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Sema v. Automall 46 Inc.

384 N.J. Super. 145, 895 A.2d 77 (App. Div. 2006)

CONSUMER FRAUD; ATTORNEYS FEES—Under the Consumer Fraud Act, so long as a consumer demonstrates a bona fide claim of an ascertainable loss, the consumer is entitled to an award for attorneys fees even if the jury ultimately finds no such ascertainable loss.

A consumer purchased a car from a dealer. The dealer represented that the car had only been driven ten miles. The documentation provided to the consumer at the time also stated that the car had only been drive ten miles. In actuality, the car had actually been driven almost ten thousand miles at the time of sale. At trial, the dealer even admitted that the car had been driven almost ten thousand miles. The consumer sued for breach of contract, violation of the Consumer Fraud Act and violation of the Federal Odometer Law. She paid $17,600 for the car. At trial, her expert testified that a used car with the same mileage would cost about $3,000 less, although the expert did indicate that there were different ways to value a used car. The dealer’s expert determined that the price for a used car with the higher mileage was about the same as the price paid by the consumer. In the end, the jury found that the dealer violated the Consumer Fraud Act. However, the jury found that the consumer did not suffer any ascertainable loss and did not award damages, but because the jury found that the dealer violated the Consumer Fraud Act, the consumer was awarded attorneys’ fees of about $28,000.

The dealer appealed, arguing that because the consumer did not prove an ascertainable loss, she was not entitled to attorney’s fees. The Court held that a consumer can recover reasonable attorney’s fees in a consumer fraud action even if there is no showing of an ascertainable loss. It noted that the statute’s purpose is remedial. It was designed to allow consumers to pursue consumer fraud claims without experiencing the financial hardship of paying attorney’s fees. The Court noted that in order to receive attorney’s fees, a consumer did not need to win the case, but only needed to assert a bona fide claim for an ascertainable loss. Here, the consumer did demonstrate a bona fide claim that the value of the car she purchased was about $3,000 less than what she paid. Even though, ultimately, the jury did not find an ascertainable loss, she was still entitled to recovery of her attorney’s fees. The dealer also argued that, since, at trial, it made an offer of judgment for $6,000, which was far better than verdict, it was entitled to an award of attorney’s fees under the offer-of-judgment rule. The Court disagreed, noting that when there is an unliquidated claim (where there is uncertainty as to the amount of damages and no fixed standard to determine them), the offer of judgment rule applies if the consumer had obtained a judgment of at least $750, and the amount of the judgment was less than 80% of the offer. Therefore, the dealer would have been entitled to recovery of its legal fees, but because the consumer did not receive a money judgment on her consumer fraud claim, the offer-of-judgment rule did not apply.

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