PETER G. SHERIDAN, District Judge.
This matter is before the Court on Defendant, Vivint Solar, Inc.'s motion for summary judgment (ECF No. 12).
Plaintiff New Jersey Manufacturers Insurance Group ("NJM"), a New Jersey insurance company, and the owners of the home insured by it, George and Patricia Templer (collectively, "Plaintiff")
Plaintiff filed a Complaint with this Court on July 12, 2016 (ECF No. 1). Parties engaged in limited discovery
The facts leading to the incident alleged in this matter are summarized as follows.
For over twenty years, the Tramplers owned a residence covered by a homeowner insurance policy issued by NJM. In the spring of 2014, Patricia and George Trampler were approached by a Vivint Solar sales representative at their home. They met with the representative for an hour, however, they did not sign a contract on that day. On May 5, 2014, the Tramplers entered into a contract with Defendant. (ECF No. 12; Ex. F). The contract was for the design, installation, service and maintenance of a solar photovoltaic system on the Trampler property and for the purchase of electricity. (Ex. E, No. 10, 12; see also Ex. F, ¶ 1A, 2A). In exchange for the installation of the solar panels and system, the Tramplers were to pay Vivint Solar $0.119 per kWh plus applicable taxes for all energy produced by the solar photovoltaic system for two years. (Ex. F, ¶ 2A). The contract contained, among the other things, a waiver of subrogation clause on Paragraph 19, entitled "SUBROGATION," containing the following language:
(Ex. F, ¶ 19).
On August 29, 2014, during the installation process, a fire originated on the exterior of the home, on the root directly below what was identified as solar panel 2E in the area of an enphase interactive converter. (Compl. 5-8).
Summary judgment is appropriate under Fed. R. Civ. P. 56(c) when the moving party demonstrates that there is no genuine issue of material fact and the evidence establishes the moving party's entitlement to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). A factual dispute is genuine if a reasonable jury could return a verdict for the non-movant, and it is material if, under the substantive law, it would affect the outcome of the suit. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). 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." Marino v. Indus. Crating Co., 358 F.3d 241, 247 (3d Cir. 2004) (quoting Anderson, 477 U.S. at 255).
Once the moving party has satisfied its initial burden, the party opposing the motion must establish that a genuine issue as to a material fact exists. Jersey Cent. Power & Light Co. v. Lacey Twp., 772 F.2d 1103, 1109 (3d Cir. 1985). The party opposing the motion for summary judgment cannot rest on mere allegations and instead must present actual evidence that creates a genuine issue as to a material fact for trial. Anderson, 477 U.S. at 248; Siegel Transfer, Inc. v. Carrier Express, Inc., 54 F.3d 1125, 1130-31 (3d Cir. 1995). " [U]nsupported allegations . . . and pleadings are insufficient to repel summary judgment." Schoch v. First Fidelity Bancorp., 912 F.2d 654, 657 (3d Cir. 1990); see also Fed. R. Civ. P. 56(e) (requiring nonmoving party to "set forth specific facts showing that there is a genuine issue for trial"). Moreover, only disputes over facts that might affect the outcome of the lawsuit under governing law will preclude the entry of summary judgment. Anderson, 477 U.S. at 247-48. If a court determines, "after drawing all inferences in favor of [the non-moving party], and making all credibility determinations in his favor "that no reasonable jury could find for him, summary judgment is appropriate." Alevras v. Tacopina, 226 Fed. App'x. 222, 227 (3d Cir. 2007).
Defendant argues that each of NJM's insureds signed a valid and binding contract containing a waiver of subrogation clause and/or arbitration clause which acts as an absolute bar to Plaintiff's claims. (ECF No 12-3 pg. 5). Plaintiff argues that the subrogation waiver is unenforceable because it is a contract of adhesion. The Plaintiff also argues that the contract violates the New Jersey Truth-in-Consumer Contract, Warranty and Notice Act (NJTCCWNA). (ECF No. 17 pg.13). Because the Court agrees that the waiver of subrogation clause is unenforceable, Defendant's motion for summary judgment is denied.
This Court has defined the concept of subrogation in a recent decision, Allstate New Jersey Ins. Co. v. Avalonbay Communities, Inc., No. CV 16-5441, 2017 WL 1095473, at *2 (D.N.J. Mar. 22, 2017). There, Judge Walls stated,
The right to subrogation is not absolute, and parties may agree to waive or limit it. LIG Ins. Co. v. Bonanno Real Estate Grp. II, L.P., No. A-4489-11T4, 2013 N.J. Super. Unpub. LEXIS 1660, 2013 WL 3329746, at *3 (N.J. Super. Ct. App. Div. July 3, 2013).
Plaintiff argues that the contract at issue in this case does not meet the requirements mandated by N.J.S.A. 56:12-2. Pursuant to NJTCCWNA, N.J.S.A. 56:12-2, "[a] consumer contract... shall be written in a simple, clear, understandable, and easily, readable way." In determining whether a contract meets said requirements we review the guidelines provided by N.J.S.A. 56:12-10.
Among the requirements that may be considered to ensure compliance with N.J.S.A. 56:12-2 are:
N.J.S.A. 56:12-10. The main issue in question in this matter is the subrogation section. (Ex. F, ¶ 19).
