PETER J. LAMONT, et al. v. OPTA CORPORATION, et al.

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0710-05T30710-05T3

PETER J. LAMONT, On Behalf of

Himself and All Others Similarly

Situated and on Behalf of the

General Public,

Plaintiff-Appellant,

v.

OPTA CORPORATION, LOTUS PACIFIC,

INC., OPTA SYSTEMS, LLC, CARMCO

INVESTMENTS, LLC, GO VIDEO, OPTA

CORPORATION d/b/a GO VIDEO, and

OPTA SYSTEMS, LLC d/b/a GO VIDEO,

Defendants-Respondents.

________________________________________

 

Submitted June 1, 2006 - Decided June 16, 2006

Before Judges Conley and Winkelstein.

On appeal from the Superior Court of New Jersey, Law Division, Passaic County, L-2226-05.

Gainey & McKenna, attorneys for appellant (Barry J. Gainey, on the brief).

Reed Smith, and James C. Martin of the California bar and David J. Bird of the Pennsylvania bar, admitted pro hac vice, attorneys for respondents Opta Corporation, Lotus Pacific, Inc. and Opta Systems, LLC d/b/a Go Video (Greg A. Dadika, on the brief).

PER CURIAM

Plaintiff bought a digital videodisc (DVD) recorder advertised during a QVC television show and offered for sale by telephone and the Internet. He paid $408.40. Several months later, plaintiff discovered the machine was not compatible with certain nationally retailed blank DVDs. When he contacted defendants, he claims he was "advised that [defendants] were aware of the defect and that only certain brands of DVD discs are usable on the recorder." Based primarily upon his contentions that:

Defendants failed to advise their customers at the time of purchase that the DVD Recorder is only compatible with certain brands of DVD discs. Rather, they promoted it as being compatible with all DVD discs[;]

Thus, the DVD Recorder contains a defect which prevents it from being compatible with certain DVD brands. Defendants either knew, recklessly disregarded, or reasonably should have known about both the falsity and deceptive nature of its product representations and advertisements at the time of the introduction and initial sales of the DVD Recorder,

plaintiff filed a multi-count class action suit. The allegations contained therein include the following:

CLAIMS

36. Pursuant to principles of notice pleading, plaintiff hereby alleges each and every cause of action and remedy at law or in equity supported by the facts alleged in this Complaint. Those causes of action and remedies at law or in equity include the following:

COUNT ONE

VIOLATIONS OF N.J.S.A. 56:8-2 ET SEQ.

(CONSUMER FRAUD ACT)

37. The New Jersey Consumer Fraud Act (hereinafter "Act") states, in relevant part:

56:8-2. Fraud, etc., in connection with sale or advertisement of merchandise or real estate as unlawful practice.

The act, use or employment by any person of any unconscionable commercial practice, deception, fraud, false pretense, false promise, misrepresentation, or the knowing, concealment, suppression, or omission of any material fact with intent that others rely upon such concealment, suppression or omission, in connection with the sale or advertisement of any merchandise or real estate, or with the subsequent performance of such person as aforesaid, whether or not any person has in fact been misled, deceived or damaged thereby, is declared to be an unlawful practice; provided, however, that nothing herein contained shall apply to the owner or publisher of newspapers, magazines, publications or printed matter wherein such advertisement appears, or to the owner or operator of a radio or television station which disseminates such advertisement when the owner, publisher, or operator has no knowledge of the intent, design or purpose of the advertiser.

38. Defendants violated the Act by failing to alert customers that the DVD Recorder did not work with all brands of DVD+R or DVD+RW discs, but rather only works with certain brands.

39. Defendants advertised and promoted their product as having the ability to record on DVD+R and DVD+RW discs. However, defendants concealed the fact that only certain brands work with the DVD Recorder.

40. The individual plaintiff saw the DVD Recorder on www.qvc.com. read the specifications, examined the pictures provided of the unit and purchased the unit. At no time prior to purchasing the unit was plaintiff warned that the DVD Recorder only worked with certain brands of DVD discs.

41. Once the unit was received, the plaintiff set up the recorder in accordance with the instructions provided in the user guide which was packaged along with the DVD Recorder. Plaintiff used the unit along with the DVD+RVV disc that the Defendants provided.

42. A few months later, plaintiff purchased brand name DVD+R discs from a national retail chain. However, the discs did not work with the DVD Recorder.

43. After purchasing additional discs which also did not work, plaintiff contacted defendants and was advised that only certain brands of DVD discs work with the DVD Recorder.

