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Wildy v. M&R Auto Sales


June 18, 2010


On appeal from the Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-705-08.

Per curiam.


Argued April 12, 2010

Before Judges Baxter and Alvarez.

Defendant M&R Auto Sales, Inc. (M&R) appeals from a judgment issued after a bench trial awarding plaintiff Harry Wildy damages of $21,265.50 plus attorney's fees. For the reasons that follow, we reverse and remand only as to the calculation of damages.

The following facts were developed during the trial on plaintiff's complaint alleging violations of the Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -184. On August 15, 2007, plaintiff took possession of a 1997 silver, four-door Cadillac he purchased for $6500 from M&R, a used car dealership. Prior to delivery, the vehicle had been serviced as per the parties' agreement. As plaintiff drove home, the oil light came on and the car began to overheat. Since the Cadillac was under warranty, M&R instructed plaintiff to return the car. It was towed to the dealership, and two days later M&R reported to plaintiff that he could retrieve the vehicle as it was repaired. On the way home, the oil light came on again and plaintiff returned the Cadillac to the dealership. This time, Anthony Masi, Jr., one of M&R's owners, personally told plaintiff to leave the car at M&R a second time so it could be repaired.

Masi took the car first to Roth Brothers Auto Repair where the problem could not be corrected and then to Automotive Degree. While Masi was testifying, the judge ruled sua sponte that Masi could not describe the specific repairs made by Automotive Degree or the paid receipt for the work on the grounds that the testimony was inadmissible hearsay. Masi was only permitted to testify that Automotive Degree was unable to fix the problem. In any event, the Cadillac was sent to a third repair shop, Crown Cadillac. Crown Cadillac was able to correct the oil light problem, however, the trial judge prohibited Masi from testifying further as to those repairs or the cost based on her previously expressed concern that such statements were hearsay.

The Cadillac was returned to plaintiff approximately six weeks later on September 28, 2007, but the car continued to have problems. The engine overheated if plaintiff drove it more than twenty-five to thirty miles at a time. The car lost a significant amount of anti-freeze, even though there did not appear to be a leak in the cooling system. When plaintiff notified M&R this time, Masi told him that there was nothing wrong with the vehicle. As a result, plaintiff decided "there wasn't any sense in going back again."

In December 2007, plaintiff hired Robert Maggio, a retired automotive technician who acts as a consultant for car dealerships. His inspection revealed the Cadillac's head gaskets were leaking. He instructed plaintiff to only drive the car locally for short periods of time. Plaintiff then contacted M&R in the hopes of returning the vehicle, but because the warranty had expired, his request was refused. At trial, Maggio was qualified as plaintiff's expert "[i]n the field of automotive repair, specifically [] Cadillacs . . . ."

In April 2008, the Cadillac stopped running completely. Prior to this point, plaintiff had driven approximately 5420 miles, using the Cadillac only for short trips at slow speeds as Maggio had advised. He rented a car whenever he needed to make longer trips.

On April 24, 2008, Maggio inspected the Cadillac in order to prepare a report for litigation. The Cadillac was towed to Clairmont Auto Group (Clairmont) for the necessary testing and Maggio's diagnosis of a blown head gasket was confirmed. The court allowed Maggio to testify regarding the results of the testing done by Clairmont because "experts like" Maggio rely on such documents when "reaching an opinion" and rendering a report.

Nonetheless, the trial judge barred M&R's expert, Terry Shaw, from testifying about previous work done on the vehicle even though she allowed Maggio to testify about Clairmont's diagnosis. Shaw did state that in his opinion the car could not have passed New Jersey emissions inspections and been driven for over 5000 miles, "with discernable leaking head gaskets or combustion chamber leaks." He theorized that the Cadillac exhibited symptoms of a combustion chamber leak in the cooling system, indicating other mechanical problems.

