Chattin v. Cape May Greene, Inc.

• Court: New Jersey Superior Court — Appellate Division
• Writing for the Court: SKILLMAN; BRODY
• Citation: Chattin v. Cape May Greene, Inc., 243 N.J.Super. 590, 581 A.2d 91 (N.J. Super. App. Div. 1990)
• Decision Date: 24 September 1990
• Parties: Wayne E. CHATTIN, et ux; Frank J. Ingargiola, et ux; Joseph J. Martella, et ux; Anthony Buccaferni and Patrick Smith, on behalf of themselves and on behalf of a class of homeowners, Plaintiffs-Respondents-Cross-Appellants, v. CAPE MAY GREENE, INC., a New Jersey Corporation, Defendant-Appellant-Cross-Respondent, and Capitol Products Corporation, Defendant.

Page 590

243 N.J.Super. 590

581 A.2d 91

Wayne E. CHATTIN, et ux; Frank J. Ingargiola, et ux Joseph J. Martella, et ux; Anthony Buccaferni and Patrick Smith, on behalf of themselves and on behalf of a class of homeowners, Plaintiffs-Respondents-Cross-Appellants, v. CAPE MAY GREENE, INC., a New Jersey Corporation Defendant-Appellant-Cross-Respondent and Capitol Products Corporation, Defendant.

Superior Court of New Jersey Appellate Division.

Argued Dec. 18, 1989.

Decided Sept. 24, 1990.

Frederick J. Dennehy, for defendant-appellant-cross-respondent (Wilentz, Goldman & Spitzer, attorneys; Lisa Adubato Nesi, Dakar Rahim Ross and Frederick Dennehy, Woodbridge, on the brief).

Thomas J. Vesper, for plaintiffs-respondents-cross-appellants (McAllister, Westmoreland, Vesper & Schwartz, attorneys; Emily H. Armstrong and Thomas J. Vesper, West Atlantic City, on the brief).

Before Judges BRODY, MUIR, Jr. and SKILLMAN.

The opinion of the court was delivered by

SKILLMAN, J.A.D.

This suit by a group of homeowners against the developer from which they purchased their homes is before us for the second time. See Chattin v. Cape May Greene, Inc., 216 N.J.Super. 618, 524 A.2d 841 (App.Div.1987), certif. den. 107 N.J. 148, 526 A.2d 209 (1987). The development, which is located in Ventnor and is known as Kings Bay West, was constructed by defendant Cape May Greene, Inc. (CMG). The windows in the development, manufactured by defendant Capitol Products Corporation (Capitol), consist of a double pane of glass set into a hollow aluminum frame. The double pane of glass has substantial insulating qualities but the frame has none. CMG described the homes in a written brochure and in oral representations to prospective purchasers as having "insulated windows." The uncontradicted evidence at trial was that a window with a double pane of glass and an uninsulated frame was referred to in the construction and window industries as an "insulated window." However, the homeowners all testified that they understood this term to mean that the entire window including the frame was insulated. There was substantial evidence presented at the retrial, as in the original trial, that the homeowners experienced significant problems with the windows, including condensation on the inside and drafty conditions in the homes.

In our original opinion we affirmed the part of a final judgment awarding the homeowners $181,642.50 in compensatory damages based on a jury's determination that CMG was negligent and breached warranties to the homeowners by installing defective windows and doors. However, we reversed the part of the final judgment awarding an additional $285,947.19 in damages based on a directed verdict entered in favor of the homeowners on their claims under the Consumer Fraud Act. Consequently, we remanded for a retrial on the homeowners' consumer fraud claims.

At the retrial, the jury determined that CMG had violated the Consumer Fraud Act, thereby causing the affected homeowners to incur damages of $550 for each window in their homes. ¹ The trial court molded this verdict by multiplying the total number of windows in the homes by $550, trebling this amount and deducting the compensatory damages for negligence and breach of warranty awarded in the first trial, resulting in a net award of $184,305. In addition, the court awarded the homeowners $502,469.62 in attorneys' fees and $44,610.49 in costs and thus entered a final judgment of $731,385.11 in their favor.

CMG appeals from the judgment, contending that (1) the trial court incorrectly instructed the jury as to the elements of a claim under the Consumer Fraud Act, (2) the trial court erred in allowing the jury to award replacement costs as damages for consumer fraud, (3) the trial court erred in refusing to submit to the jury the issue of codefendant Capitol's liability for consumer fraud, thereby depriving the jury of the opportunity to apportion consumer fraud damages as between CMG and Capitol, (4) the trial court erred in submitting to the jury the consumer fraud claims of six homeowners, (5) the trial court committed various errors in the conduct of the trial which were so prejudicial that a new trial on all issues must be conducted, and (6) the trial court awarded excessive attorneys' fees to the homeowners. The homeowners cross appeal, contending that (1) the trial court erred in submitting the consumer fraud claims of only sixteen rather than twenty-four homeowners to the jury, and (2) the trial court erred in denying their motion to enforce a 1978 arbitration award against CMG.

