BRADLEY Z. RICHARDS v. AVANTI POWERBOATS, INC.

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-2094-05T12094-05T1

BRADLEY Z. RICHARDS,

Plaintiff-Respondent,

v.

AVANTI POWERBOATS, INC.,

Defendant-Appellant.

________________________________

 

Submitted: October 24, 2006 - Decided December 7, 2006

Before Judges Coburn and Axelrad.

On appeal from the Superior Court of New Jersey, Law Division, Burlington County, L-927-04.

Burnham & Wiesner, attorneys for appellant (Philip S. Burnham, II, on the brief).

Cureton Caplan, attorneys for respondent (Anthony L. Marchetti, Jr., on the brief).

PER CURIAM

Defendant Avanti PowerBoats, Inc., appeals from the judgment of the Law Division entered on November 7, 2005, in favor of plaintiff, Bradley Richards, following a bench trial. The court found defendant violated the Consumer Fraud Act (CFA), N.J.S.A. 56:8-2, trebled plaintiff's ascertainable loss of $27,000, added counsel fees, and entered judgment against defendant in the amount of $95,412.11. We affirm.

Plaintiff and defendant's principal Dennis Fridmann testified at trial. Plaintiff purchased for pleasure a 200l model 33-foot double engine custom boat from defendant, which makes and sells custom boats. Plaintiff was dissatisfied with the boat's performance and on January 8, 2003, he and Fridmann agreed to a "like exchange" of the boat for a 2003 model 26-foot single engine custom boat with a 525-HP engine. The replacement boat was in the process of being built and needed a new engine. Because it was defendant's "slow" season and it had limited cash flow, plaintiff agreed to lend defendant $40,000, which was listed on the contract as a "refundable deposit," so it could purchase the motor package for the new boat. Plaintiff testified that Fridmann agreed to have the new boat ready by March l5, 2003, and that the $40,000 would be returned when the deal was complete. Plaintiff further testified there had been no additional work done to the new boat when he arrived at defendant's showroom in early March. According to plaintiff, Fridmann then informed him that, for an extra $6,000, he could install a 575-HP motor in the new boat. Frustrated with the lack of progress on the boat, and concerned that Fridmann had not ordered the 525-HP motor they had contracted for, plaintiff demanded the return of his deposit and took his 33-foot boat out of defendant's lot.

Fridmann admitted the transaction was an even deal in which one boat was traded for another to retain plaintiff as a customer and acknowledged the purpose of the $40,000 deposit was to "front" defendant the money to purchase the boat engine. He claimed, however, the money was to be returned after he was able to sell plaintiff's trade-in boat. He testified he had performed work in customizing the new boat from January through March and had used some of the $40,000 towards that work, but he did not provide specifics of the amount spent or produce receipts. Fridmann further testified he had told plaintiff some time during that period he had ordered the larger engine for the boat at a discounted price of $40,825 for no additional cost to plaintiff and claimed the upgrade was acceptable to plaintiff. According to Fridmann, when plaintiff came into the storeroom in March, he told him the motor package would be arriving any day and he would complete the boat.

Fridmann admitted that when plaintiff cancelled the transaction, he was able to cancel the COD order for the engine. Despite numerous demands, however, defendant did not return plaintiff's $40,000 deposit to him. As of October 2003, defendant had only made two payments totaling $13,000. In March 2004, plaintiff filed suit for breach of contract, which he later amended to include a CFA violation, asserting as his ascertainable loss the $27,000 balance of his refundable deposit that defendant had retained, notwithstanding that its principal had failed to purchase and install the motor package in the new boat as promised.

The trial judge credited plaintiff's testimony that no work of any significance was done on the boat from January through March and that the conversation about the larger motor occurred on the later date. He thus concluded plaintiff was justified in terminating the contract as there was "little satisfaction by the purchasing party that the boat would be delivered as promised." The judge further found the $40,000 was specifically earmarked by the parties for the purchase of the drive train and the engine to complete the 26-foot boat and defendant had not taken delivery of or paid for that item when plaintiff cancelled the contract in March 2003. Defendant, however, did not refund the money to plaintiff as promised. The judge drew the inference that, because the money tendered by plaintiff in good faith had neither been used for the required purpose nor was available for return, defendant had misused the funds for other business purposes not set forth in the contract. He concluded this was an unconscionable commercial practice under the CFA. N.J.S.A. 56:8-2. Accordingly, plaintiff was entitled to treble damages, counsel fees and costs. N.J.S.A. 56:8-19. Following defendant's motion to lift the judgment or grant a new trial, denied by court order of October 7, 2005, and submission of plaintiff's fee petition, the court entered the final judgment that is the subject of this appeal.

On appeal, defendant argues that plaintiff's claim should have been limited to breach of contract and damages under the Uniform Commercial Code because the underlying transaction is the purchase of a product in a purely commercial transaction. Defendant also contends plaintiff failed to prove a violation of the CFA. According to defendant, plaintiff did not show a causal relationship between an alleged unlawful fraud perpetrated by defendant and his loss, did not prove an ascertainable loss, and any loss plaintiff suffered was caused by his breach of the contract. Defendant further contends he would have continued to make payments but plaintiff refused to accept a payment plan, therefore, his conduct could not constitute consumer fraud. Lastly, defendant contends that plaintiff failed to comply with the CFA because he failed to certify that the pleadings were served on the Attorney General.

