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Murnane v. Finch Landscaping, LLC

420 N.J. Super. 331, 21 A.3d 637 (App. Div. 2011)

CONSUMER FRAUD ACT; CONTRACTOR’S REGISTRATION ACT; CONTRACTORS — Even though a homeowner may act as his or her own general contractor, he or she may still seek damages under the Consumer Fraud Act and the Contractor’s Registration Act against the contractors who actually perform work for the homeowner.

A homeowner entered into a written contract with a building contractor to lay a bluestone patio in the backyard of his home. The homeowner, in turn, contracted with a patio designer to draft a plan for the patio and contracted with subcontractors to perform other components of the project, specifically masons to do preparation work, build retaining walls, and apply stone veneer. The homeowner referred to himself at one point as the “general contractor” for construction of his patio. During construction of the patio, there were various changes made, including an increase in the size of the patio and installation in some locations of thinner bluestone than provided in the contract. None of these changes were reflected by change orders or other writings.

The homeowner paid the full contract price to the building contractor, but the contractor subsequently sent the homeowner invoices for additional amounts, which according to the contractor represented additional costs it incurred as a result of changes in the scope of the project, including the increase in the size of the patio. The homeowner refused to pay those additional amounts. The homeowner also claimed that the work the contractor performed failed to conform in various respects to the contract.

The homeowner initially sued pro se in the Special Civil Part, asserting claims for both breach of contract and a violation of the Consumer Fraud Act (CFA). The contractor filed a counterclaim for the additional work it allegedly performed. After the homeowner retained counsel to represent him, he moved to transfer the action to the Law Division on the ground that the trebling of his damages under the CFA would be likely to result in a judgment in excess of the jurisdictional limit of the Special Civil Part. The contractor responded by filing a cross-motion for a declaration that the CFA was inapplicable to this case and for dismissal of the homeowner’s CFA claim. The lower court concluded that because the homeowner had characterized himself as the general contractor for his patio project, he could not assert a CFA claim against the contractor. Consequently, the lower court denied the homeowner’s motion to transfer the action to the Law Division and granted the contractor’s motion to dismiss the CFA claim. At trial, a jury returned a verdict of no cause of action on the homeowner’s contract claim, but found the contractor had negligently damaged the homeowner’s property in performing the work and awarded damages for that reason. The jury then ruled in the contractor’s favor on its counterclaim and awarded damages for the additional work. The contractor moved for an award of counsel fees under the Frivolous Litigation Statute. Its motion was denied. The homeowner appealed from the dismissal of his CFA claim and sought a new trial on both its CFA and breach of contract claims and on the contractor’s counterclaim. The contractor cross-appealed from the denial of its motion for counsel fees.

On appeal, the Appellate Division noted that the Contractor’s Registration Act (CRA), a supplement to the CFA, defines a home improvement contract as an oral or written agreement for the performance of a home improvement between a contractor and an owner, tenant or lessee of a residential or noncommercial property. The Court found that the contract between the homeowner and the contractor clearly fell within the confines of the CRA. Even if the homeowner could have been characterized as the general contractor, he was still an owner of a residential property who entered into a home improvement contract with a contractor.

The Court then found that the jury verdict on the breach of contract claims did not preclude a finding in the homeowner’s favor on his CFA claim. Rather, the lower court’s finding on the CFA issue made certain evidence about alleged oral change orders potentially inadmissible. Thus, the Court found that the outcome on the breach of contract claim could very well could have been different. Therefore, it reversed the jury’s verdict of no cause of action on the breach of contract claim and remanded the matter for a retrial of both the CFA and contract claims. Further, the Court rejected the contractor’s Frivolous Litigation Statute claim, finding the homeowner’s CFA claim did not lack merit.

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