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A few months ago, the Appellate Division decided a case where a homeowner sued a major installer of windows. The opinion is an important one because it addresses various issues associated with New Jersey’s Consumer Fraud Act (CFA), as well as other consumer protection law implemented by both the state of New Jersey and the federal government.

In order to better understand the issues associated with these consumer protection laws, as they were applied in this lawsuit, an analysis of the facts of that case will be helpful. Initially, the homeowner received a postcard from the defendant, window replacement company. That card prompted a phone call from the homeowner requesting a visit from a sales person. A contract was signed at the end of the salesman’s presentation at the homeowner’s home. The salesman also discussed some financing arrangement with the homeowners. At the end of the presentation, the salesman left the homeowner with a contract, a document relating to the financing and a notice of cancellation. Thereafter, the homeowner elected to cancel.

Notwithstanding the homeowner’s decision to cancel, the defendant’s representative visited the home to measure the windows. At that point, the homeowner signed a number of documents, one of which was a credit application. Still later, when the homeowner called the defendant and sought to cancel again, The defendant agreed to reduce the purchase price of the windows approximately $1,000. Once again, the homeowner agreed to buy the windows and signed a change order. The change order stated in essence, that the homeowner would not attempt to cancel the change order.

A few days later, a roofing contractor engaged by the homeowner explained that the manner in which the defendant was to install the bay windows were improper. As a result and for the third time, the homeowner cancelled the contract. The defendant then filed a small claims action seeking $3,000 in damage. The homeowner responded with an eight count class action complaint. The trial judge ultimately dismissed all of the homeowner’s claims.

The Appellate Division reversed the trial court’s decision and remanded for further findings an analysis of homeowner’s theories of liability follow:

A. Door-to-Door Home Repair Sales Act (DDHRSA).

In creating this statute, the legislature recognized that unsolicited door-to-door sales people can assert unethical persuasion over a homeowner and, to that extent, it determined that home repair contracts would include a three- day “cooling off” period in which the homeowner can cancel the deal. The courts have determined that the statute should be liberally construed in favor of the consumer.

Notably, the DDHRSA does not apply to telephone, catalog or mail order sales. Nor, does it apply where the owner asks the merchant to enter into a contract at a site other than the merchant’s place of business. It will apply, however, if the owner requests a demonstration and the homeowner has not requested to enter into a sale at the time of the demonstration. Stated differently, if the consumer has already made up his mind to purchase the item before the demonstration, the statute does not apply. If the homeowner is uncertain as to whether he/she wishes to buy the product or service, the statute will apply.

The DDHRSA also requires the merchant to provide the homeowner with two copies of the contract documents, the right to cancel in 10 point bold face print, as well as a clear description of the list of services or materials to be purchased.

In analyzing the issues in the case, the court noted that the defendants’ contract was deficient for a number of reasons, including that the type face was to small, the description of the product to vague and the homeowner did not receive a required number of contracts.

The court also concluded that the DDHRSA applied because when the defendants’ agents visited the plaintiffs’ home to measure the installation of the window and the second contract was signed, that encounter did not contemplate a demonstration where the homeowner had already made up his mind to purchase the windows.

B. The Federal Trade Commission Regulation

This federal regulation, like the DDHRSA provides the consumer with a three-day cooling off period and certain other ministerial responsibilities for a merchant in the preparation of the contract relating to door-to-door sales. Door-to-door sales as defined by the FTC includes transactions involving any goods or services over a purchase price of $25 solicited or offered for sale, at a place other than the merchant’s principal place of business.

In the case before the Appellate Division, the court concluded that the transaction appeared to fall within the FTA regulation and returned the case back to the trial judge to determine whether the exception to the FTA regulation applied. That exception, like the exception in the DDHRSA would excuse a merchant’s liability if the homeowner initiated the visit to the homeowner’s home.

C. CFA Claim.

The trial judge dismissed the homeowners’ claim because he could not establish an “ascertainable loss.” An ascertainable loss has been defined as “a definite certain and measurable loss, rather than one that is merely theoretic.”

In the case before the court, the homeowner claimed that their ascertainable loss was the attorney fees and other costs spent to defend the defendants’ small claim action. While the appellate court recognized that there are circumstances where attorney fees can be considered an ascertainable loss, that concept could not be made available to the homeowner.

D. Truth in Consumer Contract Warranty and Notice Act (TCCWNA).

The TCCWNA which was enacted by New Jersey to cover consumers who are defined to mean “any individual who buys . any property . . . which is primarily for personal, family or household purposes.” TCCWNA provides another theory of liability against a merchant, where there is a violation of other legal rights a consumer may have under either state or federal law (i.e. CFA DDHRSA, etc.)

Since the trial judge concluded that the merchant did not violate any consumer protection statute, this theory of liability was dismissed as well. The Appellate Division remanded the issues back to the trial judge to reconsider his position, given the Appellate Division’s ruling on the various other issues in the case.

Conclusion

There is a whole constellation of laws and regulations that protect the consumer against unscrupulous merchants. Resultingly, all transactions between a merchant and a homeowner must be scrutinized with a very close eye. An experienced trial lawyer can assist you in that effort.

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