DENNIS HUSTON v. ROBERT LIEBER

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

DENNIS HUSTON,

Plaintiff-Respondent,

v.

ROBERT LIEBER AND

EILEEN LIEBER,

Defendants-Appellants.

_______________________________________

April 17, 2015

Submitted January 28, 2015 Decided

Before Judges Ashrafi and O'Connor.

On appeal from Superior Court of New Jersey, Law Division, Special Civil Part, Cape May County, Docket No. DC-1633-13.

Weltman, Weinberg & Reis Co., L.P.A., attorneys for appellants (Robert T. Lieber, Jr., of counsel and on the brief).

The Deweese Law Firm, P.C., attorneys for respondent (David S. Deweese, on the brief).

PER CURIAM

Plaintiff Dennis Huston, a licensed contractor, provided home improvement services to defendant Robert Lieber. Defendants Robert and Eileen Lieber1 appeal from a Special Civil Part judgment entered against them and in favor of plaintiff for $5,004.75. Defendant contends plaintiff was precluded from enforcing the contract because he violated the New Jersey Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -195, specifically the Contractors' Registration Act (CRA), N.J.S.A. 56:8-136 to -152. We reverse.

I

Robert Lieber and Eileen Lieber own two residential rental properties in Avalon. In February 2012, defendant solicited plaintiff to install a new deck and storm doors on the properties. Plaintiff had previously performed one or two home improvement projects for defendant. Plaintiff drew up a written estimate of the work he understood defendant wanted performed and indicated in the estimate he would charge $16,480 for the work. After receiving the estimate, defendant hand-wrote onto the estimate clarifications of what he wanted, and then signed and returned the estimate to plaintiff with a check for $8240. There is no dispute the estimate constituted a contract between the parties.

After the work was completed, defendant found flaws in the work plaintiff performed and refused to pay the remaining balance of $5,254.75. Plaintiff filed a complaint in the Law Division, Special Civil Part, seeking the latter amount from defendants. Although the record indicates defendants obtained an order permitting them to amend their answer to file a counterclaim, there is no copy of the counterclaim in the record. However, it is not contested defendants filed a counterclaim seeking attorney's fees for having to defend against plaintiff's complaint.

At the close of plaintiff's proofs, defendant moved to dismiss the complaint pursuant to Rule 4:40-1. Defendant pointed out that plaintiff failed to sign and include his contractor registration number in the contract, and also noted that the contract failed to contain "the notice language."

Although it was not clear from the transcript to what notice defendant was referring, the briefs indicate the parties understood that defendant was referring to the following. First, the contract did not advise that the consumer could cancel the contract within three days of its receipt. Second, plaintiff failed to append a copy of his certificate of commercial general liability insurance to the contract. Defendant contended these omissions constituted a violation of the CFA and the CRA,2 warranting the dismissal of the complaint.

The court denied defendant's motion, finding that there were

ongoing negotiations in addition to the prior working relationship.

And, that here we're not -- we're not dealing with a scenario where there was some misunderstanding as to the work that was going to be performed or the cost of that work or any of those things.

While [defendant is] right that . . . the contract doesn't have [plaintiff's] contractor registration number[,] . . . the subject of this Complaint has to do with essentially, at least as I see it, the inability of plaintiff to make repairs to work that would satisfy the defendant and the factual basis for that is not really having to do with the underlying contract.

Not only that, but much of the work we're talking about has to do with work that was modified or changed by [defendant] in terms of the negotiations.

At the end of the trial, the court found that plaintiff's work had been performed in a workmanlike manner, but agreed with defendant that the floor boards on one deck appeared uneven. Even though plaintiff addressed the appearance of the unevenness by installing a "sill plate," the court reduced the amount he sought from defendants by $250 and entered judgment for $5,004.75.

The court again found plaintiff had not violated the CFA. The court determined the CFA was not applicable because defendant had hired plaintiff previously to do home improvement work; defendant had solicited plaintiff and dictated the work he wanted plaintiff to perform; and plaintiff's role was merely to reduce to writing what defendant wanted a writing defendant later edited and to insert an estimated price. The court found that

[t]here's a distinguishing factor to be pointed out for the record. . . . The testimony isn't that [plaintiff] said, "Here's my contract, please sign this and give me a check."

It is that [defendant] made several changes to the proposal, which was appropriately termed as an "estimate," and then signed that piece of paper and sent it back to [plaintiff] with some additional information together with a check.

On appeal, defendant contends the court erred by denying his motion to dismiss the complaint and by entering judgment against him and Eileen Lieber.

