I
am always amazed when contractors come into my office looking for legal advice
and they cannot understand why in the world a customer is suing them for
consumer fraud. "We were friends", "He said we did not
need a contract", "Why should I have to tell her what materials I'm
using" - and the list of mishaps goes on and on and on (even though the
N.J. Administrative Code spells out quite clearly what every home improvement
contract must have). If you care about your contracting business, then
you need to start incorporating into your thought process scenarios where you
can envision a problem (i.e., will I get sued for this?). If you
don't, then you (yes, you, individually) and your company are just asking for a
problem. I am a firm believer that everyone needs to read Sun Tzu,
"The opportunity to secure ourselves against defeat lies in our own
hands". Had the defendant in Chaykowsky v. Marut followed
that advice, they would not be looking at a judgment of over $2.5 million
dollars!
In Chaykowsky, the defendant operated a landscaping business and
entered into an agreement with a homeowner to build a number of projects for
the agreed upon sum of $750,000. Plaintiff paid the entire sum as
invoices were presented. Of course, the defendant never used a contract,
never informed the homeowner about the materials it would supply and use at the
job and never provided a schedule of when the project would begin and
end. Coupled with nearly $200,000 in additional monies that had to be
paid, inexcusable delays by the defendant (or no work at all) and requests for
even more money to complete the project, the plaintiff eventually got tired of
the defendant's antics and sued the company and the individual owners of the
company for violating the N.J. Consumer Fraud Act ("CFA").
We need not bother ourselves with the nitty gritty procedural aspects of the
case but needless to say the defendant did not comply with its discovery
obligations thus resulting in dismissal of their answer counterclaim and
third-party complaint with prejudice. The lower court also denied
defendant's subsequent attempt to restore their pleadings and entered judgment
against them in the amount of $2,510,798.22 - finding that plaintiff sustained
compensatory damages in the amount of $802,774.00 and that defendant violated
N.J.A.C. 13:45A-16.2(a)(12) by failing to have a written contract. The
lower court thereafter awarded plaintiff $1,605,548 in statutory damages
(remember the CFA provides for TREBLE/TRIPLE damages), $98,612.50 in attorney's
fees and $3,863.72 in costs (all recoverable by a plaintiff who successfully
pleads consumer fraud).
The Appellate Division upheld the lower court's findings and judgment and
remanded the case (meaning sent it back) to the lower court for the purpose of
determining an appropriate award of legal fees and costs of suit to the
plaintiff and to determine whether whether the individual defendants are liable
for the plaintiff's damages.
Click on Chaykowsky v. Marut for the
entire opinion. http://www.judiciary.state.nj.us/opinions/a2901-10.pdf
Are you a contractor who needs advice on how to protect your individual and
business assets from attack. Call us today and make an appointment to see
how we can help.
For more information, or if you have other legal concerns, email Gavin Handwerker, Esq. at gih@beinlaw.com.