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Biederman v. Mitsubishi Motors Credit of America, Inc.

332 N.J. Super. 583, 753 A.2d 1251 (Law Div. 2000)

AUTOMOBILE LEASING—The Consumer Protection in Leasing Act does not apply to automobile leases beginning prior to June 21, 1995.

A consumer leased a car about six months before passage of the New Jersey Consumer Protection in Leasing Act (CPLA). Under the lease, it was a default to fail to make any payment when due and it was also a default to assign, sublease or transfer any of the consumer’s rights or obligations under the lease without prior written consent of the leasing company. Upon default, the leasing company had listed a number of its own rights in the leasing agreement, including the right to terminate the lease and to recover early compensation damages. Unbeknownst to the leasing company, the consumer subleased the vehicle. A few months later, the consumer missed two payments under the lease. The vehicle was repossessed and sold at auction. The consumer then brought an action against the leasing company, alleging violation of the CPLA. The leasing company argued that the Legislature expressly stated that the CPLA took effect on a specific date which was about six months after the leasing agreement had been signed. Therefore, it argued that the act had no retroactive effect. The Law Division pointed out that New Jersey courts favor prospective application of statutes, absent an unequivocal expression of legislative intent that the statute should have that effect, especially when property rights are affected. “Retroactive application is appropriate only when the legislature has so indicated, when the statute is ameliorative or curative, or where there are other compelling considerations which require retroactive application, such as where it would further the expectations of the parties.” The CPLA defines a “lease” as a contract or other agreement entered into after the CPLA’s effective date. Even though the act was intended to supplement the Consumer Fraud Act, the Court felt that a clear reading of the CPLA and the committee statement that accompanied the CPLA added only to the conclusion that the Consumer Fraud Act would be violated if the acts committed by the leasing company concerned a leasing agreement executed after the effective date of the CPLA. Consequently, the Court refused to apply the CPLA retroactively. The consumer also argued that the leasing company, by failing to provide her with notice of default, opportunity to cure the default and proper notice of sale, deprived her of the benefits of the lease and consequently, this was a violation of the implied covenant of good faith and fair dealing that is present in every contract. The Court disagreed, pointing out “the implied covenant of good faith and fair dealing does not foreclose the [leasing company] from exercising its rights under the lease upon default by the [consumer].” The covenant does not prevent the party from terminating the contract in accordance with its express provisions, irrespective of motive. Further, as has been stated by the New Jersey Supreme Court, “the implied covenant of good faith and fair dealing cannot override an express termination clause.” Here, the terms of the lease were clear and expressly stated that upon default by the consumer, the leasing company was entitled to terminate the lease and sell the vehicle without notice to the consumer. These clearly expressed clauses could not be overridden by the implied covenant of good faith and fair dealing.


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