ANDREW KAPLAN v. WHOLESALE AUTOMOTIVE SUPPLY CO.

(NOTE: The status of this decision is .)
 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-2182-07T32182-07T3

ANDREW KAPLAN,

Plaintiff,

and

FRANK MOROZ, on behalf of himself

and all others similarly situated,

Plaintiff-Appellant,

v.

WHOLESALE AUTOMOTIVE SUPPLY CO.,

Defendant-Respondent,

and

BURNS-KULL INC., d/b/a BURNS HONDA;

BURNS PONTIAC GMC TRUCK, INC.,

d/b/a BURNS HYUNDAI, BURNS PONTIAC

AND BURNS GMC; KULL AUTO SALES,

INC., d/b/a AVALON HONDA; R.K.

CHEVROLET, INC., d/b/a R.K. SUBARU,

R.K. CHEVROLET, R.K. CADILLAC AND

R.K. KIA AND R.K. AUTO GROUP; L.K.

AUTO SALES, INC., d/b/a TOYOTA OF

VINELAND AND SCION OF VINELAND;

MANAGERITE, INC., d/b/a BURNS-KULL

MANAGEMENT GROUP AND BURNS-KULL

AUTO GROUP; AUTONATION, INC.; AUTO

HOLDING CORP.; AUTONATION

ENTERPRISES INCORPORATED; CLINTON

H 2000, LLC d/b/a CLINTON HONDA;

CCDJ, LLC, d/b/a CLINTON-CHRYSLER-

DODGE-JEEP; CFORD, LLC, d/b/a

CLINTON FORD; CLINTON CHEVROLET-

CADILLAC, LLC; CLINTON CAR AND

TRUCK COUNTRY; LANDROVER, PRINCETON,

LLC; FLEMINGTON LAND ROVER, INC.;

PNCFLM, LLC d/b/a PRINCETON NASSAU/

CONOVER FORD-LINCOLN-MERCURY;

PRINCETON'S NASSAU/CONOVER FORD-

LINCOLN-MERCURY, INC.; PAUPVW, LLC,

d/b/a PRINCETON VW AUDI; PRINCETON

AUDI VW, LLC; PRINU, INC.; PRINCETON

CAR AND TRUCK COUNTRY; DFFLM, LLC

d/b/a DITSCHMAN/FLEMINGTON FORD-

LINCOLN MERCURY; DITSCHMAN/FLEMINGTON

FORD-LINCOLN-MERCURY, LLC; FDCJ, LLC

d/b/a FLEMINGTON DODGE-CHRYSLER-JEEP;

FLEMINGTON-DODGE-CHRYSLER-JEEP, LLC;

FLEMINGTON BUICK CHEVROLET, PONTIAC,

GMC, LLC; CIRCLE BUICK/GMC, LLC;

FLEMINGTON SUBARU/ISUZU, LLC;

FLEMINGTON CAR AND TRUCK COUNTRY;

FLEMINGTON SUBARU, LLC; EFFEN, LLC

d/b/a FLEMINGTON NISSAN; FLEMINGTON

NISSAN/BMW, LLC; EFFEMZEE, LLC d/b/a

FLEMINGTON MAZDA; JJSS, LLC; EFFEYE,

LLC, d/b/a FLEMINGTON INFINITI;

FLEMINGTON INFINITI, LLC; FVWPAB,

LLC, d/b/a FLEMINGTON VW PORSCHE AUDI,

BMW; SNDK, LLC; WARNOCK AUTOMOTIVE;

WARNOCK BUICK-GMC; WARNOCK CHEVROLET;

WARNOCK CHRYSLER-PLYMOUTH; WARNOCK

DODGE INC.; WARNOCK LEXUS; WARNOCK

MOTOR SALES INC.; WARNOCK MOTORS INC.;

and WARNOCK NISSAN,

Defendants.

 
 

Argued March 11, 2009 - Decided

Before Judges Cuff, Baxter and King.

On appeal from the Superior Court of New Jersey, Law Division, Camden County, L-3979-04.

Simon Bahne Paris argued the cause for appellant (Saltz Mongeluzzi Barrett & Bendesky, P.C., and Spector, Roseman, Kodroff & Willis, P.C., attorneys for appellant (Mr. Paris, of counsel, Mr. Paris and John A. Macoretta, on the brief).

Marvin J. Brauth argued the cause for respondent (Wilentz, Goldman & Spitzer, P.A., attorneys; Mr. Brauth and Robert L. Selvers, on the brief).

PER CURIAM

This is an appeal by Frank Moroz (plaintiff) from the summary judgment dismissal of his complaint against defendant Wholesale Automotive Supply Co. (defendant). The complaint alleged claims under New Jersey's civil Racketeer Influenced and Corrupt Organizations Act, N.J.S.A. 2C:41-1 to -6.2 (NJRICO), the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1 to -20 (CFA), and the Magnuson-Moss Warranty-Federal Trade Commission Improvement Act, 15 U.S.C.A. 2301 to 2312 (MMWA). The complaint also sought damages for civil conspiracy and unjust enrichment. Plaintiff's claims arose from his purchase of an automobile loss prevention system, marketed by defendant through automobile dealers.

Plaintiff contends that the court erred in concluding (1) that the product in question constituted a warranty, rather than insurance; (2) that the sale of the product did not constitute an illegal tie-in under the MMWA; (3) that plaintiff had no standing to sue under the MMWA, and (4) that plaintiff suffered no ascertainable loss under the CFA. We reject plaintiff's contentions and affirm.

I

This is the procedural history. Plaintiffs Andrew Kaplan and Frank Moroz filed an amended ten-count complaint in Superior Court, Law Division, Camden County, on behalf of themselves and others similarly situated, against defendant and a number of automobile dealers, alleging violations of NJRICO (counts one through three), the CFA (count four), and the MMWA (count eight), and civil conspiracy (count five) and unjust enrichment (count ten), in connection with defendant's sale of an automobile loss deterrent system. Counts six, seven, and nine related to the sale of a lease protection guarantee that is not at issue on this appeal.

On June 20, 2006 defendant moved to dismiss count eight of the complaint, alleging violations of the MMWA. On July 21, 2006 Judge Fratto heard argument, granted the motion and signed an order dismissing this count with prejudice.

On July 26, 2006 a stipulation of dismissal was entered, dismissing the complaint as to the Warnock defendants. On December 5, 2006 the Ditschman and Auto Nation defendants were dismissed pursuant to Rule 1:13-7 for lack of prosecution.

On December 21, 2006 defendant moved for summary judgment on counts one through five of the amended complaint. Plaintiffs cross-moved for partial summary judgment, seeking a declaration that the sale of defendant's product constituted the sale of insurance. Judge Fratto heard argument on February 16, 2007 and placed his rulings on the record the same day. At oral argument, the parties agreed that the determination regarding certification of the class would be deferred pending the outcome of the summary judgment motions.

On March 1, 2007 the judge entered an order finding that as a matter of law, sale of defendant's product constituted the sale of a product with a warranty, rather than the sale of insurance. He denied plaintiffs' cross-motion for partial summary judgment. He also denied defendant's motion to dismiss counts one through five, pending defendant's further application as to the viability of these counts in light of his legal ruling on the warranty-insurance issue.

The judge also dismissed Kaplan as a plaintiff, pursuant to the representation of plaintiffs' counsel that he was no longer in the case. Hereafter, "plaintiff" in the singular refers to Moroz only.

Defendant then renewed its motion for summary judgment as to counts one through five, and also moved for summary judgment as to count ten. Plaintiff moved for partial summary judgment, seeking an order that the warranty provided with defendant's product contained an illegal tie-in under the MMWA. Judge Fratto heard argument on May 25, 2007 and entered orders dismissing with prejudice counts one through three of the complaint as to defendant, and denying plaintiff's motion for partial summary judgment.

