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Lopez v. Mahwah Ford Sales & Service, Inc.

A-7208-97T3 (N.J. Super. App. Div. 1999) (Unpublished)

CONSUMER FRAUD ACT; AUTOMOBILES—A seller can not purposely withhold critical information from employees who have direct contact with the consuming public and then hide behind the ignorance of those employees because to permit it to do so would circumvent the goals of the Consumer Fraud Act.

An automobile buyer discovered that the automobile had been damaged and inadequately repaired prior to sale. The buyer brought suit against the dealership, the manufacturer, and employees of the dealership. Ultimately, the only claims that remained before the lower court were against the dealer and were based on fraudulent misrepresentation and consumer fraud. The car was bought from the showroom floor. A few months prior to the sale, it had been damaged on the dealer’s lot and the dealer repaired and painted the car in its on-site body shop. The body shop’s invoice showed a repair cost of $220, reflecting a 20% internal discount. The buyer returned the vehicle and requested a different vehicle or refund of the purchase price. The dealer offered to repair the car, but the buyer refused the offer. At trial, the buyer’s expert testified that it would cost approximately $1,400 to correct the damage to the car caused by the inadequate refinishing. With respect to the Consumer Fraud allegation, the dealership argued that neither the salesperson nor the sales manager knew of the existence of damage to the car until after the vehicle had been sold and, therefore, the sale was without fraud. The Court held that even if the sales staff did not know of the car’s history, the dealership would not be insulated from liability where it could be clearly established that the dealership knew about the damage to, and repair of, the car, and failed to disclose it to the buyer. “To permit a business entity to purposely withhold critical information from its employees and then hide behind the ignorance of those employees who have direct contact with the consuming public would circumvent the goals of the Consumer Fraud Act.” The dealership also contended that because it did not violate a specific provision under the regulations to the Consumer Fraud Act, to wit, that it was in violation of the automobile advertising rules requiring disclosure of substantial repairs or body work having a retail value of $1,000 or more, it had not committed an unlawful practice under the Consumer Fraud Act failing to disclose damage of only $200. The Court rejected that argument because the dealership was not required to disclose the $200 repair work done to the vehicle in its advertising, it did not follow that it was also not required to make a disclosure in the course of direct sale negotiations. Unlike the regulations concerning advertising, the Act does not have a monetary requirement with respect to a seller’s duty to disclose material information to a customer. Lastly, the lower court had awarded substantial attorney’s fees which the dealer argued were unreasonably high. The Court disagreed, holding that “New Jersey’s fee-shifting statutes [do not] require proportionality between damages recovered and counsel-fee awards… .” In sum, the Court upheld both the lower court’s jury verdict of triple the amount of the damages, as opined by the buyer’s expert, and also upheld the award of attorney’s fees.


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