August 21, 2007
THOMAS ROMOND AND LYDIA ROMOND, PLAINTIFFS-APPELLANTS,
VALIANT HOME REMODELERS AND GREAT LAKES WINDOW, INC., DEFENDANTS-RESPONDENTS, AND VALIANT HOME REMODELERS, THIRD-PARTY PLAINTIFF,
GREAT LAKES WINDOW, INC. THIRD-PARTY DEFENDANT.
On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, L-5869-03.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued June 4, 2007
Before Judges Lintner, Seltzer and C.L. Miniman.
Plaintiffs Thomas and Lydia Romond appeal from the denial of their cross-motion for summary judgment on March 6, 2006,*fn1 on certain claims advanced pursuant to the Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -166. They also appeal from a verdict of no cause for action returnable on April 18, 2006, in favor of defendants Valiant Home Remodelers (Valiant Home) and Great Lakes Window, Inc. (Great Lakes), and from the May 26, 2006, denial of their motion for a new trial. A final judgment dismissing the action was entered on August 16, 2006. We affirm the denial of summary judgment, but we reverse the final judgment and remand the matter for a new trial on the CFA claims.*fn2
The Romonds, as part of a general exterior remodeling project, wanted to replace their twenty-five-year-old eight-foot Andersen bow window with a new one of the same style, having five lights*fn3 and narrow mullions.*fn4 They looked at newspaper and magazine advertisements and requested brochures from four or five companies. The Romonds were particularly interested in a bow window pictured in Valiant Home's newspaper advertisement because it had five lights and narrow mullions.*fn5 Other remodeling companies offered bow windows with wide mullions and did not have eight-foot-wide, five-light bow windows. Based on Valiant Home's newspaper advertisement, the Romonds called Valiant Home, and its president, Michael Valiant, went to their home in late August or early September 2001.
Mrs. Romond testified that when Valiant arrived at the Romonds' house, he gave her two Great Lakes brochures*fn6 and told her that she could have the five-light bow window pictured on page nine of the brochure. Although Mrs. Romond asked Valiant about the glass available from other manufacturers, he told her to concentrate on what he had in the Great Lakes brochure and he took the competitors' brochures from Mrs. Romond and set them aside. She told him that she wanted the bow window with the star-beveled glass pattern depicted in the brochure. She also told him she wanted the narrow mullions. Mrs. Romond assumed that was what he would order.
Mr. Romond testified that he told Valiant that they wanted the same five-light bow window that was in the brochure, with the same beveled glass and the same color. The brochure did not specify the size of the window or the size of the mullions. The Andersen window in their home had narrow mullions and they wanted the same mullions. They showed Valiant other brochures, including one from Window Man, to point out that they did not want wide mullions like those shown in the other brochures. The Romonds were not told that they could choose from different size mullions, believing they would receive what was shown in the brochure. Valiant admitted that the mullions in the Romonds' window should have been the same as the mullions in the brochure. Mr. Romond further testified that he and his wife selected Valiant Home because all the other remodelers had only wide mullions depicted in their advertisements, whereas the advertisements of Valiant Home depicted windows with narrow mullions. He believed that they were ordering a bow window from Valiant Home with the narrow mullions depicted in the brochure.
Mr. Romond also testified that he and his wife had one-year-old custom-made vertical blinds in their existing window and they wanted those blinds to fit inside the replacement window because they had been purchased at considerable expense. The old window was ninety-six inches on the inside measurement where the blinds were installed. The rough opening would have been two-and-a-half to three inches wider. Mr. Romond was with Valiant when he measured the window.
Valiant testified that he told Mrs. Romond that the configuration of the glass would be different depending on the overall size of the window, but he could not remember at his deposition what words he used to explain the difference. However, at trial he testified that he said "that the glass in the bow window is going to be a little bit . . . altered. It's not going to look exactly the same as it is in the brochure. That's what I said."*fn7 He admitted that he never told Mrs. Romond when they were going over the contract that she would get a one-diamond pattern rather than the two-diamond pattern depicted in the brochure. What he did tell her was that the glass in the door was going to be different from the glass in the bow window, but they would, nevertheless, have a similar diamond pattern. Valiant also admitted he never told Mrs. Romond that the window in the brochure was a different size than the eight-foot bow window she was ordering.
Valiant returned to the Romonds with a "Remodeling Proposal"*fn8 dated September 4, 2001. When he prepared the proposal, he did not specifically refer to the window in the brochure, nor did he refer to the configuration of the glass or the size of the mullions.*fn9 The proposal described the window by brand name (Plygem) and by various features, but it did not include any measurements of the window. The contract merely called for a five-light bow window with "star-beveled/classic designer glass." Mrs. Romond testified that they were never given a choice respecting the size of the mullions and so believed that only the narrow mullions were available. Therefore, they did not ask to have the size specified in the contract.
