It is well-established precedent that, so long as it does not violate public policy, New Jersey courts will enforce a choice of law provision contained in the parties’ contract.  Nonetheless, consistent with the Restatement (Second) of Conflicts of Laws § 187 (1969), a New Jersey court will not enforce a choice of law provision if:  1) the chosen state does not have a substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties’ choice of that state; or 2) applying the law of the chosen state would be inconsistent with a fundamental policy of a state that has a materially greater interest than the chosen state in the resolution of the particular issue and which would be the state to have its law applied if the parties did not have a choice of law provision.  The Appellate Division relied upon those principles in Eisenberger v. Boston Service Co., Inc., No. A-2003-10 (App. Div. Aug. 24, 2011), in reversing the trial court’s decision to not apply the choice of law provision that the parties had agreed to in a automobile leasing agreement.

The agreement provided in pertinent part that the plaintiff agreed that “the law of the State in which I reside at the time I sign this lease … shall govern this lease and my obligations.”  There was no dispute that the plaintiff lived in New Jersey when she signed the lease in 2003 and that the defendant’s principal place of business was also located in New Jersey.  Five years later the plaintiff moved to Florida, bringing her car along with her.  At the conclusion of her lease she returned the vehicle to the defendant in New Jersey.  The defendant sent the plaintiff an invoice in the amount of $3,712.71 for damages that it asserted were beyond normal wear and tear.

The plaintiff did not pay but instead chose to file suit in Middlesex County.  Her complaint claimed that the defendant violated the following:  1) New Jersey Consumer Protection Leasing Act; 2) New Jersey Truth in Consumer Contract, Warranty and Notice Act; and 3) New Jersey Consumer Fraud Act.  She further alleged that the defendant charged her for end-of-lease property damage and did not notify her of her right to challenge those charges.

The defendant responded to the complaint by filing a motion for failure to state a claim upon which relief could be granted.  The trial court ruled that Florida law applied and granted the motion.  Specifically, the court determined that even though New Jersey courts normally apply choice of law provisions, the facts of this case satisfied an exception because Florida had an overriding interest in protecting its consumers.  The trial court therefore dismissed the plaintiff’s complaint because the plaintiff did not establish a claim for relief under Florida law.  The Appellate Division reversed.

After reviewing the aforementioned choice of law principles and the exceptions when New Jersey courts will not enforce such a provision, the Appellate Division explained that “the choice of law provision explicitly stated that the lease agreement would be governed by the law of the residence of the lessee ‘at the time [the lessee] sign[s] this lease,’ and it is undisputed that [plaintiff] was a resident of New Jersey when she signed the lease.”  The court reasoned that the first Restatement exception did not apply because New Jersey had a substantial relationship to the parties and the transaction, stressing that the agreement was signed in New Jersey, the plaintiff lived in the State when it was signed, and that the vehicle was returned to New Jersey at the end of the lease.  The Appellate Division also found that the Restatement’s second exception did not apply because application of New Jersey law was not against the fundamental policy of Florida.  Moreover, the Appellate Division declared that New Jersey had a greater interest than Florida in regulating the lease.  Because the Appellate Division concluded that the plaintiff had stated a basis for relief under New Jersey law in her complaint, it reversed the trial court’s dismissal.