Plaintiff alleges, among other violations, that the clause at issue, the subrogation waiver, was provided without an explanation of the legal meaning of "subrogation, violating N.J.S.A. 56:12-10(5). The parties dispute the legibility and size of the contract's text. Plaintiff argues that that contract did not meet the required font size mandated by the statute in N.J.S.A. 56:12-10(3). Defendant argues that the original contract was printed in legal size papers, while the copy provided to the Court was formatted to fit a regular size paper. Additionally, Defendant contends that the legibility of the contract is irrelevant as the Tramplers admitted to not reading the entirety of the contract before signing it, notwithstanding Paragraph 6 of the contract, entitled "NOTICE TO CUSTOMERS," and specifically section (C) of that paragraph, containing the following language:
(Ex. F, ¶ 6(C); see also Ex. E, No. 20)(Ex. A T20: 16-21:21; Ex. B, T. 45:2-6, T. 81:14-23). In response to this argument, Plaintiff cites to Peter W. Kero, Inc. v. Terminal Const. Corp., 6 N.J. 361, 368 (1951) which stands for the principle that when the execution of a contract has been procured by fraud the general rule that one who does not read a contract before signing cannot later avoid being bound by its terms does not apply.
Plaintiff also argues that the subrogation waiver that was part of the contract signed by the Tramplers should not be enforced because it was a contract of adhesion which imposes a separate affirmative duty on Plaintiff. The Court finds this argument to be persuasive.
"In New Jersey, courts enforce subrogation waivers based on the rationale that courts should not get in the way if parties waive their rights to subrogation because they `intended to shift the risks of loss to insurance policies which they undertook to procure." Allstate New Jersey Ins. Co.. v. Avalonbay Communities, Inc., 2017 WL 1095473, at *3 (citing Borate, 288 N.J. Super. at 347). "The rationale behind the validity of these waivers depends on the contracting parties having a meaningful choice in how to distribute liability." Id.
"A contract of adhesion is defined as one `presented on a take-it-or-leave-it basis, commonly in a standardized printed form, without opportunity for the `adhering' party to negotiate.'" Stelluti v. Casapenn Enterprises, LLC, 203 N.J. 286, 301, 1 A.3d 678, 687 (2010) (internal citation omitted.)
Allstate New Jersey Ins. Co., 2017 WL 1095473, at *3 (internal citations omitted). Courts will also consider "whether enforcement of the contract implicates matters of public interest." Stelluti, 203, N.J. at 301. Additionally, New Jersey courts have recognized that the knowledge and sophistication of a contracting party may be a factor in determining whether a contract is one of adhesion. See Owens-Illinois v. United Ins. Co., 264 N.J.Super. 460, 488 (App. Div. 1993).
We review the validity of the waiver also in light of its exculpatory nature. "As a threshold matter, to be enforceable an exculpatory agreement must `reflect the unequivocal expression of the party giving up his or her legal rights that this decision was made voluntarily, intelligently and with the full knowledge of its legal consequences.'" Stelluti, 203, N.J. at 304-05 (quoting Gershon v. Regency Diving Ctr., Inc., 368 N.J.Super. 237, 247, 845 A.2d 720 (App. Div. 2004). "Any doubts or ambiguities as to the scope of the exculpatory language must be resolved against the drafter of the agreement and in factor of affording legal relief." Gershon, 368 N.J. Super. at 247. (citations omitted).
New Jersey courts have identified four considerations, pertinent to the enforcement of an exculpatory agreement, stating that they will be enforced if:
Gershon, 368 N.J.Super. at 248, 845 A.2d 720 (citations omitted).
The contract in question in this matter was printed on a standardized form and concerned the sale of electricity. The contract was provided as a take-it-or leave it approach with an option to either contract for ten or twenty years. The Tramplers were equipped with inferior sophistication on the subject of the contract or its legal consequence. The Tramplers are both 64 years old and collecting social security. They likely were enticed by the prospective of saving money on electricity and entered the contract not fully understanding what it entailed.
The subrogation waiver is also against public interest because it fails to define subrogation, who the waiver is releasing from liability, its nature and its scope. It would be difficult for an individual unfamiliar with the purpose of this clause to assess the legal consequences that accepting it would lead to. Thus, there is public interest in preventing companies from shielding themselves from liability and damages suffered by those impacted by their negligence. Additionally, the language of the contract imposes a duty on the consumer to notify the insurance company on the agreed upon terms.
Given the unclear manner in which the subrogation clause in this matter was drafted, Plaintiff may be able to show that the contract constituted a contract of adhesion if it can show that the insured lacked meaningful choice in the acceptance of the subrogation waiver in the contract. See Stelluti v. Casapenn Enterprises, LLC, 203 N.J. 286, 301 (2010); See also Allstate New Jersey Ins. Co., v. Avalonbay Communities, Inc., 2017 WL 1095473, at *3.
Thus, the motion for summary judgment is denied.
THIS MATTER having been opened to the Court by Defendants' motions for summary judgment (see ECF No.12); and the Court having fully considered the submissions in support thereof, and any opposition thereto; and having considered the arguments of counsel; and for good cause shown;