Valiant testified that when he sells a specific product or sells a product by reference to a brochure, he has to put that information into the contract. However, if Valiant Home sells a product that is going to be different in any way from the product in a brochure, he claimed that he does not have to put that information into the contract. Mrs. Romond signed the proposal that day and gave Valiant Home a deposit of $3000 on the total contract price of $6700.*fn10 It is undisputed that the signed proposal became the contract between plaintiffs and Valiant Home.*fn11
The day after the window was installed, Mrs. Romond told Valiant that it was not the window she ordered and that she could not see out of the window.*fn12 The Romonds were dissatisfied with the size of the mullions and the fact that they could not see out of the window because of the extent of the frosted glass. They insisted that the mullions depicted in the brochure were smaller than the ones in the window, despite repeated representations to the contrary.
When the window was installed, the blinds did not fit because the inside measurement was only about ninety-four inches wide, rather than ninety-six, and the blinds had to be cut. Additionally, Mr. Romond testified that he and his wife never received a warranty on the window from either Great Lakes or Valiant Home. Valiant Home, in answers to interrogatories, indicated that warranties are mailed by Great Lakes to Valiant Home's customers. Great Lakes, however, claimed that it only supplies warranties to its dealers. Valiant admitted that he personally did not give the warranty to the Romonds, although he assumed that someone at Valiant Home sent it to them.
Valiant testified that right after the window was installed, Mrs. Romond showed him that the brochure had a two- diamond pattern, but she received only a one-diamond pattern. He denied that she told him that she wanted two diamonds at the time she signed the contract. He also denied that she made any mention of the size of the mullions before she signed the contract. He claimed that the only complaint she made right after the window was installed was about the glass. He promised to return with a representative from Great Lakes to see what could be done.
Within a week of the installation, Valiant brought Jeff O'Leary, a representative of Great Lakes from 1999 to 2004,*fn13 to the Romonds' house in an effort to resolve their dissatisfaction.*fn14 O'Leary told Mrs. Romond that the window was manufactured according to the order submitted by Valiant Home. O'Leary told the Romonds that the window in the brochure was a studio shot of a twelve-foot, five-light bow window which made the mullions look smaller. He insisted that the window in the brochure was the same window that the Romonds received.
Valiant confirmed that when he and O'Leary were at the Romonds' house, Mrs. Romond disputed O'Leary's statement that the window in the brochure was twelve feet wide. She pointed to the dining room table in front of the window and said that it could not possibly be a twelve-foot window from a comparison of the size of the table to the window. She contended that the brochure window was only eight feet wide. He also confirmed that Mrs. Romond "thought all along" that the mullions in the brochure were smaller than what she got and that she made this claim when he and O'Leary were at the Romonds' house. Mr. Romond believed that Valiant and O'Leary were lying to him.
In October 2001, Great Lakes proposed several glass patterns, including one with a double-diamond design, which would provide an increased viewing area. Valiant testified in detail respecting the proposals made by Great Lakes to modify the glass in the lights or to remake the window as a four-light bow to increase the viewing area. Mr. Romond testified that none of them were acceptable because they all had wide mullions, which they specifically did not want. He did concede that one of the glass proposals would have been acceptable if the mullions were smaller, but they were not. Mr. Romond also testified that they would not accept the proposal for a three-or four-light bow window with six-inch mullions because that was neither what they wanted nor what they ordered.
Walsh appeared as Great Lakes' representative at deposition and at trial. He testified at trial that the double-diamond glass pattern in the brochure can be manufactured in widths from 14-11/16 inches to 21-7/16 inches wide. With six-inch mullions the overall size of the window ranges between 98-3/4 inches and 131-1/2 inches.*fn15 A window smaller than 98-3/4 inches, like that of the Romonds, would have only a single-diamond glass pattern.*fn16
This is because the size of the diamonds is fixed and the other components are designed around the diamonds. If the window was larger than 131-1/2 inches, it would have three or more diamonds, depending on its size.*fn17 Walsh never saw a Great Lakes brochure with six-inch mullions.
Walsh explained that what really changed was the frame of the window around all four sides of a light. This was done in order to have uniform frame sizes for fixed and vented casements. The consequence of that change was that the standard mullions went from 3-7/16 inches wide in 1997 to six inches wide in 1998. Until Walsh's deposition on January 27, 2006, no one admitted to the Romonds that the window in the brochure had mullions narrower than the one installed in their home.
Although Walsh did not know the actual size of the window in the 1997 and subsequent brochures, he did know that it had to be between eighty-seven inches and 118-3/4 inches.*fn18 From looking at the picture, he felt that it was closer in size to the maximum because, at the minimum size, the two diamonds would have been touching. He explained that in the two-diamond pattern, the size of the diamond, the size of the clear glass below the diamond, and the size of the frosted glass are always the same, but as the width of the light increases from 14-11/16 inches up to 21-7/16 inches, the amount of clear glass between the diamonds increases.*fn19 Thus, the change to the size of the mullions required an increase in the overall width of the window, precluding an eight-foot window from having a double-diamond glass pattern after 1998.*fn20
The Great Lakes brochures and advertising continued to show the smaller 3-7/16 inch mullions on the bow window, even though they were no longer available. A window with 3-7/16 inch mullions could only be manufactured if Great Lakes had leftover stock. Walsh did acknowledge that he would have expected a dealer to tell a customer that the window would not look like the brochure and would offer to provide the customer with photographs of what the window would look like.
