Before Judges Pressler and Ciancia.
The opinion of the court was delivered by: Ciancia, J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
On appeal from the Superior Court of New Jersey, Law Division, Civil Part, Somerset County.
Plaintiff Josantos Construction sued defendants Michael and Mary Bohrer for money owed on a home improvement contract entered into for the construction of a patio and walkway. Defendants in turn counterclaimed alleging violations of the Consumer Fraud Act in relation to the patio. Plaintiff's claim for money owed for the patio construction was denied, and defendants' counterclaim was granted. In calculating the award to defendants, a credit was given to plaintiff for the cost of the walkway.
On appeal plaintiff contends the consumer fraud damages awarded against it were excessive because their calculation included treble damages for construction defects unrelated to the Consumer Fraud Act. Defendants cross-appeal claiming the judgment in their favor should be increased to include expert fees.
The underlying facts are relatively straight-forward. Defendants contracted with plaintiff to construct a walkway and a cement patio with steps. The trial court found that before the steps were completed, but after all other work had been done, defendant Michael Bohrer signed a Certificate of Completion at plaintiff's request. Because the work was not actually finished when the certificate was signed there was a violation of the Consumer Fraud Act, specifically the regulation set forth at N.J.A.C. 13:45A-16.2(a)(6)(v) that prohibits a seller from requesting a buyer to sign a Certificate of Completion before the home improvement is completed in accordance with the contract. When the steps were finally put in, they did not conform to the construction contract. Subsequently other defects in the work became apparent.
The case was tried without a jury. The trial Judge correctly determined that there must be a causal connection between the construction defects and the breach of the Consumer Fraud Act to permit recovery under that act. It is essentially undisputed that there was sufficient causal linkage between the premature signing of the Certificate of Completion and the improperly built steps to support trebling of the $600 damages attributable to that defect. The issue on appeal concerns the additional deficiencies discovered subsequent to the signing of the Certificate of Completion. Those deficiencies consisted of such things as discoloration of the concrete, improper imprinting of the stamped concrete, and cracks in the patio surface. The trial Judge found these defects could be remedied at a cost of $4,361.53 and trebled that amount when entering judgment for defendants. Although acknowledging the general proposition that there must be a causal connection between the construction defects and the Consumer Fraud Act, the trial Judge failed to articulate what those connections were in the present case. We are unable to ascertain the necessary relationship that would support an award under the Consumer Fraud Act.
Both sides rely on Cox v. Sears Roebuck & Co., 138 N.J. 2 (1994). In that case, plaintiff's decedent (plaintiff) had entered into a home repair contract with Sears to renovate his kitchen. The work was unsatisfactory in a number of ways, and plaintiff sued. It was ultimately determined Sears had violated the Consumer Fraud Act by breaching various regulations promulgated thereunder. Significantly, Sears had not obtained the required building, plumbing, electrical, and construction permits. In finding that the consumer had suffered an ascertainable loss caused by the unlawful practices of Sears, the Court said:
The record satisfies us that Sears' failure to comply with the Home Improvement Practices regulations visited an ascertainable loss on plaintiff. The purpose of the regulations is to protect the consumer from hazardous or shoddy work. Had all applicable permits been obtained before Sears began work, the issued permits would have triggered periodic inspections of the renovations. An inspector would have detected any substandard electrical wiring or cabinet work and would not have permitted the work to progress or have issued the required certificates until Sears corrected the deficiencies. Because the inspections did not occur, the wiring remained unsafe, the cabinets remained unattractive, and both resulted in a loss measured by the cost of repairing those conditions. [Id. at 22.]
By way of contrast, in the present case there was no claim and no proof that plaintiff failed to apply for or obtain any permits or inspections. The only violation of the Consumer Fraud Act was the premature submission of the Certification of Completion to the defendants. It was premature because the steps had not been completed. We fail to see a causal connection between that technical violation of the Consumer Fraud Act and the subsequent discovery of additional defects in the work. The fortuitous occurrence that the signing of the Certificate of Completion preceded the discovery of the deficiencies does not supply the causal connection necessary to establish an "ascertainable loss." The defects in the work would have been discovered in the same manner if the Certificate of Completion had not been presented prematurely or indeed if it had not been presented at all. *fn1
In Roberts v. Cowgill, 316 N.J. Super. 33 (App. Div. 1998), we discussed the nature of the causal connection necessary to establish an ascertainable loss under the statute. We distinguished between work defects with sufficient nexus to the Consumer Fraud Act and those not sufficiently related. There the homeowners demonstrated sufficient connection between ascertainable losses and violation of the Act to require the builder to show that no such connection existed. The homeowners prevailed because the builder failed to do so. In the present case we find the homeowners did not meet the initial burden of showing sufficient connection between breach of the consumer fraud regulations and breach of the contract, except as to the patio steps.
Plaintiff's claim for money owed on the patio was properly denied, and defendants' damages claim for breach of contract was correctly upheld. A Consumer Fraud Act violation, however, with its concomitant trebling of ascertainable loss, requires more than the showing of a breach of contract. It requires a causal ...