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Petinga v. Sears, Roebuck and Co.

2009 WL 1622807 (U.S. Dist. Ct. D. N.J. 2009) (Unpublished)

CONSUMER FRAUD; CONTRACTORS — It is not a case of “bait and switch” where a contractor advertises a given product, sells the given product at the advertised price, and then encourages the consumer to purchase an additional different product because the “switch” component is missing.

A husband and wife owned a two-story, two-apartment, residence. After visiting a national retail chain, they purchased an upgraded heating system and a new central air conditioning system. Although initially they were only interested in purchasing an air conditioning system, the salesperson convinced them to purchase the heating system too. The contract had no starting or completion dates. There were numerous construction problems. The first subcontractor began work without permits, caused damage to the residence, and disappeared without explanation when his permit application was rejected. According to the homeowners, the retailer and a second subcontractor then falsely represented to them that they had re-submitted the permit applications to the municipality. In fact, the subcontractor did not submit the application until months later. The second subcontractor commenced work and caused considerable damage to the residence. Moreover, the reinstallation work failed six inspections and there was no certificate of occupancy for the first-floor apartment. The homeowners also alleged that the heating and air conditioning systems did not work properly. They sued the retailer alleging that it: (a) had violated New Jersey’s Consumer Fraud Act (CFA); (b) had committed fraud; (c) had breached the implied warranty of fitness of purpose; and (d) was negligent and grossly negligent. The retailer moved for summary judgment and filed a third-party complaint against its subcontractors.

The United States District Court granted in part and denied in part each of the parties’ motions. It rejected the homeowners’ claim that the retailer was engaged in an illegal “bait and switch” advertising scheme in violation of the CFA. It felt that no reasonable jury could conclude that the retailer’s efforts to convince the homeowners to replace their heating system was a “bait and switch” scheme. It held that a plan or scheme not to sell the item or service so advertised is an essential element of the bait selling statute. The Court ruled that it was not unlawful to advertise a product, sell the product at the advertised price, and to encourage the consumer to purchase an additional different product. Here, the “switch” component of the “bait-and-switch” scheme was absent. The Court also found that the retailer violated at least some CFA regulations, and that the homeowner had suffered an “ascertainable loss” related to the repair of their property, lost rental income, and replacement of the HVAC system. Thus, it was up to a jury to determine if the retailer’s actions were the cause of the loss. The Court dismissed the emotional distress claims because the homeowners’ pleadings stated that such claims were based on the retailer’s gross negligence. The Court ruled that grossly negligent conduct, alone, does not rise to the level of outrageous conduct required to set forth a valid cause of action for intentional emotional distress. It also found that the retailer did not negligently cause emotional distress because the injury was not caused by physical impact, a prerequisite for the validity of such an action.

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