44. Defendants failed to advise their customers at the time of purchase that the DVD Recorder is only compatible with certain brands of DVD discs. Rather, they promoted it as being compatible with all DVD discs.

45. Thus, the DVD Recorder contains a defect which prevents it from being compatible with certain DVD brands. Defendants either knew, recklessly disregarded, or reasonably should have known about both the falsity and deceptive nature of its product representations and advertisements at the time of the introduction and initial sales of the DVD Recorder.

46. Thus, defendants have violated the Act and have caused the plaintiff to sustain damages, including treble damages and attorney fees.

COUNT TWO

FRAUD/INTENTIONAL MISREPRESENTATION

47. Defendants knowingly and intentionally made false statements of existing material facts.

48. Defendants intended for plaintiff to rely on their material misrepresentations of fact.

49. Plaintiff reasonably and justifiably relied on Defendants' material misrepresentations, unaware of the falsity of defendants' representations, and had a right to rely on those representations.

50. The individual plaintiff saw the DVD Recorder on www.qvc.com. read the specifications, examined the pictures provided of the unit and purchased the unit. At no time prior to purchasing the unit was plaintiff warned that the DVD Recorder only worked with certain brands of DVD discs.

51. Once the unit was received, the plaintiff set up the recorder in accordance with the instructions provided in the user guide which was packaged along with the DVD Recorder. Plaintiff used the unit along with the DVD+RW disc that the Defendants provided.

52. A few months later, plaintiff purchased brand name DVD+R discs from a national retail chain. However, the discs did not work with the DVD Recorder.

53. After purchasing additional discs which also did not work, plaintiff contacted defendants and was advised that only certain brands of DVD discs work with the DVD Recorder.

54. Defendants failed to advise their customers at the time of purchase that the DVD Recorder is only compatible with certain brands of DVD discs. Rather, they promoted it as being compatible with all DVD discs.

55. Thus, the DVD Recorder contains a defect which prevents it from being compatible with certain DVD brands. Defendants either knew, recklessly disregarded, or reasonably should have known about both the falsity and deceptive nature of its product representations and advertisements at the time of the introduction and initial sales of the DVD Recorder.

56. Plaintiff suffered damages as a result of relying on Defendants' material misrepresentations of fact.

COUNT THREE

NEGLIGENCE

57. Defendants owed a duty to Class members to fully disclose the limitations of the DVD Recorder.

58. Defendants breached that duty by failing to fully disclose to the Class members the fact that the DVD Recorder only works with certain brands of DVD discs.

59. Defendants breach of their duty proximately caused damage to the Class members.

60. The individual plaintiff saw the DVD Recorder on www.qvc.com. read the specifications, examined the pictures provided of the unit and purchased the unit. At no time prior to purchasing the unit was plaintiff warned that the DVD Recorder only worked with certain brands of DVD discs.

61. Once the unit was received, the plaintiff set up the recorder in accordance with the instructions provided in the user guide which was packaged along with the DVD Recorder. Plaintiff used the unit along with the DVD+RW disc that the Defendants provided.

62. A few months later, plaintiff purchased brand name DVD+R discs from a national retail chain. However, the discs did not work with the DVD Recorder.

63. After purchasing additional discs which also did not work, plaintiff contacted defendants and was advised that only certain brands of DVD discs work with the DVD Recorder.

64. Defendants failed to advise their customers at the time of purchase that the DVD Recorder is only compatible with certain brands of DVD discs. Rather, they promoted it as being compatible with all DVD discs.

65. Thus, the DVD Recorder contains a defect which prevents it from being compatible with certain DVD brands. Defendants either knew, recklessly disregarded, or reasonably should have known about both the falsity and deceptive nature of its product representations and advertisements at the time of the introduction and initial sales of the DVD Recorder.

66. Defendants breach of their duty actually caused damage to the Class members.

COUNT FOUR

BREACH OF IMPLIED WARRANTY ON GOODS

67. Defendants reasonably expected the plaintiff and Class members to utilize the DVD Recorder to record media onto DVD+R and DVD+RW discs.

68. Defendants sold the DVD Player both directly to the Class members and through retailers, such as QVC www.qvc.com, and www.amazon.com.

69. Defendants breached an implied warranty as codified in N.J.S.A. 12A:2-314 in that the DVD Recorder only records on certain brands of DVD discs.

70. The individual plaintiff saw the DVD Recorder on www.qvc.com. read the specifications, examined the pictures provided of the unit and purchased the unit. At no time prior to purchasing the unit was plaintiff warned that the DVD Recorder only worked with certain brands of DVD discs.

