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Sanchez v. Fitness Factory Edgewater, LLC

Sanchez v. Fitness Factory Edgewater, LLC

Supreme Court of New Jersey

February 3, 2020, Argued; May 28, 2020, Decided

A-93 September Term 2018, 082834

Opinion

 [*257]   [**608]  JUSTICE FERNANDEZ-VINA delivered the opinion of the Court.

This case requires the Court to consider the application of the Retail Installment Sales Act, N.J.S.A. 17:16C-1 to -61 (RISA). Plaintiff Henry Sanchez brings this class action seeking relief based on RISA. He contends that the "initiation fee" charged in defendant Fitness Factory's gym membership contract, among other provisions, violates RISA.

 [**609]  The trial court dismissed Sanchez's complaint, finding that RISA did not apply to the contract because it was a contract for services. The Appellate Division affirmed. While acknowledging that RISA applies to some services contracts, the Appellate Division found that RISA applies only to contracts that [***8]  contain a financing arrangement. We disagree. By its terms, RISA applies to services contracts. Further, while the Department of Banking and Insurance (DOBI) urges us to find that there is a requirement that a contract include a financing arrangement to be covered by RISA, no such requirement is contained in the statute as written. We therefore reverse the judgment of the Appellate Division.

In March 2013, Plaintiff Henry Sanchez joined the Fitness Factory gym in Edgewater and signed the club's membership contract, entitling him to unlimited use of the Edgewater facility for twenty-four months.

 [*258]  The membership contract provided for two alternative payment methods. The first option was payment in full upon signing the contract. The second was referred to as the "Electronic Funds Transfer" option, which allowed the member to make monthly payments of $39.99. Only those members who chose the second option were required to pay an "initiation fee" of $29.99. At the conclusion of the twenty-four-month term, the member had the option of continuing membership on a month-to-month basis or terminating membership without penalty.

Sanchez opted for the funds transfer membership and paid the initiation [***9]  fee. At the end of the twenty-four months, Sanchez ended his membership without issue.

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242 N.J. 252 *; 231 A.3d 606 **; 2020 N.J. LEXIS 661 ***; 2020 WL 2758719

HENRY SANCHEZ, ON BEHALF OF HIMSELF AND OTHERS SIMILARLY SITUATED, PLAINTIFF-APPELLANT, v. FITNESS FACTORY EDGEWATER, LLC, FITNESS FACTORY ROCKAWAY, LLC, THE FITNESS FACTORY GROUP, LLC, AND DENNIS CIERI, DEFENDANTS-RESPONDENTS.

Subsequent History: Motion granted by Sanchez v. Fitness Factory Edgewater, LLC, 2020 N.J. LEXIS 985 (N.J., Sept. 9, 2020)

Prior History:  [***1] On certification to the Superior Court, Appellate Division.

Sanchez v. Fitness Factory Edgewater, LLC, 2019 N.J. Super. Unpub. LEXIS 783, 2019 WL 1500909 (App.Div., Apr. 4, 2019)

CORE TERMS

retail, financing arrangements, membership, installment contract, provisions, financing, contracts, services contract, retail seller, consumers, includes, plain language, regulates, retail buyer, differential, charge account, health club, installments, purposes, initiation fee, time-price, indicates, argues, aims

Governments, Legislation, Interpretation, Business & Corporate Compliance, Types of Commercial Transactions, Secured Transactions, Installment Contracts, Sales of Goods, Breach, Excuse & Repudiation, Application & Construction, Definitions, Security Agreements, Requirements