On June 20, 2007 defendant moved for summary judgment as to counts four, five, and ten. On July 20, 2007 the judge heard argument, granted the motion, and entered an order dismissing these counts of the complaint as to defendant.

On September 19, 2007 a consent order was entered, dismissing without prejudice counts six through ten of the complaint as to the Burns-Kull defendants. On December 7, 2007 a settlement agreement with the Burns-Kull defendants as to the remaining counts of the complaint, which had been entered into on June 14, 2007, was approved by the court. The plaintiff Moroz and the "settlement class" settled with the Burns-Kull defendants for $1.25 million. Paragraph 5 of the December 7, 2007 order provides for: (1) $412,500 counsel fees; (2) $123,033 litigation costs, and (3) $169,381 administrative costs.

On January 10, 2008 plaintiff filed a notice of appeal from the orders of July 21, 2006, May 25, 2007, July 20, 2007, and August 17, 2007, and from paragraphs 2 and 6 of the order of March 1, 2007.

II

These are the relevant transactional facts. Defendant is a cooperative of new car dealers who are shareholders of the cooperative. It provides dealers with products and services, such as office supplies, equipment, and after-market programs. One of the after-market programs offered for sale by defendant to its members was the WLPS.

The WLPS package consisted of several components. First, the package provided six stencils that physically etched a unique identification number onto a car's front, side, and rear windows. Second, the package provided two warning decals for placement on the car's front-side windows, which stated that the car was protected by the WLPS. Third, the package provided a toll-free number etched into the stencils that the police could use to contact defendant.

The package included a guarantee that, in the event the car was stolen and either not recovered or recovered but declared a total loss, defendant would pay the owner a certain sum of money, the amount of which was determined by the type of package purchased. The parties differed in their characterization of this guarantee. Plaintiff contended that the guarantee was the only item actually purchased and was a form of theft insurance. Defendant contended that the WLPS was a loss deterrent system that consisted of the stencils, the decals, and the toll-free phone number, and that the guarantee was merely a warranty issued to implement this product. This dispute is the basis for the first issue on this appeal and was the subject of the first two summary judgment motions.

A car dealer would make two separate purchases from defendant. The first was the window stencils and the second was the warranty. The dealer would pay for the stencils when ordered but would be given blank warranty registration forms at no charge. Defendant would be told that a customer had purchased the warranty only when the dealer submitted a warranty registration form to defendant on behalf of the customer. At that point, the dealer then paid for the warranty portion of the WLPS, and defendant would enter the etch number into its internal database. If a car was stolen and the police called defendant's toll-free number, defendant would be able to locate the customer's name from this database.

On April 21, 2004 plaintiff purchased a 2004 Hyundai from Burns Pontiac GMC Truck, one of the car dealerships that was part of the Burns-Kull group of defendants. As part of the sale, plaintiff purchased the WLPS for $99.50.

At the time of purchase, the window decals and stencils had already been pre-installed on plaintiff's car. Peter Lanzavecchia, an executive vice-president of Burns Buick Pontiac-GMC Hyundai, admitted that Burns pre-etched all of its cars, i.e., prior to the sale of the car to a customer. However, he was clear that Burns did not sell the etching as a separate product without the warranty. That is, if a customer declined the $99.50 fee and chose not to purchase the theft deterrent system, the car would still have the etching on it but would not be registered anywhere. In such a case, Burns would "eat the loss," which consisted of the price it paid to defendant for the window stencils plus the cost of its labor in doing the etching.

Lanzavecchia explained that it was administratively easier for the dealership to have all cars etched when they arrived on the lot and to have the price of the WLPS pre-printed on the order forms. If a customer elected not to purchase the system, the computer put "X's" through the price. This practice also insured that a sales representative would present the option to the prospective buyer, though it did not guarantee a sale. For the relevant period, Burns's dealerships sold 28,000 WLPS systems, or about 55% of the cars it sold. Lanzavecchia also thought that the pre-etching was required by defendant and that it allowed the dealers' cars to be protected against theft while still on the lot.

Plaintiff alleged that no one at the dealership ever discussed the WLPS with him; he was simply given a "whole bunch" of documents to sign. Although he checked off the box to purchase the WLPS, he did not recall any "big discussion" regarding it. He thought all the etchings and decals on his car windows were advertisements for the glass manufacturer.

Lanzavecchia claimed that Burns's customers were given information at three separate times about the option of purchasing the WLPS. The first time was on the bill of sale, the second was on the warranty registration form, and the third was on the customer acknowledgement form. Burns used a version of the warranty registration form that did not include the price for the WLPS, even though defendant had modified its form in 2001 to include price as a line item.

Without dispute, plaintiff signed a document entitled "Customer Acknowledgement Re Purchase of Auto Theft Registration Protection," and this document stated that the dealer had advised him the purchase of this protection was voluntary. Although plaintiff also signed a warranty registration form, he claimed this form was not explained to him by the dealer.

Plaintiff bought the WAS-2 package. This package provided that if, within three years, the vehicle either was stolen and not recovered or recovered but declared a total loss, defendant would pay plaintiff $1000 directly. An additional $1000 would be paid jointly to him and the dealer, which was to be used towards the purchase of another vehicle. Defendant also sold two other packages, the WAS-5 and the WAS-25, which provided for different terms and levels of pay-out. Those packages were never offered by Burns and are not at issue here. That additional payment forms the basis for Issue Two on this appeal, and was the subject of defendant's third summary judgment motion. Lanzavecchia claimed that, because Burns believed in customer satisfaction, he would endorse a two-party check even if the customer planned to buy a new car from another dealer. However, he was not aware if that ever had occurred.

The actual warranty, as printed on the warranty registration form, provided as follows:

The Wasco Loss Prevention System, which is permanently installed on the vehicle windows, includes two (2) warning decals affixed to the driver and passenger windows, guarantees to the above name purchaser/lessee of the described vehicle that the system installed will be an effective theft deterrent. In the event the system fails, and the described Vehicle is stolen and not recovered, or stolen, recovered and declared a total loss (see exclusions), the above registered owner will receive $1,000.00 for out of pocket expenses. In addition $1,000.00 will be sent to the originating dealer, crediting the registered owner upon purchase of a vehicle. The maximum benefit covered by this guarantee shall not exceed $2,000.00. You may obtain window etching from a person of your choice. The window etching program is not required to obtain credit.

Plaintiff's car was never stolen; he never asserted any warranty claim against defendant. Rather, he sought damages in the amount he paid for the WLPS, because it was something he did not need and something that was not explained to him correctly. He did not have any complaints about the WLPS per se. Plaintiff never spoke to anyone from defendant.

Defendant's Operations

According to Susan Tassitano, defendant's president since 1990, defendant first started selling an etching program to car dealers when it purchased the program from another company, ECP, Inc. Although defendant did not have a marketing department, it employed one salesperson for a period of six months who sold the program to all car dealerships, not just members of defendant cooperative. The program never really prospered and defendant never got any benefit from it. After this salesperson was terminated, defendant continued to supply the etch system, but it did not have any representatives in the field to solicit customers. Essentially, the program was available if dealers wanted it.

In March 1998 defendant started selling its own etch program, which became known as the WLPS. Defendant admitted that in October 1998, at a board of directors meeting, the board used the term "insurance" to refer to the new program. However, Tassitano claimed that this term was used "loosely" to cover any product that had a warranty pursuant to which the company had to pay claims. She said that neither she nor the board members were insurance experts and that they did not always use the correct terminology. Defendant also admitted that in November 1998, at an annual stockholder meeting, it announced it had started its own insurance company.

