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Mitigation Services, Inc. v. McErlean

May 18, 2009


On appeal from the Superior Court of New Jersey, Law Division, Burlington County, Docket No. L-2414-06.

Per curiam.


Submitted November 18, 2008

Before Judges Gilroy and Chambers.

Plaintiff is the owner of a Servpro cleaning and restoration franchise. Defendants Joseph and Margaret McErlean are owners of a single-family residence in Moorestown. Plaintiff appeals from: 1) the October 23, 2006 order granting partial summary judgment dismissing its complaint; 2) the April 27, 2007 order granting partial summary judgment dismissing its amended complaint; 3) the August 24, 2007 order denying its motion for reconsideration; and 4) that part of the February 1, 2008 order awarding defendants $39,535 in attorneys' fees and $1,713 in costs of litigation. For reasons that follow, we affirm.


Plaintiff is "an international franchiser which specializes in mitigating damage after a fire or flood has occurred." Specifically, its trademarked motto is "clean up and restoration," and it is "often asked to work on an emergency basis to remove water and damaged materials as quickly as possible to alleviate further damage."

On October 10, 2005, the sump pump in defendants' home failed, causing their 1,700 square-foot finished basement to flood. Defendants telephoned plaintiff inquiring about its cleaning services. The discussion that ensued among defendants and plaintiff's representative, Elisabeth Adams, pertaining to plaintiff's pricing structure, is in dispute.

Adams contends she explained to defendants that: "there are several ways customers are charged depending on the type of tasks to be performed and the equipment needed to perform those tasks"; "some work, like extractions and chemical sprays, is charged by the square foot, while other work is charged by the amount of time spent"; the "use of equipment is charged by the day for each piece used"; "simple manual labor, like removing furniture before cleaning a stained carpet, would cost the then[-]going rate of $33.50 per hour during normal business hours"; and that "costs will be [a]ffected by the time of day the work is done, in that work done on evenings or [weekends] is charged at a higher rate." In addition, Adams asserts that, because defendants were unsure whether their homeowner's insurance policy would cover the services, they said they "would look into that," and at defendants' request, plaintiff faxed them the Authorization to Perform Services and Direction of Payment (the agreement).

Conversely, defendants contend "that they were told the price for [p]laintiff's services would be $33.50 per hour, nothing more." Based on that representation, defendants entered into the agreement for plaintiff "to perform any and all necessary cleaning and/or restoration services" at their residence.

The agreement was silent as to the amount the services would cost defendants, either in the total amount charged or on a time-and-material basis. However, the agreement authorized First Trenton Insurance Company, defendants' homeowners' insurance carrier, to pay plaintiff for any services performed at defendants' residence. As to defendants' obligation to pay for services rendered, the agreement provided: "It is fully understood that [defendants] . . . are personally responsible for any and all . . . costs not covered by insurance. Any and all charges for services not reimbursed by the [i]nsurance [c]ompany are the responsibility of the [defendants] and are to be paid upon the completion of work."

Beginning on the evening of October 11, 2005, and for several days thereafter, plaintiff performed the requested services at defendants' residence. Specifically, plaintiff properly cleaned defendants' exercise room, family room, piano room, and laundry room. After its completion of services, plaintiff submitted an invoice to First Trenton, but after "several weeks," plaintiff was informed that defendants "had never turned in a claim for this loss and thus [it] needed to bill [defendants] directly." Accordingly, on December 5, 2005, plaintiff forwarded defendants an invoice in the amount of $8,242.72. Although the invoice indicated the nature of the services rendered, it did not provide an itemized charge for each service. On January 3, 2006, based on defendants' request for a more detailed invoice, plaintiff faxed defendants an itemized bill that included a charge for each service performed. The invoice evidences that plaintiff charged defendants in excess of $33.50 per hour.

Defendants refused to pay the amount requested. On May 8, 2006, plaintiff filed a complaint in the Special Civil Part, alleging that defendants breached the agreement by failing to pay for the services performed. Defendants counterclaimed, asserting that plaintiff had violated the Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -20, by making affirmative misrepresentations and by charging in excess of the agreed-upon price of $33.50 per hour.

On June 27, 2006, defendants moved to transfer the action to the Law Division, contending that if successful on their counterclaim, their recovery would exceed the monetary jurisdiction of the Special Civil Part. After the matter was transferred to the Law Division, defendants moved for partial summary judgment, seeking dismissal of plaintiff's complaint, contending that the agreement was unenforceable because plaintiff, as a home improvement contractor, failed to disclose the amount charged for its services in the agreement. Plaintiff countered that its cleaning services did not qualify as a home improvement contract under the Home Improvement Practices (HIP) regulations, N.J.A.C. 13:45A-16.1 and -16.2.

Prior to the return date of the motion, plaintiff filed a motion seeking leave to file an amended complaint to assert claims of unjust enrichment, and negligent and intentional misrepresentation. On October 23, 2006, supported by an oral opinion of October 6, 2006, the trial court entered an order granting defendants' motion for partial summary judgment ("summary judgment I"). The court reasoned that "[t]he services provided by the [p]laintiff to the [d]efendants constitute[d] a home improvement as that term is defined in N.J.A.C. 13:45A-16.1A"; and that the agreement "is void for [p]laintiff's failure to comply with the price disclosure requirements of N.J.A.C. [13:45A-16.2(a)12]." The court also granted plaintiff leave to file its amended complaint.

On March 23, 2007, defendants filed a second motion for partial summary judgment, seeking dismissal of plaintiff's amended complaint, asserting that if a party is found to have violated the CFA, that party is prohibited from recovering damages for services rendered, regardless of the cause of action asserted. On April 27, 2007, the court entered an order granting the motion ("summary judgment II").

Plaintiff moved for reconsideration of the order of April 27, 2007 that dismissed its amended complaint. The court denied the motion on August 24, 2007. In the interim, on June 25, 2007, plaintiff filed a second motion for reconsideration, that time of the October 23, 2006 order dismissing its original complaint. The court denied the second motion on September 28, 2007.

On July 27, 2007, defendants moved to amend their counterclaim, asserting that plaintiff violated the HIP regulations, specifically, N.J.A.C. 13:45A-16.2(a)12, and the Truth-in-Consumer Contract, Warranty and Notice Act (TCCNWA), N.J.S.A. 56:12-14 to -18. The court granted defendants' motion on August 24, 2007. The amended counterclaim alleged: violation of N.J.A.C. 13:45A-16.2(a)12 by failing to include pricing terms in the agreement (Count One); affirmative misrepresentations (Count Two); breach of contract by charging in excess of an agreed-upon price (Count Three); violation of the TCCNWA by ...

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