71. Once the unit was received, the plaintiff set up the recorder in accordance with the instructions provided in the user guide which was packaged along with the DVD Recorder. Plaintiff used the unit along with the DVD+RW disc that the Defendants provided.

72. A few months later, plaintiff purchased brand name DVD+R discs from a national retail chain. However, the discs did not work with the DVD Recorder.

73. After purchasing additional discs which also did not work, plaintiff contacted defendants and was advised that only certain brands of DVD discs work with the DVD Recorder.

74. Defendants failed to advise their customers at the time of purchase that the DVD Recorder is only compatible with certain brands of DVD discs. Rather, they promoted it as being compatible with all DVD discs.

75. Thus, the DVD Recorder contains a defect which prevents it from being compatible with certain DVD brands. Defendants either knew, recklessly disregarded, or reasonably should have known about both the falsity and deceptive nature of its product representations and advertisements at the time of the introduction and initial sales of the DVD Recorder.

76. As a result of Defendants breach of warranty Class members sustained damages.

COUNT FIVE

BREACH OF WARRANTY OF MERCHANTABILITY

77. Defendants reasonably expected the plaintiff and Class members to utility the DVD Recorder to record media onto DVD+R and DVD+RW discs.

78. The DVD Recorder is not fit for the particular purpose of recording of DVD+R and DVD+RW media formats.

79. The plaintiff and Class members relied upon the Defendants specifications, promotional materials and/or advertising materials to select the DVD Recorder as being one that would record on DVD+R and DVD+RW media formats without limitation.

80. The individual plaintiff saw the DVD Recorder on www.qvc.com. read the specifications, examined the pictures provided of the unit and purchased the unit. At no time prior to purchasing the unit was plaintiff warned that the DVD Recorder only worked with certain brands of DVD discs.

81. Once the unit was received, the plaintiff set up the recorder in accordance with the instructions provided in the user guide which was packaged along with the DVD Recorder. Plaintiff used the unit along with the DVD+RW disc that the Defendants provided.

82. A few months later, plaintiff purchased brand name DVD+R discs from a national retail chain. However, the discs did not work with the DVD Recorder.

83. After purchasing additional discs which also did not work, plaintiff contacted defendants and was advised that only certain brands of DVD discs work with the DVD Recorder.

84. Defendants failed to advise their customers at the time of purchase that the DVD Recorder is only compatible with certain brands of DVD discs. Rather, they promoted it as being compatible with all DVD discs.

85. Thus, the DVD Recorder contains a defect which prevents it from being compatible with certain DVD brands. Defendants either knew, recklessly disregarded, or reasonably should have known about both the falsity and deceptive nature of its product representations and advertisements at the time of the introduction and initial sales of the DVD Recorder.

86. Defendants breached the warranty of merchantability as codified in N.J.S.A. 12A:2-14 in that the DVD Recorder only works with certain brands of DVD discs.

87. As a result of Defendants breach of warranty Class members sustained damages.

COUNT SIX

NEGLIGENTLY CAUSED ECONOMIC LOSS

88. The Defendants knew or should have known that the failure of their DVD Recorder to operate as advertised, described and/or promoted would cause an identifiable class of persons to suffer economic harm.

89. The Defendants failed to take reasonable measures to avoid the risk of causing economic harm to Class members.

90. The individual plaintiff saw the DVD Recorder on www.qvc.com. read the specifications, examined the pictures provided of the unit and purchased the unit. At no time prior to purchasing the unit was plaintiff warned that the DVD Recorder only worked with certain brands of DVD discs.

91. Once the unit was received, the plaintiff set up the recorder in accordance with the instructions provided in the user guide which was packaged along with the DVD Recorder. Plaintiff used the unit along with the DVD+RW disc that the Defendants provided.

92. A few months later, plaintiff purchased brand name DVD+R discs from a national retail chain. However, the discs did not work with the DVD Recorder.

93. After purchasing additional discs which also did not work, plaintiff contacted defendants and was advised that only certain brands of DVD discs work with the DVD Recorder.

94. Defendants failed to advise their customers at the time of purchase that the DVD Recorder is only compatible with certain brands of DVD discs. Rather, they promoted it as being compatible with all DVD discs.

95. Thus, the DVD Recorder contains a defect which prevents it from being compatible with certain DVD brands. Defendants either knew, recklessly disregarded, or reasonably should have known about both the falsity and deceptive nature of its product representations and advertisements at the time of the introduction and initial sales of the DVD Recorder.

