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Real v. Radir Wheels, Inc.

A-6074-04T1 (N.J. Super. App. Div. 2007) (Unpublished)

CONSUMER FRAUD ACT; AUTOMOBILES —A casual seller of automobiles over the internet is not liable under the Consumer Fraud Act because such a casual seller cannot be considered a merchant or dealer of automobiles pursuant to the Act.

This decision was reversed on April 8, 2009 by the New Jersey Supreme Court under Docket No. A-26-2008.

A purchaser successfully bid for an exotic automobile being sold through an internet site. The purchaser paid the bid price and had the vehicle shipped to him. The seller, an individual and his company, represented that the car was in good condition, yet verbally told the purchaser after sale that the headlights did not come up automatically, that the windshield wipers did not work, and that there was no spare tire. After receiving the car, the purchaser had the vehicle examined. The frame, advertised as good, was nearly rusted in half, rendering the car unsafe. The soft top, also advertised as good, was in poor condition, and the car, advertised as running strong, hesitated greatly upon acceleration. The purchaser took digital photos of the damage and filed suit for breach of contract, fraud, and violations of the Consumer Fraud Act (CFA).

The purchaser utilized an expert who stated that no part of the car’s frame was salvageable, and that the engine was weak and had been rebuilt once. He testified that if he had known the true condition of the car, 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 for which the lister did not receive any commission. 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 to observe 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 the purchaser more credible than the seller, and, in fact, found the seller’s testimony unreasonable and unbelievable. The court concluded that the seller intentionally misrepresented the condition of the car when he advertised the car’s features. Thus, the Court awarded the purchaser treble the compensatory damages calculated, counsel fees, and costs under the CFA. The seller appealed, arguing he was not subject to liability under the CFA.

The Appellate Division held that the seller was not liable under the CFA as he could not be considered a merchant or dealer of automobiles pursuant to the CFA. Rather, the Court found that he was a casual seller of automobiles over the internet. The Court found that the lower court should have granted the seller’s motion to dismiss the CFA claim at the end of the purchaser’s case because there was no evidence that the seller was a dealer or merchant under the CFA. The Court, in upholding the lower court finding of common law fraud, directed that the treble damages, counsel fees, and costs, be reversed and modified to reflect only the compensatory damages calculated because of the intentional misrepresentations.

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