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Ollendorf v. Monk

A-5031-05T5 (N.J. Super. App. Div. 2007) (Unpublished)

CONTRACTS; DAMAGES — It is possible to award consequential damages if a repairperson breaches a contract to repair and engages in a deceptive business practice by making a deceptive or misleading statement or false promise of a character likely to induce a customer to authorize a repair.

An automobile owner brought his car to a home based repair shop. The repairman said he would repair the car by rebuilding the engine, making the car like new, and causing the engine to outlast the rest of the automobile. This oral agreement was consummated by a down payment by the owner. Upon the repair’s completion, the owner paid the balance of the price. Immediately after, the owner noticed that the heater wasn’t working and returned the car for further repair. After this repair was done, the owner soon noticed that the oil pressure warning light was on. It stayed on even after a further repair. At that point, the repairman admitted that he made a mistake in rebuilding the engine, and it was his fault, and he was going to fix the car after he recovered from a back injury. Ultimately, the repairman refused to perform any additional work on the car, and the owner removed the vehicle from the owner’s possession. The owner noticed that the odometer had advanced about 800 miles from the time when he had most recently left the car in the repairman’s possession. The owner then got a diagnostic estimate from a professional auto repair service. The service reported that the engine had low oil pressure and had been defectively rebuilt. The owner drove the automobile 4,000 more miles before the auto became inoperable.

In the owner’s lawsuit against the home repairman, the lower court ultimately concluded that the owner had made a prima facie case for rescission for purposes of a default judgment, thereby entitling the owner to a refund of the monies paid for the initial repair. On appeal, the Appellate Division concluded that the lower court mistakenly determined that the owner’s primary claim was for a rescission of the repair contract. It held that the owner had a claim for consequential damages caused by the repairman’s deceptive business practices. The Court noted that a rescission remedy requires that the parties be returned to their original positions, which did not occur here. Rather, the Court found that consequential damages ensued after the repairman breached his contract to repair and that he engaged in a deceptive business practice by making a deceptive or misleading statement or false promise of a character likely to induce the owner to authorize the repair. The Court noted that the repairman stated that he would rebuild the engine making the car like new; however the repairman did not completely rebuild the engine, causing it to fail before the rest of the car. It found that the damages constituted an ascertainable loss under the New Jersey Consumer Fraud Act, proximately flowing from the repairman’s misrepresentations.


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