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.