II

The standard for deciding a motion under Rule 4:40-1 is the same as that for deciding a motion for involuntary dismissal under Rule 4:37-2(b). Dolson v. Anastasia, 55 N.J. 2, 5 (1969). Specifically, a court must decide

whether the evidence, together with the legitimate inferences therefrom, could sustain a judgment in favor of the party opposing the motion, i.e., if, accepting as true all the evidence which supports the position of the party defending against the motion and according him the benefit of all inferences which can reasonably and legitimately be deduced therefrom, reasonable minds could differ, the motion must be denied.

[Ibid. (internal quotes and citations omitted).]

A trial court's decision on a Rule 4:40-1 motion is reviewed de novo. RSB Lab. Servs., Inc. v. BSI, Corp., 368 N.J. Super. 540, 555 (App. Div. 2004). Here, the facts supporting the motion were undisputed; the issue before the trial court was a legal one only and that was whether plaintiff was precluded from recovering the amount due under the contract because he violated the CRA and CFA.

N.J.S.A. 56:8-151(a) and (b) state in pertinent part

(a) [E]very home improvement contract for a purchase price in excess of $500, and all changes in the terms and conditions of the contract, shall be in writing. The contract shall be signed by all parties thereto, and shall clearly and accurately set forth in legible form and in understandable language all terms and conditions of the contract, including but not limited to

(1) The legal name, business address, and registration number of the contractor;

(2) A copy of the certificate of commercial general liability insurance required of a contractor pursuant to section 7 [C. 56:8-142] of this act

. . .;

. . . .

(b) [A] home improvement contract . . . shall contain a conspicuous notice printed in at least 10-point bold-faced type [stating that the consumer may cancel the contract at any time before midnight of the third business day after receiving a copy of this contract].

[N.J.S.A. 56:8-151 (emphasis added).]

Here, both parties failed to sign the contract; plaintiff's registration number was not in the contract; a copy of plaintiff's certificate of commercial general liability insurance was not appended to the contract; and the contract failed to advise defendant he had three days after receiving the contract to cancel it. Plaintiff's failure to adhere to any one of these provisions constituted a violation of N.J.S.A. 56:8-151, and a violation of this statute is also an unlawful practice and a violation of the CFA. N.J.S.A. 56:8-146(a). As our Supreme Court noted in Czar, Inc. v. Heath, 198 N.J. 195, 203-204 (2009)

The [CRA] specifically makes any violation of its provisions 'an unlawful practice' subject to the remedies available under the CFA, N.J.S.A. 56:8-146(a) . . . The statute's identification of the CFA as its principal civil enforcement mechanism, particularly in light of the adoption of implementing regulations that identify numerous prohibited practices, . . . strongly suggests that the Legislature intended to broadly empower consumers of these services to seek relief for violations and to be made whole.

Significantly, a party who has violated the CFA may not obtain damages even if the violation was innocent and committed in good faith. Scibek v. Longette, 339 N.J. Super. 72, 80 (App. Div. 2001) (citing Huffmaster v. Robinson, 221 N.J. Super. 315, 322 (Law Div. 1986) (holding that even a technical violation of the CFA deprived repairman of the capacity to enforce a contract with a consumer)).

In a limited context we permitted the plaintiff-landscaper to pursue a complaint against the defendant-consumer for an unpaid bill, even though the plaintiff failed to obtain a signed written contract from the defendant before landscaping his property. See Joe D'Egidio Landscaping, Inc. v. Apicella, 337 N.J. Super. 252 (App. Div. 2001). However, in that case, the defendant refused to sign a contract because of the parties' longstanding personal relationship, id. at 257, and was himself in the home improvement business and thus "chargeable for knowing the applicable regulations." Id. at 258. We found the consumer was

not entitled to the protections offered by the [CFA] and the [CFA] regulation because it was his own conduct which caused the violation. Were we to conclude that [the consumer] is entitled to invoke [the applicable CFA regulation] the result would be to permit [the consumer] to retain, at no cost, the fruits of [the landscaper's] labor when he was the one who insisted a written contract was unnecessary in light of their longstanding relationship. It would also reward [the consumer] with the remedial provisions of the consumer fraud statute. We consider such a result unacceptable; one who induces the alleged wrongdoing should not benefit as a result of it.

[Id. at 257 (citations omitted).]

However, we emphasized the limited applicability of our decision to the unique facts presented in that case. Id. at 258-59.

