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DiIorio v. Structural Stone & Brick Co., Inc.

368 N.J. Super. 134, 845 A.2d 658 (App. Div. 2004)

CONTRACTORS; UCC—A contract to build real property deals primarily with services, the construction materials being only incidental to the project; consequently, such a contract is not one for the sale of goods and the Uniform Commercial Code does not apply.

A home buyer sued for losses arising out of the deterioration of the stone façade of his home. The stone supplier argued that the four-year statute of limitation of the Uniform Commercial Code (UCC) applied, barring the suit. The owner claimed that the Consumer Fraud Act’s (Act) six-year statute applied because it was applicable to tortuous injury to real or personal property. The lower court applied the six-year statute because it saw this to be a products liability case, not governed by the UCC. It felt that the home buyer bought a house containing allegedly defective stones, not fit for exterior use, which resulted in damage to the house. Thus, the claimed damage was to the entire house and not just to its stone façade. The home buyer bought an entire house, not the individual stones which were an integral part of the house.

The Appellate Division affirmed the lower court’s holding. Article 2 of the UCC applies to transactions in goods. “Goods” mean all things that are movable at the time of identification to the contract for sale. According to the Court, this matter dealt with a transaction in real property and a transaction for the rendition of services. The UCC statute of limitations does not apply to transactions in real property. The construction of a residential premises constitutes a “service,” which incidentally includes the provision of construction goods. Where there is a mixture of sales and services, a court must determine whether the goods component or the services component aspect predominates. To decide, a court is required to look to the circumstances and language of the contract, the relationship between the goods and services, the compensation structure, and the intrinsic worth of the goods provided.

Here, the home buyer entered into a transaction with a builder. Although he was introduced to the builder’s stone supplier, the predominant aspect of the transaction was with the builder. The amount paid to the builder included the cost of the stone and the labor associated with its installation. Thus, the transaction in goods aspect of the contract was clearly incidental.

The Court also affirmed the lower court’s decision that the claim under the Consumer Fraud Act was governed by its six year statute of limitations. The Act is violated by the knowing concealment, suppression or omission of any material fact with the intent that others relied on those actions for the sale. In this case, the home buyer claimed that the builder and the stone supplier knew of the intended use, knew or should have known the stones were not fit for that purpose, and failed to disclose that information. Unlike the UCC, the Consumer Fraud Act applies to real estate. It provides that any person who suffers any loss as a result of the use or employment by another person of any act or practice declared unlawful under the Act may bring an action. The Act sets forth that the following is an unlawful act: “The act, use or employment by any person of any unconscionable commercial practice, deception, fraud, false pretense, false promise, misrepresentation, or the knowing concealment, suppression, or omission of any material fact with intent that others rely upon [such actions] . . . in connection with the sale or advertisement of any . . . real estate.” Therefore, the Court held that the owner’s allegations raised genuine questions of fact under the Act, and affirmed the lower court’s decision not to dismiss the home buyer’s claims.

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