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Veale-Middleton v. Artzberger

Superior Court of New Jersey, Appellate Division

May 24, 2013

CAROL R. VEALE-MIDDLETON, Plaintiff-Appellant,
v.
RUTH ARTZBERGER, GEORGE W. ARTZBERGER and TROPICAL POOL SERVICE & REPAIRS, L.L.C., Defendants-Respondents, and MULTI PHASE CONTRACTING and ANDY UJHELYI, Defendants.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued December 4, 2012.

Before Judges Alvarez, Waugh and St. John.

On appeal from Superior Court of New Jersey, Law Division, Special Civil Part, Cumberland County, Docket No. DC-6224-09.

Matthew W. Ritter argued the cause for appellant (The Ritter Law Office, L.L.C., attorneys; Mr. Ritter, on the brief).

Respondents have not filed a brief.

PER CURIAM.

Plaintiff Carol R. Veale-Middleton appeals the December 20, 2011 order granting defendants' motion for summary judgment dismissing plaintiff's claims under the Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -184, and the January 26, 2012 order denying her motion for a full refund. We affirm.

I.

We briefly summarize the relevant procedural history and the facts based on the record before us.

Defendant Tropical Pool Service and Repairs, L.L.C. entered into a contract with plaintiff to install an in-ground swimming pool with a four-foot-wide concrete patio apron. The parties' written agreement specified a contract price of $20, 000, as well as details of the work to be performed. Its provisions included the following statement: "All material is guaranteed to be as specified. All work to be completed in a workmanlike manner according to standard practices." Tropical installed the pool and hired subcontractor Andy Ujhelyi of Multi Phase Contracting to pour the concrete patio. Tropical completed the work and received full payment of $20, 000 from Veale-Middleton.

Within a year of installation, settling of the underlying ground caused the patio to crack and "disintegrate." Ujhelyi later stated in his answer to Veale-Middleton's complaint that "under normal circumstances" he compacts the soil before he pours concrete. On this occasion, however, George Artzberger told him not to compact the soil because the pool, which had been installed by that point, would have been damaged by compression of the earth around it.

After the concrete failed, Veale-Middleton and her husband repeatedly asked defendants to fix it, asserting they were responsible under the warranty language of the contract. Defendants were unresponsive. The Middletons eventually hired a different contractor for $3400 to repair the concrete.

On February 26, 2010, plaintiff, acting pro se, filed a complaint against defendants Ruth and George Artzberger, seeking $3400 and costs. The Artzbergers filed an answer, including a third-party complaint that identified Andy Ujhelyi and Multi Phase Contracting as bearing primary responsibility for any alleged negligence or breach of contract.

Plaintiff hired an attorney and, on June 11, 2010, amended her complaint to add claims under the CFA and to add defendants Tropical Pool Service & Repairs, L.L.C. (the Artzbergers' company), as well as Andy Ujhelyi and Multi Phase Contracting. On March 24, 2011, the Artzbergers and Tropical filed a motion for partial summary judgment as to the CFA claims and the claims against them individually. Plaintiff filed a cross-motion for partial summary judgment on April 29, 2011, "seeking a finding of liability under the Consumer Fraud Act." According to plaintiff's attorney, in April 2011, he also served defendant's counsel with a notice to refund plaintiff's money pursuant to N.J.S.A. 56:8-2.11. He did not, however, amend the complaint to include a demand for a refund.

On May 9, 2011, the trial judge heard oral arguments on the cross-motions for partial summary judgment. At the hearing, defendants acknowledged that "there's evidence that they engaged in regulatory violations under the Consumer Fraud Act." They also "acknowledged and admitted . . . that the reason we're all here is because [the Middleton's] patio around the swimming pool failed" because "the ground underneath the concrete settled, leading to the cracking and disintegration of the concrete."

In a written opinion and order dated December 20, 2011, the trial judge denied Veale-Middleton's request for partial summary judgment on liability; granted defendants' summary judgment as to CFA claims for treble damages, attorneys' fees and costs; and granted the Artzbergers' summary judgment dismissing the breach of contract claims against them personally.

The motion judge noted that plaintiff was asserting claims based on two types of unlawful practices under the CFA: regulatory violations; and affirmative acts, specifically "'unconscionable commercial practices, ' due to fraud and misrepresentation." He found that plaintiff had not established unconscionable commercial practices, but that she had established regulatory violations. The violations of CFA regulations were Tropical's failure to provide notice of the three-day right of cancellation, N.J.S.A. 56:8-151(b), certification of contractor's insurance in the contract, N.J.S.A. 56:8-151(a)(2), as well as Tropical's performance of a home improvement contract when it was not registered with the New Jersey Division of Consumer Affairs, in violation of the Home Improvement Registration Act, N.J.S.A. 56:8-138(a).