To sell the program, defendant first tried to form its own insurance company in Bermuda. However, the Bermuda Insurance Board rebuffed defendant's attempts because of concerns that defendant would be paying out more in claims than it would be charging for the program. Defendant then entered into an agreement with a Bermuda company, Atlantic Security Management, also known as a "rent-a-captive" company. This company was not a subsidiary of or related to defendant.

Essentially, a portion of what defendant charged to dealers for each WLPS contract was paid to the Bermuda company as a premium to insure defendant's performance in paying claims. Defendant paid all claims prior to sending any money to Bermuda. Pursuant to the agreement, if the amount of the claims exceeded the funds remitted, then the Bermuda company would pay the difference. However, that never happened.

Defendant initially paid $250,000 to set up this rent-a-captive company. Over time, portions of that "deposit" were returned to defendant. By the time of this litigation, the deposit had been completely returned.

In 2002 defendant looked to obtain a reinsurance policy on the WLPS program in case the funds in Bermuda ran out. Ultimately, defendant purchased a reinsurance, or stop-loss, policy from Universal. Defendant was considered the "insured" under this policy and Universal was the insurer. The coverage was considered vehicle theft protection insurance on an occurrence basis. It corresponded exactly to the terms of defendant's guarantee under the WLPS program. Defendant paid Universal a set premium per contract.

WLPS was marketed to dealers in New Jersey until September 2004. Defendant stopped selling the WLPS in September 2004 because of concerns regarding liability, i.e., not being able to pay claims. Defendant then entered into an agreement with Vanguard Dealer Services in which Vanguard agreed to sell the etch program to defendant's dealers beginning in September 2004 and to pay defendant a specific dollar amount for each contract. Defendant also entered into a memorandum of understanding and agreement with Dealers Assurance Company, wherein Dealers agreed to reinsure the "run-off" risk, i.e., the liability on any pre-September 2004 claims that had not yet been submitted. Defendant paid a one-time premium of $40,000 for this protection.

Except for one or two dealers, all of the dealers to whom defendant sold the WLPS were members of defendant cooperative. All nine directors of defendant's board were also members of defendant. To become a member, a dealer purchased stock in defendant.

Defendant's shareholders received both a stock dividend and a patronage dividend from defendant each year. The profits earned from the etch program, which was one of sixty-six product lines that defendant carried, were included in the line item for after-market products. That is, there was no separate payment to members from the etch program. Historically, defendant paid its members about 90% to 95% of its profits each year.

Tassitano admitted that defendant never filed any application with any State insurance department to be licensed as an insurance carrier, producer, or seller, and that it never sought an opinion as to whether the WLPS constituted insurance under New Jersey law. However, defendant was aware that the state of New York considered WLPS to be insurance. Tassitano claimed that an independent consultant hired by defendant had informed defendant that finance reserve service contracts, such as etch gap insurance, were not regulated as insurance.

In March 2006, a lawyer representing automotive retailers in New Jersey asked the New Jersey Department of Banking and Insurance (Department) for guidance as to whether "the sale of window etching in conjunction with a financial commitment to the product's efficacy as a theft-deterrent" constituted the sale of insurance in New Jersey. According to plaintiff, this letter was solicited by the settling defendants' counsel after this litigation started. According to the attorney's inquiry, the window etching materials were supplied by defendant, and "[a]t no additional charge to the consumer, each customer who purchased the window etching was also registered in the WASCO Vehicle Identification Loss Prevention System." This system "essentially reinforce[d] the product as an effective-theft-deterrent." According to counsel:

This product was in no way meant to provide insurance coverage nor supplant the coverage provided by auto-theft insurance. Neither [defendant] nor our clients assumed the risk of theft of their customers' vehicles, which typically cost between 10 and 20 times the maximum value of the product. Further, the loss is not distributed among a large group bearing similar risks as part of a general "risk shifting" scheme. [Defendant]'s willingness to financially support etching products is intended to underscore the efficacy of the product, and was meant to demonstrate that [defendant] believed in the product. In the event that a vehicle with the window etching enrolled in the System was stolen and not recovered, [defendant] would provide the owner with $1,000.00 for "out of pocket expenses" and another $1,000.00 "toward the purchase of a new vehicle."

In April 2006, Robert J. Melillo, the Department's chief of legislative and regulatory affairs, responded to this inquiry. Melillo cautioned that his response was not a formal declaratory ruling pursuant to N.J.S.A. 52:14B-8, that it was not binding on the Department, and that it was an advisory letter only. In addition, it was limited to the issues and facts presented to him and was not intended to address other fact patterns or additional issues.

Based on the facts contained in counsel's letter, Melillo stated that it did not appear that the sale of the window etching product "would constitute the regulated sale of insurance in this State."

I am sure you are aware that, generally speaking, certain elements constitute an insurance contract: (1) the insured owns an insurable interest; (2) there is a risk of loss to the insurable interest; (3) the insurer agrees to assume the risk of loss; (4) the loss is distributed among a large group bearing similar risks as part of a general scheme; and (5) the insured pays a premium for the assumption of the risk.

Based on the above, it would seem that the WASCO System would not be considered insurance because the essential elements of an insurance contract are absent. Rather, it appears that the WASCO System would more appropriately be considered a warranty of the etching product with a liquidated damages provision and not subject to regulation by this Department.

In support of his cross-motion for partial summary judgment on this issue, plaintiff presented the reports of three separate insurance experts, all of whom opined that the WLPS constituted insurance. One of the experts, Constance B. Foster, who was the former insurance commissioner of Pennsylvania, stated that the WLPS had all of the traditional elements of an insurance contract, not a warranty or service contract, and that it was a risk transfer product, not a true theft-deterrent device. In addition, defendant's operations resembled that of an insurance company, and defendant's own board treated the WLPS as an insurance program. She believed that the Department's advisory ruling had been based on incomplete information.

III

Our first concern is the ruling as a matter of law that the WLPS was a warranty rather than insurance. Plaintiff contends that the judge erred in ruling as a matter of law that the WLPS was a warranty rather than insurance. Plaintiff argues that: the WLPS meets all of the traditional criteria of insurance; defendant created and administered the WLPS as insurance; and the WLPS does not possess any of the attributes of a warranty. He also asserts that, although some state legislatures _ including New Jersey's effective as of April 1, 2008, L. 2007, c. 166 _ have enacted statutory schemes clarifying that vehicle protection products are not insurance, the WLPS does not meet the definition of such a vehicle protection product. See N.J.S.A. 17:18-19 to -26.

Defendant responds that: the court properly gave deference to the Department's determination that the WLPS is not insurance; the WLPS does not meet the common-law definition of insurance; the courts of other jurisdictions have concluded that similar products are not insurance; the newly-enacted statute in New Jersey has clarified that these products are not insurance; and defendant's decision to obtain insurance to cover its own potential liability for claims is irrelevant to determining whether the WLPS is insurance or a warranty.

In concluding that the WLPS did not have the attributes of insurance, the judge found that there was no agreement by defendant to assume the risk of loss and to distribute that loss among a large group bearing similar risks. In addition, the fee charged for the system was not based on geographic location or the type of vehicle, and the amount of benefits paid did not depend on the value of the vehicle.

The Law Division judge found that the WLPS was, instead, a theft-deterrent system. It met the definition of a warranty under both the New Jersey Warranty Act (the judge was probably referring to the express warranty provision of New Jersey's Uniform Commercial Code, N.J.S.A. 12A:2-313) and the MMWA, and it also met the definition of an anti-theft vehicle recovery device under N.J.A.C. 11:3-39.5(c)(11), for the purpose of reducing automobile insurance premiums. In the judge's view, there was an express warranty to pay a certain benefit if the etching and decals did not deter the theft of the vehicle and as a matter of law, the WLPS was a warranty, and not insurance.

