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Hundred East Credit Corp. v. Eric Schuster Corp.

Decided: September 11, 1986.

HUNDRED EAST CREDIT CORPORATION, PLAINTIFF,
v.
ERIC SCHUSTER CORPORATION, DEFENDANT-THIRD PARTY PLAINTIFF-RESPONDENT, V. NORTH AMERICAN PHILIPS CORP. AND PHILIPS BUSINESS SYSTEMS, INC., THIRD PARTY-DEFENDANTS-FOURTH PARTY-PLAINTIFFS-APPELLANTS, V. DATA SYSTEMS OF NEW JERSEY, INC., AND JOHN FITZSIMONS, FOURTH PARTY-DEFENDANTS



On appeal from the Superior Court, Law Division, Passaic County.

Gaulkin, Deighan and Stern. The opinion of the court was delivered by Gaulkin, J.A.D.

Gaulkin

North American Philips Corp. and Philips Business Systems, Inc. (hereinafter jointly referred to as "Philips") appeal from a judgment in favor of Eric Schuster Corporation (Schuster) awarding treble damages and attorneys' fees and costs pursuant to N.J.S.A. 56:8-1 et seq., commonly known as the Consumer Fraud Act (Act).

Schuster's claims, pleaded both under the Act and in common law fraud, arose out of its 1976 purchases from Philips of a P-142 disc unit and a P-143 disc drive (peripherals) to expand the capacity of a P-359 computer which Schuster had bought from Philips in 1974. After a bench trial, the trial judge found*fn1 that at the time of the 1976 sales Philips knew that production of the P-350 line of computers, including the P-359, "would end some time in 1976" but nevertheless "continued to market and sell the computers . . . in an organized, systematic plan to liquidate the inventory of P-350 line computers so as to avoid sustaining a loss of profits on these items." The judge further found that at the time Philips sold the peripherals neither Schuster nor the "consuming public" had been informed of the imminent discontinuance of the P-350 line. Discontinuing manufacture of the P-350 series in 1976 meant that Schuster

was "unable to accomplish the objectives which motivated its purchases in the first instance." The judge concluded that Philips' conduct was fraudulent and also constituted "unconscionable commercial practices" within the meaning of N.J.S.A. 56:8-2. He found compensatory damages of $199,506.50 and, pursuant to N.J.S.A. 56:8-19, awarded treble damages of $598,519.50 and attorneys' fees and costs of $154,760.65.

I.

Philips first argues that the Act "was not meant to apply to the sale of merchandise for use in business operations" but rather "was intended for the protection of the consumer in the context of the personal, family or household use of goods and services." We find the contention unpersuasive.

N.J.S.A. 56:8-2 declares to be an unlawful practice

[t]he act, use or employment by any person of any unconscionable commercial practice, deception, fraud, false pretense, false promise, misrepresentation, or the knowing concealment, suppression, or omission of any material fact with intent that others rely upon such concealment, suppression or omission, in connection with the sale or advertisement of any merchandise or real estate, or with the subsequent performance of such person as aforesaid, whether or not any person has in fact been misled, deceived or damaged thereby.

An "unlawful practice" thus can be committed by "any person" with respect to the sale or advertisement of "any merchandise." "Person" is defined in N.J.S.A. 56:8-1(d) as including

any natural person or his legal representative, partnership, corporation, company, trust, business entity or association, and any agent, employee, salesman, partner, officer, director, member, stockholder, associate, trustee or cestuis que trustent thereof.

"Merchandise" is defined in N.J.S.A. 56:8-1(c) as including

any objects, wares, goods, commodities, services or anything offered, directly or indirectly to the public for sale.

Any "person" who suffers "any ascertainable loss of moneys or property" as a result of any "practice declared unlawful" may bring an action; if successful, the plaintiff "shall" recover treble ...


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