On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, DC-9750-01.
Before Judges King, Lintner and S.L. Reisner.
The opinion of the court was delivered by: King, P.J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted: January 28, 2004
This case involves an air conditioning subcontractor's complaint that Sayreville homeowners Terry and Lisa Hodder (Hodder) did not pay in full for the installation of two air conditioning units. The work involved the reconstruction of a rehabilitated house, which had been totally gutted to a shell by a general contractor working with various subcontractors. This case implicates concerns about the Consumer Fraud Act, N.J.S.A. 56:8-1 to 8-106 (CFA), its policies, and basic fairness. We find the CFA inapplicable in the circumstances to the plaintiff subcontractor and reverse the judgment of the trial judge in the owner's favor.
On August 15, 2001 Messeka Sheet Metal Co., Inc. (Messeka), the air conditioning subcontractor, filed a complaint alleging Hodder was responsible for a balance of $3000 plus interest on a contract for the installation of two air conditioning units. Messeka attached to the complaint a copy of an invoice it had presented to Hodder in May 2001. The invoice stated Messeka's demand for payment from Hodder for the sale and installation of a two-zone (first and second floor) air conditioning system.
The total price was $11,000. The invoice shows that Hodder had made a $5,000 payment in November 2000 and a $3,000 payment in March 2001, leaving a balance of $3,000 [.arrowhorizex] the subject of this suit. The invoice was identical in substance to the written quotation Messeka had furnished in August 2000 to John Rupp, the general contractor, at Rupp's request. Rupp accepted the $11,000 quotation and directed Messeka to proceed with the work.
Hodder denied Messeka's allegations, and asserted, as an affirmative defense and counterclaim, that Messeka had violated the CFA, specifically certain implementing regulations. These regulations, at N.J.A.C. 13:45A-16.2, are set out in pertinent part in Appendix A to this opinion.
Hodder claimed Messeka violated the CFA and regulations because it:
a. failed to obtain a building permit [N.J.A.C. 13:45A-16.2(10.i.) and 13:45A-16.2(10.ii.)];
b. failed to obtain the required municipal inspections [N.J.A.C. 13:45A-16.2(10.i.) and 13:45-16.2(10.ii.)];
c. failed to obtain and deliver to defendants final compliance certification from the local government prior to demanding and suing for payment [N.J.A.C. 13:45A-16.2(10.i.) and 13:45A-16.2(10.ii.)];
d. failed to furnish the buyers with a written copy of all guarantees and/or warranties [N.J.A.C. 13:45A-16.2(11.i.)];
e. failed to provide defendants with copies of all guarantees and/or warranties prior to commencing work [N.J.A.C. 13:45A-16.2(11.i.)];
f. failed to obtain a signed, written contract, legibly, clearly, and, accurately setting forth all terms and conditions of the contract, including plaintiff's legal name, business address, and, the name and business address of the specific person negotiating the contract [N.J.A.C. 13:45A-16.2(12)];
g. failed to provide a written description of the work with the products and materials [N.J.A.C. 13:45A-16.2(12)];
h. failed to provide in writing the total price to be paid [N.J.A.C. 13:45A-16.2(12)];
i. failed to provide in writing the start and finish date of the work or project [N.J.A.C. 13:45A-16.2(12)]; and
j. did, in fact, make a claim for payment and claim a contract existed where no final, written agreement, in fact, existed [N.J.A.C. 13:45A-16.2(12)];
k. did misrepresent to the defendants that the initial down-payment was the full amount that defendants would be obligated to pay [N.J.A.C. 13:45A-16.2(6.vii.)]; and,
l. did misrepresent that the machinery and materials plaintiff was installing were of sufficient size, capacity, character, and, nature to perform the job expected [N.J.A.C. 13:45A 16.2(2.vii.)].
Messeka answered the counterclaim, denying that it had any legal obligation under the CFA, and it asserted various affirmative defenses, including estoppel, waiver, and laches.
The case proceeded to a non-jury trial on June 17, 2002. After the completion of Messeka's case, Hodder moved for a directed verdict, which the judge denied. However, the judge found that the CFA applied to Messeka, and, as a consequence, ruled Messeka could only recover in quantum meruit, not for the contract price.
The trial ended after a second day. The judge issued a written opinion on July 22, 2002 and entered a final judgment. The judge said in his written opinion:
First, it is clear from the plaintiff's own testimony that there have been violations of the [CFA] and of the Administrative Rules set forth in [N.J.A.C. 13:45A-16.2, paragraphs 11.i. and 12.i, ii, iv]. Because of these violations, plaintiff cannot recover on the book account, and will be limited to its claim for quantum meruit.
There is uncontroverted testimony on the part of George Messeka that the labor and equipment for the job in question cost the plaintiff $8,225.51, and that plaintiff's profit, if it were to be paid the full amount it seeks, would be $1,800.
The only testimony before the court as to the value of the work performed and the goods provided was that of plaintiff, who, not surprisingly, testified that the value was $11,000.00, the amount on the original"quotation" (P-1 in evidence). This would mean that all of plaintiff's costs totaled $9,200.00, though they have not accounted for the difference of $944.49.
I find that because of plaintiff's statutory violations, they are entitled to recover only the cost to them of the labor and equipment, namely, $8,255,51. However, they have already been paid $8,000.00; therefore, judgment will be entered on the complaint in favor of the plaintiff in the amount of $255.51. With regard to plaintiff's claim of $150.00 for"extra work" on the stove vent, this would not have violated the CFA, because the price did not exceed $200.00. However, there was no testimony whatsoever that plaintiff ever made a demand for this sum; therefore, plaintiff's claim for this amount fails.
With regard to the counterclaim, there has been no proof of any damages incurred by the counterclaimants as a result of plaintiff's violation of the statute. There wasn't even testimony as to what they paid to have the system started up. Therefore, there will be no damages awarded on the counterclaim. Counterclaimants are, however, entitled to an award of reasonable attorney fees. [See N.J.S.A. 58:8-19.] [Emphasis supplied.]
Messeka filed a motion for reconsideration which the judge ruled upon in an oral opinion. In this opinion, the judge again stated that the CFA applied to Messeka. He also said:
With regard to the opinion from the Court of July 22nd, I have revisited my thinking and I have decided to adjust the judgment up to $1200, adding back to the 255.51 the 944.49 referred to on the second page of the opinion.
With regard to the issue of attorney's fees, I find that contrary to [Messeka's counsel] Mr. Bulman's very capable arguments, this is the classic case. Had there been no fee shifting provision to the Consumer Fraud Act these people could probably not have found an attorney to represent them on a relatively small matter. They would not have prevailed. They might not have even answered, that I don't really know. The plaintiff would've just steamrolled them into a $3,000 judgment. I find that the homeowner's counsel was quite successful in this matter and is entitled to the fee sought and granted in the original application.
The judge then awarded Messeka $1200, an increase from the initial August 2002 judgment which directed Messeka receive only $255.51. The judge also required Messeka to pay Hodder $4,188 in counsel fees under the CFA. See N.J.S.A. 56:8-19. Messeka lost out on the profit, the remaining $1800 of the $3000 which the complaint demanded less the $1200 which the judge awarded.
The subcontractor Messeka urges on this appeal that the judge erred in applying the CFA to this transaction, an air conditioning installation on a totally gutted and rehabilitated house where the job was undertaken by a general contractor hired by the owner and where the owner was also represented by a hired architect. Messeka ...