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All The Way Towing, LLC v. Bucks County International, Inc.

Supreme Court of New Jersey

January 24, 2019

All The Way Towing, LLC, and Chayim Goodman, Plaintiffs-Respondents,
v.
Bucks County International, Inc., and Dynamic Towing Equipment and Manufacturing, Inc., Defendants-Appellants.

          Argued November 27, 2018

          On certification to the Superior Court, Appellate Division, whose opinion is reported at 452 N.J.Super. 565 (App. Div. 2018).

          Thomas E. Kopil argued the cause for appellant Bucks County International, Inc. (Marte and Toadvine, attorneys; Thomas E. Kopil, on the briefs).

          Daniel J. Kluska argued the cause for appellant Dynamic Towing Equipment and Manufacturing, Inc. (Wilentz, Goldman & Spitzer, attorneys; Daniel J. Kluska, of counsel and on the briefs).

          Jay J. Rice argued the cause for respondents (Nagel Rice and Levin Cyphers, attorneys; Jay J. Rice, of counsel and on the brief, and Randee M. Matloff, on the brief).

          Henry P. Wolfe submitted a brief on behalf of amicus curiae New Jersey Association for Justice (The Wolf Law Firm and Law Offices of Charles N. Riley, attorneys; Henry P. Wolfe, Andrew R. Wolf, and Charles N. Riley, on the brief).

         LaVECCHIA, J., writing for the Court.

         In this appeal, where plaintiffs, an individual and his limited liability towing company, entered into a contract for the purchase of a customized medium-duty 4x4 truck with autoloader tow unit, the Court considers whether New Jersey's Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -210, covers the transaction as a sale of "merchandise."

         Plaintiff Chayim Goodman is the sole owner of plaintiff All the Way Towing, LLC (ATW) (Goodman and ATW collectively, plaintiffs). After Goodman conducted online research, he contacted a salesman at defendant Bucks County International, Inc. (BCI), which is in the business of truck sales, parts sales, and service, to order an "International" brand all-wheel drive truck with an autoloader tow body manufactured by defendant Dynamic Towing Equipment and Manufacturing, Inc. (Dynamic) installed. Goodman testified that he spent "a couple of months" negotiating options and pricing. BCI and ATW signed a ten-page contract, which contains a list of specifications. Goodman testified that he was aware that the truck was to be custom-built according to his requested specifications. According to the contract, the overall estimated cost of the outfitted truck was $166, 089.27. ATW paid BCI a $10, 000 deposit.

         After BCI delivered the truck to Dynamic, Dynamic discovered that its tow body was incompatible with the truck, prompting Dynamic to make modifications to the towing unit. Goodman testified that defendants attempted to deliver the truck with the tow rig to ATW on four occasions. Each time, ATW identified deficiencies with the truck and/or the towing rig. After the fourth attempted delivery, ATW rejected the truck and wanted a refund of the deposit. When BCI refused, plaintiffs commenced this action.

         The trial court dismissed the CFA count on defendants' motion for summary judgment. The court determined that the truck's custom design caused the product not to fit within the definition of merchandise, and thus, the CFA did not apply. The court did not address whether, if the product had fit within that definition, plaintiffs provided sufficient evidence to survive defendants' summary judgment motion regarding the CFA.

         The Appellate Division reversed. 452 N.J.Super. 565 (App. Div. 2018). In the panel's view, the customized truck with towing rig involved here met the definition of merchandise under the CFA. Id. at 570-71. In reaching its holding, the Appellate Division distinguished two prior Appellate Division cases cited by defendants and plaintiffs --Princeton Healthcare System v. Netsmart New York, Inc., 422 N.J.Super. 467 (App. Div. 2011), and Finderne Management Co., Inc. v. Barrett, 402 N.J.Super. 546 (App. Div. 2008) -- where products were determined not to be a "sale of merchandise" because "the goods and services sold there were 'complex.'" Ibid. Finally, because the trial court did not reach the issue, the panel declined to determine whether plaintiffs had established the elements of a CFA claim and could therefore survive summary judgment, instead remanding the case for the trial court to make that determination first. Id. at 572 n.6.

         The Court granted defendants' petitions for certification, but limited the issues to "whether the [CFA] is applicable to this sale of a custom-built tow truck and whether the Appellate Division erred by failing to address whether plaintiff established the elements of a claim under the [CFA]." 233 N.J. 304 (2018); 233 N.J. 323 (2018).

         HELD: The customized tow truck and rig fit within the CFA's expansive definition of "merchandise" and, therefore, plaintiff's CFA claim should not have foundered based on an application of that term. The Court further agrees with the appellate panel's remand to the trial court for a determination of whether defendants' other bases for seeking summary judgment are meritorious.

         1. The CFA prohibits unconscionable commercial practices, deception, and fraud "in connection with the sale or advertisement of any merchandise." N.J.S.A. 56:8-2. The CFA defines "merchandise" to "include any objects, wares, goods, commodities, services or anything offered, directly or indirectly to the public for sale." N.J.S.A. 56:8-1(c). The Legislature amended the definition of "merchandise" in 1967 to read as it presently does, and new language simply expanded the definition of merchandise by adding to the classes of items previously listed "anything" that is offered to the public for sale through indirect as well as direct means. The CFA's history has been one of constant expansion of consumer protection, and courts have recognized that the CFA must be liberally construed. (pp. 12-15)

         2. The CFA is applicable to commercial transactions, but context is important. The Court does not suggest that all business-to-business transactions fit the intendment of a sale offered to the public. Second, several cases have already recognized that the CFA may apply to custom-made goods. Thus, neither the commercial setting of a transaction nor a customization of an item removes a transaction from the CFA's reach. However, a more nuanced assessment can be required to determine whether a transaction, good, or service is of the type offered to the public, bringing it within the CFA. (pp. 15-18)