Walsh admitted that, before the change in the size of the mullions, the bow window depicted in the brochure could not have been any larger than 9 feet, 10-3/4 inches, and that after the mullions were enlarged the maximum standard width was slightly under eleven feet wide. He testified that Great Lakes can manufacture special-order windows that do not conform to their standard sizes and patterns, including narrower mullions and varied glass patterns, but stated that Valiant Home did not submit an order for a customized window. Although Great Lakes could have remade the lights with a mullion only one-half inch bigger than the pre-1968 mullions, i.e., 4-1/16 inches wide, it did not offer to do so.
There was also testimony respecting the course of the litigation as a result of the opening statement of Valiant Home's counsel and the judge's ruling permitting that statement.
Mr. Romond explained the progression of the suit from a small claims case to a Superior Court case with CFA claims. He testified that he moved the case to Superior Court because Valiant Home and Great Lakes kept insisting that the mullions they got were the same size as those in the brochure. Mr. Romond also testified in some detail respecting the expense of the litigation and his obligation for counsel fees. This was introduced because the trial judge had permitted defense counsel to discuss counsel fees in their opening statements and had denied the Romonds' motion for a mistrial based on those statements.
After the jury returned a verdict in favor of defendants and the trial judge denied the Romonds' motion for a new trial, they filed this appeal and present the following issues for our consideration.
POINT I -- THE LOWER COURT IMPROPERLY DENIED THE PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT.
A. The Undisputed Proofs Established that the Defendants Committed an Unlawful Affirmative Act in Violation of the Consumer Fraud Act as a Matter of Law.
B. The Undisputed Proofs Established that the Plaintiffs Sustained an Ascertainable Loss as a Direct Result of the Defendants' Unlawful Practice.
POINT II -- THE TRIAL COURT'S REFUSAL TO INSTRUCT THE JURY ON ALL RELEVANT PORTIONS OF THE CONSUMER FRAUD ACT AND THE HOME IMPROVEMENT PRACTICES REGULATIONS WAS REVERSIBLE ERROR.
POINT III -- THE CUMULATIVE EFFECT OF THE TRIAL COURT'S ERRONEOUS EVIDENTIARY RULINGS RESULTED IN A MISCARRIAGE OF JUSTICE.
A. The Trial Court Abused Its Discretion in Allowing the Defendants to Present Evidence of the Pre-Suit Settlement Offers at Trial.
B. The Trial Court Abused Its Discretion in Refusing to Allow the Plaintiffs to Ask Leading Questions of the Defendants' Representatives Called in Their Case in Chief and in Allowing the Defendants to Cross-Examine Their Own Representatives Through Leading Questions.
C. The Trial Court Abused Its Discretion in Refusing to Allow the Plaintiff to Read Relevant Portions of the Deposition Testimony of the Defendants' Representatives to the Jury.
POINT IV -- THE TRIAL COURT SHOULD HAVE GRANTED THE PLAINTIFFS A NEW TRIAL BECAUSE THE JURY'S VERDICT WAS AGAINST THE WEIGHT OF THE EVIDENCE.
POINT V -- THE TRIAL COURT ABUSED ITS DISCRETION IN REFUSING TO ALLOW THE PLAINTIFFS TO PRESENT A CLAIM FOR A KNOWING OMISSION AGAINST GREAT LAKES.
On February 21, 2006, the Romonds filed a cross-motion for summary judgment. They sought a ruling that defendants violated the CFA as a matter of law and that they sustained an ascertainable loss in the amount of $5461, the cost of the window. They sought entry of a judgment for treble damages plus attorneys' fees and costs. The Romonds contended in their summary judgment motion that the Great Lakes sales brochure depicted a window with a discontinued mullion size, that they relied on the photograph of the window in placing their order with Valiant Home, and that the Great Lakes representatives, nonetheless, insisted for more than four years after delivery of the window that the Romonds received a window with the exact mullion size depicted in the brochure. Great Lakes, through the testimony of John Walsh, finally admitted on January 27, 2006, that the mullions depicted in the brochure were 3-7/16 inches wide and that a 1998 design change enlarged the mullions to six inches in width for windows manufactured thereafter.*fn21 The Romonds asserted that these facts established an affirmative-act violation of N.J.S.A. 56:8-2*fn22 as an unconscionable commercial practice, deception, fraud, or misrepresentation.*fn23
The motion judge denied both motions for summary judgment. He found:
In this case, it appears that there is a general dispute as to whether defendants committed unlawful practice under the [CFA] or whether the plaintiffs have sustained an ascertainable loss as a result. There is a genuine issue as to whether the defendants represented to the plaintiffs that they could have the window as pictured in the brochure.