Additionally, for purposes of the motion, the judge accepted that there were issues regarding whether Tropical had violated regulations regarding maintaining insurance coverage, N.J.S.A. 56:8-142, and had failed to include start and end dates in the contract, N.J.A.C. 13:45A-16.2(a)(12)(iv). The judge concluded that Tropical had committed "unlawful practices" within the meaning of N.J.S.A. 56:8-2.

However, the motion judge found that Veale-Middleton had not established that the regulatory violations caused her an ascertainable loss as there was no causal link between her losses and defendants' unlawful conduct. Accordingly, he granted defendants' partial summary judgment, dismissing Veale-Middleton's claims under the CFA, including treble damages, attorneys' fees and costs.

On December 29, 2011, plaintiff filed a motion for partial summary judgment, seeking an order that under N.J.S.A. 56:8-2.11, defendants should refund to Veale-Middleton the $20, 000 she had paid under the contract. Plaintiff's demand for a refund had not previously been raised in the pleadings or motion practice.

On January 26, 2012, a hearing was held on the motion for refund. The judge questioned why the refund was being brought up in this manner, rather than as part of plaintiff's demand for relief. He also stated that the motion was filed out of time. However, the attorneys were prepared to address the refund issue, as was the judge, so the hearing proceeded on the merits. After hearing counsel's arguments, the trial judge denied plaintiff's late-filed motion for summary judgment which sought to compel defendants to refund to Veale-Middleton the entire $20, 000 that she had paid for the pool.

After the judge's ruling denying plaintiff's motion for a refund, the parties met with a mediator at the court and reached a stipulated settlement. The judge entered into the record the settlement terms, whereby the Artzbergers agreed to pay $1400 to plaintiff. Veale-Middleton released her breach of contract claims against the Artzbergers and Tropical, while reserving the right to appeal the trial court's grant of summary judgment as to ascertainable loss and denial of her motion for a full refund and attorney's fees. The release also stated that plaintiff would agree to "dismiss and release any other right or demand for damages under the Consumer Fraud Act against the Artzbergers individually and Tropical, " and "to release, as to all parties, for damages under the Consumer Fraud Act, " without affecting her claim for attorney's fees or refund. Ujhelyi also agreed to pay plaintiff $1400. Veale-Middleton settled all claims against Ujhelyi and Multi Phase Contracting.

It is from the December 20, 2011 and January 26, 2012 orders that plaintiff appeals.

II.

In reviewing a grant of summary judgment, we apply the same standard as the motion judge. EMC Mortg. Corp. v. Chaudhri, 400 N.J.Super. 126, 136 (App. Div. 2008) (citing Liberty Surplus Ins. Corp. v. Nowell Amoroso, P.A., 189 N.J. 436, 445-46 (2007)). See also R. 4:46-2(c) (entitling moving party to judgment as a matter of law "if the pleadings . . . show that there is no genuine issue as to any material fact challenged").

We first determine whether the moving party has demonstrated there were no genuine disputes as to material facts. Alt. Mut. Ins. Co. v. Hillside Bottling Co., 387 N.J.Super. 224, 230 (App. Div.), certif. denied, 189 N.J. 104 (2006).

[A] determination whether there exists a "genuine issue" of material fact that precludes summary judgment requires the motion judge to consider whether the competent evidential materials presented, when viewed in the light most favorable to the non-moving party, are sufficient to permit a rational factfinder to resolve the alleged disputed issue in favor of the nonmoving party.

[Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995).]

We then decide "whether the motion judge's application of the law was correct." Atl. Mut. Ins. Co., supra, 387 N.J.Super. at 231. In doing so, we owe no deference to the motion judge's conclusions on the issues of law, and review those de novo. Ibid. (citing Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995)).

Veale-Middleton argues that the motion judge erred in (i) granting defendants' motion for summary judgment on her claims under the CFA, arguing that she presented sufficient proof of ascertainable loss to survive defendants' motion, and (ii) dismissing her unconscionable commercial practices claim. She also contends the motion judge erred in failing to order a full refund of her contract price pursuant to N.J.S.A. 56:8-2.11.

The enactment of the CFA was "aimed basically at unlawful sales and advertising practices designed to induce customers to purchase merchandise or real estate." Daaleman v. Elizabethtown Gas Co., 77 N.J. 267, 270 (1978). The Supreme Court has interpreted a CFA claim to include "three elements: (1) unlawful conduct . . .; (2) an ascertainable loss . . .; and (3) a causal relationship between the defendants' unlawful conduct and the plaintiff's ascertainable loss." Int'l Union of Operating Eng'rs Local No. 68 Welfare Fund v. Merck & Co., Inc., 192 N.J. 372, 389 (2007) (quoting N.J. Citizen Action v. Schering-Plough Corp., 367 N.J.Super. 8, 12-13 (App. Div.), certif. denied, 178 N.J. 249 (2003)).

