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Fernandes v. Ramsey Nissan

A-3085-04T2 (N.J. Super. App. Div. 2005 (Unpublished)

ARBITRATION—Where a contract merely permits either party to elect arbitration by filing with the designated arbitration agency and no party does so, a court may resolve disputes because arbitration is not the exclusive dispute resolution procedure.

In litigation, a dispute arose about the applicability of an arbitration provision in an automobile lease. The dealer and the leasing company sought to enforce the arbitration provision. The consumer argued that the “arbitration clause [was] unenforceable because it [was] ambiguous and [did] not contain a definitive waiver of [the consumer’s] statutory right to a consumer fraud claim.” The lower court dismissed the consumer’s suit, finding that the dispute should have “gone to arbitration.” On appeal, the Appellate Division reversed.

According to the Appellate Division, the relevant portion of the arbitration provision provided the following: “... either you or we may choose to have the Dispute resolved by binding arbitration under the rules then in effect of the National Arbitration Forum… . The election to arbitrate may be made even if an action has been filed in court, so long as no judgment has been rendered… .” The rules of the National Arbitration Forum provide that arbitration begins by filing an “Initial Claim,” accompanied by the appropriate filing fee, with the Forum. According to the Appellate Division, by its expressed terms “the arbitration provision neither compels arbitration nor provides that a party waives all rights to prosecute a claim arising out of a lease in a court of law. Rather, the provision gives either party the option to elect or choose to resolve the dispute in arbitration under the rules of [the National Arbitration Forum]. Thus, so long as neither party has initiated a claim by filing with [the Forum], a court retains jurisdiction.” Here, neither the dealer nor the leasing company initiated arbitration proceedings in accordance with the Forum’s rules. Consequently, the lower court should not have dismissed the action because the lower court had subject matter jurisdiction and should have ruled on the consumer’s motion to strike the defendants’ answers by reason of their failure to participate in discovery. As to the definition of a “Dispute” under the leasing agreement, the Court believed that it was broad enough to encompass a consumer fraud action.

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