There is also a genuine issue whether defendants informed the plaintiffs that the particular design pictured in the brochure was unavailable because of the eight-foot opening in the plaintiff's home. Whether or not such statements were exchanged between the parties will . . . help determine whether there was any consumer fraud. Therefore, the summary judgment . . . should be denied at this time.
Nonetheless, he also found that "if, indeed, the defendants violate[d] the [CFA], the plaintiffs will have suffered an ascertainable loss." The motion judge denied the Romonds' motion, finding that there were genuine disputed issues of fact precluding summary judgment.
We review the decision of the motion judge based solely on the evidential materials submitted on the summary judgment motion.*fn24 Bilotti v. Accurate Forming Corp., 39 N.J. 184, 188 (1963); Scott v. Salerno, 297 N.J. Super. 437, 447 (App. Div.), certif. denied, 149 N.J. 409 (1997).*fn25 We apply the same standard used by the motion judge to resolve the issues, without affording any special deference to the judge's interpretation of the law. Balsamides v. Protameen Chems., Inc., 160 N.J. 352, 372 (1999); Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995); Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608 (1998). We must decide whether "the competent evidential materials presented, when viewed in the light most favorable to the non-moving party, are sufficient to permit a rational factfinder to resolve the alleged disputed issue in favor of the non-moving party." Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995).
To prove an affirmative-act violation of the CFA, the Romonds must establish unlawful conduct by defendants, an ascertainable loss, and a causal relationship between the unlawful conduct and the ascertainable loss. Dabush v. Mercedes-Benz USA, LLC, 378 N.J. Super. 105, 114 (App. Div.), certif. denied, 185 N.J. 265 (2005). Proof that defendants committed any one of the prohibited affirmative acts, an unconscionable commercial practice, deception, fraud, or misrepresentation, will establish consumer fraud. Cox, supra, 138 N.J. at 18-19. Intent is not an element of an affirmative-act violation. Id. at 17-18. Neither is knowledge of falsity. Mango v. Pierce-Coombs, 370 N.J. Super. 239, 251 (App. Div. 2004).*fn26 Not even negligence need be shown. Lingar v. Live-In Companions, Inc., 300 N.J. Super. 22, 28 (App. Div. 1997). This is because "the [CFA] is designed to protect the public even when a merchant acts in good faith." Cox, supra, 138 N.J. at 16.
Having reviewed the record before the motion judge, we conclude that there were genuine disputes of fact. There was a dispute as to whether Valiant told the Romonds they could have the exact same window pictured in the brochure or whether he told them that they could not have that window because the opening was too small. Valiant testified that when he first met the Romonds to discuss the window replacement, they did not concentrate on the window in the brochure. He also testified that he told them the configuration of the glass would be different. The Romonds, on the other hand, testified that they did concentrate on the window in the brochure and understood that they would receive the exact configuration of glass depicted. These fact disputes preclude a ruling as a matter of law that defendants violated the CFA, at the very least with respect to proximate causation. As a consequence, we affirm the denial of summary judgment.
The Romonds contend that the trial court erred in refusing to charge all of the affirmative acts specified in N.J.S.A. 56:8-2, and some of the provisions of the Home Improvement Practices Regulations, that is, N.J.A.C. 13:45A-16.2(a)(6)(v), -16.2(a)(9)(ii), -16.2(a)(11)(i), and -16.2(a)(12)(i) and (ii). The trial judge only charged on affirmative misrepresentation, not on unconscionable commercial practice, deception, or fraud, and not on N.J.A.C. 13:45A-16.2(a)(2)(iii) and -16.2(a)(3)(iv).
In reviewing a refusal to charge the jury on legal principles, we must determine whether there was factual support for the proposed charge. "Where there is a refusal to charge at all on a point that is involved in the case, such refusal is, in itself, an error in law." Petre v. State, 35 N.J.L. 64, 68 (Sup. Ct. 1871). Additionally, improper jury instructions may constitute plain error. Das v. Thani, 171 N.J. 518, 527 (2002). "Erroneous instructions are poor candidates for rehabilitation as harmless, and are ordinarily presumed to be reversible error." State v. Afanador, 151 N.J. 41, 54 (1997). When a jury charge as a whole does not adequately convey the law, a new trial should be granted. Fischer v. Canario, 143 N.J. 235, 254 (1996).
The Romonds urge that the trial judge erred in failing to instruct the jury on unconscionable commercial practice, deception, fraud, false pretense and false promise. The Romonds' counsel sought such a charge, but the judge would charge only misrepresentation. The CFA makes the following practices unlawful:
The act, use or employment by any person of any unconscionable commercial practice, deception, fraud, false pretense, false promise, misrepresentation, or the knowing, concealment, suppression, or omission of any material fact with intent that others rely upon such concealment, suppression or omission, in connection with the sale or advertisement of any merchandise or real estate, or with the subsequent performance of such person as aforesaid, whether or not any person has in fact been misled, deceived or damaged thereby . . . . [N.J.S.A. 56:8-2.]