96. The Class members suffered economic harm as a direct and proximate result of Defendants' failure to take reasonable steps to avoid the risk of causing economic harm.

COUNT SEVEN

NEGLIGENT MISREPRESENTATION

97. The Defendants negligently provided false and/or misleading information to Class members concerning the performance of the DVD Recorder.

98. The Class members reasonably relied upon the Defendants' false and/or misleading information in purchasing the DVD Recorder.

99. The individual plaintiff saw the DVD Recorder on www.qvc.com. read the specifications, examined the pictures provided of the unit and purchased the unit. At no time prior to purchasing the unit was plaintiff warned that the DVD Recorder only worked with certain brands of DVD discs.

100. Once the unit was received, the plaintiff set up the recorder in accordance with the instructions provided in the user guide which was packaged along with the DVD Recorder. Plaintiff used the unit along with the DVD+RW disc that the Defendants provided.

101. A few months later, plaintiff purchased brand name DVD+R discs from a national retail chain. However, the discs did not work with the DVD Recorder.

102. After purchasing additional discs which also did not work, plaintiff contacted defendants and was advised that only certain brands of DVD discs work with the DVD Recorder.

103. Defendants failed to advise their customers at the time of purchase that the DVD Recorder is only compatible with certain brands of DVD discs. Rather, they promoted it as being compatible with all DVD discs.

104. Thus, the DVD Recorder contains a defect which prevents it from being compatible with certain DVD brands. Defendants either knew, recklessly disregarded, or reasonably should have known about both the falsity and deceptive nature of its product representations and advertisements at the time of the introduction and initial sales of the DVD Recorder.

105. The Class members suffered harm as a direct and proximate result of their reasonable reliance upon Defendants' false and/or misleading statements concerning the performance of the DVD Recorder.

In lieu of an answer, defendants filed an R. 4:6-2(e) motion to dismiss for failure to state a claim upon which relief can be granted. Specifically, defendants contended that pursuant to Theidemann v. Merecedes-Benz USA, 183 N.J. 234 (2005), the consumer fraud count must be dismissed for failure to specifically plead an ascertainable loss, that the breach of warranty claims must be dismissed because the complaint admits the recorder did work with some DVD discs, and that a nationwide class action for consumer fraud is not maintainable as it requires examination of all fifty states' separate consumer fraud statutes.

The judge granted the motion, saying only:

Well, I don't think you've got damages, quite frankly, and I think they're going to be very difficult to establish.

I don't know what the purchase price of this instrument was, that it was not satisfactory - I think you should have applied - for return of the funds - so you weren't happy with it. As far as the issue of DVDs that worked or didn't work - didn't work, you could take them back as well.

I am going to dismiss it without prejudice at this time. And if those damages cannot be established with more specificity, when it comes back the next time, it will be dismissed "with."

We reverse.

The applicable standard that should have informed the motion judge below has been stated, without variation, repeatedly:

the complaint must be searched "in depth and with liberality to ascertain whether the fundament of a cause of action can be gleaned even from an obscure statement of claim . . . . " Printing Mart-Morristown v. Sharp Elecs. Corp., 116 N.J. 739, 746 (1989) (quoting DiCristofaro v. Laurel Grove Mem'l Park, 43 N.J. Super. 244, 252 (App. Div. 1957)). We accord every reasonable inference to the plaintiff. Ibid. The motion to dismiss should be granted only in rare instances and ordinarily without prejudice. As such, "[i]f a generous reading of the allegations merely suggests a cause of action, the complaint will withstand the motion." F.G. v. MacDonell, 150 N.J. 550, 556 (1997).

[Smith v. SBC Commc'ns, Inc., 178 N.J. 265, 282 (2004).]

See Banco Popular N. Am. v. Gandi, 184 N.J. 161, 165-66 (2005); Fazilat v. Feldstein, 180 N.J. 74, 78 (2004); F.G. v. MacDonell, supra, 150 N.J. at 556; Craig v. Suburban Cablevision, 140 N.J. 623, 625-26 (1995); Richardson v. Standard Guar. Ins. Co., 371 N.J. Super. 449, 467 (App. Div. 2004); Castro v. NYT Television, 370 N.J. Super. 282, 294 (App. Div. 2004); Darakjian v. Hanna, 366 N.J. Super. 238, 248 (App. Div. 2004); N.J. Citizen Action v. Schering-Plough Corp., 367 N.J. Super. 8, 13 (App. Div.), certif. denied, 178 N.J. 249 (2003). It is, further, axiomatic that a complaint should not be dismissed on a Rule 4:6-2(e) motion where a cause of action is suggested by the facts and any missing element can be corrected by amendment of the complaint. Printing Mart-Morristown v. Sharp Elecs., supra, 116 N.J. at 746. As the Court said in Printing:

