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Real v. Radir Wheels

April 8, 2009


On certification to the Superior Court, Appellate Division.


(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).

In this appeal, the Court determines whether the Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -20, applies to a transaction where an out-of-state consumer purchased a used automobile from an in-state seller via an internet advertisement; and specifically, whether the individual seller satisfies the CFA definition of "person."

Plaintiff Lyle Real, a Missouri resident, came upon an internet auction advertisement for a 1970 Chevrolet Corvette Convertible. The advertisement described the car as having a good frame, good soft top, original radio, and new exhaust system. The ad also stated that the "original interior is ok but seats are a little worn." The e-mail address and telephone number listed on the ad belonged to defendant Radir Wheels, Inc., a company wholly owned by defendant Richard Conklin. Based on the ad, plaintiff bid $13,651 for the car. After placing his bid but before the auction closed, plaintiff telephoned the number and spoke with Conklin. Conklin verified the contents of the ad and assured plaintiff that the Corvette was in good condition and could be driven from New Jersey to Missouri. After plaintiff's bid won the auction, he again contacted Conklin. This time Conklin told him it might not be safe to drive the car from New Jersey to Missouri: the automatic headlights and windshield wipers did not work, and the car had no spare tire. Those defects were not disclosed in the ad or in Conklin's earlier conversation with plaintiff. Plaintiff thus had the Corvette shipped to Missouri. He paid for the car with a check made payable to Conklin and received title to the car from Conklin, but in a Radir Wheels envelope.

Once the Corvette arrived in Missouri, plaintiff had it taken to a specialty repair shop for an examination. The car's frame was rusted nearly in half, thus disqualifying it from registration in Missouri; the convertible top was in poor condition; the seats were ripped in various places; the driver's seat frame was broken; the radio was not the original equipment; the engine hesitated during acceleration; and the carburetor was out of tune. According to plaintiff, the description of the Corvette in the ad was "not even close" to the car he received, and if he had known the Corvette's true condition, he never would have bought it. Plaintiff noted that he paid over $13,000 for a car that was then worth from $5,000 to $8,000. He also paid over $40,000 for professional work that rendered the car, once repaired, worth in the $25,000 to $30,000 range.

The trial court, sitting without a jury, heard the case. The court ruled that all actions taken on the seller's behalf were Conklin's alone; it thus dismissed plaintiff's claims against Radir Wheels. It also found that the Corvette did not have a solid frame; the engine did not run strong; the headlights and windshield wipers did not function; the seat covers were not worn, but torn; the car had been owned by more than one person; and the radio was not original equipment. The court also found that Conklin qualified as a "dealer" under the CFA, and that his actions had been proved to have violated the CFA by clear and convincing evidence. It found that plaintiff's ascertainable loss under the CFA was $8,651, representing the difference between the amount paid and the value of what was delivered. As provided in the CFA, the court trebled those damages to $25,953, and awarded attorneys' fees and costs.

In an unpublished opinion, the Appellate Division affirmed in part, reversed in part, and remanded the case for the entry of a modified judgment. The panel concluded that the trial court should have granted Conklin's motion to dismiss plaintiff's CFA claim because there was no evidence that Conklin was a "dealer" or "merchant" under the CFA. The panel nevertheless upheld the judgment against Conklin based on an implicit finding of common law fraud; affirmed the $8,651 award of damages; reversed the trebling of damages and the award of fees and costs under the CFA; and remanded the matter to the trial court to reconsider the issues of costs and prejudgment interest.

The Supreme Court granted plaintiff's petition for certification. 196 N.J. 344 (2008).

HELD: Plaintiff pled and proved a textbook Consumer Fraud Act claim. The trial court found by clear and convincing evidence that Conklin intentionally engaged in unconscionable commercial practices in connection with the advertisement and sale of merchandise; Conklin satisfies the CFA definition of "person" and the Corvette satisfies the CFA definition of "merchandise"; and plaintiff suffered an ascertainable loss.

1. The CFA is remedial legislation designed to address sharp dealings in the marketing of merchandise whereby the consumer could be victimized by being lured into a purchase through fraudulent or deceptive practices. The CFA outlaws the use "by any person of any unconscionable commercial practice, . . . misrepresentation, or the knowing . . . omission of any material fact . . . in connection with the sale or advertisement of any merchandise or real estate."

N.J.S.A. 56:8-2. "Advertisement" includes the attempt to induce a person to acquire an interest in merchandise; and "merchandise" includes any goods offered to the public for sale. N.J.S.A. 56:8-1. The CFA also expansively defines a "person" to include any natural person, company or business entity. The wide breadth of the Legislature's definition of the CFA's scope is reflected in the varied contexts in which the statute has been applied. (pp. 11-13)

2. Although intentionally broad, the reach of the CFA is not without boundaries. When determining whether activity presumptively within the ambit of the CFA nevertheless is exempt from its reach, a court must be satisfied that a direct and unavoidable conflict exists between application of the CFA and application of another regulatory scheme. The conflict must be sharp, and must not simply constitute a mere possibility of incompatibility. Application of those principles has led to few, very limited exceptions to the CFA's reach. (pp. 14-16)

3. The Court's duty is to construe the statute as enacted. A court should not resort to extrinsic interpretive aids when the statutory language is clear, unambiguous, and susceptible to only one interpretation. Section 2 of the CFA prohibits certain acts performed by "any person," N.J.S.A. 56:8-2, and the statutory definition of "person," N.J.S.A. 56:8-1(d), is sufficiently expansive to ensnare defendant. Defendant cannot claim that he is a member of a regulated industry or of a learned profession and, hence, he does not qualify for exemption from the CFA's reach. As a plain matter of statutory interpretation, the CFA governs defendant's conduct in this case. (pp. 16-18)

4. Relying on Strawn v. Canuso, 140 N.J. 43 (1995), Conklin asserts that he is not a "dealer" of automobiles and, thus, is not subject to the CFA. In respect of the imposition of liability under the CFA, Strawn categorically states that real estate brokers, agents, and salespersons representing professional sellers of real estate are subject to the CFA. Nothing in Strawn supports the proposition Conklin advances. For purposes of determining whether the CFA applies, it is immaterial whether Conklin was a "dealer," a label that has relevance in this context solely within the meaning of the statute commonly known as the Used Car Lemon Law. By its own terms, the Used Car Lemon Law never was intended to substitute for the CFA; on the contrary, it is intended to supplement the CFA's rights and remedies. Because no statutory or regulatory regime -- akin to those governing public utilities or regulated learned professions -- purports to govern the sale of used cars to the exclusion of all others, there is no exception to the CFA's reach that is applicable here. (pp. 18-21)

5. The Court rejects plaintiff's claim that the trial court erred in dismissing Radir Wheels as a party defendant. The trial court's finding that the sale was by Conklin and not by Radir Wheels is supported by sufficient credible evidence and is entitled to deference. (p. 21)

The judgment of the Appellate Division is REVERSED and the judgment of the Law Division is REINSTATED in all respects.


The opinion of the court was delivered by: ...

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