Furst v. Einstein Moomjy, Inc.

• Decision Date: 15 November 2004
• Citation: 182 N.J. 1,860 A.2d 435
• Parties: HENRY F. FURST, PLAINTIFF-RESPONDENT, v. EINSTEIN MOOMJY, INC., THE CARPET DEPARTMENT STORE, AND WALTER MOOMJY, DEFENDANTS-APPELLANTS.
• Court: New Jersey Supreme Court

182 N.J. 1

860 A.2d 435

HENRY F. FURST, PLAINTIFF-RESPONDENT, v. EINSTEIN MOOMJY, INC., THE CARPET DEPARTMENT STORE,AND WALTER MOOMJY, DEFENDANTS-APPELLANTS.

Supreme Court of New Jersey

Argued September 13, 2004

November 15, 2004

Bruce H. Nagel, argued the cause for appellants (Nagel Rice & Mazie, attorneys).

Leon Grauer, argued the cause for respondent.

Justice ALBIN delivered the opinion of the Court.

In this case, defendants, a carpet department store and its president, sold plaintiff-customer a defective carpet at a warehouse clearance sale in violation of the Consumer Fraud Act, N.J.S.A. 56:8-1 to -20. The trial court determined that plaintiff's "ascertainable loss" was the replacement value of the carpet, not the purchase price. The court, however, found that plaintiff did not offer sufficient evidence establishing replacement value to warrant a jury trial and, therefore, the ascertainable loss was simply the price paid by plaintiff. Although the Appellate Division agreed that replacement value was the proper measure of damages, it held that the "regular price" on the marked-down sales sticker was proof sufficient to justify a damages trial. Last, the Appellate Division found that the trial court did not adequately state its reasons for its award of attorneys' fees to plaintiff.

We affirm the Appellate Division decision. Plaintiff's ascertainable loss in this consumer fraud action is the carpet's replacement value. Moreover, at a new damages trial, plaintiff will be entitled to a rebuttable presumption that the regular price on the marked-down sales sticker represents the carpet's replacement value. On remand, at a new hearing to determine plaintiff's reasonable attorneys' fees, the trial court will give its reasons for its fee award with reference to the governing case law.

I.

The essential facts are not in dispute. Defendant Walter Moomjy is the president of defendant Einstein-Moomjy, Inc., a large retail distributor of carpets with stores located in Paramus, North Plainfield, Whippany, and Manhattan. In August 1999, at an annual clearance sale held by Einstein-Moomjy, plaintiff Henry F. Furst purchased five remnant carpets for his home for $10,139.68. After delivery, plaintiff discovered that two of those carpets—the "Jungle Fever Antelope" and the "Mystery Ivory"—were defective. Only the Mystery Ivory is of concern to us in this appeal.

Attached to the Mystery Ivory carpet at the time of its sale to plaintiff was a tag containing the following information: The Back Yd.

Einstein Moomjy, The Carpet Department Store

REMNANT

REDUCED FOR CLEARANCE

SIZE:¹ 11'4" x 31'

REGULAR PRICE $5,775-

SALE PRICE

$1,499-

QUALITY: Mystery

COLOR: Ivory

Fibre: Wool

Sale

1,199

When the Mystery Ivory carpet was delivered to his home, plaintiff noticed that the carpet was damaged and smaller than the size indicated on the sales invoice. Plaintiff complained about the condition and size of the carpet to defendants, who offered either a refund of the sale price of $1,199.00 or a similar carpet at an additional price. Defendants claimed that the Mystery Ivory carpet was a high quality "Ireloom" white wool carpet that had been tagged mistakenly with the wrong sale price. Plaintiff demanded that defendants comply with the warranty on the back of the sales invoice. The invoice promised that if the carpets purchased were not delivered by the scheduled delivery date, plaintiff had the choice of canceling the "order with a prompt full refund" or "accepting delivery at a specific later date." Plaintiff insisted on delivery of an undamaged Ireloom carpet at the size he ordered and at the price he paid.

When defendants refused to replace the Ireloom carpet at that price, plaintiff filed a seven-count complaint alleging, among other things, violations of the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1 to -20, fraud, and breach of warranty in the sale of the Jungle Fever Antelope and Ireloom carpets. Although the parties negotiated a settlement with regard to the Antelope carpet, they continued to litigate their differences over the Ireloom carpet.

The trial court entered summary judgment on liability in favor of plaintiff, finding that defendants violated the Consumer Fraud Act in the sale of the Ireloom carpet. Defendants do not contest that ruling. Next, the court determined that the "ascertainable loss" suffered by plaintiff under the Act was the benefit of his bargain, i.e., the fair market or replacement value of the carpet. Before the impaneling of a jury to decide damages, defendants moved to restrict the proofs plaintiff could offer to establish the carpet's replacement value. Plaintiff stated that he intended to prove market value by introducing the carpet's sales tag, which displayed the unmarked-down "regular price," and by calling as witnesses his interior decorator and defendant Moomjy.