We conclude that the trial court incorrectly instructed the jury as to the elements of a claim under the Consumer Fraud Act. However, the court properly submitted the issue of damages to the jury. Therefore, the case is remanded for a retrial limited to the issue of liability. We further conclude that the trial court erred in various respects in determining the award of attorneys' fees. Consequently, if the jury on remand again returns a verdict in favor of the homeowners, the court must redetermine the award of attorneys' fees in accordance with the guidelines set forth in this opinion. Finally, we conclude that the trial court erred in refusing to enforce the 1978 arbitration award against CMG and that a judgment in the amount of that award should therefore be entered immediately.

I

CMG argues that the jury verdict must be reversed because the trial court permitted the jury to impose liability for consumer fraud without any showing that CMG intended to mislead the purchasers of homes in Kings Bay West.

In reversing the trial court's order granting a directed verdict in favor of the homeowners on their consumer fraud claims, we stated in our first opinion that:

[T]he determination whether an advertisement is misleading is ordinarily for the trier of fact--here the jury--to decide....

In this case it was undisputed that the windows installed in the homes sold to plaintiffs have a double pane of glass which provides insulation. It was also undisputed that the aluminum frames of the windows have no insulating features. The factual issue which should have been submitted to the jury was whether the average consumer would understand the term "insulated aluminum windows" to refer only to the glass or to the entire window unit. [216 N.J.Super. at 639-640, 524 A.2d 841].

But since the trial court failed to submit the homeowners' consumer fraud claims to the jury in the first trial, we had no occasion in our first opinion to consider the appropriate form of jury instructions.

N.J.S.A. 56:8-2 states in pertinent part:

The act, use or employment by any person of any unconscionable commercial practice, deception, fraud, false pretense, false promise, misrepresentation, or the knowing, concealment, suppression, or omission of any material fact with intent that others rely upon such concealment, suppression or omission, in connection with the sale or advertisement of any merchandise or real estate, or with the subsequent performance of such person as aforesaid, whether or not any person has in fact been misled, deceived or damaged thereby, is declared to be an unlawful practice N.J.S.A. 56:8-2 thus creates two categories of prohibited acts. The first category (unconscionable commercial practice, deception, fraud, false pretense, false promise or misrepresentation) consists of affirmative acts, and the second category (concealment, suppression or omission of any material fact) consists of acts of omission. The Supreme Court indicated in Fenwick v. Kay American Jeep, Inc., 72 N.J. 372, 378, 371 A.2d 13 (1977) that those kinds of consumer fraud consisting of affirmative acts do not require a showing of "intent":

The capacity to mislead is the prime ingredient of deception or an unconscionable commercial practice. Intent is not an essential element.

See also D'Ercole Sales, Inc. v. Fruehauf Corp., 206 N.J. Super. 11, 22, 501 A.2d 990 (App.Div.1985). However, by the express terms of N.J.S.A. 56:8-2, an essential element of a consumer fraud consisting of an act of omission is that a defendant's act be "knowing." See Fenwick v. Kay American Jeep, Inc., supra, 72 N.J. at 377, 371 A.2d 13 ("[T]he requirement that knowledge and intent be shown is limited to the concealment, suppression or omission of any material fact").

Therefore, where a defendant's alleged consumer fraud may be viewed as either an affirmative act or an omission, the court must clearly inform the jury that it can hold defendant liable without a finding of intentional wrongdoing only if it finds that defendant committed a kind of consumer fraud consisting of an affirmative act. ² Moreover, the court must clearly explain to the jury the difference between the kinds of consumer fraud consisting of affirmative acts, which may be committed without a showing of intent, and acts of omission, which must be committed "knowingly" in order for liability to be imposed under the Consumer Fraud Act. ³

The trial court's jury instructions in this case failed to satisfy these requirements. The court described the elements of a cause of action for consumer fraud under N.J.S.A. 56:8-2 as follows:

I said I was going to define the concept of consumer fraud to you, and here goes. The so-called consumer fraud remedy arises out of an act of our legislature, and that act provides in its pertinent part ... consumer fraud is the act, use or employment by any person of any unconscionable commercial practice, deception, fraud, false pretense, false promise, misrepresentation, or the knowing concealment, suppression or omission of any material fact, with intent that others rely upon such concealment, suppression, or omission in connection with the sale or advertisement of, and in this case, real estate.

Our courts have determined that this is a remedial act and should be liberally construed in favor of protecting consumers. I will advise you, as well, that...