In Scibek, supra, 339 N.J. Super. at 76, plaintiff was a car mechanic who repaired defendant's car without providing a written estimate to defendant or obtaining written authorizations from him for additional work as the work progressed. Defendant refused to pay the final bill, and plaintiff sued to recover the full amount owed. Id. at 77. Defendant counterclaimed, contending plaintiff violated various consumer fraud regulations. Ibid. The trial court dismissed the counterclaim, finding defendant was not entitled to the CFA's protections because he was an automobile repairman and aware of the subject regulations. Ibid. The trial court also found that plaintiff's violation of the CFA did not cause defendant an ascertainable loss. Ibid.

Although we acknowledged that it is arguable strict enforcement of the CFA "should not be followed where the consumer has obtained the benefit of his bargain and attempts to use the [CFA] as a sword rather than a shield," we reversed the trial court, determining there was "no sound basis to deny [the consumer] the benefit of the [CFA's] protection." Id. at 82, 85. While we acknowledged the facts in Scibek bore a resemblance to those in D'Egidio, we found the defendant's conduct in D'Egidio, where the defendant "actually beseeched the plaintiff to violate the [CFA's] prescriptions" far more egregious than the defendant's conduct in Scibek. Ibid. Further, in Skibek, defendant did nothing to cause plaintiff to violate the CFA. Ibid.

Here, defendant did not refuse to sign a written contract, was not in the home improvement business, and did nothing to cause or induce plaintiff to violate the CRA and the CFA. Further, there is no authority for the premise that plaintiff was exempt from complying with the CRA or CFA because he had previously performed services for defendant or defendant made specific requests of the work he wanted performed. More important, the CRA makes explicit that a violation of any provision in the CRA is an unlawful practice and a violation of the CFA. Defendant's motion to dismiss the complaint under Rule 4:40-1 should have been granted and plaintiff precluded from enforcing the contract between him and defendant.

We therefore reverse the denial of defendant's motion to dismiss plaintiff's contract claim, and vacate the judgment against defendants3 and reinstate the counterclaim. But plaintiff is not without a remedy. We have previously held that where a claim is stricken for failure to comply with the CFA, the contractor may nonetheless proceed in quantum meruit. See Marascio v. Campanella, 298 N.J. Super. 491, 504-05 (App. Div. 1997).

As for the counterclaim, even if defendant does not have ascertainable loss, see Thiedemann v. Mercedes-Benz USA, LLC, 183 N.J. 234, 248 (2005), "a consumer-fraud [claimant] can recover reasonable attorneys' fees, filing fees, and costs if that [claimant] can prove that [the other party] committed an unlawful practice, even if the victim cannot show any ascertainable loss and thus cannot recover treble damages." Cox v. Sears Roebuck & Co., 138 N.J. 2, 24 (1994) (citing Performance Leasing Corp. v. Irwin Lincoln-Mercury, 262 N.J. Super. 23, 31, 34 (App. Div.), certif. denied, 133 N.J. 443 (1993)). A party may be eligible for attorney's fees and costs under N.J.S.A. 56:8-19 if it successfully asserts a defense based upon the CFA. Delta Funding Corp. v. Harris, 189 N.J. 28, 49 (2006).

Accordingly, we remand for a determination of the costs and counsel fees defendant incurred to defend against plaintiff's efforts to enforce the contract, as well as prosecute his counterclaim. Because a remand is required, plaintiff may seek to recover under a theory of quantum meruit, where he must establish the services he provided and also bears the burden of proving the reasonable value of those services. See generally Weichert Co. Realtors v. Ryan, 128 N.J. 427, 438 (1992).

Reversed and remanded for proceedings consistent with this opinion. We do not retain jurisdiction.

1 Although Eileen Lieber was named as a defendant, only Robert Lieber and plaintiff signed the home improvement services contract in dispute in this matter. Therefore, when we use the term "defendant" in this opinion, we refer to Mr. Lieber only.

2 Enacted in 2004, the CRA supplements the CFA by imposing various disclosure obligations upon contractors. Many of the CRA's provisions are enforced through administrative regulations applicable to home improvement practices, N.J.A.C. 13:45A-16.1 to -16.2, and home improvement contractor registration, N.J.A.C. 13:45A-17.1 to -17.14. Failure to comply with the CRA's provisions constitutes a violation of the CFA. N.J.S.A. 56:8-146(a).

3 It is undisputed Eileen Lieber did not sign the contract. Further, the trial court did not make any findings that she was liable under the parties' contract. For those reasons alone a judgment should not have been entered against her.