The trial judge read this statute to the jury in its entirety and then instructed the jury that "concealment, suppression or omission" was not in the case and that the jury would be dealing only with the first part of the statute. He stated, "We're not dealing here with . . . any unconscionable commercial practice, deception, fraud, false pretense, false promise or misrepresentation." He included the definition of "misrepresentation" in his charge, but refused to instruct the jury with respect to the other affirmative acts.
Model Jury Charge (Civil), 4.23, "Model Charge Under Consumer Fraud Act" (2001), has defined the various affirmative acts the judge refused to charge as follows:
An "unconscionable commercial practice" is an activity in the public marketplace, which is basically unfair or unjust, which materially departs from standards of good faith, honesty in fact and fair dealing. To be unconscionable, there should be factual dishonesty and a lack of fair dealing.
"Deception" is conduct/advertisement misleading to an average consumer to the extent that it is capable of, and likely to, mislead an average consumer. It does not matter that at a later time it could have been explained to a more knowledgeable and inquisitive consumer, nor need the conduct/ advertisement actually have misled the plaintiff(s). The fact that the defendant(s) may have acted in good faith is unimportant. It is the capacity to mislead that is important.
"Fraud" is a perversion of the truth, a misstatement or a falsehood communicated to another person creating the possibility that that other person will be cheated.
"False pretense" is an untruth knowingly*fn27 expressed by a wrongdoer.
"False promise" is an untrue commitment or pledge (which is communicated to another person) to create the possibility that that other person will be misled. [Footnotes omitted.]
By comparison, a misrepresentation is defined in the following way:
A "misrepresentation" is an untrue statement which is made about a fact which is important or significant to the sale/advertisement, and is communicated to another person to create the possibility that other person will be misled. A "misrepresentation" is a statement made to deceive or mislead.*fn28
It is clear from these definitions that they are substantively different and there was more than sufficient evidence before the jury to support a verdict under any one of these definitions. Furthermore, it is evident that the jury was confused, because after beginning their deliberations, they asked to be recharged on the definition of fraud. Instead of responding to that question, the judge merely repeated the charge previously given to them. Through these omissions, the charge on the CFA was plainly erroneous.
The third category of CFA violations is failure to comply with regulatory requirements. N.J.S.A. 56:8-4. Pursuant to the authority granted by that section of the CFA, the Attorney General has promulgated regulations specific to home remodelers. The omitted regulations that the Romonds claim should have been charged provide as follows:
(a) Without limiting any other practices which may be unlawful under the Consumer Fraud Act, N.J.S.A. 56:8-1 et seq., utilization by a seller of the following acts and practices involving the sale, attempted sale, advertisement or performance of home improvements shall be unlawful hereunder.
6. Price and financing: . . . .
v. Request the buyer to sign a certificate of completion, or make final payment on the contract before the home improvement is completed in accordance with the terms of the contract; . . . .
9. Sales representations: . . . .
ii. Knowingly fail to make any material statement of fact, qualification or explanation if the omission of such statement, qualification or explanation causes an advertisement, announcement, statement or representation to be false, deceptive or misleading; . . . .
11. Guarantees or warranties:
i. The seller shall furnish the buyer a written copy of all guarantees or warranties made with respect to labor services, products or materials furnished in connection with home improvements. Such guarantees or warranties shall be specific, clear and definite and shall include any exclusions or limitations as to their scope or duration. Copies of all guarantees or warranties shall be furnished to the buyer at the time the seller presents his bid as well as at the time of execution of the contract, except that separate guarantees or warranties of the manufacturer of products or materials may be furnished at the time such products or materials are installed.
12. Home improvement contract requirements-writing requirement: All home improvement contracts for a purchase price in excess of $500.00, and all changes in the terms and conditions thereof shall be in writing. Home improvement contracts which are required by this subsection to be in writing, and all changes in the terms and conditions thereof, shall be signed by all parties thereto, and shall clearly and accurately set forth in legible form and in understandable language all terms and conditions of the contract, including, but not limited to, the following:
i. The legal name and business address of the seller, including the legal name and business address of the sales representative or agent who solicited or negotiated the contract for the seller;
ii. A description of the work to be done and the principal products and materials to be used or installed in performance of the contract. The description shall include, where applicable, the name, make, size, capacity, model, and model year of principal products or fixtures to be installed, and the type, grade, quality, size or quantity of principal building or construction materials to be used. Where specific representations are made that certain types of products or materials will be used, or the buyer has specified that certain types of products are to be used, a description of such products or materials shall be clearly set forth in the contract. [N.J.A.C. 13:45A-16.2.]
As to the regulation governing pricing and financing, we find no error in the refusal to charge that provision. The evidence adduced by the Romonds was that Mrs. Romond offered to pay Valiant Home the balance due under the contract while the workmen were installing the window and door. The regulation only prohibited Valiant Home from seeking payment before the work was complete, not accepting payment. N.J.A.C. 13:45A-16.2(a)(6)(v).