"A trial court's interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference." Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995). A review of a legal question is de novo. Sprenger v. Trout, 375 N.J. Super. 120, 128 (App. Div. 2005). However, to the extent a lower court considers facts that are relevant to the legal issue, an appellate court must accord all legitimate inferences from the record to the party opposing summary judgment. Estate of Spencer v. Gavin, 400 N.J. Super. 220, 241 (App. Div.), certif. denied, 196 N.J. 346 (2008).

Insurance can be defined in many ways, but the variations are "primarily semantic." Lee R. Russ and Thomas F. Segalia, 1 Couch on Insurance 3d 1:6 (2005) (hereafter, Couch on Insurance). Essentially, it is

a contract by which one party (the insurer), for a consideration that usually is paid in money, either in a lump sum or at different times during the continuance of the risk, promises to make a certain payment, usually of money, upon the destruction or injury of "something" in which the other party (the insured) has an interest. . . . Other common definitions of insurance are (1) a contract to pay a sum of money upon the happening of a particular event or contingency; (2) indemnity for loss in respect of a specified subject by specified perils; (3) an undertaking by one party to protect another party from loss arising from named risks, for the consideration and upon the terms and under the conditions recited; (4) a contractual security against anticipated loss where the risk of loss is occasioned by some future or contingent event and is shifted to or assumed by the insurer, with a distribution of the risk of loss by the payment of a premium or other assessment into a general fund; and (5) a contract whereby one party promises for a consideration to indemnify the other against certain risks.

[Ibid. (footnotes omitted).]

Although an insurance policy is basically a contract of indemnity, not all contracts of indemnity are insurance contracts. Id. at 1:7. A court should not consider the character of the company offering the contract or the terminology used, but only the nature of the contract actually entered into. Id. at 1:8. "Even the fact that the contract expressly states that it is not a contract of insurance is not controlling." Ibid.

Our courts have accepted the definition of insurance as "a contract to pay a sum of money upon the happening of a particular event." CNA Ins. Co. v. Selective Ins. Co., 354 N.J. Super. 369, 378 (App. Div. 2002). "The essential nature of insurance is that risk is shifted to the insurer for the payment of a premium. It is a gamble." Warnig v. Atl. County Special Servs., 363 N.J. Super. 563, 572 (App. Div. 2003).

A warranty, on the other hand, is an assurance of title or the quality of property. Couch on Insurance, supra, 1:20. Whether a warranty amounts to insurance will depend upon its terms and, if relevant, on the wording of any statutory definition. Ibid.

As a general statement, a warranty that covers the goods sold for defects that likely existed in the goods at the time of sale is not an insurance contract, while a warranty that goes materially beyond the goods, or beyond defects in the goods, to compensate for losses due to causes unrelated to the general merchantability of the goods is an insurance contract. To some degree, this distinction appears to represent a recognition that sellers of warranties are ordinarily in the business of manufacturing or selling products other than insurance, and offer warranties merely as inducements to purchase their products.

[Ibid. (emphasis added) (footnotes omitted).]

As noted earlier above, the Department of Insurance (Department) applied a five-part test to determine whether the WLPS constituted insurance: (1) whether the insured owned an insurable interest; (2) whether there was a risk of loss to that interest; (3) whether the insurer agreed to assume that risk; (4) whether the loss was distributed among a large group bearing similar risks as part of a general scheme; and (5) whether the insured paid a premium for the assumption of the risk. Without elaborate explanation, the Department concluded that these elements were not present in connection with the WLPS.

A governmental agency charged with the enforcement of a statute can provide guidance in how that statute should be interpreted, and such interpretations are entitled to deference. Nat'l Waste Recycling, Inc. v. Middlesex County Improvement Auth., 150 N.J. 209, 227-28 (1997); Merin v. Maglaki, 126 N.J. 430, 436-37 (1992). The agency's interpretation should prevail unless it is "plainly unreasonable." Merin, supra, 126 N.J. at 437. An opinion letter from agency counsel may be accorded the status of an official administrative interpretation for purposes of judicial deference. See N.J. Guild of Hearing Aid Dispensers v. Long, 75 N.J. 544, 576 (1978) (referring to federal agency).

The agency here did not support its opinion with a sophisticated analysis. Nevertheless, one could argue that the Department has the expertise to determine what constitutes insurance, and it is the Department who interprets, enforces, and applies its regulations to determine whether to require the seller of a particular product to be licensed and regulated as the seller of insurance. If the Department chooses not to regulate the sale of the WLPS and other similar products, it would be somewhat anomalous for a court to afford a remedy to a plaintiff based on a claim which alleges that the product constituted the illegal sale of insurance.

Plaintiff stresses that the Department's opinion was based on facts that are contradicted by the record. For example, he contends that it was not true that the cost of the etching was $99.50 and that there was no additional charge for the $2000 indemnity benefit. In fact, according to plaintiff, the opposite was true, i.e., there was no charge for the etching and the fee was only for the right to be indemnified.

We tend to agree with plaintiff that the inquiry presented to the Department was perhaps somewhat misleading. The record before us supports plaintiff's position that the $99.50 he paid for the WLPS included the indemnity benefit as well as the window etching. Indeed, his car already had the window decals on them when he bought it. If he had declined to sign the warranty registration form, he would not have been charged anything. In that event, the decals would have remained on his car but he would not have been compensated in the event of the theft of his vehicle. We agree with him it was inaccurate to state that there was no additional charge for the $2000 guarantee. It also is difficult to say whether this distinction was material to the Department's opinion. In the final analysis, we accord the Department's opinion some, but certainly not controlling deference.

Two Federal District court cases recently have ruled on this issue, one from the Eastern District of Pennsylvania and one from New Jersey. Both held that the warranty view prevailed over the insurance view. Since these opinions are "unpublished" opinions, we cannot cite them and do not rely on them. R. 1:36-3.

Two published decisions address the issue, neither of which were cited to us by either party. In Pope v. TT of Lake Norman, LLC, 505 F. Supp. 2d 309, 312 (W.D.N.C. 2007), the federal court concluded that the Secure Etch Silent Guard Security System, which was virtually identical to the WLPS, constituted a warranty rather than insurance because it was a theft deterrent system. The court noted the well-settled principle that "'a warranty covers defects in the article sold while insurance indemnifies against damage from perils outside the article.'" Ibid. (quoting GAF Corp. v. County Sch. Bd., 629 F.2d 981, 983 (4th Cir. 1980)).

However, in Phelps v. Robert Woodall Chevrolet, Inc., 306 F. Supp. 2d 593 (W.D. Va. 2003), another federal court reached the opposite conclusion with respect to another similar product, the Automotive Theft Protection (ATP). In that case, the court accepted the plaintiff's argument that the ATP involved a shifting of the risk of the theft of the car. Id. at 596-97. The court found that, absent the ATP agreement, the defendant had no connection to the purchased automobile and would suffer no harm if it were stolen. Id. at 597. Although the defendant argued that the ATP consisted of more than just an etched number and that it also included a nationwide registry that would allow police to easily identify the vehicle and heighten the chances of its return, the court refused to give credence to that argument because nothing in the record indicated what the ATP warranted against, "other than an ultimate outcome perpetrated by a third party." Ibid.

In our view, the contention that these products constitute a warranty rather than insurance is more persuasive. We agree with defendant that it was not providing car owners with theft insurance. Rather, it was selling them a theft-deterrent and vehicle-recovery product, accompanied by a limited warranty. As both Couch on Insurance and the Pope court have noted, a contract will be deemed a warranty when it guarantees against a defect in the product itself, whereas insurance indemnifies against outside perils. Couch on Insurance, supra, 1:20; Pope, supra, 505 F. Supp 2d at 312. Here, the WLPS warranted against the "defect" that the system would fail to deter a theft and fail to aid in the recovery of the owner's vehicle. It did not warrant against the fortuitous happening of the theft itself.

