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Hann Financial Service Corp. v. Hansil

A-1375-02T3 (N.J. Super. App. Div. 2003) (Unpublished)

CONSUMER FRAUD—Suppression of a material fact is one basis for a finding of a violation under the Consumer Fraud Act.

A woman leased a new car from a dealer. The lease was assigned to a leasing company. Three years later, the vehicle needed extensive repairs. Near the end of the lease term, the woman began negotiations with a salesman at the same dealer about the possibility of leasing a new vehicle. The old vehicle had extensive “over-mileage,” and one of the “sticking points” was the charge for that mileage. The woman could not afford to both purchase a new car and pay the over-mileage charges. On the other hand, the old vehicle was not worth keeping. At a trial, the woman testified that the car salesperson agreed to significantly reduce the over-mileage charges so that, together with other sales inducements offered by the dealer, the woman could lease a new car. The dealer denied any such discussion, allegedly telling the customer that she had the deal with the over-mileage charges directly with the leasing company. The woman chose to turn her vehicle in and lease a new one. The sales agreement did not deal with the over-mileage charges for the old car.

The old leasing company sued the woman for almost $10,000 in charges and, in that suit, she made a claim against the dealer and its salesperson. A jury found both breach of contract and consumer fraud by the dealer and the salesperson. The lower court tripled the award and added counsel fees and costs under the Consumer Fraud Act. It held that it was not necessary for the customer to “prove an unconscionable commercial practice. Rather, the Act specifies the conduct that will amount to an unlawful practice in the disjunctive, as ‘any unconscionable commercial practice, deception, fraud, false pretense, false premise, misrepresentation or knowing concealment, suppression of any material fact.’” It held that the jury found that the salesperson promised a negotiated reduction in the excess mileage fee and this was a material fact upon which the woman relied in deciding to sign a new lease. According to the lower court, this constituted “a fraud, false promise or unconscionable commercial practice.” The Court cited a torts treatise which stated: “A contractual promise made with the undisclosed intention not to perform it is a fraud.”

Essentially, the salesperson and the dealer argued that “there was an insufficient aggravated circumstance in the present case to warrant a finding of consumer fraud and that, in general, the verdict was against the weight of the evidence.” The Appellate Division disagreed and affirmed because it inferred “that the jury believed that [the salesperson] agreed to negotiate with [the woman] regarding the over-mileage fees.” According to the Court, the jury was free to accept the woman’s version of the negotiations and therefore, could believe that the salesperson, by virtue of having “suppressed material fact underlying the transaction and creat[ing] a false impression that leasing a new vehicle was the most advantageous alternative] for [the woman], [s]he was thus induced to proceed.”


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