CONSUMER FRAUD LAW IN BERGEN AND PASSAIC COUNTIES: THE BROAD SCOPE OF NEW JERSEY'S CONSUMER FRAUD ACT

As I have explained many times in the past, New Jersey's Consumer Fraud Act (CFA)is conceived to be "one of the strongest consumer protection laws in the nation." The primary purpose of the CFA is to protect the consumer against loss resulting from fraudulent practices by persons engaged in the sale of goods and services.

In May, the Appellate Division decided a case involving a CFA claim filed by a homeowner against a "cleaning and restoration" service that was hired to remediate a finished basement damaged by a flood. After a protracted procedural history, the trial court issued a judgment in favor of the homeowner including over $40,000 in attorney fees and costs. The trial court also concluded that the homeowner did not have to pay the restoration company the balance of the contract price despite the fact that the work had been completed.(See prior blog postings on this issue). One of the major issues in the trial court's analysis of the controversy related to the fact that the remediation company failed to specifically identify the cost of the work in its contract. 

On appeal, the remediation company argued that it was not a home improvement contractor and as a result, it did not have any responsibility to follow the requirements of the statute that relates to home improvement contractors. (Statute). The company also said that the homeowner had received a windfall because of its technical breach when the court discharged the homeowner's responsibility to pay the balance of this contract's value.

In rejecting the remediation company's arguments, the court looked to the language of the Statute which defines material and service providers as those who remodel, alter, paint, renovate or restore residential property. The court then observed that the advertisement disseminated by the remediation company said rather clearly that it was a "cleaning and restoration" franchise. 

As to the second argument, the Appellate Division concluded that there was no evidence presented by the restoration company that would justify depriving the homeowner of the right under the CFA to obtain a dismissal of the restoration company's claim for payment.

New Jersey's Consumers Fraud Act: The Element of Materiality

New Jersey’s Appellant Division has decided a new that case addresses the question of materiality in the context of the state’s Consumer Fraud Act (CFA).  In that case, a homeowner sued a swimming pool contractor who installed a pool that caused flooding in his home because of the elevation of the pool.

The trial judge concluded that the pool installer violated the CFA because the pool installer did not consult with the homeowner about the pool’s elevation. He also concluded that the homeowner suffered damages that exceeded $67,000.  By the instruction of the CFA, that judgement was trebled. 

The case was reversed on appeal, however.  The court concluded that in order for a misrepresentation to be actionable  under the CFA, it must be material, while meant that the consumer had to show:  (a) a reasonable consumer considered the representation important in  making a choice; or (b) the person making the representation knew or should have known that the consumer would regard the matter as important in making a choice.

The appellant next observed that while the elevation of the pool would be an important issue for anyone in deciding  to install a pool, the homeowner had to establish that the pool installer promised to consult with him/her as to the elevation of the pool before the issue could be determined to be a material term of the contract.