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Furst v. Einstein Moomjy, Inc.

A-240-02T3 (N.J. Super. App. Div. 2004)

CONSUMER FRAUD; DAMAGES—The original pre-sale price of a consumer good is indicative of the replacement price of the merchandise for the purpose of determining contract damages.

A customer purchased a carpet from a retailer at a discount price. When the customer discovered that the carpet was defective, he demanded that the retailer replace the defective carpet. The retailer refused and the customer sued the retailer for unconscionable business practices and fraud under the Consumer Fraud Act. The lower court determined that the customer’s damages equaled the discounted price he paid for it, not the market value of the carpet he thought he was buying. The lower court also awarded the customer its attorney’s fees. The retailer appealed. The Appellate Division affirmed the damage award. It found that the legislature intended for the Consumer Fraud Act to provide the greatest level of protection for consumers in order to deter unconscionable business practices. Therefore, it was not unreasonable to award the customer the replacement cost of the carpet even though it exceeded the actual cost he paid. With respect to the attorney’s fees, the Court reversed and remanded. The Court noted that the lower court failed to determine if the fee was reasonable before approving it. A court, in awarding the other party’s attorney’s fees under a fee shifting statute, must consider if the fee was reasonable based on the number of hours reasonably expended at a reasonable hourly rate. It must also evaluate the reasonableness of the attorney’s fee by evaluating the experience and skill of the attorney and by comparing that attorney’s rates to the rates charged by other comparably skilled attorneys. In this case, the lower court failed to do so.

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