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Multiverse, Inc. v. Scarab

A-2835-07T2 (N.J. Super. App. Div. 2009) (Unpublished)

CONSUMER FRAUD ACT — A simple breach of contract does not, in and of itself, constitute a violation of the Consumer Fraud Act.

A band entered into a twelve show tour contract with a promoter for booking and publicity services. The publicist assured the band that the revenue for the shows would at least cover the tour costs. Before the band left for the tour, they paid the promoter the full amount due for his services but then found out that only four shows had been booked and that they would not break even. A representative for the band told the promoter that they were cancelling the tour and demanded a refund. In response, the promoter agreed to cancel the shows and refund the booking fees. After not receiving the refund, the band sued the promoter, alleging breach of contract and violations of consumer fraud statutes. During the course of the proceedings, the promoter failed to produce documents requested by the band. The lower court awarded the band the amount paid to the promoter, but refused to impose treble damages on the basis that there was no unlawful practice or regulatory violation under the New Jersey Consumer Fraud Act (CFA). The band’s motion for reconsideration was denied.

On appeal, the Appellate Division pointed out that a party asserting a claim under the CFA must prove that it has suffered an ascertainable loss as a result of an unlawful practice. It also pointed out that a simple breach of contract does not, in and of itself, constitute a violation of the CFA. Applying such standards, it found that there were no unconscionable or deceptive practices on the part of the promoter and that no material facts were omitted by the promoter during negotiations. The Court, however, agreed with the band that, based on equitable principles, they were entitled to prejudgment interest because the promoter had access to, and use of, the amount paid to him by the band during the time that the band was entitled to have its monies returned. Based on this, the Court affirmed the lower court’s determination that the band was not entitled to treble damages, but reversed the denial of prejudgment interest.

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