The New Jersey Supreme Court decision in Henry Sanchez v. Fitness Factory Edgewater, LLC, has clarified the application of the Retail Installment Sales Act (RISA). The Court reversed the Appellate Division panel below, which had found that “to fall within RISA’s purview, a contract for the sale of goods or services must involve financing.  The decision also overturns a previous Appellate Division decision in Mellet v. Aquasid, which had held that RISA applies only to contracts involving an “ownership interest in an object or service.” 

Writing for a unanimous court, Justice Fernandez-Vina explained that the text of the statute does not limit the scope to contracts that include financing arrangements, or to sales involving an “ownership interest” in goods or services.

The decision had the effect of extending the application of the RISA statute, along with potential liability provided by the statute.  But it also highlighted the flaws in the “purposive” analysis that had caused the lower courts to depart from the text of the statute.  As Justice Fernandez-Vina explained, “our first step in interpreting a statute is to look to the actual words of the statute, giving them their ordinary and commonsense meaning.”

The Mellet court found that “health club members are not in the category of consumers RISA is designed to protect.”  The prior appellate division decision emphasized that the purpose of RISA was to regulate “the charges associated with the time sale of goods.”  The Department of Banking and Insurance (DOBI) had argued as amicus that “installment contracts charging no interest pose very little risk to consumers and, thus, do not require RISA’s protections.” 

No matter.  The text of the statute itself includes no such limitations.  Apart from certain express exclusions – services covered by the “Home Repair Financing Act,” and insurance premiums financing – the statute applies generally to contracts involving installment payments. 

The decision should serve as a useful reminder that the legislature and governor do not enact intent.  They enact the words that make up the statute, and we can expect the courts to give full effect to the meaning of those words.  Assurances that “no one” is seeking to extend the statute to practices or parties outside the scope of legislators’ particular intent are worthless and should be treated as such.