April 13, 2009
MITCHELL AND JODI ZIETS, PLAINTIFFS-RESPONDENTS,
SWIM-MOR POOLS AND SPAS, AND BONETTI ENTERPRISES, INC., DEFENDANTS-APPELLANTS, AND CLARK BONETTI, BILL WRIGHT, WRIGHTWAY CONCRETE, AND ROBERT C. DUBOIS, P.E., DEFENDANTS.
On appeal from Superior Court of New Jersey, Law Division, Camden County, No. L-6407-03.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted February 3, 2009
Before Judges Wefing, Yannotti, and LeWinn.
Defendant Bonetti Enterprises, Inc., d/b/a Swim-Mor Pools and Spas ("Swim-Mor"), appeals from so much of the judgment entered by the trial court as found it liable to plaintiffs under the Consumer Fraud Act, N.J.S.A. 56:8-1 to -184. It does not contest that portion of the judgment which found it liable for negligence. After reviewing the record in light of the contentions advanced on appeal, we agree with Swim-Mor that the trial court erred when the court imposed liability against it under the consumer fraud statute.
Plaintiffs Mitchell and Jodi Ziets were constructing a new home in Cherry Hill and wished to have an in-ground pool installed at the same time. The Zeitses wanted their pool to be concrete and their search for a contractor who installed concrete pools led them to Swim-Mor. Mr. Zeits visited Swim-Mor and spoke with Jerry Brunetti. Mr. Zeits outlined what he wanted, including a walkway leading from the door of the finished basement to the pool. Brunetti explained how Swim-Mor worked and what it could do for the Zeitses. Mr. Zeits decided to select Swim-Mor to construct the pool.
Throughout the course of the proceedings below, Mr. Zeits was consistent in what led him to select Swim-Mor as the pool contractor--the fact that it installed concrete pools and that it performed all the work itself, that is, it did not subcontract out the job. He was asked on direct examination why he decided to select Swim-Mor. He responded with the following answer.
Well there [were] several reasons. I mean one was that we liked, we liked the shape of the pool. We liked the -- I mean everything about the pool it seemed to make sense. We liked what we heard in terms of the process.
You know they advertise in the promotional materials that they do everything themselves, they don't use subcontractors.
Kind of compared it to some of the other pool companies. So we liked all that 'cause obviously we just wanted to deal with one entity. That's how we built our house.
We dealt with a general contractor. We weren't dealing with all the individual subs so that was important to us. So all those things together is kind of what drove that decision.
In October 2000, the Zeitses and Swim-Mor signed a contract for Swim-Mor to construct a pool twenty-two feet wide and forty-five feet long in the rear of the Zeitses property for a price of $32,000. Item #5 of the construction specifications provided:
5. Excavation -- SWIM-MOR to layout and set elevation for pool on day of excavation for Owner[']s approval. SWIM-MOR will excavate, handshape, and remove soil on day of excavation.
When the time approached to begin construction of the pool, defendant Clark Bonetti, the principal of Swim-Mor, met with the Zeitses at the site to pin down the site of the proposed pool.
Swim-Mor hired defendant Robert C. DuBois, a professional engineer, to prepare a grading plan for the pool, which was submitted to Cherry Hill and approved. The plan shows the pool at an elevation approximately four inches higher than the door leading from the finished basement.
The Zeitses had no contact with DuBois and never discussed with Bonetti the elevation of the pool. After the pool shell was completed, the Zeitses learned that it was several inches higher than the basement door.
After plaintiffs moved into the home, they experienced repeated flooding problems in the finished basement. In 2003, they hired a landscape contractor who removed the slope leading from the pool to the basement. When this did not rectify the problem, they hired an engineer and landscaper; new drains were installed, together with pavers, to direct as much water as possible away from the house. This solution cured the problem.
Plaintiffs sued for damages, naming as defendants Swim-Mor, Bonetti, DuBois, and the contractor who installed the concrete surrounding the pool. Plaintiffs alleged both negligence and consumer fraud.
Following a bench trial, the trial court found that plaintiffs had suffered damages of $67,857.91 and that Swim-Mor had also violated the consumer fraud statute, making it liable for treble damages and counsel fees.*fn1 The final judgment totaled $314,493.45. The trial court rested its determination that Swim-Mor had violated the consumer fraud statute on its failure to consult with plaintiffs with respect to the elevation of the pool prior to excavation, in violation of the contract specification set forth above. On appeal, Swim-Mor challenges only the finding of liability under the consumer fraud statute.
The consumer fraud statute prohibits
[t]he 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, is declared to be an unlawful practice . . . . [N.J.S.A. 56:8-2.]
Liability under the statute does not require a finding of bad faith on the part of a defendant. Cox v. Sears Roebuck & Co., 138 N.J. 2, 16 (1994). Nor does it require proof of an intent to deceive. Gennari v. Weichert Co. Realtors, 148 N.J. 582, 605 (1997). Further, a party may be liable under the statute for making an affirmative misrepresentation without knowing that the representation was false when made. Ibid. Not every breach of a contract, however, constitutes a consumer fraud. Cox, supra, 138 N.J. at 18.
