Chattin v. Cape May Greene, Inc.

• Decision Date: 01 July 1991
• Citation: Chattin v. Cape May Greene, Inc., 591 A.2d 943, 124 N.J. 520 (N.J. 1991)
• Parties: Wayne E. CHATTIN; Frank J. Ingargiola and Barbara J. Ingargiola, his wife; Joseph J. Martella and Barbara J. Martella, his wife; Anthony Buccaferni and Patrick Smith, on Behalf of Themselves and on Behalf of a Class of Homeowners, Plaintiffs-Appellants and Cross-Respondents, v. CAPE MAY GREENE, INC., a New Jersey Corporation, Defendant-Respondent and Cross-Appellant, and Capitol Products Corporation, Defendant.
• Court: New Jersey Supreme Court

Page 520

124 N.J. 520

591 A.2d 943

Wayne E. CHATTIN; Frank J. Ingargiola and Barbara J Ingargiola, his wife; Joseph J. Martella and Barbara J Martella, his wife; Anthony Buccaferni and Patrick Smith on Behalf of Themselves and on Behalf of a Class of Homeowners, Plaintiffs-Appellants and Cross-Respondents, v.CAPE MAY GREENE, INC., a New Jersey CorporationDefendant-Respondent and Cross-Appellant, and Capitol Products Corporation, Defendant.

Supreme Court of New Jersey.

Argued May 6, 1991.

Decided July 1, 1991.

Thomas J. Vesper, for plaintiffs-appellants and cross-respondents(McAllister, Westmoreland, Vesper & Schwartz, attorneys, Thomas J. Vesper and Dara A. Quattrone, on the briefs), West Atlantic City.

Frederick J. Dennehy, for defendant-respondent and cross-appellant(Wilentz, Goldman & Spitzer, attorneys, Frederick J. Dennehy, Lisa A. Rosenmertz, and Lisa Adubato Nesi, on the briefs), Woodbridge.

PER CURIAM.

The judgment of the Appellate Division is affirmed, substantially for the reasons expressed in Judge Skillman's majority opinion, reported at 243 N.J.Super. 590, 581 A.2d 91.

STEIN, J., concurring.

I join in the Court's affirmance of the judgment below, which reversed plaintiffs' liability verdict on their Consumer Fraud Act (Act) claim.I am in full agreement with the Appellate Division's conclusions that the trial court's jury instruction was erroneous because it failed "to explain the difference between the kinds of consumer fraud [that] require 'knowing' action and those [that] may be established without any showing of scienter,"243 N.J.Super. 590, 600, 581 A.2d 91(1990), and that the error was not harmless.Id. at 603, 581 A.2d 91.I write separately because I anticipate that the issue remanded by the Appellate Division for the jury's determination at retrial will be particularly difficult for a jury to adjudicate.I also perceive that the Appellate Division's opinion may not adequately guide the trial court in framing an instruction that will clarify for the jury the distinction between conduct violative of the Act without proof of intent and conduct that violates the Act only if committed with an intent to deceive the purchaser or customer.

Preliminarily, I note that although this case was tried to a jury, no court has yet determined whether there exists a right to trial by jury for damage claims asserted under the Consumer Fraud Act.We explained in Meshinsky v. Nichols Yacht Sales, Inc., 110 N.J. 464, 472-73, 541 A.2d 1063(1988), that

[a]s originally enacted, the Act was exclusively enforced by the Attorney General, who was provided with broad powers to investigate, N.J.S.A. 56:8-3, subpoena records, N.J.S.A. 56:8-5, and seek injunctions prohibiting fraudulent conduct and orders of restitution to make whole any person damaged by conduct violating the Act, N.J.S.A. 56:8-8.* * *

In 1971, the Legislature amended the Act to permit a private right of action through which a successful plaintiff receives treble damages, reasonable attorneys' fees, filing fees, and costs.L. 1971, c. 247, § 7, codified at N.J.S.A. 56:8-19.[Footnote omitted.]

The 1971amendment to the Act, however, did not provide for jury trials, and no right to a jury trial has been recognized in suits brought under the Act by the Attorney General seeking equitable relief and financial penalties.SeeKugler v. Market Dev. Corp., 124 N.J.Super. 314, 319, 306 A.2d 489(Ch.Div.1973);Kugler v. Banner Pontiac-Buick, Opel, Inc., 120 N.J.Super. 572, 581-82, 295 A.2d 385(Ch.Div.1972).Although this Court in Shaner v. Horizon Bancorp, 116 N.J. 433, 561 A.2d 1130(1989), rejected the right to a jury trial in the context of a claim for discriminatory termination on the basis of age under the New Jersey Law Against Discrimination, N.J.S.A. 10:5-1 to -42, its holding could be read to suggest by analogy that a statutorily-created cause of action under the Consumer Fraud Act does not carry with it the right to a jury trial.Id. at 454-55, 561 A.2d 1130.In any event, that issue is not before us and I advert to it only to emphasize my perception that the issue remanded by the Appellate Division for retrial is not particularly well-suited for resolution by a jury.

