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Hagan v. Castro

A-2504-05T3 (N.J. Super. App. Div. 2007) (Unpublished)

CONSUMER FRAUD ACT — It is for a jury, not a judge, to determine if a seller or other person covered by the Consumer Fraud Act has made an affirmative, material misrepresentation that induced a consumer to enter into a transaction.

A beautician contacted a real estate broker because she was interested in renting a store to open a hair salon. Hair salons, pursuant to state regulation, must have an area of at least 350 square feet. She told the real estate agent about the requirement. He assured her that he had years of experience and knew the requirements. He told her not to worry and said he knew exactly what she needed. The beautician subsequently signed a one year lease. The lease presented to her by the realtor indicated that the area consisted of approximately 350 square feet. The beautician was later advised by a supplier that the area appeared to be less than 350 square feet. When the realtor was contacted, he arrived at the premises and claimed to calculate an area of 356 square feet. Eventually, a State investigator measured the salon and calculated the area at 286 square feet. On that basis alone, the salon was found unsuitable and the beautician was denied authorization to operate her business at that location. She sought a waiver, but that request was denied.

The beautician sued the broker under the Consumer Fraud Act (CFA) and for common law negligence. A jury fixed damages at $65,000 and found the broker seventy percent negligent. Prior to sending the case to the jury, the lower court had barred any relief under the CFA, on the broker’s motion, by making factual determinations that no affirmative misrepresentation occurred. The broker moved for a new trial or remittitur and the lower court reduced the judgment. The beautician filed an appeal.

The Appellate Division found that the evidence presented to the jury could have permitted it to find that the broker had made an affirmative, material misrepresentation that induced the beautician to execute the lease. The Court found the lower court resolved factual disputes and did not accept the beautician’s evidence as true at the close of the beautician’s case, and therefore dismissed the CFA claim erroneously. Accordingly, the Court reversed and remanded for a new trial on the question whether the realtor violated the CFA. Additionally, the Court found that the lower court properly remitted the damage award to the highest figure that could be supported by the evidence, and so affirmed the remittitur but remanded so that the beautician could be given the option to accept the reduced damage award or submit to a new trial on damages.


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