In order for a misrepresentation to constitute a violation of the statute, it must be material. Gennari, supra, 148 N.J. at 607. For liability under the statute to attach, an affirmative misrepresentation must have been on a "critical issue." Vagias v. Woodmont Properties, L.L.C., 384 N.J. Super. 129, 134 (App. Div. 2006).
In Vagias, the plaintiffs were looking to purchase a home in the Montville section of Montville Township, as opposed to the Towaco and Pine Brook sections of the Township. Id. at 131. Their real estate agent showed them a home which she told them was in the Montville section. Id. at 131-32. The home, however, was actually located in the Towaco section of Montville, but the agent was not aware of that. Ibid. The plaintiffs did not learn of this error until they had completed their purchase and they then sued the agent. Ibid. The trial court dismissed their claim, and they appealed. We remanded the matter, finding that the agent could be liable under the consumer fraud statute for misrepresenting the house to be in the Montville section even if she did not know the house was not in that section if it were proven at trial that the misrepresentation went to a critical issue. Id. at 136.
Ji v. Palmer, 333 N.J. Super. 451 (App. Div. 2000), is also instructive. The plaintiffs in that matter purchased a four-unit property in Atlantic City in an area zoned for single-family use. Id. at 454. The contract called for the seller to produce both a certificate of occupancy and a certificate of land use at the closing. At the closing, the seller's broker produced only a certificate of occupancy. The buyer's broker told the plaintiff that seemed acceptable, and plaintiff closed on the transaction. After the closing, plaintiff learned of the single-family zoning and sued his broker, including a claim of consumer fraud. The trial court dismissed the suit against the broker, and plaintiff appealed. Id. at 460. In considering whether representations by the broker could be considered material to the transaction, we looked to the discussion of materiality in the Restatement.
A statement or matter is material if: "(a) a reasonable person would attach importance to its existence in determining a choice of action . . .; or (b) the maker of the representation knows or has reason to know that its recipient regards or is likely to regard the matter as important in determining his choice of action, although a reasonable man would not so regard it."
[Id. at 462 (quoting Restatement (Second) of Torts § 538(2) (1977)).]
We remanded the matter to the trial court to determine whether the broker's misrepresentation about the sufficiency of the certificate of occupancy "induced" plaintiff to complete his purchase of this four-unit building. Id. at 463.
For plaintiffs to have prevailed on the consumer fraud claim against Swim-Mor, they were required to establish that the provision in their contract that Swim-Mor would secure their approval for the elevation of the pool was material to their decision to hire Swim-Mor to construct their pool. Unlike the plaintiffs in Vagias, supra, and Ji, supra, plaintiffs had the opportunity to establish that element at trial. The record, however, is barren of any proof that this provision of the contract was "material" to their decision to retain Swim-Mor. Rather, the record makes clear that plaintiffs selected Swim-Mor because they liked the shape of the pool to be installed, the process that Swim-Mor utilized in its construction method, and that Swim-Mor did all the work in-house. Plaintiffs never testified that they selected Swim-Mor because Swim-Mor promised to consult with them with respect to the elevation of the pool.
Clearly, the elevation of a pool would be an important item to anyone installing a pool. That, however, is not sufficient to create liability under the consumer fraud statute.
Plaintiffs were required to establish that Swim-Mor's promise to consult with them in fixing the elevation of the pool was "material" to their decision to hire Swim-Mor. Absent such testimony, there is no basis to find a violation of the consumer fraud statute.
Plaintiffs contend that Swim-Mor not only breached its contract with plaintiffs but violated a regulation enacted under the consumer fraud statute and that this regulatory violation supports a determination of liability under the statute. We recognize that a violation of an administrative regulation promulgated under the consumer fraud statute constitutes a violation of the statute. Cox, supra, 138 N.J. at 17. We also recognize that a defendant's liability for violation of such a regulation is a matter of strict liability. Id. at 18-19.
In our judgment, the regulation upon which plaintiffs rely, N.J.A.C. 13:45A-16.2(a)(2)(viii), is not applicable to the present situation. It states in pertinent part (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. . . .
2. Product and material representations: Misrepresent directly or by implication that products or materials to be used in the home improvement:
viii. Are or will be custom-built or specially designed for the needs of the buyer[.]
A swimming pool is included in the regulation's earlier definition of what constitutes a home improvement. N.J.A.C. 13:45A-16.1A.
Swim-Mor, however, did not make a misrepresentation that a product or material used in construction of plaintiffs' pool would be "custom-built" or "specially designed" for them. The provision about consultation with respect to the pool elevation was a standard item in this pre-printed contract, not an element unique to plaintiffs.
The judgment under review is reversed insofar as it imposed liability on defendant Swim-Mor under the consumer fraud statute. The matter is remanded to the trial court for entry of a corrected judgment.
Reversed and remanded.