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Barfield v. Manley

A-2264-04T5 (N.J. Super. App. Div. 2006) (Unpublished)

CONTRACTORS; CONSUMER FRAUD—While it is true that the lack of a written contract for a home improvement contract is a clear violation of the Consumer Fraud Act, the contractor is still entitled to be paid for its services on a quantum meruit basis.

A homeowner hired a contractor to work on her house. The contractor presented a written contract listing the work to be performed, materials to be purchased, and the overall price of the home improvement project. The homeowner decided to purchase some of the materials herself. She adjusted the contract price and presented a written counter-offer to the contractor. The homeowner and the contractor never signed a contract. Despite the lack of a written contract, the contractor completed the work. When the homeowner refused to pay, the contractor filed a complaint claiming he was owed for the services performed pursuant to an oral agreement. The homeowner counter-claimed, asserting the contractor misrepresented his prices and failed to guard against future water damage. The lower court ruled that, absent a written contract, a contractor can only recover in quantum meruit for the reasonable value of services rendered. Without specifying its reasons, the lower court awarded damages in favor of the contractor, in quantum meruit, for the full value of the services rendered as claimed by the contractor in his complaint.

Although the lower court found no written contract, it stopped short of finding a violation of the Consumer Fraud Act (CFA). The Appellate Division, however, held that the lack of a written contract for home improvement project is a clear violation of the regulations promulgated pursuant to the CFA. Nonetheless, the Appellate Division held that for the homeowner to recover under the CFA, there must be a causal connection between an alleged construction defect and an ascertainable loss. The Appellate Division affirmed the lower court’s finding that the homeowner suffered no loss resulting from the contractor’s work.

According to the Appellate Division, the burden is on a contractor to require a written contract. Absent a valid and enforceable written contract, the contractor can only recover under the quasi-contractual theory of quantum meruit. Recovery under quantum meruit is permitted where one party has conferred a benefit on another and the circumstances are such that to deny recovery would be unjust. Recovery under quantum meruit is limited to the reasonable value of services rendered. Therefore, a contractor is not entitled to profit on account of the services rendered. The Appellate Division found that lower court failed to make any distinction on the record between the reasonable value of the services rendered and the amount of the contractor’s profit. Further, a contractor cannot solely rely on its own books of account or its own quotation as evidence of the reasonable value of its services rendered for the price to be charged. The entry of judgment in favor of the contractor was affirmed, but the case was remanded to either determine the reasonable value of the contractor’s services; or for the lower court to state on the record its reasons for awarding the amount it did.

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