As support for our conclusion, we note the year-old statute governing such products in New Jersey, N.J.S.A. 17:18-19 to -26, effective April 1, 2008. According to N.J.S.A. 17:18-19, a "vehicle protection product" means a vehicle protection device, system or service that:

(a) is installed on or applied to a vehicle;

(b) is designed to prevent loss or damage to a vehicle from a specific cause or to facilitate the recovery of the vehicle after it has been stolen; and

(c) includes a written warranty by a warrantor that provides if the vehicle protection product fails to prevent loss or damage to a vehicle from a specific cause or to facilitate the recovery of the vehicle after it has been stolen, the warranty holder shall be paid specified incidental costs by the warrantor as a result of the failure of the vehicle protection product to perform pursuant to the terms of the warranty.

Vehicle protection products specifically include "window etch products." Ibid.

According to N.J.S.A. 17:18-20(e), L. 2007, c. 166, effective date April 1, 2008, "[a] vehicle protection product warranty offered or issued in this State shall . . . [c]ontain a disclosure that reads substantially as follows: THIS AGREEMENT IS A PRODUCT WARRANTY, NOT INSURANCE, AND IS UNDER THE PURVIEW OF THE DIVISION OF CONSUMER AFFAIRS." Ibid. Significantly, according to N.J.S.A. 17:18-22:

A vehicle protection product warranty issued by the warrantor of a vehicle protection product does not constitute a contract substantially amounting to insurance or its issuance the business of insurance under Title 17 of the Revised Statutes and is an express warranty, if all of the following conditions are met:

a. The warranty is limited to indemnifying the warranty holder for incidental costs which may be reimbursed under the provisions of the warranty in either a fixed amount specified in the warranty or sales agreement or by the use of a formula itemizing specific incidental costs incurred by the warranty holder;

b. The warranty meets all the requirements set forth in section 2 of P.L.2007, c.166 (C.17:18-20), including, but not limited to, being guaranteed by a warranty reimbursement insurance policy; and

c. The warrantor meets all the requirements set forth in section 3 of P.L.2007, c.166 (C.17:18-21).

N.J.S.A. 17:18-21 requires the warrantor of a vehicle protection product to register with the Director of the Division of Consumer Affairs and to meet certain requirements in connection with that registration. Significant here, the failure of a warrantor, prior to April 1, 2008, to administer a vehicle protection product in accordance with the requirements of the new warranty statute, is not admissible in any proceeding "and may not otherwise be used to prove that the action of any person or the affected vehicle protection product was unlawful or otherwise improper." N.J.S.A. 17:18-25.

Although plaintiff suggests that the WLPS would not qualify as a vehicle protection product under the terms of this new statute because defendant did not meet all of the new statute's requirements, it recognizes that this failure cannot be used to prove that, prior to April 1, 2008, the sale of the WLPS was unlawful. In our view, the enactment of the new warranty statute fortifies the Department's conclusion and the conclusion of most of the other courts and agencies which have considered this issue, that these types of products are not insurance and that they are more appropriately regulated as consumer products.

The opposite conclusion would contravene legislative intent if we allowed plaintiff's case to proceed on a theory that defendant illegally sold an insurance product when the Legislature has now declared that such products are not insurance and when it has further declared, in essence, that warrantors such as defendant should not be penalized for failing to previously comply with the requirements of the new statute. This result makes even more sense here, where plaintiff's only alleged damages are $99.50 which he paid for the product and where no other class member has been identified.

This brings us to plaintiff's argument that the WLPS should be deemed insurance because of the way defendant created and administered it. Plaintiff contends that: defendant purchased insurance to insure its own assumed risk under the WLPS, even after it stopped selling the product; defendant's board of directors approved the creation of an insurance company to sell the WLPS; defendant's original warranty registration form referred to the "WASCO Insurance Company"; the exclusions in defendant's coverage were similar to those contained in an automobile insurance policy; and defendant offered WLPS sellers a premium-sharing arrangement which calculated premium reserves after losses.

Defendant responds that the manner in which it determined to fund its potential obligation to make payments pursuant to warranty claims was not an aspect of the WLPS itself and was irrelevant to a determination of whether it constituted insurance. It also argues that any attempt to create an insurance company was an aborted one, but which explains why the minutes from the meetings of the board of directors contain references to insurance.

We agree with defendant that the manner in which it chose to fund its obligation to consumers pursuant to the WLPS guarantee is not determinative of the insurance question. Without dispute defendant had a financial obligation to the consumers who purchased the WLPS and whose cars were stolen and not recovered. That defendant chose to meet this obligation through the vehicle of insurance explains only the nature of the relationship between defendant and the companies with whom it contracted to assume this obligation _ not the relationship between defendant and its consumers.

Moreover, Tassitano, defendant's president, explained that, although defendant had originally planned to form an insurance company to sell the WLPS, it was never able to do so. Hence, plaintiff's reliance on the minutes of board meetings, where the concept of insurance was discussed, and on the initial version of defendant's warranty registration form, which referred to the never-created WASCO Insurance Company, is simply misplaced. As Tassitano explained it, neither she nor the board members had any expertise in insurance matters, and they used these concepts loosely. We cannot conclude that the characterization of how they intended to fund defendant's obligation under the WLPS should control the Department's own characterization of WLPS as formalized in legislation.

IV

Plaintiff also contends that the court erred in dismissing his claims under the MMWA. He contends that the judge erred in concluding that the WLPS did not violate the MMWA by illegally conditioning a portion of its warranty benefit on the purchase of a new vehicle, and that plaintiff did not incur damages within the meaning of the MMWA. We disagree with both arguments.

In response, defendant argues that the court did not err in finding that the statute was not violated and that plaintiff suffered no damages. Defendant also argues that there is another basis upon which to affirm the dismissal of plaintiff's MMWA claims, i.e., plaintiff's failure to provide defendant the opportunity to cure any violation. We also agree with defendant on these points.

According to 15 U.S.C.A. 2302(b)(1)(B)(2), nothing in the MMWA "shall be deemed to . . . require that a consumer product or any of its components be warranted." However, if a manufacturer does warrant a product, then the MMWA imposes specific obligations and minimum federal standards. Poli v. DaimlerChrysler Corp., 349 N.J. Super. 169, 180 (App. Div. 2002) (citing 15 U.S.C.A. 2304). "If a warrantor violates any of those obligations, a buyer may bring an action in federal or state court for damages and equitable relief." Id. at 180-81 (citing 15 U.S.C.A. 2310(d)) (footnote omitted).

The purpose of the MMWA "was to make warranties on consumer products more readily understandable and enforceable." Ventura v. Ford Motor Corp., 180 N.J. Super. 45, 59 (App. Div. 1981). It was enacted "to improve the adequacy of information available to consumers, prevent deception, and improve competition in the marketing of consumer products." 15 U.S.C.A. 2302(a). Among other things, the statute allows recovery under a warranty without regard to privity of contract and enlarges the remedies available to a consumer. Ventura, supra, 180 N.J. Super. at 59.

According to 15 U.S.C.A. 2310(d)(1) (emphasis added), "a consumer who is damaged by the failure of a supplier, warrantor, or service contractor to comply with any obligation under . . . [15 USCS 2301], or under a written warranty, implied warranty, or service contract, may bring suit for damages and other legal and equitable relief" in any federal or state court. Plaintiff contends that the statutory obligation with which defendant failed to comply was the one set forth at 15 U.S.C.A. 2302(c), which plaintiff refers to as the "anti-tying" provision. According to that subsection:

No warrantor of a consumer product may condition his written or implied warranty of such product on the consumer's using, in connection with such product, any article or service (other than article or service provided without charge under the terms of the warranty) which is identified by brand, trade, or corporate name; except that the prohibition of this subsection may be waived by the Commission if--

(1) the warrantor satisfies the Commission that the warranted product will function properly only if the article or service so identified is used in connection with the warranted product, and

(2) the Commission finds that such a waiver is in the public interest.

