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Lanza v. Secret Gardens Landscaping, Inc.

A-2613-07T2 (N.J. Super. App. Div. 2008) (Unpublished)

CONSUMER FRAUD ACT; LIMITED LIABILITY COMPANIES; PERSONAL LIABILITY — Even though a member of a limited liability company or a corporate officer or employee may be acting on behalf of the company or corporation, if he or she personally participates in a violation of the Consumer Fraud Act or its implementing regulations, he or she may be held individually liable for the violation.

A consumer sued a landscaping service and the service’s president alleging violations of the Consumer Fraud Act (CFA). The lower court agreed with the company’s president that he was not liable for the acts of the landscaping company because the landscaping company was organized as a limited liability company. The lower court stated that “the New Jersey Limited Liability Act [entitles] members and managers of New Jersey Corporations [sic] to take advantage of that corporate [sic] structure that’s afforded according to the statute, 42:2B-1. There is also ample case law that shows this court that the courts do not generally pierce the corporate veil absent fraud or injustice.” On appeal, the Appellate Division reversed the lower court’s decision, pointing out that “[o]ur case law has long recognized that a corporate officer or employee who participates personally in a violation of the CFA or its implementing regulations may be held individually liable for the violation.” It didn’t matter to the Court that the president was acting within the scope of his employment. What mattered was that the president testified that he personally prepared the contract, personally inspected the work as it was being performed, and personally discussed change orders with the consumer. Those were the actions that constituted “the primary grounds” for the CFA claims. Therefore, if properly proven, the landscaper’s president “would be liable for any violations of the CFA in which he participated personally.”

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