Defendants argued that the regular price on the sales sticker neither suggested nor established replacement value, and therefore did not satisfy the basic standard of relevance. Defendants also moved to bar the testimony of the interior decorator because plaintiff had neither listed that witness as an expert nor provided an expert's report in discovery. Defendants further claimed that defendant Moomjy could not be compelled to give opinion testimony on behalf of plaintiff to show the market value of the carpet.² The court granted defendants' motion to bar the evidence plaintiff offered to prove market value. In light of plaintiff's inability to prove replacement value, the trial court limited damages to the purchase price of the carpet, $1,199.00, trebled under the Act. The trial court denied defendants' oral request for a plenary hearing on plaintiff's attorney-fee application and awarded plaintiff attorneys' fees totaling $28,050.00 plus $1,055.55 in costs.

Defendants appealed, contending that the trial court erred by awarding excessive attorneys' fees and by failing to conduct a plenary hearing to determine the reasonableness of those fees. Plaintiff cross-appealed, arguing that the court erred by barring his proofs of replacement value. The Appellate Division agreed with the trial court that the ascertainable loss was the replacement cost of the Ireloom carpet. The appellate panel, however, parted with the trial court by finding that the sales tag was sufficient evidence of replacement value to raise a triable issue. In particular, the panel held that the sales tag could be "used as evidence of the piece's market value without the need of producing expert testimony." The panel also concluded that the trial court did not properly explain its reasons or reference the standards set forth in Rendine v. Pantzer, 141 N.J. 292, 661 A.2d 1202 (1995), in awarding attorneys' fees in the amount requested by plaintiff. The panel ordered a remand, but found no need for a plenary hearing and stated that after the parties submitted detailed certifications they could present their positions in court. We granted defendants' petition for certification. Furst v. Einstein Moomjy, Inc., 179 N.J. 372, 845 A.2d 1254 (2004).

II.

We agree with the trial court and Appellate Division that when a merchant violates the Consumer Fraud Act by delivering defective goods and then refusing to provide conforming goods, a customer's ascertainable loss is the replacement value of those goods.

The Legislature passed the Consumer Fraud Act in 1960 to give consumers relief from fraudulent practices in the marketplace and to deter merchants from employing those practices. Cox v. Sears Roebuck & Co., 138 N.J. 2, 21, 647 A.2d 454, 463-64 (1994). Today, the Act makes it unlawful for a person to use "any unconscionable commercial practice, deception, fraud, false pretense, false promise, [or] misrepresentation . . . in connection with the sale or advertisement of any merchandise. . . ." N.J.S.A. 56:8-2. The Act protects against knowing misrepresentations, omissions of material fact, and violations of administrative regulations, whether or not the merchant acts in bad faith. N.J.S.A. 56:8-2; Cox, supra, 138 N.J. at 16-17, 647 A.2d at 463.

It is a "deceptive practice" for a merchant to deliver household furnishings "that are damaged or that are not the exact size, style, color or condition indicated on the sales contract," and for that merchant to refuse to offer the consumer the choice of a refund or delivery at a later date. N.J.A.C. 13:45A-5.1(a), (b), (d), (e). These defendants offered plaintiff the option of receiving a refund or the option of receiving conforming goods at an additional cost. That was a deceptive practice in violation of N.J.A.C. 13:45A-5.1.

In quantifying plaintiff's damages, we must determine his ascertainable loss. We neither can ascribe a plain meaning to the term ascertainable loss, nor find legislative history that sheds direct light on those words. See Brodsky v. Grinnell Haulers, Inc., 181 N.J. 102, 109-10, 853 A.2d 940, 944-45 (2004) ("To divine [legislative] intent, we first look to the plain meaning of the words of the statute. . . . When faced with an ambiguous statute, we also rely on legislative history to gain further insight into the probable intent of the Legislature.") (citations omitted). We must look to the clear objectives of the Act itself, informed by well-established remedies available in a typical breach-of-contract case, to find the meaning of ascertainable loss.

The Consumer Fraud Act is remedial legislation that we construe liberally to accomplish its broad purpose of safeguarding the public. Cox, supra, 138 N.J. at 15-16, 647 A.2d at 460-61; Barry v. Arrow Pontiac, 100 N.J. 57, 69, 494 A.2d 804, 811 (1985). The Act protects consumers from more than just "shifty, fast-talking and deceptive merchant[s]" and "sharp practices and dealings. . . ." Cox, supra, 138 N.J. at 16, 647 A.2d at 461 (internal quotations omitted). It also protects consumers from unfair practices "even when a merchant acts in good faith." Ibid. In furtherance of the Act's...