The First Step Toward Rejection of a Dubious Consumer Fraud Act Defense

All the Way Towing, LLC v. Bucks County International, Inc., ___ N.J. Super. ___ (App. Div. 2018).  Today’s opinion by Judge Fisher reaffirms a fundamental principle: on summary judgment, a court must view the facts most favorably to the opponent of the motion.  The panel in this case found that the Law Division failed to do that here.  Accordingly, the decision below, which had granted the defense’s motion for summary judgment, was reversed.  But that failure of the Law Division was not the most important aspect of today’s decision, or the reason for its publication.  The panel clarified an area of consumer protection law that has plagued consumer claims in certain contexts.

The case involved a contract under which defendant Bucks County International, Inc. (“Bucks”) was to manufacture and deliver to plaintiffs a custom-built tow truck.  Plaintiffs gave a $10,000 deposit.

Delivery was to occur by April 15, 2011.  Bucks did not deliver the truck on that date.  In fact, delivery was not attempted until October 2011.  At that time, there was evidence that “the two truck’s forks did not move correctly; other significant problems were identified as well.”  Three more delivery attempts followed, the last of which was in November 2011.  On those occasions too, there were problems: “the towing function was not operational and the truck spewed hydraulic fluid …. [,] metal fell out from beneath the truck, and the wheel lift failed to close properly.”

In light of all that, plaintiffs found the situation “hopeless.”  They therefore rejected delivery and demanded the return of their deposit.  When the deposit was not returned, plaintiffs sued, asserting claims under the Uniform Commercial Code (“UCC”)and the Consumer Fraud Act (“CFA”), and alleging breach of contract.  Defendants moved for summary judgment on all claims, which the Law Division granted.  Plaintiffs appealed and won reversal.

The Law Division granted summary judgment on the UCC claim because “as the judge explained, the contract called for the delivery of ‘an International  7300 4X4 with a Dynamic 801 tow body mounted’ and that’s what was tendered.”  But the Law Division did not assume, most favorably to plaintiffs, “that Bucks attempted delivery on four occasions– all well beyond the stipulated delivery date– and on each occasion failed to deliver a truck that adequately performed its essential functions.”  That alone created a genuine dispute of fact for trial that precluded summary judgment.

Bucks argued that, regardless, plaintiffs had not suffered damages.  Judge Fisher disagreed.  The retention of plaintiffs’ deposit, by itself, constituted damage.

The Law Division’s decision on the CFA claim fared no better.  That court concluded that the CFA did not apply to this transaction because this was not a “sale of merchandise” under the CFA, involving (as the Law Division saw it) a truck not available “to the public for sale.”  That was because the vast bulk of the contract for the truck consisted of detailed specifications tailored to plaintiffs’ specific needs.  But Judge Fisher noted that caselaw, including one of the cases cited by the Law Division, made clear that “items indisputably designed specifically for a particular consumer” can fall within the CFA.  The item for sale need not be “offered to consumers in the popular sense.”  Rather, “[i]t has been firmly established that a sale of a custom-built item may constitute a ‘sale of merchandise.'”

The Law Division relied on Finderne Mgmt. Co. v. Barrett, 402 N.J. Super. 546 (App. Div. 2008), and Princeton Healthcare Sys. v. Netsmart N.Y., Inc., 422 N.J. Super. 467 (App. Div. 2011).  Judge Fisher stated that those cases “appear to have adopted an exemption from what constitutes a ‘sale of merchandise’  based upon the fact that the goods and services sold there were ‘complex.'”  The panel stated that even if it were to agree that the sale of a “complex” item does not constitute “sale of merchandise” under the CFA, an issue that the panel expressly and pointedly declined to reach, that theory had no application here.  There was no showing that the tow truck here was any more “complex” than any other tow truck.

The notion that “complex” or custom-built items are somehow exempt from the CFA was deservedly questioned by today’s decision.  It remains for another case to take the next step of actually rejecting that idea and restoring to consumers the protection that the CFA, which is to be liberally construed in favor of consumers, promised to those who buy complex products as well as to those who purchase simple ones.

 

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