Further, defining what constitutes the unlawful conduct element, the CFA provides:

The act, use or employment by any person of any unconscionable commercial practice, deception, fraud, false pretense, false promise, misrepresentation . . . in connection with the sale or advertisement of any merchandise or real estate, or with the subsequent performance of such person as aforesaid . . . is declared to be an unlawful practice [.]
[N.J.S.A. 56:8-2.]

The New Jersey Supreme Court has identified three general categories of consumer fraud violations - affirmative misrepresentations, knowing omissions, and regulatory violations. Allen v. V & A Bros., Inc., 208 N.J. 114, 131 (2011); Bosland v. Warnock Dodge, Inc., 197 N.J. 543, 556 (2009); Cox v. Sears Roebuck & Co., 138 N.J. 2, 17 (1994).

An "unconscionable commercial practice" satisfies the unlawful act requirement under N.J.S.A. 56:8-2. Although the term "unconscionable commercial practice" is not defined in the CFA, the Supreme Court has held it to be an "amorphous concept obviously designed to establish a broad business ethic." Cox, supra, 138 N.J. at 18 (quoting Kugler v. Romain, 58 N.J. 522, 543 (1971)). The word "unconscionable" is generally interpreted liberally to "effectuate the public purpose of the CFA." Assocs. Home Equity Servs., Inc. v. Troup, 343 N.J.Super. 254, 278 (App. Div. 2001) (quoting Kugler, supra, 58 N.J. at 543). However, it implies a "lack of 'good faith, honesty in fact and observance of fair dealing.'" Cox, supra, 138 N.J. at 18 (quoting Kugler, supra, 58 N.J. at 544). Moreover, whether a particular practice is unconscionable must be determined on a case-by-case basis. Troup, supra, 343 N.J.Super. at 278 (citing Kugler, supra, 58 N.J. at 543).

A breach of contract is not per se unconscionable and does not alone violate the CFA. See Cox, supra, 138 N.J. at 18 (reiterating that "'a breach of warranty, or any breach of contract, is not per se unfair or unconscionable . . . and a breach of warranty alone does not violate a consumer protection statute[]'") (quoting D'Ercole Sales, Inc. v. Fruehauf Corp., 206 N.J.Super. 11, 25 (App. Div. 1985)). See also Chattin v. Cape May Greene, Inc., 243 N.J.Super. 590, 601 (App. Div. 1990), aff'd o.b., 124 N.J. 520 (1991). The Supreme Court reasoned that any breach of contract is unfair to a non-breaching party, but contract law already provides remedial damages in those circumstances. Cox, supra, 138 N.J. at 18; see also D'Ercole Sales, Inc., supra, 206 N.J.Super. at 31.

In order to justify the much larger treble damages provided under the CFA, the Supreme Court explained that:

the Legislature must have intended that substantial aggravating circumstances be present in addition to the breach. DiNicola v. Watchung Furniture's Country Manor, 232 N.J.Super. 69, 72 (App. Div.) (finding that breach of warranty in supplying defective furniture and denying that defect existed was not unconscionable), certif. denied, 117 N.J. 126 (1989); D'Ercole Sales, supra, 206 N.J.Super. at 31 (holding that breach of warranty for malfunctioning tow truck and refusal to repair was not unconscionable practice).

[Cox, supra, 138 N.J. at 18.]

The claims asserted by plaintiff in her complaint sound primarily in contract, namely shoddy workmanship and failure to timely complete the patio. We agree with the motion judge that defendants' failure to honor the contractual warranty did not constitute an "unconscionable commercial practice, " thereby affording plaintiff the benefits of the CFA. We agree with the motion judge that defendants' regulatory violations did not cause an ascertainable loss to plaintiff.

Veale-Middleton also argues that even without proving ascertainable loss due to defendants' unlawful practices, she is entitled to a refund under N.J.S.A. 56:8-2.11 and -2.12 ("the refund provisions") as "an independent statutory remedy." She urges an interpretation of the statute that, as a matter of law, would provide for a refund of the $20, 000 contract price based on Tropical's regulatory violations.

The motion judge found that Veale-Middleton was not entitled to a refund because the refund provisions do not apply to the CFA in its entirety, and secondarily because even if they do apply, Veale-Middleton would not qualify for the refund remedy because she has not shown a compensable ascertainable loss. Additionally, the judge found for defendants because plaintiff's motion was not timely filed.

Plaintiff's reliance on N.J.S.A. 56:8-2.11 and Artistic Lawn & Landscape Co. v. Smith, 381 N.J.Super. 75 (Law Div. 2005) is misplaced. The statute requires "a refund of all moneys acquired by means of any practice declared to be unlawful [by the CFA]." N.J.S.A. 56:8-2.11. We conclude that the $20, 000 contract amount was not "acquired by means of" any unlawful practice under the CFA. Therefore, we are not convinced that N.J.S.A. 56:8-2.11 would entitle plaintiff to a refund.

Affirmed.


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