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Froehlich v. Hillside Auto Center

A-3034-05T3 (N.J. Super. App. Div. 2007) (Unpublished)

CONSUMER FRAUD ACT; DAMAGES — For purposes of the Consumer Fraud Act, an ascertainable loss may be calculated by employing the benefit of the bargain rule, i.e., by measuring the difference between the price paid for an item and what its value would have been had the seller’s representations been true.

A consumer bought a car and obtained financing through a dealer. The dealer acknowledged that it sold the automobile without giving notice to the consumer that the car’s manufacturer had repurchased it from its initial owner due to a malfunctioning audio system. The dealer paid $46,000 plus a fee of $475 for the car, and the consumer bought the car from the dealer for $55,885.77 with financing. After learning of the defect, the consumer attempted to return the car to the dealer. The consumer then attempted to sell the car privately, but the highest offer received was $22,400. The consumer rejected that offer. The consumer then sued the dealer for damages, chiefly under the New Jersey Consumer Fraud Act. The lower court awarded treble damages and interest in the amount of $108,847.80 as well as counsel fees and costs in the amount of $33,780.18. The dealer appealed, arguing that the consumer failed to demonstrate an ascertainable loss under the Consumer Fraud Act, and argued that expert opinion was required to establish the value of the vehicle.

The Appellate Division held that to establish an ascertainable loss, a claim must be supported by specific proofs that the loss is quantifiable. It then recited the benefit of the bargain rule which allows recovery of the difference between the price paid for an item and what its value would have been had the seller’s representations been true. Here, the Court found that the lower court based its damages award on the difference between the price paid for the car and the amount of the highest offer made by a prospective purchaser with knowledge of the history of the vehicle. Therefore, the Court concluded that evidence of an ascertainable loss had been presented below.

The Court also concluded that the dealer presented nothing to refute the consumer’s evidence of fair market value or of the value of use of the car. So, the Court affirmed the lower court’s finding that the consumer’s evidence of efforts to sell the car and the offer received after full disclosure was adequate to establish the car’s fair market value.


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