Opinion
DOCKET NO. A-4494-11T4
02-28-2013
LOCAL BAKING PRODUCTS, INC., individually and as the representative of a class of similarly situated persons, Plaintiff-Appellant, v. WESTFIELD RENTAL-MART, INC., d/b/a PARTY STOP COSTUME CORNER a/k/a WESTFIELD RENTAL MART, INC., Defendant. FARMERS INSURANCE COMPANY OF FLEMINGTON, Intervenor-Respondent.
Archer & Greiner, P.C., attorneys for appellant (Christopher T. Karounos, on the brief). White and Williams, LLP, attorneys for respondent (Paul Piantino, III, of counsel and on the brief; Geoffrey F. Sasso, on the brief).
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
Before Judges Axelrad and Sapp-Peterson.
On appeal from the Superior Court of New Jersey, Law Division, Essex County, Docket No. L-4701-09.
Archer & Greiner, P.C., attorneys for appellant (Christopher T. Karounos, on the brief).
White and Williams, LLP, attorneys for respondent (Paul Piantino, III, of counsel and on the brief; Geoffrey F. Sasso, on the brief). PER CURIAM
Plaintiff Local Baking Products, Inc. appeals from the Law Division's March 16, 2012 order granting permissive intervention to Farmers Insurance Company of Flemington (Farmers), decertifying the underlying class action filed against Farmers' insured for violations of the Telephone Consumer Protection Act (TCPA), 47 U.S.C.A. § 227, and dismissing the complaint with prejudice. As the judge neither articulated his reasoning in an oral decision nor issued a written opinion before or after the appeal was filed, we are unable to conduct an appropriate review of this order. See R. 1:7-4 (requiring a trial judge to articulate findings of fact and conclusions of law on matters including "every motion decided by a written order that is appealable as of right"); R. 2:5-1(b) (permitting a trial judge to file a supplemental opinion or written opinion stating findings of fact and conclusions of law in the absence of a prior statement, opinion, or memorandum within fifteen days after an appeal has been filed). Accordingly, we remand.
On June 5, 2009, plaintiff filed a putative class action complaint in the Superior Court, Law Division, Essex County, against defendant Westfield Rental-Mart d/b/a The Party Stop Costume Corner, a/k/a Westfield Rental Mart, Inc., seeking relief under the TCPA and the common law tort of conversion, alleging that on December 20 and 27, 2005, defendant sent a mass transmission of unsolicited facsimile advertisements to recipients, including plaintiff. Defendant was an insured under a business owners policy issued by Farmers, #B116859, with a policy period of May 22, 2005 to May 22, 2006. Farmers was never joined as a party to this lawsuit.
Defendant promptly tendered defense of the complaint to Farmers for coverage. By letter of June 29, 2009, Farmers responded that it was "taking no action to protect [defendant] in this legal matter" and advised that the policy "excludes all coverage for knowingly violating the law." Defendant wrote a second tender letter to Farmers on July 24, 2009, urging it to reconsider its position. Farmers apparently did not respond. On August 20, 2009, defendant's counsel filed an answer to the complaint.
On November 9, 2009, plaintiff sent correspondence to Farmers and to defendant's counsel referencing the putative class action lawsuit and demanding that Farmers settle the case for the policy's general aggregate limit of $2 million. On November 11, plaintiff received a letter from Farmers' counsel directing that all further communications to Farmers be sent to its attorney. The following day, counsel for plaintiff and Farmers had a telephone conversation in which the latter reiterated that Farmers would not defend or indemnify defendant, would not agree to a settlement demand, and made no offer to settle.
Plaintiff and defendant reached a settlement in January 2010, in which defendant stipulated to faxing over 30,000 unsolicited advertisements to almost 17,000 individuals representing the class during the period of December 1, 2005 through December 31, 2005, and that a finding of liability to the class under the TCPA, with statutory damages of $1500 per fax, would result in a damage award exceeding $47 million, which would bankrupt defendant and cause dissolution of its business. Defendant agreed to allow judgment to be entered in the amount of $14.9 million against it and in favor of the class. Plaintiff and the class agreed not to execute against defendant's non-insurance assets, even if a determination were made that defendant's insurance carrier(s) did not owe coverage or indemnity for the claims made in the litigation, and that the judgment would be enforceable only against the proceeds of defendant's insurance polic(ies). The agreement further provides that defendant assigned to the class all of its rights under all applicable insurance policies and against the insurers.
