The question in this case is whether punitive damages may be awarded in a consumer fraud case where the plaintiff has not suffered a compensable loss.
Plaintiff purchased a 1976 Mercedes Benz from the defendant, Pamela Nittolo. She discovered, shortly after the purchase, that the odometer of the vehicle had been turned back. Plaintiff brought suit against the seller and three of the car's previous owners, alleging fraud and violations of both the federal odometer statute (15 U.S.C.A. § 1981, et seq.), and the New Jersey Consumer Fraud Act (N.J.S.A. 56:8-1, et seq.).
After a lengthy non-jury trial, this Court held that the defendants, Willie Hardy and Willie Hardy Enterprises, were responsible for the re-setting of the odometer,*fn1 and dismissed the claims against the other defendants. This Court also held that the plaintiff failed to prove that she had suffered a pecuniary loss as a result of the re-setting of the odometer, because the price she had paid for the automobile was the fair market value of the vehicle even with the additional mileage.
The federal odometer statute provides that a plaintiff who is successful in proving that an odometer has been re-set
shall be awarded three times his actual damages or the sum of $1,500, whichever is greater, plus attorney fees and costs. 15 U.S.C.A. § 1989(a)(1). This remedy is enforceable in state courts. See Vogt v. Nelson, 69 Wis. 2d 125, 230 N.W. 2d 123 (Wis.Sup.Ct.1975).
The New Jersey Consumer Fraud Statute provides that treble damages are to be awarded to any person who suffers "any ascertainable loss of moneys . . . as a result of any method, act or practice declared unlawful under this act." N.J.S.A. 56:8-19. It also provides that the "use or employment by any person of an unconscionable commercial practice . . . is . . . an unlawful practice." The intentional re-setting of an odometer is clearly unconscionable conduct encompassed by the statute. The plaintiff cannot recover under the state statute, however, because she did not sustain a compensable loss. She may recover under the federal statute, but being cognizant of the minimal remedy afforded to her under that statute, she elects not to do so. She seeks, instead, recovery for punitive damages under common law fraud.
The re-setting of the odometer in this case is conduct which constitutes legal fraud. "Legal fraud or misrepresentation consists of a material representation of a presently existing or past fact, made with knowledge of its falsity, with the intention that the other party rely thereon, and he does so rely to his damage." Foont-Freedenfeld v. Electro-Protective, 126 N.J. Super. 254, 257 (App.Div.1973). It is also conduct which warrants an award of punitive damages even if there are no compensable damages.
To warrant a punitive award, the defendant's conduct must have been wantonly reckless or malicious. There must be an intentional wrongdoing in the sense of an "evil-minded act" or an act accompanied by a wanton and wilful disregard of the rights of another. (Citation omitted). Nappe v. Anschelewitz, Barr, Ansell & Bonello, 97 N.J. 37, 49 (1984).
Because of the fortuitous circumstance that an injured plaintiff failed to prove compensatory damages, the defendant should not be freed of responsibility for aggravated misconduct.
People should not be able with impunity to trench wilfully upon a right. Moreover, it is especially fitting to allow punitive damages for actions such as legal fraud, since intent rather than mere negligence is the requisite state of mind. . . . We therefore hold that punitive damages may be assessed in an action for an intentional tort involving egregious conduct whether or not compensatory damages ...