The judge concluded that "[t]here were material misrepresentations" made to plaintiff and consequently determined that M&R violated the CFA, "after being given an opportunity to correct the defects, and provide [Wildy] with what he had paid for, . . . a motor vehicle which was road worth[y] and operable, without defects." The trial judge awarded plaintiff $242.15 for work performed by Clairmont, $30 for towing on July 15, 2007, $315.35 for the cost of rental vehicles, and the $6500 purchase price of the Cadillac. She then trebled the $7088.50 total and awarded plaintiff damages of $21,265.50 "plus reasonable attorney's fees."

We are bound by the trial judge's findings of fact "when supported by adequate, substantial and credible evidence." Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974) (citation omitted). See also Metuchen Sav. Bank v. Pierini, 377 N.J. Super. 154, 161 (App. Div. 2005). The court's "interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference." Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995) (citations omitted). Thus, "our review of the trial court's legal conclusions is de novo." 30 River Court E. Urban Renewal Co. v. Capograsso, 383 N.J. Super. 470, 476 (App. Div. 2006).

Defendant's contentions of error pertain to the trial judge's evidentiary rulings and her calculation of damages. The applicable standard when we review the trial court's evidentiary rulings is that of abuse of discretion. See State v. Kemp, 195 N.J. 136, 149 (2008). See also Hisenaj v. Kuehner, 194 N.J. 6, 12 (2008) (citation omitted); Brenman v. Demello, 191 N.J. 18, 31 (2007) (citation omitted). We only correct those errors "'of such a nature as to have been clearly capable of producing an unjust result.'" Kemp, supra, 195 N.J. at 150 (quoting State v. Castagna, 187 N.J. 293, 312 (2006) (citations omitted)).

Defendant asserts that the trial judge erred in ruling that Masi's statements regarding repairs made to the Cadillac by Automotive Degree and Crown Cadillac were inadmissible hearsay. Masi was permitted to testify, however, as to his knowledge that Automotive Degree did not successfully repair the Cadillac, but that as far as he knew, Crown Cadillac fixed the problem.

We further note that when plaintiff objected to the proposed testimony at trial, M&R did not argue, as it does on appeal, that the statements were not being offered for the truth of the matter asserted. In fact, once the court ruled, counsel moved on to the next series of questions and did not say anything further about the ruling.

Generally, we decline to consider arguments not previously raised, unless they "'go to the jurisdiction of the trial court or concern matters of great public interest.'" Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 234 (1973) (citation omitted). See also State v. Churchdale Leasing Inc., 115 N.J. 83, 100-01 (1989). Hearsay is an out-of-court statement being made "'to prove the truth of the matter asserted'" therein. State v. Long, 173 N.J. 138, 152 (2002) (quoting N.J.R.E. 801). Counsel did not dispute the court's ruling that the excluded material was hearsay. Certainly, if the argument had been made that the testimony was not being introduced for the truth of the matter asserted therein, as is being claimed on appeal, the trial judge may well have reached a different conclusion. See Carmona v. Resorts Int'l Hotel, Inc., 189 N.J. 354, 376 (2007) (quoting Russell v. Rutgers Cmty. Health Plan, 280 N.J. Super. 445, 456-57 (App. Div.), certif. denied, 142 N.J. 452 (1995)). But that position was not advanced at trial.

In any event, plaintiff must prove that Masi or M&R Sales knew, or should have known, of the significant problems with the Cadillac at the time of sale, not afterwards. See N.J.S.A. 56:8-68. The CFA provides that when an automobile is sold, it is unlawful for a used car dealer to: (1) make material misrepresentations as to "the mechanical condition of a used car"; (2) "fail to disclose, prior to sale, any material defect"; or (3) "represent that a used . . . vehicle . . . is free from material defects in mechanical condition at the time of sale, unless the dealer has a reasonable basis for this representation at the time it is made."

