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Kaspersetz v. Clarks Landing Marina, Inc.

A-5104-07T3 (N.J. Super. App. Div. 2009) (Unpublished)

CONSUMER FRAUD ACT; WARRANTIES — A breach of contract or warranty is not a per se violation of the Consumer Fraud Act.

A customer signed a sales agreement with a boat dealer to purchase a customized thirty-eight foot fishing boat. After several delays, the boat arrived at the dealership. Before accepting delivery, the customer commissioned a boat survey. The dealer assured the customer that it would correct all the deficiencies discovered in the survey. At closing, the customer signed a separate document acknowledging that limited warranties were provided solely by the boat manufacturer. The contract also included a disclaimer of any and all warranties, express or implied. The limited warranty restricted a buyer’s remedies to repair or replacement of any part that the manufacturer determined to be defective. Less than a year after the closing, a mechanical failure was discovered in the boat’s starboard engine. The faulty engine was replaced at no cost to the owner. A month later the engine overheated and further repairs were made. The owner then decided he no longer wanted the boat and listed it for sale. He also sued the dealer claiming breach of contract, breach of implied and express warranties, violation of the Magnuson-Moss Warranty-Federal Trade Commission Improvement Act (Act), violation of the Consumer Fraud Act (CFA), rescission, and compensatory damages. After the action was filed, it was discovered that a small metal object that had fallen out of the flywheel cavity during disassembly. The object was removed and the boat ran at full throttle for a sustained amount of time without incident. Although it was possible that the engine overheating could have caused internal damage, the extent of the damage could not be determined unless the engine was dismantled. The owner refused to permit dismantling of the engine. The remaining deficiencies were “annoyances,” rather than structural or serious issues.

The lower court dismissed the owner’s complaint. Even though the owner amicably resolved his dispute with the manufacturer, he appealed the lower court’s decision as it pertained to the boat dealer.

The Appellate Division affirmed, holding that the items on the boat owner’s punch list were minor and cosmetic, and the boat dealer never disputed its obligation to repair them. The Court held these items did not warrant rescission as they did not cause a nonconformity that would substantially impair the value of the boat. It also ruled that the Uniform Commercial Code permits a warranty contract to limit the remedies available to a buyer to repairs as opposed to revocation. With respect to possible engine damage that might have been sustained, the Court noted that the owner refused to allow the engine to be taken apart, and this prevented anyone from making necessary repairs. Thus, it ruled that the owner did not comply with the terms of the warranty. As to the CFA claims, it ruled that breach of contract or warranty is not a per se violation of the CFA. It held that the dealer’s statement that the product it was selling was good was not an unconscionable commercial practice. The dealer’s representations as to the delivery date were also not unconscionable. It noted that each version of the contract indicated the approximate delivery date and explained that a definite date could not be fixed. Further, the requirement that the buyer make a non-refundable deposit was held to be enforceable and was not to be a violation of the CFA when applied to a customized high-end item such as a boat. As to the warranty claims, the Court found that the boat owner acknowledged that the dealer extended no warranties. It concluded that this commitment was more of a disclaimer than a promise to perform. The Court ruled that none of the manufacturer’s warranties imposed any responsibility on the dealer to perform warranty- related repairs. Thus, the disclosure was considered to be neither a written warranty nor a service contract that would be covered by the Act.

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