Simply stated, the critical issue on retrial is the categorization of Cape May Greene's use of the term "insulated windows" to describe to prospective purchasers windows with a double pane of glass and an uninsulated frame.The Consumer Fraud Act distinguishes between two categories of unlawful practices.The first category--which includes unconscionable commercial practice, deception, fraud, false pretense, false promise, and misrepresentation--does not require proof of intent to deceive, suggesting an analogy to what the common law denominates as equitable fraud.SeeJewish Center v. Whale, 86 N.J. 619, 625, 432 A.2d 521(1981).The second category--concealment, suppression, or omission of any material fact--requires proof that the offending conduct occurred knowingly and with an intent that others rely on the concealment, suppression, or omission.SeeFenwick v. Kay Am. Jeep, Inc., 72 N.J. 372, 377, 371 A.2d 13(1977);N.J.S.A. 56:8-2.The Appellate Division observed that the "first category * * * consists of affirmative acts[ ] and the second category consists of acts of omission."243 N.J.Super. at 598, 581 A.2d 91.Viewing defendant's use of the term "insulated windows" as a statement that could be characterized either as an "affirmative act" or an "omission,"the court determined that the jury instruction failed to "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."Id. at 598-99, 581 A.2d 91.In the court's view, the deficiency in the jury charge constituted reversible error necessitating a retrial on the issue of liability, in the course of which the jury is to be properly instructed on the critical distinction between an affirmative misrepresentation and a knowing omission made with intent to deceive.Id. at 603-04, 581 A.2d 91.

I share the Appellate Division's concern that an imprecise jury charge on the essential elements of an unlawful practice under the Act could erroneously cause a jury to impose a verdict resulting in treble damages and attorneys fees for conduct not violative of the Act.As the court observed in D'Ercole Sales, Inc. v. Fruehauf Corp., 206 N.J.Super. 11, 501 A.2d 990(App.Div.1985),

[h]owever, attorneys fees, costs and treble damages are powerful weapons for the consumer and invoke a formidable remedy.Any breach of warranty, or of any contract for that matter, is unfair to the non-breaching party.Yet, "[i]n a sense, unfairness inheres in every breach of contract when one of the contracting parties is denied the advantage for which he contracted, but this is why remedial damages are awarded on contract claims.If such an award is to be trebled, the ... legislature must have intended that substantial aggravating circumstances be present."[Id. at 31, 501 A.2d 990(quotingUnited Roasters, Inc. v. Colgate-Palmolive Co., 649 F.2d 985, 992(4th Cir.), cert. denied, 454 U.S. 1054, 102 S.Ct. 599, 70 L.Ed.2d 590(1981)).]

The fly in the ointment, however, is that instructing the jury on the difference between an affirmative misrepresentation of fact and a knowing omission of a material fact is easier said than done.

As the Appellate Division acknowledges, the term "insulated window" applied to a double-pane window with an uninsulated frame could be considered an affirmative misrepresentation to the extent that it is understood to mischaracterize the frame as insulated.It could also be viewed as a term that correctly describes the window in accordance with industry standards but omits to disclose the material fact that the frame is uninsulated.On a semantic level, a misrepresentation could be viewed as a statement requiring a correction to be truthful, and an omission could be characterized as a statement requiring an addition to be truthful.In practice, however, the distinction between a correction and an addition may be more apparent than real.

I note that the decided cases under the Consumer Fraud Act fail to illuminate the distinction between misrepresentations and omissions.The leading case is Fenwick v. Kay American Jeep, Inc., supra, 72 N.J. 372, 371 A.2d 13, in which two automobile dealers were charged with having violated a regulation promulgated under the Act pursuant to which an advertisement for a used automobile that fails to disclose the odometer reading constitutes an unlawful practice.The agency that placed the advertisements was joined as a respondent, and contended that a member of its staff inadvertently had failed to include the odometer reading.The hearing officer determined that the dealers and the agency had violated the Act, and that proof of intent was not required.The Appellate Division reversed, holding that intent was an essential element of the alleged violations.Fenwick v. Kay Amer. Jeep, Inc., 136 N.J.Super. 114, 118-19, 344 A.2d 785(1975).This Court reinstated the order of the Division of Consumer Affairs, holding that the omission of the odometer reading in violation of a specific regulation adopted by the Attorney General was a deceptive practice not requiring proof of intent:

Significantly, the requirement that knowledge and intent be shown is limited to the concealment, suppression or omission of any material fact.Respondent argues that his failure to include the mileage in each sales ad was at most the omission of a material fact and would not be an unlawful practice unless knowledge and intent were shown.

However, this argument overlooks the power of the Attorney General to adopt rules to further the purpose of the act to prevent fraud and other ...