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Marrone v. Greer & Polman Construction, Inc.

405 N.J. Super. 288, 964 A.2d 330 (App. Div. 2009)

CONSUMER FRAUD ACT; PRODUCT LIABILITY — The subsequent buyer of a house who, itself, never received, reviewed or relied upon any product representation to its detriment cannot sustain a Consumer Fraud Act claim against the original contractor’s material suppliers and, further, cannot sustain a claim under the Products Liability Act for a component part of the entire house because the house is considered the “product” covered by that Act.

An exterior siding product was applied to a house when it was constructed. The original owners had no knowledge and did not receive or rely on any representations about the product. In fact, they thought the material was stucco. The material had been applied by a subcontractor when the house built. It was obtained from the product’s distributor. The home was sold eight years after construction. The subsequent buyers had no contact with the product distributor and did not receive, or rely on, information or representations from anyone concerning the exterior product. They also believed the material was stucco.

After closing, the buyers discovered the exterior product was defective as it was not water-tight. The condition caused water damage to the underlying home structure. The buyers filed suit against the product distributor, asserting claims under the Consumer Fraud Act (CFA) for intentional misrepresentations or omissions, and strict liability under the Products Liability Act (PLA). The buyers also filed claims for negligent manufacture and distribution of the product, breach of express and implied warranties, and negligent misrepresentations and omissions.

The lower court granted summary judgment dismissing the complaint brought by the buyers. It found that the distributor did not issue a written warranty. The Court also held that any implied warranty was barred by a four-year statute of limitations. As to the misrepresentation claims under the CFA, the Court found no evidence that the buyers ever received, reviewed or relied upon any product representation to their detriment. Lastly, it dismissed all negligence and strict liability claims under the economic loss doctrine. The Court ruled that where a component of an integrated product causes injury solely to the integrated product, damages may only be sought under a contractual cause of action.

On appeal, the Appellate Division affirmed the lower court’s ruling and addressed the lower court’s dismissal of the consumer fraud and product liability claims. It held that the CFA permits recovery by those harmed for unconscionable commercial conduct in connection with the sale or advertisement of any merchandise or real estate. In this case, however, the Court found that the subsequent buyers of the home did not prove that they received, much less relied on, any representation from the exterior product distributor. Rather, the evidence indicated the product distributor actively marketed to builders, architects, and other construction professionals. No representations about the product were conveyed to the original owners or subsequent buyers of the home. Notably, both parties believed the material in question was simply stucco. As to the product liability claims, the Court explained that a product liability action means any claim for harm (to property) caused by a product, irrespective of the theory underlying the claim. “Harm” to property is defined as physical damage to property other than to the product itself. The Court held the buye\ers could not pursue a PLA claim for two reasons. First, the Court concluded that the house is the “product” and it could not be subdivided into component parts for purposes of suing in strict-liability for defects in the components. Second, the Court concluded that even if the exterior material was considered as a separate defective item, the defect would constitute damage to the product itself and not to the property. The Court agreed with the lower court’s finding that where the only damage caused by a defective product is to the product itself, the only remedies available would be to bring a contract action.

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