We assume this figure was based on the discretionary trebling of the $500 per fax damages for a willful violation. See 47 U.S.C.A. § 227(b)(3).
On January 20, 2010, plaintiff filed a motion before the trial court for certification of the class and preliminary approval of the settlement under Rule 1:6-2(d). Farmers nor its attorneys were provided formal notice of the motion, nor provided a copy of the proposed settlement agreement. By order of February 5, 2010, the court preliminarily approved the class action settlement and approved the class notice, expressly providing that opt-outs and motions to intervene be filed by March 25, 2010. The court scheduled April 23, 2010 as the final fairness hearing on the reasonableness of the settlement. The court issued an order for final approval of the settlement agreement and judgment on that date.
At some point Farmers obtained a copy of the February 5 order and Notice of Proposed Class Action settlement. However, rather than moving to intervene in that action, on or about March 2, 2010, Farmers filed a declaratory judgment complaint against plaintiff and defendant in the Superior Court, Law Division, Hudson County, alleging that under the policy and state law defendant was not entitled to coverage or a defense for the TCPA class action claims asserted by plaintiff. The February 5 order and Notice were referenced in and attached to the complaint. Farmers included among its allegations that defendant's assignment to plaintiff of its right to the insurance policy under the Settlement Agreement was a violation of the terms of the policy that provides "[n]o assignment of an interest here is binding on us without our written consent."
Farmers Ins. Co. v. Westfield Rental Mart, HNT-L-137-10.
On October 12, 2010, plaintiff in the underlying tort action moved to transfer the declaratory judgment action to Essex County. Farmers opposed the motion arguing the issues in the two actions were "vastly different[.]" By order of November 29, 2010, the court denied the venue transfer motion.
On July 19, 2011, during the declaratory judgment litigation, we decided Local Baking Products, Inc. v. Kosher Bagel Munch, Inc., 421 N.J. Super. 268 (App. Div.), certif. denied, 209 N.J. 96 (2011). In that case we surveyed jurisdictions where the question of private action remedies under the TCPA pursued through a class action have been addressed, noting that the reported decisions have varying results. Id. at 276-280. We ultimately affirmed the trial court's dismissal of the plaintiff's TCPA class action claims for unsolicited blast faxes advertising the defendant's food services received by approximately 4649 fax machines, concluding that a plaintiff may not maintain a class action to enforce this private cause of action. Id. at 271.
After the class action claims were dismissed by the trial court, judgment was entered in the plaintiff's favor for the $500 statutory damages. Kosher Bagel, supra, 421 N.J. Super. at 271.
While we expressed doubts whether the plaintiff could meet the commonality and typicality requirements for class action certification under Rule 4:32-1(a), we expressly held it could not meet "the more demanding criteria" of predominance and superiority. Id. at 280. We noted "that the same facts required to prevail on an individual TCPA claim - an unsolicited fax was received from a sender with whom the recipient had no prior business relationship - are identical to the facts that would have to be proven to merely identify a single class member." Id. at 281. We explained that under the TCPA, "by imposing a statutory award of $500, a sum considerably in excess of any real or sustained damages, Congress has presented an aggrieved party with an incentive to act in his or her own interest without the necessity of class action relief[,]" and that under New Jersey procedures, an individual litigant could quickly and inexpensively pursue a small claims case. Id. at 280-81.
On December 13, 2011, the Supreme Court denied certification. 209 N.J. 96 (2011). On February 15, 2012, Farmers moved to intervene under Rule 4:33-1 (as of right) or Rule 4:33-2 (permissively), and to decertify the class action, citing Kosher Bagel.