We approach our review of the judgment below mindful of the test for determining the adequacy of a pleading: whether a cause of action is "suggested" by the facts. Velantzas v. Colgate-Palmolive Co., 109 N.J. 189, 192 (1988). In reviewing a complaint dismissed under Rule 4:6-2(e) our inquiry is limited to examining the legal sufficiency of the facts alleged on the face of the complaint. Rieder v. Dep't of Transp., 221 N.J. Super. 547, 552 (App. Div. 1987). However, a reviewing court "searches the complaint in depth and with liberality to ascertain whether the fundament of a cause of action may be gleaned even from an obscure statement of claim, opportunity being given to amend if necessary." Di Cristofaro v. Laurel Grove Mem'l Park, 43 N.J. Super. 244, 252 (App. Div. 1957). At this preliminary stage of the litigation the Court is not concerned with the ability of plaintiffs to prove the allegation contained in the complaint. Somers Constr. Co. v. Board of Educ., 198 F. Supp. 732, 734 (D.N.J. 1961). For purposes of analysis plaintiffs are entitled to every reasonable inference of fact. Independent Dairy Workers Union v. Milk Drivers Local 680, 23 N.J. 85, 89 (1956). The examination of a complaint's allegations of fact required by the aforestated principles should be one that is at once painstaking and undertaken with a generous and hospitable approach.

[Ibid.]

While failure to allege facts demonstrating that plaintiff has been or will be damaged can, indeed, be fatal, id. at 760, the governing standards are no more or less restrictive. In this respect, defendants' reliance upon Thiedemann v. Mercedes-Benz USA, supra, 183 N.J. 234, is misplaced. Thiedemann was not a Rule 4:6-2(e) dismissal. There is nothing in Thiedmann that requires the pleading of an ascertainable loss element of a consumer Fraud Act cause of action with any special specificity. As observed in Printing Mart-Morristown v. Sharp Elecs.:

This issue of "damage" . . . is one the resolution of which by this Court should await the development of a record or, at the very least, the research efforts and arguments of counsel, with reasoned consideration by the courts below, wherefore we will not permit the complaint to be stricken at this juncture.

[116 N.J. at 770.]

Liberally reading the complaint here, plaintiff asserted damages in the form of money spent on the non-usable DVD discs and purchase of a product that does not do what it is purported to do. At this stage of the pleading, we see no basis for engaging in the Thiedemann analysis. Whether there are warranties plaintiff could have pursued, such as in Thiedemann, and/or whether plaintiff could return the non-usable discs and obtain a full refund, or whether the discs that do work will require plaintiff to pay more than expected to make the machine work, are ascertainable loss inquiries that should not be resolved at the initial pleading stage. See Perkins v. DaimlerChrysler Corp., 383 N.J. Super. 99, 110-11 (2006).

We comment briefly on defendants' contention that:

I: THIS APPEAL MUST BE DISMISSED BECAUSE THE TRIAL COURT'S ORDER IS NOT A FINAL ORDER OR JUDGMENT UNDER RULE 2:2-3(a).

. . . .

III: THE TRIAL COURT'S ORDER DISMISSING PLAINTIFF'S COMPLAINT WITHOUT PREJUDICE CAN AND SHOULD BE AFFIRMED BECAUSE THE COMPLAINT CONTAINS OVERLY BROAD CLASS ALLEGATIONS AND INADEQUATELY PARTICULARIZED ALLEGATIONS OF FRAUD AND MISREPRESENTATION.

A. THE COMPLAINT MUST BE REPLEADED BECAUSE IT CONTAINS CLASS ACTION ALLEGATIONS THAT ARE OVERLY-INCLUSIVE ON THEIR FACE.

B. THE COMPLAINT MUST BE REPLEADED BECAUSE IT FAILS TO ALLEGE FRAUD AND MISREPRESENTATION WITH PARTICULARITY.

As to point I, even assuming the judgment is not final, we would exercise our discretion to grant leave to appeal, e.g., Scalaza v. Shop Rite Supermarkets, Inc., 304 N.J. Super. 636, 639 (App. Div. 1997). As to point III, we decline to address the issues raised therein as they were not decided by the motion judge.

Reversed and remanded.

 

(continued)

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A-0710-05T3

June 16, 2006