Shaw v. Shand, DOCKET NO. A-5686-17T1

Citation460 N.J.Super. 592,217 A.3d 1180
Decision Date15 August 2019
Docket NumberDOCKET NO. A-5686-17T1
Parties Jodi SHAW and Thomas Shaw, Plaintiffs-Appellants, v. Brian SHAND and All Points Home Inspection and Services, Respondents-Defendants.
CourtNew Jersey Superior Court — Appellate Division

460 N.J.Super. 592
217 A.3d 1180

Jodi SHAW and Thomas Shaw, Plaintiffs-Appellants,
v.
Brian SHAND and All Points Home Inspection and Services, Respondents-Defendants.

DOCKET NO. A-5686-17T1

Superior Court of New Jersey, Appellate Division.

Argued January 14, 2019
Decided August 15, 2019


Linda A. Peoples argued the cause for appellants (Horlacher & Peoples, LLP, attorneys; Linda A. Peoples, of counsel and on the briefs).

Wendy B. Shepps argued the cause for respondents (Mound, Cotton, Wollan & Greengrass LLP, attorneys; Wendy B. Shepps, Florham Park, on the briefs).

Jeffrey A. Koziar, Deputy Attorney General, argued the cause for amicus curiae Office of the Attorney General (Gurbir S. Grewal, Attorney General, attorney; Jason W. Rockwell, Assistant Attorney General, of counsel; Jeffrey A. Koziar, on the brief).

Before Judges Sabatino, Haas and Mitterhoff (Judge Sabatino, concurring).

The opinion of the court was delivered by

MITTERHOFF, J.S.C. (temporarily assigned).

460 N.J.Super. 598

This interlocutory appeal arises from the trial court's June 11, 2018 order entering partial summary judgment dismissing plaintiffs Jodi and Thomas Shaw's claims under the Consumer Fraud Act ("CFA"), N.J.S.A. 56:8-1 to - 210. Plaintiffs challenge the court's finding that home inspectors are "learned professionals" and therefore excluded from CFA liability.

460 N.J.Super. 599

The narrow issue before us is whether semi-professionals such as home inspectors should be deemed to be learned professionals. Because this case necessarily required us to interpret the scope of the "learned professional" exception to the CFA, which is a statute that is enforced by the Attorney General's office, and also because home inspectors are regulated by the Attorney General's Division of Consumer Affairs, we invited that office to participate as amicus curiae. We issued that invitation in order to discern both on a narrow basis the agency's view whether home inspectors should be deemed "learned professionals," and on a broader basis how and when the "learned professional" exception should be applied by courts to exempt individuals from CFA liability.

Considering the CFA's remedial purpose and applying well-established canons of statutory construction, we conclude that the judicially created learned professional exception must be narrowly construed to exempt CFA liability only as to those professionals who have historically

217 A.3d 1185

been recognized as "learned" based on the requirement of extensive learning or erudition. To the extent our prior decisions, including Plemmons v. Blue Chip Insurance Services, Inc., 387 N.J. Super. 551, 904 A.2d 825 (App. Div. 2006), have applied the learned professional exception to "semi-professionals" who are regulated by a separate regulatory scheme, we are constrained, upon further review, to depart from that reasoning as inconsistent with the Supreme Court's decision in Lemelledo v. Beneficial Management Corp. of America, 150 N.J. 255, 696 A.2d 546 (1997). As the Court explicitly held in Lemelledo, the existence of a separate regulatory scheme will "overcome the presumption that the CFA applies to a covered activity" only when "a direct and unavoidable conflict exists between application of the CFA and application of the other regulatory scheme or schemes." 150 N.J. at 270, 696 A.2d 546.

Our decision comports with the Attorney General's persuasive interpretation of the CFA and addresses the Attorney General's policy concern that an expansive interpretation of the learned professional exception unduly curtails the authority of the Attorney

460 N.J.Super. 600

General and the Division of Consumer Affairs to protect New Jersey consumers and limits the redress available to private litigants.

Accordingly, because home inspectors are not historically recognized learned professionals and because no direct and unavoidable conflict exists between the CFA and the regulations governing home inspectors, we conclude that the CFA applies to the activities of licensed home inspectors. Therefore, we reverse the trial court's summary judgment dismissal of the CFA claim against defendants and remand for further proceedings.