With respect to sales representations, N.J.A.C. 13:45A-16.2(a)(9)(ii), the judge erred in refusing to charge same. The evidence from Great Lakes would have supported an inference that Valiant Home had received a notice that the mullions had been changed, but did not communicate that to the Romonds. Furthermore, on the evidence presented, a jury might have concluded that Valiant did not specifically tell the Romonds that they would have only one diamond, not two, in the lights of their bow window. A jury could have concluded this was an omitted material fact, qualification or explanation that made the negotiation of the contract false, deceptive or misleading.
As to guarantees or warranties, the evidence at trial from Mr. Romond was that they never received any warranty, whereas Valiant testified that he did not know if Valiant gave the Romonds a warranty, although he would "like to think we did," but admitted that he personally had not done so, and the installers would not have had a warranty with them. This was more than sufficient evidence to mandate a charge under N.J.A.C. 13:45A-16.2(a)(11)(i), and the judge erred in refusing to charge it.
Last, we conclude that the trial judge erred in refusing to charge N.J.A.C. 13:45A-16.2(a)(12)(i) and (ii). The agreement between the Romonds and Valiant Home was well in excess of the $500 minimum, was in writing, and was signed by the parties. At issue was whether the contract provisions complied with regulatory subsections (i) and (ii). The contract did not specifically state the legal name and business address of Valiant as the sales representative, although he did sign the contract. The jury should have been charged in this respect to determine whether the contract violated subsection (i). The jury should also have been charged under subsection (ii) to determine whether the written contract satisfied the obligation to adequately describe the product as prescribed by the regulation, in light of the jury's findings of fact with respect to the disputes over the discussions that led up to the preparation of the proposal.
We also note that the Cox Court held that intent is not an element of [violations of specific regulations], and the regulations impose strict liability for such violations. The parties subject to the regulations are assumed to be familiar with them, so that any violation of the regulations, regardless of intent or moral culpability, constitutes a violation of the Act. [Cox, supra, 138 N.J. at 18-19 (citation omitted).]
The jury should have been charged that the regulations require certain information in a home improvement contract, that intent or moral culpability need not be shown by the Romonds and that failure to include the information required by the regulation is a violation of the CFA.
The Romonds argue that the trial judge erred at the commencement of trial when he limited their proofs to affirmative acts. Great Lakes objected that the complaint did not allege a knowing omission and the Romonds sought leave to amend based on the deposition testimony of Walsh given just a month before the commencement of trial. They also argued that the complaint alleged consumer fraud, which encompassed knowing omissions. The judge refused permission to amend and barred any testimony or other evidence of a knowing omission.
The judge took a far too stringent view of the complaint in this matter. When faced with a challenge to the adequacy of a pleading, all facts, reasonable inferences and implications must be considered most strongly in favor of the pleader. Spring Motors Distribs., Inc. v. Ford Motor Co., 191 N.J. Super. 22, 29-30 (App. Div. 1983), rev'd on other grounds, 98 N.J. 555 (1985). A complaint is entitled to a liberal reading. See Van Dam Egg Co. v. Allendale Farms, Inc., 199 N.J. Super. 452, 455-56 (App. Div. 1985). Defendants apparently did not file a motion for a more specific statement of the claim pursuant to R. 4:6-4(a) at any time prior to trial. Nor did they submit contention interrogatories to the court to establish that no claim for a knowing omission had been advanced by the Romonds prior to the first day of trial. The pleading was sufficient to make out a claim of a CFA affirmative act, and it was equally sufficient to set forth a claim of a knowing omission.
Even if the complaint was not sufficiently specific, the judge should have allowed the Romonds to amend their pleading. The record established that Great Lakes did not produce a corporate representative, Walsh, until January 27, 2006, and the trial began on April 5, 2006. Walsh's testimony established that prosecution of a knowing omission was appropriate. Leave of court to amend a pleading less than ninety days prior to trial "shall be freely given in the interest of justice." R. 4:9-1. Such leave is to be granted without considering the merits of the amendment. See Kernan v. One Washington Park Urban Renewal Assocs., 154 N.J. 437, 456-57 (1998); Hansen v. Hansen, 339 N.J. Super. 128, 140 (App. Div. 2001). Indeed, leave to amend should be liberally exercised even on remand after appeal. Zacharias v. Whatman PLC, 345 N.J. Super. 218, 226 (App. Div. 2001), certif. denied, 171 N.J. 444 (2002). The trial judge erred in this respect when he refused to permit an amendment.
After all the proofs had been submitted, the Romonds again sought a jury charge on "omission of any material fact with intent that others rely upon such concealment, suppression or omission." Counsel for Great Lakes responded that "it's fairly obvious that both the misrepresentation affirmative act and the omission needs to be charged to this jury." Nonetheless, the judge refused to give such a charge.