Rule 4:33-1, intervention as of right, provides:
Upon timely application anyone shall be permitted to intervene in an action if the applicant claims an interest relating to the property or transaction which is the subject of the action and is so situated that the disposition of the action may as a practical matter impair or impede the ability to protect that interest, unless the applicant's interest is adequately represented by existing parties.Farmers claimed that by entering into a settlement, the parties to the underlying action directly placed Farmers' property, i.e., the insurance policy, at issue. As to the second and third requirements, Farmers claimed it had no representation in the lawsuit, its interests were not protected at all as the parties' interests were directly adverse to Farmers', and the parties "consciously chose not to notify Farmers or obtain its approval before entering into a 'deal' which violates the language" of the policy and "purports to give an assignment of the policy" in violation of its express provisions. As to the last factor, defendant acknowledged that the motion was made post-judgment, but emphasized that the parties "entered into a consent judgment after minimal, if any, discovery was conducted[,]" rather than from a lengthy and full discovery period and trial. Defendant further noted that the class action claims were not "processed, paid or resolved by the class"; rather, they remained opened until disposition of the declaratory judgment action.
Rule 4:33-2, permissive intervention, provides:
Upon timely application anyone may be permitted to intervene in an action if the claim or defense and the main action have a question of law or fact in common. When a party to an action relies for ground of claim or defense upon any statute or executive order administered by a state or federal governmental agency or officer, or upon any regulation, order, requirement or agreement issued or made pursuant to the statute or executive order, the agency or officer upon timely application may be permitted to intervene in the action. In exercising its discretion the court shall consider whether the intervention will unduly delay or prejudice the adjudication of the rights of the original parties.Farmers reiterated its claims that its motion was timely filed and that granting this motion would not cause any further delay to a case that concluded without significant discovery or trial. Farmers additionally urged that granting its request for intervention would eliminate the need for subsequent litigation and should the TCPA class be decertified, the declaratory judgment action would also likely end.
In its motion for decertification of the TCPA class, Farmers cited our holding and rationale in Kosher Bagel and the Supreme Court's denial of certification of the opinion. Farmers further urged that the matter presented exceptional circumstances under Rule 4:50-1(f) to revisit the order as decertification of the class action will serve New Jersey's public policy favoring uniformity and predictability of result, and would avoid an unconscionable result in a case where the parties "purposely failed to advise [Farmers] of the proposed settlement and class certification."
Plaintiff opposed the motion, apparently arguing that the intervention motion was untimely, as it was filed nearly two years after final judgment was entered, despite the fact that Farmers had actual notice of the litigation, and that it lacked a significant interest in the subject matter because it declined to defend. Plaintiff further noted that Farmers had actual notice of the February 5, 2010 order and terms of the settlement, as they were referenced in Farmers' declaratory judgment action that it filed in a separate county within the intervention deadline contained in the order. Plaintiff additionally argued that even if intervention were proper, it would be inappropriate to reopen a nearly two-year-old final judgment based solely on a new Appellate Division decision and, alternatively, that Kosher Bagel was inapposite.
We glean these arguments from Farmer's responsive brief to the trial court, contained in its appendix, and plaintiff's arguments on appeal.
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Farmers' intervention motion had been filed pursuant to Rule 1:6-2(a) with a return date of March 2, 2012, requesting oral argument only if it received timely opposition papers. The record does not reflect discussions between counsel and the court respecting oral argument. Following briefing but without oral argument, the court signed Farmers' proposed order on March 19, 2012, striking the sentence granting intervention as of right but granting Farmers permissive intervention, decertifying the class action, and dismissing with prejudice the complaint filed by plaintiff individually and as the representative of a class of similarly situated persons. Although the order states that the matter was opposed, it provides no reference to an oral or written statement of reasons, and no written statement of reasons or other memoranda is appended to the order. Plaintiff appealed.
In their May 2012 case information statements, counsel noted the lack of oral findings or written opinion but represented that the judge would be filing a statement or opinion under Rule 2:5-1(b). However, by letter dated January 31, 2013, plaintiff's attorney advised that he "confirmed with [the trial judge] that he will not be filing a Supplemental Opinion and, to our knowledge, there are no further documents or submissions outstanding regarding this Appeal."