See also 16 C.F.R. 700.10(a) ("Section 102(c) prohibits tying arrangements that condition coverage under a written warranty on the consumer's use of an article or service identified by brand, trade, or corporate name unless that article or service is provided without charge to the consumer.").

According to 15 U.S.C.A. 2310(e) (emphasis added):

No action (other than a class action or an action respecting a warranty to which subsection (a)(3) applies) may be brought under subsection (d) for failure to comply with any obligation under any written or implied warranty or service contract, and a class of consumers may not proceed in a class action under such subsection with respect to such a failure except to the extent the court determines necessary to establish the representative capacity of the named plaintiffs, unless the person obligated under the warranty or service contract is afforded a reasonable opportunity to cure such failure to comply. In the case of such a class action . . . brought under subsection (d) for breach of any written or implied warranty or service contract, such reasonable opportunity will be afforded by the named plaintiffs and they shall at that time notify the defendant that they are acting on behalf of the class . . .

Thus, it has been stated that:

In order to state an actionable claim of breach of warranty and/or violation of the Magnuson-Moss Act, a plaintiff must demonstrate that (i) the item at issue was subject to a warranty; (ii) the item did not conform to the warranty; (iii) the seller was given reasonable opportunity to cure any defects; and (iv) the seller failed to cure the defects within a reasonable time or a reasonable number of attempts.

[Temple v. Fleetwood Enters., 133 Fed. Appx. 254, 268 (6th Cir. 2005).]

Here, plaintiff alleged that defendant violated the MMWA because the only way that a customer could collect the second half of the $2000 warranty was by buying a replacement vehicle at the named dealership. He thus contended that the sales transaction itself rested upon a violation of section 2302(c), and that his damages consisted of the $99.50 he paid for the warranty.

The motion judge here dismissed the MMWA claims because he found that a private cause of action exists under the statute only when a defendant has failed to comply with a warranty and when the plaintiff has suffered damages that flow from that failure. In the court's view, an illegal sale did not constitute a failure to comply with the warranty. Moreover, plaintiff never made a claim for the $2000, and so he did not suffer any damages that flowed from defendant's alleged violation of section 2302(c). Neither party has identified any "published" case law interpreting the anti-tying provision of section 2302(c), and our independent research has failed to uncover any.

It could be argued that the warranty at issue here did identify a specific brand or trade name by requiring the consumer to purchase a new vehicle from the original dealer in order to be eligible for the second half of the $2000 benefit. Defendant, however, argues that nothing in the MMWA or its interpretive regulations prohibits a warrantor from requiring that warranty services be performed at an authorized dealer. Defendant is correct that the regulations only prohibit a warrantor from conditioning a warranty upon the use of authorized dealers for non-warranty service and maintenance. See 16 C.F.R. 700.10(c) ("No warrantor may condition the continued validity of a warranty on the use of only authorized repair service and/or authorized replacement parts for non-warranty service and maintenance.").

In Temple, supra, 133 Fed. Appx. at 268, the Sixth Circuit stated that, "[u]ltimately, the applicability of the Magnuson-Moss Act is directly dependant upon a sustainable claim for breach of warranty." "Thus, if there exists no actionable warranty claim, there can be no violation of the Magnuson-Moss Act." Ibid. We need not here resolve the illegal-tying contention because, as will be discussed next, plaintiff's MMWA claims fail because he sustained no provable damage.

V

Moving to the question of the opportunity to cure pursuant to 15 U.S.C.A. 2310(e), there is no dispute that plaintiff never gave defendant that opportunity here. However, plaintiff claims that he can avoid summary judgment on this issue by asserting that there may be members of a class yet to be certified who can show that they gave defendant the opportunity to cure. To bring a private cause of action under the MMWA, a plaintiff must show that he was "damaged by the failure of a . . . warrantor . . . to comply with any obligation" under the statute. 15 U.S.C.A. 2310(d)(1). "The MMWA only awards a refund of the purchase price for the breach of a full warranty." Cimino v. Fleetwood Enters., 542 F. Supp. 2d 869, 886 (N.D. Ind. 2008) (citing 15 U.S.C.A. 2304). State law provides the applicable measure of damages for limited warranties. Ibid.

We agree with the Law Division judge below that the MMWA requires more than a showing that the plaintiff paid for a warranty that was technically illegal under the statute. Rather, the damage sustained by the plaintiff must flow from the violation. For example, if plaintiff's car had been stolen and not recovered, and if he sought reimbursement from defendant under the warranty and was told that he could only get the second half of his $2000 if he bought a new car from the dealer who sold him the original car, then he might have sustained damages. To interpret the statute any differently would simply entitle a plaintiff to recover for a bad bargain which he made, i.e., for a warranty not worth very much. Hence, absent an event triggering the warranty in issue, we agree with the Law Division judge that plaintiff did not suffer any damages which entitle him to recover under the MMWA.

Here, the issue of class certification is not before us. In fact, it is not at all clear to us whether a class was ever actually certified with respect to any of the claims against defendant. As noted in the procedural history, it appears that a class was certified as to the Burns-Kull defendants, who later settled. As to the claims against defendant, it appears that the court deferred ruling on class certification until the summary judgment motions were decided. On appeal, plaintiff does not contend that this deferral was erroneous.

Given this procedural posture, we do not agree with plaintiff that he can avoid summary judgment dismissal of his MMWA claims by asserting that there may be members of a class yet to be certified who can show that they gave defendant the opportunity to cure. Absent some proffer by plaintiff that there was a subclass of individuals who attempted to collect on their warranty claim and who notified defendant that the warranty contained an illegal tying provision by requiring them to purchase a new car from the original dealer, the trial judge did not err in dismissing the MMWA claims.

Finally, plaintiff also contends that the opportunity-to-cure requirement of the statute was satisfied because defendant drafted the illegal tying arrangement and thus knew of the defect at the time of sale. We disagree. In support of this argument, plaintiff cites to two cases where the car manufacturers were clearly aware of defects in their cars. Where, however, the "defect" is only a technical violation of the MMWA, we will not conclude that the statutory requirement is met simply by showing that the defendant put the warranty into the stream of commerce but without causing damages. Because the sale of the WLPS constituted neither the illegal sale of insurance nor the sale of a deceptive warranty, we reject plaintiff's contention as to the MMWA.

The judge originally denied defendant's motion to dismiss the CFA claim, apparently concerned that plaintiff had not been sufficiently advised by his car dealer that he had the right to opt out of buying the WLPS. Although defendant argued that the dealer's selling practices would not render defendant liable to plaintiff, the court was concerned about the possibility that the dealer and defendant had conspired to sell the WLPS in a fraudulent manner.

Subsequently, defendant renewed its motion for summary judgment. In opposition, plaintiff submitted claim files that showed that the WLPS had been pre-printed on the retail order forms and that the price for the WLPS had been left blank on the warranty registration forms. According to plaintiff, this showed a "designed fraud" implemented by defendant through the dealers. He contended that there was strong circumstantial evidence of concerted action among defendant and the dealers. For example, the dealers got a "kickback" on every WLPS sold and thus had a joint incentive to push the product.

