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Chattin v. Cape May Greene Inc.

Decided: July 1, 1991.


On appeal from and on certification to the Superior Court, Appellate Division, whose opinion is reported at 243 N.J. Super. 590 (1990).

Justices Pollock, O'Hern, and Garibaldi join in this opinion. Justice Stein has filed a separate concurring opinion in which Justice Clifford joins. Justice Handler has filed a separate dissenting opinion. Chief Justice Wilentz did not participate.

Per Curiam

The judgment of the Appellate Division is affirmed, substantially for the reasons expressed in Judge Skillman's majority opinion, reported at 243 N.J. Super. 590.

STEIN, J., concurring.

I join in the Court's affirmance of the judgment below, which reversed plaintiffs' liability verdict on their Consumer Fraud Act (Act) claim. I am in full agreement with the Appellate Division's conclusions that the trial court's jury instruction was erroneous because it failed "to explain the difference between the kinds of consumer fraud [that] require 'knowing' action and those [that] may be established without any showing of scienter," 243 N.J. Super. 590, 600 (1990), and that the error was not harmless. Id. at 603. I write separately because I anticipate that the issue remanded by the Appellate Division for the jury's determination at retrial will be particularly difficult for a jury to adjudicate. I also perceive that the Appellate Division's opinion may not adequately guide the trial court in framing an instruction that will clarify for the jury the distinction between conduct violative of the Act without proof of intent and conduct that violates the Act only if committed with an intent to deceive the purchaser or customer.

Preliminarily, I note that although this case was tried to a jury, no court has yet determined whether there exists a right to trial by jury for damage claims asserted under the Consumer Fraud Act. We explained in Meshinsky v. Nichols Yacht Sales, Inc., 110 N.J. 464, 472-73 (1988), that

as originally enacted, the Act was exclusively enforced by the Attorney General, who was provided with broad powers to investigate, N.J.S.A. 56:8-3, subpoena records, N.J.S.A. 56:8-5, and seek injunctions prohibiting fraudulent conduct and orders of restitution to make whole any person damaged by conduct violating the Act, N.J.S.A. 56:8-8. * * *

In 1971, the Legislature amended the Act to permit a private right of action through which a successful plaintiff receives treble damages, reasonable attorneys' fees, filing fees, and costs. L. 1971, c. 247, ยง 7, codified at N.J.S.A. 56:8-19.

[Footnote omitted.]

The 1971 amendment to the Act, however, did not provide for jury trials, and no right to a jury trial has been recognized in suits brought under the Act by the Attorney General seeking equitable relief and financial penalties. See Kugler v. Market Dev. Corp., 124 N.J. Super. 314, 319 (Ch. Div. 1973); Kugler v. Banner Pontiac-Buick, Opel, Inc., 120 N.J. Super. 572, 581-82 (Ch. Div. 1972). Although this Court in Shaner v. Horizon Bancorp, 116 N.J. 433 (1989), rejected the right to a jury trial in the context of a claim for discriminatory termination on the basis of age under the New Jersey Law Against Discrimination, N.J.S.A. 10:5-1 to -42, its holding could be read to suggest by analogy that a statutorily-created cause of action under the Consumer Fraud Act does not carry with it the right to a jury trial. Id. at 454-55. In any event, that issue is not before us and I advert to it only to emphasize my perception that the issue remanded by the Appellate Division for retrial is not particularly well-suited for resolution by a jury.

Simply stated, the critical issue on retrial is the categorization of Cape May Greene's use of the term "insulated windows" to describe to prospective purchasers windows with a double pane of glass and an uninsulated frame. The Consumer Fraud Act distinguishes between two categories of unlawful practices. The first category -- which includes unconscionable commercial practice, deception, fraud, false pretense, false promise, and misrepresentation -- does not require proof of intent to deceive, suggesting an analogy to what the common law denominates as equitable fraud. See Jewish Center v. Whale, 86 N.J. 619, 625 (1981). The second category -- concealment, suppression, or omission of any material fact -- requires proof that the offending conduct occurred knowingly and with an intent that others rely on the concealment, suppression, or omission. See Fenwick v. Kay Am. Jeep, Inc., 72 N.J. 372, 377 (1977); N.J.S.A. 56:8-2. The Appellate Division observed that the "first category * * * consists of affirmative acts[] and the second category consists of acts of omission." 243 N.J. Super. at 598.

Viewing defendant's use of the term "insulated windows" as a statement that could be characterized either as an "affirmative act" or an "omission," the court determined that the jury instruction failed to "explain to the jury the difference between the kinds of consumer fraud consisting of affirmative acts, which may be committed without a showing of intent, and acts of omission, which must be committed knowingly in order for liability to be imposed under the Consumer Fraud Act." Id. at 598-99. In the court's view, the deficiency in the jury charge constituted reversible error necessitating a retrial on the issue of liability, in the course of which the jury is to be properly instructed on the critical distinction between an affirmative misrepresentation and a knowing omission made with intent to deceive. Id. at 603-04.

I share the Appellate Division's concern that an imprecise jury charge on the essential elements of an unlawful practice under the Act could erroneously cause a jury to impose a verdict resulting in treble damages and attorneys fees for conduct not violative of the Act. As the court observed in D'Ercole Sales, Inc. v. Fruehauf Corp., 206 N.J. Super. 11 (App. Div. 1985),

however, attorneys fees, costs and treble damages are powerful weapons for the consumer and invoke a formidable remedy. Any breach of warranty, or of any contract for that matter, is unfair to the non-breaching party. Yet, "in a sense, unfairness inheres in every breach of contract when one of the contracting parties is denied the advantage for which he contracted, but this is why remedial damages are awarded on contract claims. If such an award is to be trebled, the . . . legislature must have intended that substantial aggravating circumstances be present."

[Id. at 31 (quoting United Roasters, Inc. v. Colgate-Palmolive Co., 649 F.2d 985, 992 (4th Cir.), cert. denied, 454 U.S. 1054, 70 L. Ed. 2d 590 (1981)).]

The fly in the ointment, however, is that instructing the jury on the difference between an affirmative misrepresentation of fact and a knowing omission of a material fact is easier said than done.

As the Appellate Division acknowledges, the term "insulated window" applied to a double-pane ...

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