         3. Defendants rely heavily on Finderne and Princeton Healthcare to support their contention that the CFA should not apply in this case. In Finderne, the plaintiffs' CFA claim involved its participation, at defendants' recommendation, in "a tax-deductible vehicle to fund preretirement death benefits for owner-employees." 402 N.J.Super. at 553. The court did ultimately hold that the CFA was inapplicable but cited a number of fact-specific reasons. First, the contract included a "sixty-page disclosure document" and recommendations to consult tax attorneys. Id. at 571-72. Additionally, the claim related to a series of "very complex" transactions, which took place over the course of years. Id. at 554-57, 571. The court observed that the plaintiffs were not "unsophisticated buyers" but rather were informed through advice from an accountant and an attorney. Id. at 571-72. The transaction in Princeton Healthcare began with the plaintiff, a hospital and healthcare provider, distributing a request for proposals to upgrade their complex computer software system. 422 N.J.Super. at 469. The defendant "submitted a 149-page response to this request" and, after a "lengthy process of evaluation" and negotiations, which included "[the plaintiff's] computer consultant, . . . and its legal counsel," the parties entered into an agreement. Id. at 469-70. The panel concluded that "[t]his kind of heavily negotiated contract between two sophisticated corporate entities does not constitute a 'sale of merchandise' within the intent of the CFA." Id. at 474 (citing Finderne, 402 N.J.Super. at 570-73). As Finderne and Princeton Healthcare demonstrate, courts have examined with care the nature of the transaction when customized products and commercial entities are involved in a private individual CFA claim. (pp. 18-20)

         4. To promote consistency in the application of the requirement that a product be offered to the public when evaluating a private individual CFA action, the Court holds that the availability requirement can be met by showing that any member of the public could purchase the product or service, if willing and able, regardless of whether such a purchase is popular. The Court rejects defendants' characterization of Princeton Healthcare and Finderne as having placed "limitations on the application of the [CFA] in business-to-business transactions" and stresses that a product or service can be customized without being "complex." In business-to-business transactions it is the "nature of the transaction" that will determine whether it can fit within the CFA's definition of "merchandise." To promote consistency in assessing the nature of a transaction in a business-to-business setting for purposes of determining whether the CFA will apply to the merchandise, the Court adopts the following considerations for use by New Jersey courts: (1) the complexity of the transaction, taking into account any negotiation, bidding, or request for proposals process; (2) the identity and sophistication of the parties, which includes whether the parties received legal or expert assistance in the development or execution of the transaction; (3) the nature of the relationship between the parties and whether there was any relevant underlying understanding or prior transactions between the parties; and, as previously noted, (4) the public availability of the subject merchandise. Here, the customization does not remove the product from the CFA's definition of "merchandise." It was a direct consumer purchase transaction; no attorneys or other experts were involved. Similarly, it is irrelevant that the "public at large" does not purchase International trucks onto which a Dynamic tow unit is installed. The relevant point is that a member of the public so inclined could make such a purchase. It is consistent with the remedial purposes of the CFA to protect consumers regardless of the popularity of the product or service sold or advertised. (pp. 20-23)

         AFFIRMED and REMANDED to the trial court for further proceedings.

          CHIEF JUSTICE RABNER and JUSTICES PATTERSON, FERNANDEZ-VINA, SOLOMON, and TIMPONE join in JUSTICE LaVECCHIA's opinion. Justice ALBIN did not participate.

          OPINION

          LaVECCHIA JUSTICE

         New Jersey's Consumer Fraud Act (CFA or the Act), N.J.S.A. 56:8-1 to -210, is a powerful "legislative broadside against unsavory commercial practices" in the marketplace. Real v. Radir Wheels, Inc., 198 N.J. 511, 514 (2009). When initially enacted, the CFA addressed the elimination of sharp practices and dealings in the marketing of merchandise. Cox v. Sears Roebuck & Co., 138 N.J. 2, 16 (1994). Continuously expanded by the Legislature over the years, the CFA's reach now extends beyond "fast-talking and deceptive merchant[s]" to protect the public even when a merchant acts in good faith. Ibid. (alteration in original) (quoting D'Ercole Sales, Inc. v. Fruehauf Corp., 206 N.J.Super. 11, 23 (App. Div. 1985)). In light of the CFA's remedial purpose, courts liberally enforce the Act to fulfill its objective to protect consumers from prohibited unconscionable acts by sellers. Furst v. Einstein Moomjy, Inc., 182 N.J. 1, 11-12 (2004).

         In this appeal, where plaintiffs, an individual and his limited liability towing company, entered into a contract for the purchase of a customized medium-duty 4x4 truck with autoloader tow unit, we are called on to determine whether the CFA covers the transaction as a sale of "merchandise." The trial court answered that question in the negative and granted summary judgment to defendants on that basis. The Appellate Division disagreed and reversed.

         For the reasons expressed herein, we agree with the Appellate Division that the trial court took too narrow an approach in assessing what constitutes "merchandise" under the remedial CFA. The customized tow truck and rig fit within the CFA's expansive definition of "merchandise" and, therefore, plaintiff's CFA claim should not have foundered based on an application of that term. We further agree with the appellate panel's remand to the trial court for a determination of whether defendants' other bases for seeking summary judgment are meritorious. That assessment of the summary judgment record is best made by the trial court in this instance, not by an appellate body.

         I.

         A.

         This appeal arises from defendants' motion for summary judgment. Therefore, just as Rule 4:46-2 requires of a trial court, on appeal we view all facts related to the application of the term "merchandise" in the light most favorable to the non-moving parties, plaintiffs. See Brill v. Guardian Life Ins.Co. of Am., 142 N.J. 520, 523 (1995). The following facts ...


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