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Messeka Sheet Metal Co., Inc. v. Hodder

368 N.J. Super. 116, 845 A.2d 646 (App. Div. 2004)

CONSUMER FRAUD; CONTRACTORS; SUBCONTRACTORS—The Consumer Fraud Act’s regulations for home improvement contractors do not apply to a complete gutting of a house’s shell and a homeowner has no Consumer Fraud Act claim against subcontractors with whom the homeowner had no direct contract.

A subcontractor brought suit against a homeowner because the homeowner refused to pay the balance due for the installation of air conditioning units. The work was done in the course of a total rehabilitation by a general contractor who had worked with various subcontractors. The homeowner counterclaimed, asserting that the subcontractor had violated various provisions of the Consumer Fraud Act (CFA). The lower court agreed, ruling that the CFA applied to the subcontractor and holding that because of the violations, the subcontractor could only recover in quantum meruit, and not for the contract price.

On appeal, the subcontractor argued that the CFA did not apply because the rehabilitation work was undertaken by a general contractor hired by the homeowner. On that basis, the subcontractor disagreed that its work for the general contractor was beyond the scope and purpose of the CFA. The Appellate Division agreed. Although the CFA covers various home improvements, it does not cover construction of a new residence (which was arguably the case here because it had been gutted to its shell). The CFA gives no guidelines as to whether it applies to a house that had been totally gutted.

Further, the CFA’s regulations were designed to protect homeowners who deal directly with contractors. Here, the homeowner hired a general contractor to run the job. The general contractor hired the subcontractor. The contract between the contractor and a subcontractor was not within the scope of the CFA, because the contractor was responsible to the consumer for whatever the subcontractor might have done. If the CFA was violated, it would have been the general contractor that did so. The Court held that to apply all of the CFA’s regulatory requirements to each individual subcontractor would be inefficient and duplicative. Every subcontractor would need to have a contract in writing directly with the owner and secure municipal licenses and approvals for the job. The owner would have to deal directly with each subcontractor. Therefore, because the CFA did not apply to transactions between a homeowner and a subcontractor working through a general contractor, the Court held that the owner could not bring its CFA counterclaim.

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