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Fernandes v. Navas

A-2792-06T1 (N.J. Super. App. Div. 2008) (Unpublished)

CONSUMER FRAUD ACT; CONTRACTORS; DAMAGES — When trebling damages pursuant to the Consumer Fraud Act, a court must separate those damages that arise from a violation of the Act and those that arise from a breach of contract.

Homeowners hired a contractor to renovate their two-family home. The contractor failed to include within his job proposal all necessary terms such as the starting date, ending date, complete business address, and specifications for the job. The contractor failed to complete the work by the discussed deadlines, despite received payments totaling $120,000. The contractor left much of the work unfinished, but requested more money in order to keep working. The homeowners sued, claiming breach of contract and violations under the New Jersey Consumer Fraud Act (CFA).

At the conclusion of trial, the lower court found that the contractor had violated the CFA and awarded treble damages, representing three times the amount that the homeowners had paid. It also awarded counsel fees. The lower court also found that the $120,000 paid was a good measure of damages, and, for purposes of trebling damages, represented an ascertainable loss under the CFA. It found that the homeowner’s damages were due to the contractor’s delays and misrepresentations, but the court failed to address how the delays and misrepresentations constituted violations under the CFA.

On appeal, the Appellate Division affirmed the lower court’s finding that the contractor violated the CFA, but remanded for reconsideration of the quantum of damages. The Court stated that while the contractor’s proposal deficiencies indeed constituted a violation of the CFA’s home improvement practice regulations, the lower court had failed to establish findings as to any contractor delay or misrepresentation that constituted an independent violation of the CFA. The Court directed that the lower court consider whether any of the homeowner’s losses stemmed from contractual breaches by the contractor that did not amount to any unlawful practice under the CFA. It also questioned whether the contract price awarded by the lower court was indeed the correct measure of consumer fraud damages because about 60% of the renovation had been completed and the homeowner already had received some benefit of its bargain.

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