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Coastal Group, Inc. v. Dryvit Systems

Decided: June 23, 1994.

COASTAL GROUP, INC., PLAINTIFF-APPELLANT,
v.
DRYVIT SYSTEMS, INC. AND TECH 21 JUDGES SYSTEMS, INC., DEFENDANTS-RESPONDENTS. AND FAB TECH, INC., DEFENDANT-THIRD-PARTY PLAINTIFF-RESPONDENT, V. CHASE MANHATTAN BANK, N.A., FIDELITY AND DEPOSIT COMPANY OF MARYLAND, PATRICIA LAROCCA AND KAREN STROBER, THIRD-PARTY DEFENDANTS.



On appeal from Superior Court of New Jersey, Law Division, Middlesex County.

Before Judges Skillman, Kestin and Wefing.

Skillman

The opinion of the court was delivered by

SKILLMAN, J.A.D.

Plaintiff is the developer and owner of a condominium project in Weehawken known as Riva Pointe. According to plaintiff, its architect recommended that it use a Dryvit Composite Panel System, which consists of large prefabricated panels, for its exterior wall system. However, representatives of defendants Dryvit Panel Systems, Inc. and Tech 21 Panel Systems, Inc. (collectively referred to in this opinion as Dryvit)*fn1 allegedly represented to plaintiff that a new system consisting of smaller prefabricated panels, called the Fedderlite Panel System, would be less expensive and easier to install. Consequently, plaintiff agreed to purchase panels used in the Fedderlite system for use in its Riva Pointe project.

Plaintiff also entered into a contract with defendant Fab Tech, Inc. (Fab Tech) to install its exterior wall system. This contract involved both the installation of the Dryvit-manufactured Fedderlite system and the engineering, fabrication and erection of a light-gauge steel framing system to support the Fedderlite panels. Plaintiff terminated its contract with Fab Tech in May 1990.

Plaintiff subsequently brought this action alleging that Fab Tech had breached the contract in various respects. Fab Tech counterclaimed, alleging that plaintiff had wrongfully terminated the contract and had breached in various other respects, including

requiring Fab Tech to install the Fedderlite system which, according to Fab Tech, had been improperly designed and manufactured.

Thereafter, plaintiff filed an amended complaint which, among other things, added Dryvit as a defendant, charging it with fraud, misrepresentation and violation of the Consumer Fraud Act based on its allegedly false representations that the Fedderlite system was both inexpensive and easy to install. Plaintiff alleged that it had been induced by these representations to use the Fedderlite system instead of the Composite system originally specified by its architect. Plaintiff further alleged that Dryvit had invited plaintiff's representatives to see projects in several other states and had falsely represented that these projects contained the Fedderlite system. Plaintiff maintained that, contrary to Dryvit's assurances, the Fedderlite system had proven very expensive, had delayed work on the project and had resulted in it sustaining substantial losses. Plaintiff's amended complaint also contained a count which alleged that Dryvit had been negligent in the design, manufacture and sale of the Fedderlite system.

Two weeks after answering the amended complaint, Dryvit filed a motion for summary judgment. Dryvit argued that, even assuming plaintiff's allegations were true, its amended complaint failed to state a claim against Dryvit because, under Spring Motors Distributors, Inc. v. Ford Motor Co., 98 N.J. 555, 489 A.2d 660 (1985), one commercial entity may not recover in tort for economic losses allegedly caused by a product purchased from another commercial entity. Dryvit also argued that plaintiff's claim under the Consumer Fraud Act should be dismissed because the Act does not apply to products, such as the Fedderlite system, which are not available to the average consumer.

The trial court issued a written opinion, dated March 12, 1992, agreeing with Dryvit's arguments, and entered an order granting summary judgment in favor of Dryvit. After unsuccessfully attempting to take an interlocutory appeal from the dismissal of its fraud, misrepresentation and Consumer Fraud Act claims, ...


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