The judge held that there was no proof that defendant directed the dealers to do anything illegal, such as to conceal the charge for the WLPS. Moreover, the warranty agreement between defendant and the consumer did not come into play until the warranty form was signed and submitted to defendant. Although the dealer, in a sense, became the agent of defendant by submitting the warranty form, there was no agency relationship in the sale of the product. Defendant did not control the method of the sale, nor did it advocate concealing charges. Moreover, it did not mandate pre-etching, pre-printing the WLPS on the retail order forms, or leaving out the price on the warranty forms. Also, defendant had no direct contact with the consumer.

The court also found that the provision in the warranty that conditioned the second payment of $1000 upon the purchase of a new vehicle, which formed the basis for plaintiff's MMWA claim and which the court had previously rejected, did not void the warranty and was not illegal. Accordingly, the court granted defendant's motion to dismiss both the consumer fraud claim and the conspiracy claim against defendant.

On appeal, plaintiff asserts two bases for error in dismissing the CFA claim. First, he contends that the sale of the WLPS constituted the illegal sale of insurance and, as such, constituted a violation of the CFA. Second, he contends that, even if the WLPS was a warranty, it violated the anti-tying provision of the MMWA and, as such, constituted a violation of the CFA.

For the reasons set forth above, we do not find that the WLPS constituted a sale of insurance. We eschew deciding that the transaction violated the anti-tying provision of the MMWA because we found no damages ensued.

N.J.S.A. 56:8-19 sets forth the requirements for a private cause of action.

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, including those brought by the Attorney General, the court shall also award reasonable attorneys' fees, filing fees and reasonable costs of suit.

A private cause of action is afforded only to those who demonstrate "a loss attributable to conduct made unlawful by the CFA." Thiedemann v. Mercedes-Benz USA, LLC, 183 N.J. 234, 246 (2005). "[W]hen a plaintiff fails to produce evidence from which a finder of fact could find or infer that a plaintiff suffered a quantifiable or otherwise measurable loss as a result of the alleged CFA unlawful practice, summary judgment should be entered in favor of defendant." Id. at 238.

In cases involving breach of contract or misrepresentation, an out-of-pocket loss or loss in value will suffice. Id. at 248. However, defects that arise and that are addressed by warranty, at no cost to the consumer, do not provide a "predictable loss" under the CFA. Id. at 251.

In Cox v. Sears Roebuck & Co., 138 N.J. 2, 24-25 (1994), the Court suggested in dictum that a plaintiff who reaches a factfinder on a claim of ascertainable loss and successfully proves an unlawful practice but not damages, should still be eligible to recover counsel fees under the CFA. Weinberg v. Sprint Corp., 173 N.J. 233, 252-53 (2002). However, a plaintiff who cannot survive a summary judgment motion on the issue of ascertainable loss cannot proceed under the CFA at all, even for injunctive relief or counsel fees. Id. at 253. The CFA "does not provide for recovery of statutory damages where a plaintiff cannot show actual harm." Cannon v. Cherry Hill Toyota, Inc., 161 F. Supp. 2d 362, 373 (D.N.J. 2001); accord Dabush v. Mercedes-Benz USA, LLC, 378 N.J. Super. 105, 116 (App. Div.), certif. denied, 185 N.J. 265 (2005); see also Hoffman v. Hampshire Labs, Inc., 405 N.J. Super. 105, 114-15 (App. Div. 2009), and Hoffman v. AsSeenOnTV.com, Inc., 404 N.J. Super. 415, 423-29 (App. Div. 2009), where the court found that the plaintiff (same plaintiff in both cases) had not sufficiently alleged facts that would show he suffered an ascertainable loss under the CFA.

In replying to defendant's argument that he did not sustain an ascertainable loss as a result of defendant's violation of the CFA, plaintiff relies on Artistic Lawn & Landscape Co., Inc. v. Smith, 381 N.J. Super. 75 (Law Div. 2005). In that case, a landscape contractor sued a customer for payment for his services. The customer counterclaimed that the contractor had violated the CFA because it did not hold a certificate in accordance with a state statute governing landscape irrigation contractors. Id. at 82-83. The customer sought a refund of what he had already paid to the contractor. Id. at 83. Also, there was apparently a dispute as to work that had been authorized and completed. Id. at 88.

The Law Division held that the customer did not obtain the full benefit of the bargain and that he was entitled to a refund of the amount he had paid. Ibid. In so holding, the court relied on N.J.S.A. 56:8-2.11, which provides: "Any person violating the provisions of the within act [the CFA] shall be liable for a refund of all moneys acquired by means of any practice declared herein to be unlawful." The court in Artistic held that this provision was a statutory remedy, not based on proving damages or a causal relationship. 381 N.J. Super. at 89. Although it was not a "damage" to be trebled, the customer could also recover attorneys' fees pursuant to N.J.S.A. 56:8-19. Id. at 89-90.

We are not convinced that N.J.S.A. 56:8-2.11 would entitle plaintiff to a refund here, since it requires a refund only where the defendant acquired money "by means of" an unlawful practice. Even if we found that a violation of the MMWA occurred here, and that such a violation constituted a per se CFA violation, or that the sale of the WLPS constituted the illegal sale of insurance, we are not necessarily convinced that there was a causal relationship between that unlawful conduct and the amount paid by plaintiff for the WLPS. See Int'l Union of Operating Eng'rs Local No. 68 Welfare Fund v. Merck & Co., Inc., 192 N.J. 372, 389 (2007) (holding that there must be causal relationship between defendant's unlawful conduct and plaintiff's ascertainable loss).

At the time summary judgment was granted, there were no other named plaintiffs and it is not clear whether the class had yet been certified. Even if the class had been certified, however, it is the putative class representative who must be able to present sufficient evidence of ascertainable loss to withstand summary judgment. Laufer v. U.S. Life Ins. Co. in the City of N.Y., 385 N.J. Super. 172, 186-87 (App. Div. 2006).

In conclusion, we find that plaintiff did not sustain an ascertainable loss under the CFA. Neither defendant's alleged sale of insurance without a license nor its alleged violation of the anti-tying provision of the MMWA caused plaintiff to part with his $99.50. Absent a showing of conspiracy, the dealership's alleged conduct in not adequately informing plaintiff of what he was buying is a separate issue from defendant's conduct. As indicated earlier, plaintiff settled his claims against the Burns-Kull dealership defendants.

VI

Plaintiff also argues that the court erred in dismissing his conspiracy claim. We again disagree. The court's reasons for dismissing this claim were discussed above in connection with plaintiff's CFA claim.

In New Jersey, a civil conspiracy is "a combination of two or more persons acting in concert to commit an unlawful act, or to commit a lawful act by unlawful means, the principal element of which is an agreement between the parties to inflict a wrong against or injury upon another, and an overt act that results in damage." Morgan v. Union County Bd. of Chosen Freeholders, 268 N.J. Super. 337, 364, 633 A.2d 985 (App. Div. 1993), certif. denied, 135 N.J. 468, 640 A.2d 850 (1994) (quoting Rotermund v. U.S. Steel Corp., 474 F.2d 1139, 1145 (8th Cir. 1973) (internal quotations omitted)). "It is enough [for liability] if you understand the general objectives of the scheme, accept them, and agree, either explicitly or implicitly, to do your part to further them." Jones v. City of Chicago, 856 F.2d 985, 992 (7th Cir. 1988). Most importantly, the "gist of the claim is not the unlawful agreement, 'but the underlying wrong which, absent the conspiracy, would give a right of action.'" Morgan, supra, 268 N.J. Super. at 364, 633 A.2d 985 (quoting Bd. of Educ. v. Hoek, 38 N.J. 213, 238, 183 A.2d 633 (1962)); see also Weil v. Express Container Corp., 360 N.J. Super. 599, 614, 824 A.2d 174 (App. Div.), certif. denied, 177 N.J. 574, 832 A.2d 324 (2003).