The facts clearly supported a knowing-omission charge. The jury could have concluded that Valiant Home knew that the window in the brochure was no more than nine feet, 10-3/4 inches, the size of the mullions had been increased, and a two-diamond pattern was not available for windows smaller than 98-3/4 inches wide, yet omitted to call this to the attention of the Romonds. The judge erred in refusing to do so.
Although the matter must be retried, we deal with issues respecting evidentiary rulings because they are likely to arise at the retrial. The Romonds raise three issues on appeal respecting erroneous evidentiary rulings. First, they contend that the trial judge erred in allowing defendants to present evidence to the jury regarding settlement offers made prior to the institution of this action. Second, they urge that the trial judge erred in precluding them from asking leading questions on direct when they called defendants' representatives to the witness stand. Third, they argue that the trial judge erred in refusing to allow them to read into the record relevant portions of deposition testimony given by defendants' representatives.
With respect to the first issue, the Romonds made an in limine application to bar any evidence of settlement negotiations. In arguing the motion, their attorney stated that the Romonds had no objection to evidence respecting modifications of the glass because a merchant should be given an opportunity to cure,*fn29 but that evidence of their cash-settlement offer and their offer to provide a window with less than five lights should be excluded under N.J.R.E. 408. He also pointed out that no offers were made before the Romonds threatened litigation. He urged that the evidence would be used "simply to suggest that the plaintiffs are unreasonable and they can't be satisfied."
Valiant Home argued that there was no breach, and thus, the offers were not made in settlement but only to satisfy the customer. It also argued that the evidence was admissible to prove that no consumer fraud had been perpetrated because a merchant that commits consumer fraud abandons the customer.
Great Lakes, on the other hand, argued that everything but the monetary offer was admissible to disprove consumer fraud because the reach of the CFA extends to subsequent performance. See N.J.S.A. 56:8-2. It also contended that this evidence was admissible as evidence of efforts to cure under the contract.
The trial judge found that defendants "ha[d] a right to prove . . . that they did offer what they promised and that they did offer what was possible." He also found that defendants "have to have . . . an opportunity to prove that they tried to comply with the contract, that they made their best effort to deliver that which they promised." He concluded that the evidence, except for the monetary offer, was admissible.
The admission or exclusion of evidence is committed to the sound discretion of the trial judge, and those rulings will not be disturbed absent a mistaken exercise of discretion. Verdicchio v. Ricca, 179 N.J. 1, 34 (2004); Green v. N.J. Mfrs. Ins. Co., 160 N.J. 480, 492 (1999); State v. Simon Family Enters., L.L.C., 367 N.J. Super. 242, 257 (App. Div. 2004).
N.J.R.E. 408 provides as follows:
When a claim is disputed as to validity or amount, evidence of statements or conduct by parties . . . in settlement negotiations . . . shall not be admissible to prove liability for, or invalidity of, or amount of the disputed claim. Such evidence shall not be excluded when offered for another purpose; and evidence otherwise admissible shall not be excluded merely because it was disclosed during settlement negotiations.
We have explained,
There are two basic rationales for the exclusion of evidence of settlement discussions and settlements. One, advocated by Professor Wigmore, ". . . is that offers of compromise are excluded because not factually relevant; that they do not imply a belief (and, consequently, an admission by implication) on the part of the offeror that the adversary's claim is well founded, but rather that the further prosecution of the claim is preferably avoided by a purchase of the offeror's peace." Winfield Mutual Housing Corp. v. Middlesex Concrete Products & Excavating Corp., 39 N.J. Super. 92, 100 (App. Div. 1956); see 4 Wigmore, Evidence (Chadbourn rev. 1972), § 1061. The other, advocated by Professor McCormick, is "the social desirability of promoting settlements of controversies over disputed claims."
Winfield Mutual Housing, supra, at 100; see McCormick, Evidence (3 ed. 1984), § 274; see also Rynar v. Lincoln Transit Co., Inc., 129 N.J.L. 525, 529 (E. & A. 1943). [Wyatt v. Wyatt, 217 N.J. Super. 580, 586 (App. Div. 1987).]
In Wyatt the plaintiff offered evidence of a settlement she reached with Firestone, which was not a party to the lawsuit. Id. at 584. We noted that the evidence had not been offered to prove Firestone's liability, and thus, did not directly contravene N.J.R.E. 408. Id. at 586. However, we concluded that "this evidence should have been excluded because it had little or no probative value with respect to Firestone's responsibility for the accident and yet had an inherent capacity to unduly influence the jury." Id. at 587.
We are satisfied, here, that it was a mistaken exercise of discretion to admit the evidence relating to the offer to provide a bow window with less than five lights. That proposal was not an effort to cure because the contract clearly called for a five-light bow window. N.J.S.A. 12A:2-508. Furthermore, it was not evidence tending to disprove any consumer fraud in the subsequent performance of the contract because the offer was made in the context of Great Lakes' insistence that the window in the brochure was twelve feet wide with six-inch extrusions. It was simply an offer to settle after the Romonds threatened to get their attorneys involved in the dispute. The trial judge failed to consider the "inherent capacity [of the evidence] to unduly influence the jury." Wyatt, supra, 217 N.J. Super. at 587.
