Skeer v. EMK Motors, Inc.

• Decision Date: 08 December 1982
• Citation: 455 A.2d 508,187 N.J.Super. 465
• Parties: Martin H. SKEER and Susan Skeer, Plaintiffs-Respondents, James R. Zazzali, Attorney General of New Jersey, Intervenor-Appellant, v. EMK MOTORS, INC., a New Jersey Corporation, Defendant-Respondent.
• Court: New Jersey Superior Court — Appellate Division

Page 465

187 N.J.Super. 465

455 A.2d 508

Martin H. SKEER and Susan Skeer, Plaintiffs-Respondents James R. Zazzali, Attorney General of New Jersey, Intervenor-Appellant, v. EMK MOTORS, INC., a New Jersey Corporation, Defendant-Respondent.

Superior Court of New Jersey Appellate Division.

Argued Nov. 8, 1982.

Decided Dec. 8, 1982.

Claude E. Salomon, Deputy Atty. Gen., for intervenor-appellant (Irwin I. Kimmelman, Atty. Gen., attorney; Andrea Silkowitz, Deputy Atty. Gen., of counsel).

Burton Zitomer, Linden, for plaintiffs-respondents (Sevack, Posnock & Zitomer, Linden, attorneys).

Harry Dreier, Plainfield, for defendant-respondent EMK Motors, Inc. (Dreier & Dreier, Plainfield, attorneys).

Before Judges ARD, KING and McELROY.

The opinion of the court was delivered by

KING, J.A.D.

This case presents the question whether § 7 of the Consumer Fraud Act, N.J.S.A. 56:8-19 (L.1971, c. 247, § 7) mandates imposition of treble damages, attorney's fees and costs. ¹

After a bench trial the Law Division judge held that defendant, a garage owner, was liable under the Consumer Fraud Act, N.J.S.A. 56:8-1 et seq., and awarded compensatory damages of $1,091.21. The judge refused to award treble damages but forwarded a copy of the complaint to the Attorney General "to permit him to intervene or move for further relief." The Attorney General intervened, argued that the Consumer Fraud Act mandated the imposition of treble damages, failed to convince the Law Division judge, and now appeals. We agree with the Attorney General's position and reverse.

The Consumer Fraud Act, N.J.S.A. 56:8-1 et seq., was aimed at preventing the use of "any deception, fraud, false pretense, false promise, misrepresentation, or the knowing concealment, suppression, or omission of any material fact" with the purpose of inducing another to rely in connection with the sale or advertisement of any merchandise. N.J.S.A. 56:8-2. The Attorney General has promulgated regulations to enforce that aim. N.J.S.A. 56:8-4.

The trial judge found that defendant had committed deceptive practices in violation of the automobile repair regulations promulgated pursuant to the act. Specifically, a dealer may not begin work for compensation without securing a "specific written authorization from the customer" stating the nature of the repair and providing the customer with a written estimate. N.J.A.C. 13:45A-7.2. The judge found that defendant violated this regulation. Defendant does not dispute that finding on this appeal.

N.J.S.A. 56:8-19 provides:

Any person who suffers any ascertainable loss of moneys or property, real or personal, as a result of the use or employment by another person of any method, act or practice declared unlawful under this act or the act hereby amended and supplemented may bring an action or assert a counterclaim therefor in any court of competent jurisdiction. In any action under this section the court shall, in addition to any other appropriate legal or equitable relief, award threefold the damages sustained by any person in interest. In all actions under this section the court shall also award reasonable attorneys' fees, filing fees and reasonable costs of suit. [Emphasis supplied] Relying upon Daaleman v. Elizabethtown Gas Co., 150 N.J.Super. 78, 374 A.2d 1237 (App.Div.1977), rev'd on other grounds 77 N.J. 267, 390 A.2d 566 (1978), the judge held that this section did not mandate an award of treble damages. He also refused to award attorneys' fees and costs.

In Daaleman retail customers brought an action against a gas company pursuant to the Consumer Fraud Act. This court found that the trial court had jurisdiction to entertain the complaint but should have stayed the action so that the Board of Public Utilities Commissioners could exercise primary jurisdiction and adjudicate on the merits. We said that if the Board decided that the gas company had violated the act, the trial judge should then decide the issue of the customers' right to damages. Id. at 83-84, 374 A.2d 1237.