We are not persuaded by any of defendant's arguments. We defer to the trial court's credibility assessments and findings with respect to the underlying transaction. Because a trial court "'hears the case, sees and observes the witnesses, [and] hears them testify,' it has a better perspective than a reviewing court in evaluating the veracity of witnesses." Pascale v. Pascale, 113 N.J. 20, 33 (1988) (quoting Gallo v. Gallo, 66 N.J. Super. 1, 5 (App. Div. 1961)). We are satisfied there is ample support in the record for the court's finding that plaintiff was justified in terminating the contract in March 2003 due to dissatisfaction with defendant's performance. "Findings by the trial judge are considered binding on appeal when supported by adequate, substantial and credible evidence." Rova Farms Resort, Inc. v. Investors Ins. Co., 65 N.J. 474, 484 (1974).

Defendant acknowledged the larger, older model boat was given a trade value equal to the smaller, newer model boat and the $40,000 deposit was not part of the price of the replacement boat. Defendant further admitted the money was intended by the parties to fund the purchase of the engine for the replacement boat because of defendant's limited cash flow. There is no dispute the deposit was refundable. It is immaterial whether it was to be returned when the replacement boat was finished, as plaintiff testified, or when the trade-in was sold, as Fridmann testified, as the engine order was cancelled and defendant never paid for the part. Defendant, however, did not refund the $40,000 to plaintiff as promised. As of October 2003, defendant had only paid plaintiff $13,000. Fridmann admitted defendant owed plaintiff $27,000, and conceded he made no further payments after that date and offered no testimony of plaintiff's refusal to accept a payment plan.

The CFA provides, in pertinent part:

The act, use or employment by any person of any unconscionable commercial practice, deception, fraud, false pretense, false promise, misrepresentation . . . 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[.]

[N.J.S.A. 56:8-2.]

Unconscionability has been described as "an amorphous concept obviously designed to establish a broad business ethic" and implies a lack of "good faith, honesty in fact and observance of fair dealing." Kugler v. Romain, 58 N.J. 522, 543-44 (1971). Although the CFA is intended to be liberally and broadly construed, e.g., Lettenmaier v. Lube Connection, Inc., 162 N.J. 134, 139 (1999); Lemelledo v. Beneficial Mgmt. Corp. of Am., 150 N.J. 255, 264 (1997), not every breach of contract constitutes an unconscionable practice or a violation of the CFA. Cox v. Sears Roebuck & Co., 138 N.J. 2, 18 (1994).

Because any breach of contract is unfair to the non-breaching party, the law permits that party to recoup remedial damages in an action on the contract; however, by providing that a court should treble those damages and should award attorneys' fees and costs, the Legislature must have intended that substantial aggravating circumstances be present in addition to the breach.

[Ibid.]

"Unfairness (unconscionability) is measured by analyzing the potential effect the conduct will have upon the consumer or marketplace." D'Ercole Sales, Inc. v. Fruehauf Corp., 206 N.J. Super. 11, 25 (App. Div. 1985).

It is undisputed that plaintiff is a consumer within the meaning of the CFA. N.J.S.A. 56:8-1(d). We are also satisfied that merely because defendant's failure to return plaintiff's entire refundable deposit constituted a breach of contract, plaintiff was not limited to contract damages, but was also entitled to assert a CFA claim. To demonstrate the affirmative act of an unconscionable commercial practice, a plaintiff need not prove a defendant intended to deceive or commit an unlawful act. Cox, supra, 138 N.J. at 17-18 (citing Chattin v. Cape May Greene, Inc., 124 N.J. 520, 522 (1991)). Thus, even if Fridmann initially took plaintiff's $40,000 advance intending to pay for the engine for the new boat and return the funds when the boat was completed, his subsequent conduct in failing to timely order the 525-HP engine or perform the additional work on the new boat, and in refusing to return $27,000 of the refundable deposit even though he had not expended the funds for the specified purpose demonstrated a lack of good faith and fair dealing. Essentially, defendant used plaintiff's deposit, advanced in good faith for the purchase of the engine package for the new boat, as an interest-free loan to the business. We are in accord with the trial judge's conclusion that such misuse of plaintiff's deposit evidenced a substantial aggravating circumstance to trigger a violation of the CFA and warrant the imposition of treble damages and counsel fees.

 
Defendant fails to provide any legal basis for its argument, first raised on its motion for a new trial and rejected by the trial court, that plaintiff's CFA claim was deficient because he failed to certify his pleadings were served on the Attorney General. We summarily reject this argument as without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).

Affirmed.

Defendant subsequently sold the 26-foot boat with a smaller engine to someone else.

(continued)

(continued)

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A-2094-05T1

 

December 7, 2006