Homeowner Can Sue Building Contractor for Consumer Fraud Even Where Homeowner Has Acted as His Own General Contractor

Murnane v. Finch Landscaping, LLC, 420 N.J. Super. 331 (App. Div. 2011).  Does the fact that a homeowner acts as his own general contractor in dealing with multiple contractors on a home improvement job mean that the homeowner cannot sue one of the contractors for consumer fraud?  The answer seems self-evident, but it was not so evident to a judge of the Law Division.

Plaintiff contracted with defendant to lay a bluestone patio in plaintiff’s backyard.  Plaintiff also hired other contractors in connection with the project.  At one point, plaintiff referred to himself as the “general contractor” for the job.

Plaintiff paid defendant the full amount due.  But defendant sent invoices for additional amounts that defendant said were for changes made during the project.  However, the changes were not reflected by change orders or other writings.  Moreover, plaintiff claimed that defendant’s work did not conform to the contract.

Plaintiff sued for breach of contract and violation of the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1 et seq. (“CFA”).  Defendant counterclaimed for payment for the additional work.  Defendant moved for summary judgment that, as a matter of law, plaintiff could not invoke the CFA because he had characterized himself as “the general contractor of his patio project.”  The Law Division agreed and granted summary judgment.

A jury then heard the rest of the case and awarded plaintiff $655, for damage that defendant negligently caused, and defendant $4,070 on its claim for additional work.  Plaintiff appealed, seeking a reversal of the CFA dismissal and a new trial on the other claims of both parties.

The Appellate Division reversed the dismissal of the CFA claim.  The CFA, including the Contractors’ Registration Act that the Legislature added to the CFA in 2004, is broad, and regulations promulgated by the Department of Consumer Affairs to implement that legislation contains a broad definition of “home improvement contract” that plainly covered the contract here.

Judge Skillman found no basis in the statutory or regulatory scheme to exclude “a homeowner who contracts with multiple contractors from the protections of the CFA and the Contractor’s Registration Act.  Even if such a homeowner could be characterized as a general contractor, he is still ‘an owner … of a residential … property’ who has entered into a ‘home improvement contract’ with a ‘contractor.’  N.J.S.A. 56:8-137.”

Defendant had relied on a prior Appellate Division decision that prevented a homeowner from suing a subcontractor with whom he was not in privity because there was a general contractor between them.  Here, however, “plaintiff had a direct contractual relationship with defendant.”  Accordingly, the panel rightly reversed and remanded for a new trial on the CFA claim.  But since evidence relevant to the CFA claim, most significantly the evidence that change orders were not contained in a writing, could have affected the result on the rest of the case, the Appellate Division vacated the entire judgment and ordered a new trial on all issues except for the $655 award to plaintiff on his negligence claim.