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Czmyr v. Avalanche Heating and Air Conditioning, Inc.

A-1674-09T1 (N.J. Super. App. Div. 2011) (Unpublished)

CONSUMER FRAUD ACT; CONTRACTORS —Under the Consumer Fraud Act, a consumer need not show any ascertainable loss to recover reasonable attorneys’ fees, filing fees, and costs so long as the consumer can prove that the merchant committed an unlawful practice.

A consumer contacted a contractor’s job manager about replacing her home’s heating and air-conditioning system. The manager responded with a detailed written proposal. It set forth the proposed work and the products involved, the costs, and the applicable warranties. The parties agreed upon a price, with half to be paid as a deposit on signing. The proposal document stated that the proposal could be withdrawn if not accepted within 30 days. At trial, the consumer argued that she understood the language to mean she could cancel the contract within thirty days after signing. The contractor maintained that the language merely provided that if the proposal was not accepted within thirty days, the contractor could withdraw it. Neither party was aware that New Jersey law provides that a home improvement contract may be cancelled by a consumer, for any reason, at any time before midnight of the third business day after the consumer receives a copy of it, and that applicable contracts must include notice of the same. In addition to that omission, the contractor also failed to include three other mandated items: its home improvement registration number; a copy of its certificate of general liability insurance; and the toll-free phone number for the Division of Community Affairs.

The two parties agreed to a change in installation date, but the change of date was never reduced to writing as required by state law. The consumer then called the manager to cancel the contract, but the manager was unavailable. When he returned her call the next day, she told him that she didn’t feel comfortable spending the money in light of her recent job loss. The manager said he told her it was too late to cancel the contract because the company had already purchased the equipment and related materials required for the project. In contrast, the consumer claimed that the manager told her he would refund her deposit if he was able to sell the equipment and other materials. The manager, however, said that he offered to allow the consumer to keep her heating and air conditioning equipment, but that she declined.

The consumer filed a complaint alleging that the company breached the contract and violated the Consumer Fraud Act (CFA) and the Contractors’ Registration Act (CRA). At trial, the consumer acknowledged that she knew the contractor would have to fabricate the ductwork for her house in advance, rather than on the job, but that the manager told her his prices were low because he already had the heating and air-conditioning units in stock. The manager testified that he described the units as being held by the supplier on consignment and that the consumer was aware that her deposit would finance the preparatory work and purchases. The lower court held that the contract was missing some provisions required by statute. It found both witnesses to be credible and characterized the contract as relatively detailed and complete. The lower court further found that the 30 day withdrawal language referred only to the contractor’s right to withdraw the proposal and, thus, the consumer had breached.

On appeal, the consumer contended that the lower court erred in basing its decision on the finding that the manager acted in good faith, arguing that good or bad faith is not relevant when there has been a per se violation of the CFA or CRA. Further, the consumer argued that the contractor should not be entitled to recover for a breach of a contract that contained per se violations.

The Appellate Division observed that the CFA follows a strict liability framework, and contractors are presumed to be familiar with the regulations. Additionally, the CFA renders infringing contractors liable for a refund of all moneys acquired by means of their violations. Treble damages are awarded if the consumer suffers an ascertainable loss arising out of a contractor’s violations. An award of counsel fees does not require an ascertainable loss.

The Court found that the consumer suffered no ascertainable loss attributable to the CFA or the CRA violations. The unambiguous language of the contract did not support the consumer’s asserted belief that she could cancel the contract within thirty days. Her decision to terminate was based upon a change of mind concerning the expense in light of her financial position. Thus, she was not actually harmed by the failure to include notice of the right to rescind the contract within three days of signing. However, because a merchant who has violated the CFA cannot obtain damages even if its violation was innocent, the Court limited the company’s award to retention of the deposit.

Finally, the Court reversed the lower court’s denial of the consumer’s claim for counsel fees. A consumer need not show any ascertainable loss to recover reasonable attorneys’ fees, filing fees or costs so long as the consumer can prove that the merchant committed an unlawful practice. The Court remanded the matter for correction of the judgment and for the calculation of counsel fees covering both the trial and the appeal.

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