In her opening remarks, the Great Lakes attorney suggested to the jury that this "case is about buyer's remorse." The attorneys for both Great Lakes and Valiant Home described their settlement proposals and commented on how the Romonds were being difficult in settlement negotiations. The evidence, in the context of these opening remarks, clearly had the capacity to unduly influence the jury and should have been excluded.
The Romonds next assert that the trial judge erred in precluding them from asking leading questions of defendants' representatives. Additionally, the trial judge would not permit their counsel to impeach the testimony of Walsh. When Valiant was called to the stand by the Romonds, their attorney asked Valiant a leading question, to which Valiant Home's attorney objected. The court ruled that Valiant was the Romonds' witness and their attorney "cannot ask him any leading questions . . . , because he's not a named defendant." At side bar the Romonds' relied on N.J.R.E. 611 and argued that because Valiant was the president of Valiant Home, he was associated with defendant, and the Romonds should be able to ask leading questions of him. The judge rejected that argument and ruled that the Romonds would have to show that Valiant was hostile before leading questions could be used. Similar rulings were made with respect to the examination of Walsh, whom the Romonds also called to the stand.
The right to call an adverse party to the stand was established by N.J.S.A. 2A:81-6. The right to ask leading questions of such a witness is governed by N.J.R.E. 611(c), which provides:
Leading questions should not be used on the direct examination of a witness except as may be necessary to develop the witness' testimony. Ordinarily, leading questions should be permitted on cross-examination.
When a party calls an adverse party or a witness identified with an adverse party, or when a witness demonstrates hostility or unresponsiveness, interrogation may be by leading questions, subject to the discretion of the court. [Emphasis added.]
There can be no doubt that Valiant and Walsh were witnesses identified with the adverse parties. The Romonds were not bound by the testimony of these witnesses. Becker v. Eisenstodt, 60 N.J. Super. 240, 248-49 (App. Div. 1960). They were entitled to broad latitude in their direct examination of Valiant and Walsh. State v. Rajnai, 132 N.J. Super. 530, 541 (App. Div. 1975). Although the right to ask leading questions of witnesses associated with an adverse party is subject to the discretion of the court, the ruling by the trial judge was not made in the exercise of his discretion but, rather, from a misunderstanding of N.J.R.E. 611(c). On retrial the request to utilize leading questions should be analyzed under the proper reading of the rule and the decision should be explained. We add that under the circumstances of this case, we see no impropriety in permitting the use of leading questions.
Finally, the Romonds argue that the trial judge erred in refusing to allow them to read into the record relevant portions of deposition testimony given by defendants' representatives. The objection to one question posed to Walsh was that it lacked a foundation in the evidence and the second question, which would have provided the foundation, was that it improperly asked for a comparison of the mullions before 1998 with the mullions "today," which would have been the date of Walsh's deposition. The objections were proper and we find no mistaken exercise of discretion in the ruling. The lack of this evidence can be cured on retrial with leading questions.
The third reading that was excluded was a series of questions posed to Valiant about whether the Romonds received a window like the one in the brochure. We perceive that the Romonds' concern over the exclusion of those questions should be cured on retrial with leading questions.
Because a new trial is mandated by the errors described above, we need not address the issues raised by the Romonds respecting the weight of the evidence. We do, however, make one observation respecting the evidence presented to the jury on the issues of treble damages and an award of counsel fees and costs. In order for evidence to be admissible, it must be relevant, i.e., "hav[e] a tendency in reason to prove or disprove any fact of consequence to the determination of the action." N.J.R.E. 401. Because the trebling of damages and the award of counsel fees and costs under the CFA are issues reserved to the judge, N.J.S.A. 56:8-19, they have no relevance to any issues to be determined by the jury.
The trial judge erred when he permitted defense counsel, over the objection of the Romonds, to comment on these issues in his opening statement and to argue in his closing that the jury can clearly see that the expectations here for Mr. and Mrs. Romond and their lawyers is for the legal fees to be paid by the defendants in this case that the motivation here to prosecute a consumer fraud case is to try to get all the legal fees paid and triple the amount of the window by getting you to believe the simple fact that we said, Romonds, that we want the exact window in the picture, and Valiant said I can get you the exact window in the picture.
This was plainly prejudicial and must be excluded from evidence on retrial. The requirement that an ultimate-outcome charge generally be given, Wanetick v. Gateway Mitsubishi, 163 N.J. 484, 494-96 (2000), does not open the door to presentation of evidence respecting counsel fees and argument thereon.
We remand this matter for a new trial consistent with this opinion before another judge of the Law Division to be selected by the Assignment Judge of Middlesex County. R. 1:12-3(a).
Reversed and remanded for a new trial.