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Real v. Radir Wheels, Inc.

198 N.J. 511, 969 A.2d 1069 (2009)

CONSUMER FRAUD ACT — Nothing in New Jersey’s Consumer Fraud Act limits its applicability to a dealer because the Act applies to any “person.”

A purchaser successfully bid for a classic car being sold through an internet site. The seller represented that the car was in good condition, yet verbally told the purchaser after sale that the headlights did not turn on automatically, that the windshield wipers did not work, and that there was no spare tire. The purchaser elected to have the car shipped to him in Missouri. After receiving the car, the purchaser had it examined. The purchaser discovered that, contrary to the on-line description, the car was not in good condition. In particular, the car was nearly rusted in half rendering it unsafe to drive, the convertible top was in poor condition, and the car hesitated when accelerating. The purchaser took photos of the damage and filed suit against the seller, alleging breach of contract, fraud, and violations of the Consumer Fraud Act (CFA).

At trial, the purchaser’s expert witness testified that no part of the car’s frame was salvageable, and that the engine, which had been rebuilt once already, was weak. The purchaser testified that if he had known the true condition of the car at the time, he would not have bought it. Ultimately, he decided to keep the car and pay to have it repaired and restored. He testified that he spent more than $40,000 to restore the car. The seller testified that neither he nor his company sold cars, but as a courtesy sometimes allowed customers to indicate that their cars were for sale. The seller claimed that he never gave the purchaser any indication that his company was the seller of the car. However, the seller did indicate that he purchased this particular car with the original intention to restore it. Prior to listing the car online, the seller claimed to have lifted the car and observed only surface rust and some scaling, and advised the purchaser after purchase that when the car left his garage there were no holes in the frame. The seller’s expert conceded at trial that scaling was an escalation of rust, and the only thing worse than scaling was having holes in the frame.

The lower court found that the seller intentionally misrepresented the condition of the car when he advertised the car’s features and that he engaged in unconscionable business practices in violation of the CFA. The seller appealed, arguing that since he was not a dealer, he was not subject to the CFA. The Appellate Division reversed in part. It found that the seller was liable for common law fraud. However, it also found that, as a casual seller, the seller was not a merchant or dealer and therefore was not subject to the CFA.

The purchaser appealed and the Supreme Court reversed, finding that nothing in the CFA that limited its applicability to a “dealer.” Rather, the CFA, which is to be interpreted broadly for the purposes of protecting consumers, identifies “persons” as being subject to the CFA. The Court noted that the seller and purchaser’s arguments over whether the seller was a “dealer” were misplaced and were based on New Jersey’s Used Car Lemon Law, which applied only to dealers. It found that the CFA and the Used Car Lemon Law were complementary statutes, and that the Used Car Lemon Law was not intended to be a substitute for the CFA. Therefore, even though the seller may not have been a “dealer” subject to the provisions of the Used Car Lemon Law, the seller was still subject to the CFA. Thus, the Court reversed the Appellate Division’s decision and reinstated the lower court’s decision.

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