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Torchio Bros., Inc. v. Egg Harbor Township Board of Ed.

ATL-L-1296-04 (N.J. Super. Law Div. 2004) (Unpublished)

CONSUMER FRAUD—A public school board can be a considered to be a consumer when it contracts for building improvements, and even though the home improvement regulations in the Administrative Code might not apply, the Consumer Fraud Act, which is much broader, does.

A renovation contractor sued a board of education for payment under its high school renovation contract. The board counterclaimed that the contractor had violated the New Jersey Consumer Fraud Act (CFA). In response, the contractor asserted that the renovation work was not a “consumer transaction,” and therefore was not governed by the CFA. “The Consumer Fraud Act is intended to protect consumers who purchase ‘goods or services generally sold to the public at large.’ The entire thrust of the Act is ‘pointed to products and services sold to consumers in the popular sense.’ While the term ‘consumer’ has historically connoted an individual purchaser, the Act has been interpreted to afford protection to corporate and commercial entities who purchase goods and services for use in their business operations… .”

The New Jersey Administrative Code identifies certain consumer transactions as covered by the CFA. “The Act is intended to cover these items as well as parts or services similar to those enumerated.” There is a subpart that is intended to apply to “residential or noncommercial property.” Such property is generally defined as being used primarily as a person’s place of residence. Here, the project was a high school. On the other hand, even though the kind of work being done might have dealt with large quantities above what might be purchased by average consumers, the services and materials were “still available to the population at large.” Further, the Court believed that the school improvements were “similar to [those] home improvements” suggested by the Administrative Code. The contractor pointed to prior case law that had held that the “design, engineer and operation of a highly specialized plant that manufactured needle coke,” was not covered by the CFA. Instead, the Court believed that “[a] building used for a high school does not require the precise details that such a [needle coke] plant would require, and more closely resemble[d] home improvements to a house. Even though the home improvement regulations in the Administrative Code might not apply, the CFA, which is much broader, does.”

Also, it didn’t matter to the Court that the affected party was “a sophisticated party with representation by counsel, an architect, and a construction manager.” According to the Court, the CFA was intended to be interpreted liberally “with a tendency to protect consumers.” Because the Act “does not define ‘consumer,’ courts have typically focused on what a party does, rather than [its] overall level of sophistication in determining whether a party is indeed a ‘consumer.’” For those reasons, the Court held that the school board was a consumer under the CFA.

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