, L, M (Butterfield’s testimony as to the account numbers that are paid off).
Further, information that may establish whether GAP coverage existed for other RICs does not
demonstrate that the coverage was in effect for the Schedule B RlCs. Indeed, if GAP coverage
had actually been in place, as Cinema argues, then TDAF would not have suffered the losses it
seeks to recoup here.
received. TDAF avers that there was no GAP coverage. Because TDAF has not received payment
for this RIC, it is entitled to summaryjudgement. In addition, Cinema does not address the second
Schedule B RIC. Consequently, Cinema fails to provide sufficient evidence to create a genuine
issue of material fact as to whether TDAF suffered damages due to Cinema’s failure to provide
GAP coverage for both Schedule B RICs.
As discussed, the Program Agreement requires Cinema to indemnify TDAF for losses that
result from a breach of the Agreement.9 Therefore, the Court will enter summary judgment in
favor of Plaintiff for Count II of the complaint and judgment will be entered for the amount of
2. Breach of Contract for Count IlL (Schedule C RICs)
TDAF also seeks summary judgment as to Count III, which alleges that Cinema sold two
RICs that contained information that was
incomplete and inaccurate.” Pit’s Br. at 32.
TDAF alleges that in one RIC “the credit application frimished to TDAF was not true, complete
Specifically. TDAF alleges that the RIC and the related credit
application listed different employers and income, and that the vehicle trade listed in the RIC never
occurred. Id. The second RIC in Schedule C relates to the Porsche Panamera discussed in note 3.
TDAF states that Cinema acknowledged the “[identity) theft deal and accepts responsibility.” Id.
TDAF argues that by selling these RlCs, Cinema breached multiple representations in the Program
Agreement. Pit’s Br. at 32. Cinema acknowledges the one instance of identity fraud as to the
The guaranty and indemnity obligations require Cinema to indemnify TDAF and hold it harmless
from “any and all claims, suits, obligations, damages, losses, costs, [and] expenses
nature and kind, that may be asserted against or incurred by such Indemnified Persons arising out
of or in any way occasioned by this Agreement.” Reid DecI. Ex. A at 5-6.
Cinema does not dispute the amount that it would owe for the Schedule B RICs if a breach
Porsche Panamera but othenvise denies that it breached the Provrarn Agreement as to the Schedule
C RICs. DePs Br. at 4-5. Cinema denies having any knowledge of fraudulent conduct or that it
“facilitated the financing of any motor vehicle knowing that the information being provided by the
customer was not truthfiul, accurate and complete.” Id.
Again, there is no dispute that the parties entered into a valid, unambiguous contract
through which Cinema represented that each vehicle purchaser “is a bonn fide individual,” and
that “the Customer has accurately represented his or her identity and all other relevant information
on the Contract, the credit application and all other documents and the Customer has not
misappropdated the identity or information of another individual.” PSOMF
Cinema argues that it did not breach the Program Agreement because the ultimate decision
of whether to grant or deny credit information was made by TDAF. Defs Br. at 5. Even if this is
true, it in no way affects Cinema’s obligation pursuant to the Program Agreement. Cinema also
appears to argue that it did not breach the Program Agreement for the RIC associated with the
Porsche Panamera because it terminated the sales representative who was involved with the
Id. at 4.
Cinema thither states that after the vehicle was recovered by law
enforcement, Hartford Insurance Company took possession of the car. Id. The Court is at a loss
as to how these facts are relevant or negate Cinema’s obligations under the Program Agreement.
Cinema represented that each vehicle purchaser was a bona fide individual and that the customer
information in each RIC was truthful and accurate. PSOMF
6. Cinema fails to provide any
evidence by which a reasonable jury could conclude that this did not occur with the Schedule C
RICs. Therefore, Cinema breached the Program Agreement.
TDAF also established that it was damaged by this breach because there are outstanding
balances for both Schedule C RICs. PSOME 156. As discussed, the Program Agreement requires
Cinema to indemnify TDAF for losses that result from a breach of the Agreement. Again, Cinema
presented no evidence creating a genuine issue of material fact as to the damages TDAF suffered.
Consequently, the Court xviii grant summary judgment for Count III of the complaint and will enter
judgment in the amount of S 154,093.81.’’
3. Cinema’s Cross-Motion for Summary Judgment
Cinema filed a cross-motion for summary judgment requesting that the Court dismiss
multiple RICs, not counts, from this matter. Cinema argues that the Schedule A RlCs that were
allegedly missing service contracts be dismissed because the warranty declaration pages establish
that the coverage existed and “there has been no damage as to TDAF.” Defs Br. at 6. Cinema
also argues that it provided evidence that GAP coverage existed, so seeks an order dismissing the
RICS that were allegedly missing this coverage “as there has been no damage to TDAF.” Id. Last,
Cinema seeks for the Court to dismiss the RICs in which the vehicles have been paid in full and
those in which payments are current “as TDAF has sustained no damages for any of those
Cinema’s arguments are addressed above in connection with TDAF’s motion. In sum,
Cinema fails to establish, or create a genuine issue of material fact, that the service contracts and
GAP coverage existed, or that TDAF did not suffer damages as a result of Cinema’s breach of the
Program Agreement. In addition, the vehicles that are paid in full are not part of this litigation and
whether vehicle purchasers make timely car payments is irrelevant. Consequently, Defendant’s
cross-motion for summary judgment is denied.
4. Attorneys’ Fees
Cinema does not contest the amount it would owe for the Schedule C RICs if a breach occurred.
TDAF also argues that it is entitled to reasonable attorneys’ fees and costs pursuant to the
express terms of the Program Agreement. Pit’s Br. at 34-35. Although New Jersey law generally
disfavors fee-shifting, “a prevailing party can recover [attorneys’] fees if they are expressly
provided for by statute, court rule. or contract.” Packard-Bamberger & Co., Inc.
N.J. 427, 440 (2001).
Collier. 1 67
When a contract provides for fee shifling, the applicable contractual
provision “should be strictly construed in light of our general policy disfavoring the award of
attorneys’ fees.” Litton Indus., Inc. v. IMO Judas., Inc., 200 N.J. 372. 385 (2009). Here, the
Program Agreement expressly states that if TDAF is required to retain an attorney to protect its
rights under the contract, it would be entitled to recover reasonable attorneys’ fees and costs
associated with enforcing the terms of the Agreement. PSOMF
Cinema offers no facts, law,
or argument to counter TDAF’s position. TDAF is the prevailing party and is protecting its rights
pursuant to the Program Agreement. Consequently, TDAF is entitled to an award of reasonable
attorneys’ fee and costs incurred in connection with this action. The Court will grant summary
judgment and enter judgment in favor of Plaintiff for an award of reasonable attorneys’ fees and
For the foregoing reasons and for good cause shown Plaintiffs Motion for Partial Summary
Judgment (D.E. 54) is GRANTED and Defendant’s Cross-Motion for Summary Judgment (D.E.
62) is DENIED. An appropriate form of order accompanies this opinion.
Dated: December 14, 2016
John r\4ichael Vazqui, U..D.J.
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