Early this month, New Jersey’s Supreme Court entertained oral arguments on a Consumer Fraud Act (CFA) case where the central issue was whether a principal of the entity that did business with the consumer could be held personally liable for violation under the CFA.

In that case, a consumer sued a landscaping company and its principals, where a retaining wall built by the business entity collapsed and caused serious damage to the consumer’s property.  At the trial level, the action against the principles was dismissed on a motion for summary judgment. On appeal, that decision was reversed. The core of the Appellate Division’s ruling was that the CFA clearly states that a "person" can be held responsible under the CFA and that since a "person" was defined to mean a principal or officer, the trial judge's decision was ill-founded and that was especially so given the legislative mandate that the CFA should be liberally construed.

Approximately 14 years ago, the Supreme Court decided a case titled Gennari v. Weichert Realty. There the court found individual liability for a real estate broker who took part in a misrepresentation made to a home buyer about the experience of the builder and the quality of the home to be sold.  In the case currently before the court, it did not appear that the principle of the company played any active role in any of the events that triggered liability under the CFA. It also appeared from the questions and comment made by the Justices during oral argument that they believe the CFA was capable of reaching around the limited liability concept afforded many business entities to tag a principal for liability under the CFA.