The evidentiary ruling, even if error, did not produce an unjust result because of the time frame delineated in the statute. See R. 2:10-2. The line of questioning about the repairs and cost of repairs made by Automotive Degree and Crown Cadillac pertained to work performed after plaintiff's purchase of the vehicle. It would not have established M&R's knowledge of the Cadillac's condition at the time of sale. That is the pivotal question. And on that score, it is clear the car suffered from serious mechanical problems from the moment it was driven off the lot. Accordingly, we do not consider this evidentiary ruling to have been "clearly capable of producing an unjust result." See Boland v. Dolan, 140 N.J. 174, 189 (1995).

Similarly, M&R contends that Shaw was "denied . . . the opportunity to explain the basis [for] his expert opinion. . . ." When plaintiff's objection was sustained, Shaw had testified that "when you take a vehicle into a dealership, . . . they look at the whole car, if they see anything wrong with it."

The court ruled that the witness could not "testify about what dealers would do" in the absence of personal knowledge. M&R urges that this testimony should have been allowed because the expert was merely describing the information upon which he relied in reaching his expert opinion. Generally, although expert opinions do not provide an independent basis for "the admission of otherwise inadmissible hearsay," hearsay is admissible where necessary to inform the court of the basis for the opinion. State v. Torres, 183 N.J. 554, 575-76 (2005) (citations omitted).

In our view, Shaw's proposed statement was based on his experience having worked at one dealership, an insufficient basis for his conclusion as to the steps Crown Cadillac would have taken upon receiving a vehicle for repair. Shaw's bare conclusion was in effect a net opinion, inadmissible for this reason. See Taylor v. DeLosso, 319 N.J. Super. 174, 179-81 (App. Div. 1999).

Shaw did extensively testify as to his opinion regarding the Cadillac's mechanical problems and the likely sources of the problems. By doing so, he supported M&R's position that at the time of sale, the Cadillac did not have a mechanical defect that brought the transaction within the rubric of the CFA. The evidentiary ruling therefore could not have affected the outcome at all, as the expert did extensively testify about the key issues in the case.

Lastly, M&R contends the court erred in its determination of plaintiff's "ascertainable loss." See N.J.S.A. 56:8-19. The term has been defined as the loss that "occurs when a consumer receives less than what was promised." Romano v. Galaxy Toyota, 399 N.J. Super. 470, 479 (App. Div.), certif. denied, 196 N.J. 344 (2008) (citing to Union Ink Co. v. AT&T Corp., 352 N.J. Super. 617, 646 (App. Div. 2002)). A plaintiff must, however, objectively prove that loss. Ibid. (citing Thiedemann v. Mercedes-Benz USA, LLC, 183 N.J. 234, 251 (2005)). It can include, depending on the nature of the item in question, replacement value, replacement and repair costs, and similar expenses. Id. at 480. The purpose of the calculation is to make the plaintiff whole. Id. at 483. Such a calculation can be completed using either the "benefit of the bargain" rule, which "allows recovery for the difference between the price paid and the value of the property," or the "out of pocket" analysis, "which provides recovery for the difference between the price paid and the actual value of the property acquired." Ibid.

The judge's award to plaintiff of the entire purchase price went beyond making plaintiff whole, as in addition he had limited use of the car and retained the vehicle. See ibid.

Accordingly, we remand the matter for additional proceedings to recalculate damages.

Plaintiff must establish the difference between the purchase price and the value of the car, as this calculation would make him whole. No findings were made by the court as to the vehicle's diminished value because of the head gasket problem at the time of sale, yet the vehicle must have had some value as plaintiff was able to drive it, albeit within a limited range, 5420 miles. We hasten to add that the final calculation as to damages should be trebled, as no challenge is made to the judge's determination that the CFA was violated; in other words, that there were material misrepresentations made at the time of the sale.

Accordingly, we affirm the judge's award of $242.15 for plaintiff's payment of costs to Clairmont, a $30 towing fee, $315.35 for a rental vehicle, and reasonable attorney's fees and costs.*fn1 In summary, the treble damage award will consist of plaintiff's expenses, plus the difference between the purchase price and the actual value of the vehicle.

Affirmed on liability, but reversed and remanded as to the assessment of damages.

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