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Ziets v. Swim-Mor Pools and Spas

A-2568-07T3 (N.J. Super. App. Div. 2009) (Unpublished)

CONSUMER FRAUD ACT; CONTRACTORS — Only material misrepresentations relating to a critical issue constitute a violation of the Consumer Fraud Act and if the owner cannot show that a promise made by a contractor was material to its decision to hire the contractor, no violation will be found.

Homeowners contracted with a pool company to construct a pool. One of the reasons homeowners selected this particular pool contractor was because the contractor represented that there would be no subcontractors handling any of the work. Despite such representations, the contractor hired a professional engineer to prepare a grading plan for the pool. The plan was submitted to the municipality. It indicated that the pool’s elevation was higher than the door leading to the homeowner’s backyard basement. When the homeowners subsequently had flooding problems they sued both the pool contractor and the engineer, alleging both negligence and consumer fraud.

The Law Division held that the contractor was negligent and that it had violated the Consumer Fraud Act (CFA). Because the contractor was found liable for violating the CFA, damages were trebled and the homeowners were awarded counsel fees. The lower court’s determination that the CFA was violated was based on a finding that, contrary to the contract specifications agreed to by the parties, the contractor did not consult with the homeowners with respect to the elevation of the pool. The pool company appealed its liability under the CFA.

The Appellate Division reversed. Although it noted that liability under the CFA does not require a finding of bad faith or intent to deceive, it held that not every contractual breach constitutes consumer fraud. It also held that only material misrepresentations relating to a “critical issue” constitute a violation of the CFA. Using a “reasonable consumer” standard, the Court held that in order for the homeowners to prevail under a consumer fraud theory, they had to establish that the provision in their contract indicating that the contractor would secure approval of the elevation of the pool was material to their decision to hire the pool company. The Court found there was nothing in the record to support such a contention. It noted that the homeowners never testified that they selected the contractor because the contractor promised to consult them with respect to the pool’s elevation. Finally, the contract itself did not violate the regulations under the CFA since: (i) the contractor did not make a representation that the pool would be “custom-built” or “specifically designed” for the homeowners; and (ii) the provision relating to consultation with respect to the pool’s elevation was a standard pre-printed item in the contract, not a unique provision for the homeowners.


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