Writing for this court, Judge Pressler there said, in dictum:

While we anticipate no serious problem in respect of an award of counsel fees, and recognize further that provision of such an award is a significant impetus to the prosecution of public interest litigation, we do appreciate that an award of treble damages might well be counterproductive to the interests of the very consumer class seeking vindication in this action. As the trial judge suggested, and as Elizabethtown here urged, such an award would simply be passed on to the consumers by increased rates charged to them. We are not persuaded that that result must necessarily follow and that the award could not be so molded so as to avoid it. In any event, the treble damage award is not mandated by the Consumer Fraud Act but only authorized by it, and we are confident that if the action is returned to the court, the parties will present such proofs as to the consequences of such an award as to permit the court to rationally exercise its discretion in this regard. [150 N.J.Super. at 84-85, 374 A.2d 1237]

On appeal, the Supreme Court reversed on the ground that the defendant gas company was not subject to the provisions of the Consumer Fraud Act at all, holding that the regulatory agency, the Board, had exclusive jurisdiction over the subject matter, deemed to be a tariff mechanism.

Referring to our court's statement on treble damages, the Supreme Court said:

The Appellate Division recognized that an award of treble damages against a utility might well be counterproductive to the interests of the very class on whose behalf the suit was allegedly brought. It sought to avoid such result by holding that an award of treble damages was not mandated by the Consumer Fraud Act but only authorized by it. We find it unnecessary to approve or disapprove of this holding in view of our disposition of the case. [77 N.J. at 273, 390 A.2d 566]

In his concurring opinion Justice Pashman said:

Finally, I find that N.J.S.A. 56:8-9 not only sanctions but requires the award of treble damages to a successful plaintiff in an action under the Consumer Fraud Act. The statutory language involved, like that used in the analogous provision of the New Jersey Antitrust Act ... clearly speaks in the imperative. I believe that the deterrent and punitive purposes of the Act would be substantially undermined by any judicial impairment of its primary weapon against those who engage in consumer fraud. [Id. at 275, 390 A.2d 566]

The Supreme Court's conclusion that the act did not apply to the utility in Daaleman eliminated the need perceived at that time by this court to protect plaintiffs-consumers from the consequences of applying the treble damage clause of the act. No published cases since Daaleman have treated this issue squarely. But see Neveroski v. Blair, 141 N.J.Super. 365, 376, 358 A.2d 473 (App.Div.1976).

Facially, the statute mandates treble damages. It says that the court "shall" award threefold damages, reasonable attorneys' fees, filing fees and reasonable costs of suit. N.J.S.A. 56:8-19. "Shall" usually is construed as mandatory, but not always. In Union Terminal Cold Storage Co. v. Spence, 17 N.J. 162, 110 A.2d 110 (1954), the Supreme Court articulated a well-established rule

In determining whether an act is imperative and mandatory or merely directory there is a presumption that the word "shall" (such word appears in this statute) is used in an imperative and not a directory sense, and while this presumption is not a conclusive one it can only be overthrown by something in the character of the legislation or in the context which will justify a different meaning. [at 166, 110 A.2d 110]

In Harvey v. Essex Cty. Freeholder Bd., 30 N.J. 381, 153 A.2d 10 (1959), the court said:

... The word "may" is ordinarily permissive or directory, and the words "must" and "shall" are generally mandatory. Such terms, however, have been held to be interchangeable whenever necessary to execute the clear intent of the Legislature. The problem is primarily one of ascertaining the intent of the Legislature [citation omitted.] Such intent may be implied from the language used or referred on grounds of policy and reasonableness. [at 392, 153 A.2d 10]

The treble damage provision is part of an act designed to prevent unconscionable commercial practices in connection with the sale or advertisement of any merchandise or real estate. Violation of the act can be shown even though a consumer has not in fact been misled or deceived. N.J.S.A. 56:8-2. It is not necessary to show actual deceit or a fraudulent act; any unconscionable commercial practice is prohibited. State v. Hudson Furniture Co., 165 N.J.Super. 516, 520, 398 A.2d 900 (App.Div.1979). A merchant's subjective good faith does not excuse technical noncompliance with regulations promulgated under the Consumer Fraud Act. Id. at 519, 398 A.2d 900. The act is broadly designed to protect the public, even when a merchant acts in good faith. We must read its remedial provisions with that purpose in mind.

The act contains two basic forms of remedy. The first requires the intervention of the Attorney General. The second provides a private cause of action.

The Attorney General may hold hearings upon any alleged violation and assess a penalty payable into the general treasury. N.J.S.A. 56:8-3.1. A penalty up to $2,000 may be imposed for the first offense and up to $5,000 for subsequent offenses. N.J.S.A. 56:8-13. In addition to assessing civil penalties, the Attorney General may direct that any money acquired by unlawful practices be restored. N.J.S.A. 56:8-15. He may also bring an action for an injunction. N.J.S.A. 56:8-8.

Thus, if a private party is injured by an unlawful practice, the Attorney General may take an interest in the case and direct that that person's money or property be restored. However, the Attorney General might not wish to pursue the case or the private party might not...