[Banco Popular N. Am. v. Gandi, 184 N.J. 161, 177-78 (2005).]

In arguing that defendant conspired with the dealers, plaintiff contends that defendant supplied the warranty registration forms to the dealers, defendant trained the dealers in how to sell the WLPS, and the dealers were shareholders of defendant who shared in the profits from the sale of the WLPS. Essentially, plaintiff argues that, regardless of any violations of state or federal statute, defendant is liable, along with the dealerships, for the deceptive manner in which the WLPS was sold.

As indicated, the trial judge found that defendant had no contact with the consumer and that its liability under the warranty did not begin until a dealership submitted a signed warranty registration form to defendant. It also found that defendant was not responsible for training the dealers in how to sell the product and that it did not mandate that the cars be pre-etched.

According to the evidence presented on the summary judgment motion, the Burns dealership made its own administrative decision to pre-etch the windows of all vehicles regardless of whether the customer purchased the WLPS. That decision was not mandated by defendant. In any event, we agree with the court that there was no evidence that any deception carried out by the car dealership was done as part of an agreement or in concert with defendant. The duty to explain what plaintiff was purchasing, and his right to refuse to purchase it, fell upon the dealership with whom he dealt. Defendant might be liable for not carrying out its benefit of the bargain, i.e., for failing to live up to its warranty, but that is not the gist of plaintiff's conspiracy claim here. Rather, he contends only that the deception carried out by the dealership was part of a larger agreement with defendant. The evidence simply does not bear that out.

Nor does the evidence support plaintiff's assertion that there was a kickback arrangement between the dealers and defendant. Rather, defendant's members shared in all of defendant's profits, and the profits from the sale of the WLPS were not separately calculated. Moreover, a dealer did not have to be a member of defendant cooperative in order to sell the WLPS.

Although a court, in ruling on a summary judgment motion, must grant all inferences to the party opposing the motion, where the evidence is so one-sided that only one resolution is possible as a matter of law, the motion must be denied. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). Applying that standard, we agree with the motion judge that the evidence would not have allowed any rational factfinder to conclude that defendant conspired with the dealerships.

VII

Plaintiff also contends that the judge erred in precluding him from obtaining discovery from the other members of defendant cooperative who sold the WLPS. We disagree.

Plaintiff asserts that, while the conspiracy claim was still viable, the court refused to allow him to engage in discovery with the other car dealerships who sold the WLPS. Specifically, plaintiff challenges the case management order entered on August 21, 2006 which stated that the parties could take discovery on all issues, but that plaintiff could not take discovery "about the identities of dealers who have sold the WASCO Loss Prevention System." It was anticipated that plaintiff would file his class certification motion in February 2007. Plaintiff contends that the court never gave a reason for the discovery restriction.

According to plaintiff, he was prejudiced by this restriction because he was unable to discover the identities of the fictitious car dealership defendants who were co-conspirators, stressing that evidence from any one co-conspirator would have been admissible against all co-conspirators, and because all co-conspirators would have been jointly and severally liable.

In addition, plaintiff contends that the court erred in allowing defendant to redact the minutes of its board meetings, and that such evidence was relevant to "issues central to the question of [whether the WLPS constituted] insurance." In this regard, plaintiff relies on the evidence, already discussed above, where, among other things, defendant's board contemplated starting an insurance company before it started selling the WLPS and eventually abandoned the program and shifted its risk to another insurance company.

Defendant responds that, because the court determined that none of plaintiff's claims against defendant had merit as a matter of law, and because those rulings should be affirmed on appeal, there is nothing left for plaintiff to seek discovery about. In the event the appellate court reverses on any claim, then the trial court may be asked to reconsider its discovery rulings.

First, it is necessary to recite the procedural posture in which this issue arises. In early July 2007 plaintiff moved for relief from the case management order dated August 21, 2006. At this point, plaintiff had already settled his claims with the Burns-Kull defendants but the consumer fraud and conspiracy counts still remained viable against the defendant here. According to plaintiff's attorney's certification in support of this motion, he had been precluded from seeking the identity of the dealers who sold the WLPS and of any person or entity with knowledge of the WLPS other than Tassitano, defendant's executive employee.

Pursuant to an earlier motion to compel discovery, the judge had engaged in an in camera review of the redacted minutes of the board meetings and the redacted warranty registration forms and had determined that they were properly redacted. The judge did not give his reasons for this determination.

Plaintiff argued that the claims against the John Doe defendants named in his complaint should remain viable, notwithstanding his settlement with the Burns-Kull defendants, because these as-yet unnamed defendants sold the WLPS pursuant to defendant's direction and in the same unconscionable manner as the Burns-Kull defendants, because they were jointly and severally liable with defendant and Burns-Kull, and because they were liable as defendant's agent for the illegal sale of the WLPS.

By the time the court heard oral argument on plaintiff's motion on August 17, 2007 it had already dismissed all of the remaining claims against defendant. Plaintiff thus correctly acknowledged that his pursuit of discovery pertained only to the identities of the fictitious John Doe defendants.

Defendant argued that plaintiff had dealt only with Burns-Kull, with whom he had settled. Although this was a class action suit, defendant argued that the class could consist only of people who did business with Burns-Kull or with defendant, both of whom were removed from the case.

The judge ruled that, for all intents and purposes, the case was over because there was no class member remaining, i.e., no named party who alleged that they had dealt with any particular car dealership, and because the court had already rejected the theory that defendant had conspired with other car dealerships in selling the WLPS. The judge denied plaintiff's motion and ruled that there was nothing left to litigate in the matter.

On December 7, 2007, after determining that plaintiff's settlement with the Burns-Kull defendants for $1.25 million plus fees and costs, was fair and reasonable, the judge entered a final judgment and order of dismissal. According to this order, the court had previously certified the action to proceed as a class action on behalf of all persons who purchased the WLPS from March 1, 1999 through September 30, 2004 and notice of the pendency of the class action and of the proposed partial settlement had been given to all class members who could be identified with reasonable effort.

No judgment may be entered against a person designated by a fictitious name. R. 4:26-4. However, this rule presumes that there has been full and complete discovery and that plaintiff had the opportunity to identify a fictitious defendant. Stegmeier v. St. Elizabeth Hosp., 239 N.J. Super. 475, 485 (App. Div. 1990).

Although it is arguable that the court here denied plaintiff the opportunity to identify the other car dealerships who sold the WLPS, the fact remains that there was only one named plaintiff in this class action and he had dealt only with Burns-Kull. Nothing stopped plaintiff's attorney, who was purportedly representing the class, from ascertaining the identities of other purchasers of the WLPS who had dealt with car dealerships other than Burns-Kull. Had other plaintiffs been identified who alleged that they had purchased their cars from another specifically named dealership, then the case would have remained viable. As it stood before the trial court in August 2007, however, there was simply nothing left to litigate because there were no plaintiffs and no defendants.

Moreover, we agree with defendant that in view of the legal rulings as to the illegal sale of insurance and the alleged violations of the MMWA or the CFA, there is simply nothing left to litigate against any car dealership other than a possible conspiracy claim. However, because plaintiff could not prove a conspiracy claim between defendant and Burns-Kull, from whom plaintiff did obtain discovery, it is highly unlikely that another named plaintiff in the class, if one could have been identified, would have been able to prove such a claim.

 
Affirmed.

The automobile dealers consisted of four groups: the Burns-Kull defendants; the Ditschman defendants; the Warnock defendants; and the Auto Nation defendants. Plaintiffs alleged that all defendants sold the WASCO Vehicle Identification Loss Prevention System (WLPS), but that only the Burns-Kull defendants also sold the lease protection guarantee.

(continued)

(continued)

55

A-2182-07T3

May 15, 2009