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Pokhan v. Peters

2011 WL 920396 (N.J. Super. App. Div. 2011) (Unpublished)

CONSUMER FRAUD ACT; CONTRACTORS — The existence of a enforceable construction contract is not required to trigger the provisions of the Consumer Fraud Act.

A homeowner and a builder signed what was styled as an agreement for the builder to construct a separate two-story house next to the homeowner’s existing house. The agreement had an estimated contract price which was to be paid in seven installments, and the job was to be completed within twenty-two weeks. Construction was delayed in part due to permitting issues. The homeowner paid nearly the entire contract price. The builder stopped construction midway and asked the homeowner for significantly more money, citing cost increases driven by inflation. The homeowner refused to pay and the project stalled.

The homeowner sued. In support of its allegations, the homeowner obtained a quote for the house’s completion. The homeowner also alleged that the builder had violated the Consumer Fraud Act by misapplying installments. The builder answered and filed a counterclaim alleging that the homeowner had breached the contract. Eventually, the builder defaulted. At a proof hearing, the lower court concluded that there was no enforceable agreement because the parties had no meeting of the minds as to the total price of the construction. The lower court then invited homeowner’s counsel to submit a memorandum explaining what the damages would be under a quantum meruit measure. The homeowner’s counsel furnished the lower court with such a memo, but the record was unclear as to whether it was routed to the lower court’s attention. In a later bench ruling, the lower court dismissed the homeowner’s claim in its entirety. The homeowner appealed.

The Appellate Division agreed that there was no enforceable contract. It noted that price is an essential term of a contract, as to which there must be a clear manifestation of mutual assent. Here, there was no mechanism to arrive at a final fixed number for the price. However, the Court found that it would be most fair in this unopposed appeal to remand for a proof hearing on the question of quantum meruit damages, the difference between the value that a party conferred upon the other party and the value that it received in return. This theory was not developed in the lower court because the homeowner’s attorney did not anticipate that the lower court would find “no contract”; this belief was reasonable in light of the builder’s prior implicit admission that a contract had existed.

Additionally, the Court found that a remand was appropriate to determine claims under the Consumer Fraud Act, since the existence of a contract is not required to trigger the Act. On remand, the homeowner was told to prove an ascertainable loss of moneys or property, which need not have been paid out of pocket by the consumer, but must be measurable.

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