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Policastro v. Jackson Auto Body/Complete Collision Centers

A-0145-09T1 (N.J. Super. App. Div. 2010) (Unpublished)

CONSUMER FRAUD ACT — Even if no award of damages has been made because there was no ascertainable loss despite a Consumer Fraud Act violation, a court is still required to award attorneys fees to the aggrieved consumer, but those fees may be adjusted to take into account what was spent to defend a breach of contract claim by the seller.

A driver leased a car for which she was required to maintain comprehensive collision coverage equal to $80,019.86, which was the cash value of the automobile as listed in the lease. However, she only secured coverage for $40,000. The car was involved in an accident while being operated by a friend, with the lessee’s permission.

The day following the accident, the lessee gave written authorization to a body shop to begin repairs. The authorization did not contain an estimate of the cost of repairs. It did contain language that all insurance checks should be forwarded to the body shop for the repair work, and that in the event of non-payment, it would impose an express mechanic’s lien on the vehicle to secure payment. The insurer retained an adjuster who faxed a written repair estimate to his client and to the body shop. The body shop faxed the estimate to the lessee. At the time the adjuster issued his repair estimate, he was aware of the potential for additional damage, and negotiated with the body shop to tear down the vehicle. That process revealed significant hidden damage. A supplemental estimate was prepared; however the body shop never sent that supplemental estimate to the lessee even though it proceeded to repair all damage. The insurer claimed that it told the body shop about the coverage cap of $40,000 on the same day the repair was completed. Further, the insurer claimed that it never authorized the body shop to perform the supplemental repairs. Despite the lessee receiving insurance checks up to the $40,000 cap, the body shop never received any payment and ultimately released the vehicle to the leasing company.

The lessee sued the body shop, claiming treble damages under the Consumer Fraud Act (CFA). The body shop answered, and filed its own claim for the unpaid repair costs. The lower court found that the body shop had violated the CFA, but that the lessee had suffered no ascertainable loss. Therefore, the lower court dismissed the claim for treble damages under the CFA, but awarded a reduced counsel fee to reflect the lessee’s partial success in defense of the breach of contract action. As to the body shop’s claim for payment, the lower court awarded the value of repairs represented by the first estimate that had been faxed to the lessee.

On appeal, the Appellate Division affirmed, holding that the body shop violated the CFA by its failure to provide the second written estimate to the lessee. The Court said that it was apparent from the record that the additional repairs, which were deemed significant, were undertaken without written approval long before the lessee or her insurer were given written notice of the additional repair costs. The Court also said the lower court properly found that the lessee had sustained no ascertainable loss for which an award of damages was warranted, as her claimed loss consisted of costs that she was otherwise obligated to pay (maintaining insurance at maximum collision coverage, and making lease payments during the term of the lease).

The Court also held the lower court did not abuse its discretion in awarding counsel fees under the CFA, as the statute permits fee-shifting where a party can prove the other party committed an unlawful practice, even where no ascertainable loss is shown after a bona fide claim of ascertainable loss is raised. The Court also approved the lower court’s reduction of the attorney’s fees, mindful that the lessee was only partially successful in her defense of the body shop’s claim. As to the body shop’s claim for the repair costs, the Court saw no basis to disturb the lower court’s reduction of the claim, recognizing that the body shop never timely informed the lessee of the additional repairs, nor did the lessee authorize the second series of repair work.


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