I.

A.

In April or May of 2015, plaintiff Thomas Shaw contracted to purchase a property located on Overlook Court in Hampton Township. Prior to purchasing the home, plaintiffs hired defendant1 to conduct an inspection of the property. Karen Kleinman, plaintiffs' real estate broker, contacted defendant and requested he conduct a home inspection of plaintiffs' property. In response, defendant had Thomas Shaw sign a one-page pre-inspection agreement setting forth the terms of the inspection. That same day, defendant inspected the property, and on May 13, 2015, he emailed his report to Jodi Shaw. Plaintiffs paid defendant $350 for the inspection.

Defendant's report concluded that "[t]his structure appears to be very well built utilizing quality materials and professional workmanship. It is in need of only typical maintenance and upgrading." In June 2015, plaintiffs proceeded with the purchase of the property, allegedly in reliance upon defendant's report, for the sum of $318,000. Plaintiffs allege that "[u]pon occupying the [p]roperty in June 2015, the Shaws quickly learned that the house

460 N.J.Super. 601

was in fact in poor condition, requiring a great deal of major repairs." These allegedly required repairs include: "replacement of the roof that leaked and was at the end of its useful life, the repair of their front deck/porch which collapsed when they moved in, the replacement of the driveway and replacement of windows and sliding glass doors to address leaks, drafts and rot from the leaks." Plaintiffs allege they have "been forced to expend tens of thousands of dollars" on repairs and "must still, at a minimum," spend an estimated

217 A.3d 1186

tens of thousands of dollars on a mold issue in the home.

At his deposition, defendant acknowledged that he had observed some problems with the home that he did not include in his report.

Defendant testified at his deposition that he became licensed as a home inspector in January 2015. In order to become licensed, defendant had to attend "hours of schooling," though he did not recall how many offhand. Defendant also did not recall the name of the school he attended. In addition, defendant had to serve forty hours of apprenticeship with a licensed home inspector. Finally, in order to become licensed, defendant had to take a State-mandated test. After successfully completing the schooling and apprenticeship and passing the test, defendant became a licensed home inspector. Defendant's inspection of plaintiffs' home was his first assignment as a licensed inspector. Defendant allowed his home-inspector license to expire in April 2017; he now works as a painter, which does not require a license.2

In their July 2016 complaint against defendant, plaintiffs alleged claims sounding in negligence, violations of the CFA, common law fraud, and breach of contract. After the parties filed cross-motions for summary judgment, the trial court issued two orders supported by a written statement of reasons. The first order, which

460 N.J.Super. 602

granted, in part, defendant's motion for summary judgment by dismissing with prejudice plaintiffs' CFA claims, is the only order at issue in this appeal.3

In dismissing the CFA claims against defendant, the trial court noted that "[t]here is no binding authority specifically addressing whether home inspectors should be considered semi-professionals exempt from the CFA." The court observed that two unreported Law Division decisions4 reasoned that "they should be [considered learned professionals] because they are regulated under N.J.A.C. 13:40[-1] et seq." The court found that our decision in Herner v. Housemaster of America, Inc., 349 N.J. Super. 89, 793 A.2d 55 (App. Div. 2002), which held that a home inspector was liable under the CFA, did not compel a conclusion in this case that the "learned professionals" exclusion does not apply. First, the court found Herner was factually distinguishable because in that case the inspector's reports were deliberately skewed in order to please the realtor, avoid "killing deals," and have real estate agents continue to recommend the home inspector.5

Second, the trial court found that Herner did not address the semi-professional exception issue. The court reasoned,

Although the Home Inspection Licensing Act ( N.J.S.A. 45:8-61 through 76), became effective July 8, 1998, the regulations implementing N.J.S.A. 45:8-61 et seq. were not implemented until 2006,
217 A.3d 1187
after the decision in Herner. See 33 N.J.R. 1318(a) N.J.A.C. 13:40 et seq. These code sections highly regulate the home inspection profession, such as further specifying the requirements for initial licensure as a home
...

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