On appeal, plaintiff argues: (1) the judge erred in allowing intervention because Farmers' motion was untimely, Farmers has not met its burden to show that permissive intervention was proper, and Farmers abandoned any interest it had when it declined to defend; (2) there is no basis to reopen the judgment; (3) Kosher Bagel does not preclude a class settlement in a TCPA case; (4) even if post-judgment decertification were appropriate, there is no basis to dismiss plaintiff's claim; and (5) absent reversal and reinstatement, remand is appropriate for findings of fact and conclusions of law.
Rule 1:7-4 states, in pertinent part, that "in all actions tried without a jury, on every motion decided by a written order that is appealable as of right," "[t]he court shall, by an opinion or memorandum decision, either written or oral, find the facts and state its conclusions of law thereon[.]" The "[f]ailure to perform that duty constitutes a disservice to the litigants, the attorneys and the appellate court." Curtis v. Finneran, 83 N.J. 563, 569-70 (1980) (quotation marks omitted).
The trial court must clearly state its factual findings and correlate them with relevant legal conclusions, so the parties and appellate courts may be informed of the rationale underlying the conclusion and perform our reviewing function. Monte v. Monte, 212 N.J. Super. 557, 564-65 (App. Div. 1986). "In the absence of reasons, we are left to conjecture as to what the judge may have had in mind." Salch v. Salch, 240 N.J. Super. 441, 443 (App. Div. 1990). Furthermore, such an omission "imparts to the process an air of capriciousness which does little to foster confidence in the judicial system." Twp. of Parsippany-Troy Hills v. Lisbon Contractors, Inc., 303 N.J. Super. 362, 367 (App. Div.), certif. denied, 152 N.J. 187 (1997).
The necessity of such findings is critical in a case such as this involving an abuse-of-discretion standard of review. See Evesham Twp. Zoning Bd. of Adjustment v. Evesham Twp. Council, 86 N.J. 295, 299 (1981) ("R[ulel 4:33-2 on Permissive Intervention vests considerable discretion in the trial court."); U.S. Bank Nat'l Ass'n. v. Guillaume, 209 N.J. 449, 467 (2012) (holding that a "trial court's determination under [Rule 4:50-1] warrants substantial deference, and should not be reversed unless it results in a clear abuse of discretion").
We have significant concerns in this matter, the most significant being the trial court's apparent indifference to Rule 1:7-4, failure to provide any explanation whatsoever for his ruling, and conscious decision not to rectify this omission and file a written opinion stating findings of fact and conclusions of law as permitted by Rule 2:5-1(b). The court's failure to fulfill this obligation constituted a disservice to the litigants, attorneys, and the appellate court.
We also have concerns about the parties' strategies and actions in this case, including plaintiff not formally placing Farmers on notice of the January 20, 2010 motion to preliminarily approve the settlement, Farmers filing a separate declaratory judgment action in another county in March 2010 rather than moving to intervene in the class action litigation, and Farmers' significant delay in filing the motion for intervention and class decertification. The trial court had to consider these issues and make specific findings in order to analyze and balance the elements of permissive intervention, as well as analyze the law and policy considerations of decertifying the class and dismissing plaintiff's complaint in total. In the absence of oral argument or any explanation for the judge's order, we have no idea what, if any, facts or law were considered by the judge in making his determination.
We reject Farmers' suggestion to exercise original jurisdiction to remedy the trial judge's omission. Rule 2:10-5 provides that "[t]he appellate court may exercise such original jurisdiction as is necessary to the complete determination of any matter on review." Nevertheless, "[o]ur original
factfinding authority must be exercised only with great frugality and in none but a clear case free of doubt." Tomaino v. Burman, 364 N.J. Super. 224, 234-35 (App. Div. 2003) (quotation marks omitted), certif. denied, 179 N.J. 310 (2004). Considering the circumstances of this case, including that fact-finding may be necessary to resolve the matter, we decline to exercise original jurisdiction. We remand to the trial court to reconsider Farmer's motion and make findings and conclusions as required by Rule 1:7-4.
Remanded consistent with this opinion. We do not retain jurisdiction.
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION