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Cardillo v. Bolger

January 12, 2009


On appeal from the Superior Court of New Jersey, Law Division, Civil Part, Hudson County, Docket No. L-1272-06.

Per curiam.


Submitted: September 24, 2008

Before Judges Fisher and C.L. Miniman.

Plaintiff Cathy Cardillo presents a narrow issue for our consideration in her appeal from a final judgment entered on September 13, 2007, which dismissed her claims against defendant Brian Bolger and entered judgment in her favor against defendant B & C Renovation, Inc. (B&C), in the amount of $42,000. She asserts that the judge erred in concluding that Bolger was not liable for his corporation's violations of regulations governing home-improvement practices. We now reverse and remand for entry of judgment against Bolger.

The first count of plaintiff's complaint alleged violations of the Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -106, by both defendants. The second count, also against both parties, sought damages for breach of contract. The plaintiff ultimately limited her CFA claims to violations of the regulations governing home-improvement practices, N.J.A.C. 13:45A-16.1 to -16.2, for which strict-liability is imposed under Cox v. Sears Roebuck & Co., 138 N.J. 2 (1994). Plaintiff also withdrew her breach of contract claim and any request under the CFA for treble damages or attorney's fees, seeking only the statutory remedy of a refund, N.J.S.A. 56:8-2.11, in the amount of $42,500 of the $68,000 she had already paid to B&C.

At trial, plaintiff made no effort to impose liability on Bolger by piercing the corporate veil. Instead, she relied exclusively upon the active participation of Bolger, a corporate officer and the sole shareholder of B&C, in the CFA violations committed by the corporation, relying on the tort-participation theory of liability recognized in Saltiel v. GSI Consultants, Inc., 170 N.J. 297 (2001), which the judge found inapplicable here.

Our discussion of the facts is drawn exclusively from the judge's findings of fact, which are summarized here.*fn1 Bolger is the sole owner of B&C and there was no evidence of any other person acting on behalf of the corporation relative to the issues before the court. The litigation arose out of a home-renovation project that began in February or March 2004. The written contract had been lost prior to trial.

The judge found by a preponderance of the evidence that plaintiff had established a CFA claim against B&C. Specifically, he found that the following acts constituted regulatory violations: (1) B&C was not a registered licensee with the City of Jersey City as required by municipal ordinance at the time of the home-improvement work and had failed to post the performance bond required by municipal ordinance;*fn2 (2) B&C started the demolition necessary to prepare for the home improvements without having obtained the necessary permits;*fn3 (3) B&C installed an inadequate cooling and heating system which was not properly sized for the needs of the plaintiff and the work that had been contracted;*fn4 and (4) B&C delayed in the completion of the work and, in some respects, failed to complete the work.*fn5 The judge concluded that these violations triggered the strict-liability standard of the CFA under Cox. He also found that the asserted defenses were not proven and, thus, he entered judgment in favor of plaintiff and against B&C for the full amount of the refund sought.

With respect to Bolger, the judge found that he was not involved in a fraudulent scheme, although he may have been negligent and may have failed to perform to the level required of him. The judge pointed out that plaintiff advanced $30,000 to B&C on March 12, 2004, and that Bolger applied for construction permits on March 17, 2004, and paid the required fee, which was inconsistent with a fraudulent scheme. Also, the judge found that Bolger cooperated with a structural inspection of the premises by plaintiff's engineer and was willing to make certain corrections to the work, albeit "[w]hether he did them the right way or not is another story, but . . . he attempted to make corrections or offered to make corrections." Additionally, the judge found that Bolger admitted to the damage to the tub and attempted to make a correction, which was again inconsistent with a fraudulent scheme.

The judge concluded that these facts were distinguishable from the facts of Kugler v. Koscot Interplanetary, Inc., 120 N.J. Super. 216 (Ch. Div. 1972). Defendant's principal stockholder and officer participated in the fraudulent pyramid scheme in which defendant made misrepresentations to prospective distributors. Id. at 257. Here, the judge opined that the tort-participation theory described in Saltiel required more than was required to impose strict-liability for CFA regulatory violations under Cox. He concluded that the evidence was insufficient to trigger the application of the tort-participation theory because Bolger was not involved in a fraudulent scheme.

The judge stated, "So I don't see this type of fraud that is required to get the participation theory to be involved in this case. And Saltiel goes into this analysis of whether . . . the facts in this case . . . sound in contract or sound in tort." The judge concluded that the CFA claims here sounded in contract and that the tort-participation theory had not been proven. Consequently, he dismissed the claims against Bolger individually. On the motion for reconsideration, the judge reaffirmed his earlier decision. This appeal followed.

Plaintiff does not raise any issue with respect to the judge's fact-findings, which are binding on appeal. See Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974). However, plaintiff contends that the judge misconstrued and misapplied the tort-participation theory of liability to the facts when he dismissed her claims against Bolger, arguing that B&C's CFA violations sounded in tort rather than contract. She also contends that Bolger is made individually liable for his own acts, although done as an officer and shareholder of B&C, pursuant to the definition of "person" in the CFA. See N.J.S.A. 56:8-1(d). Because these issues present questions of law, our review is plenary. Manalapan Realty, L.P. v. Twp. Comm. ...

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