United States: New Jersey Supreme Court Limits Plaintiffs' Entitlement to Attorney Fees Under Consumer Fraud Act

In a business-friendly decision, Perez v. Professionally Green, LLC, 214 N.J. ___ (2013), a unanimous New Jersey Supreme Court held yesterday that a plaintiff who brings a claim under the New Jersey Consumer Fraud Act (CFA) is precluded from recovering attorney fees if a defendant does not file a motion for summary judgment and the claim is involuntarily dismissed before being submitted to a jury. The decision effectively limits the reach of Weinberg v. Sprint Corp., 173 N.J. 233 (2002), which provided for an award of attorney fees so long as a plaintiff's CFA claim survived a defendant's motion for summary judgment.

Background

In Perez, plaintiffs Alex and Cathy Perez filed suit against several defendants, including Swim-Well Pools, Inc., arising out of an allegedly defective swimming pool installation. In their complaint, the plaintiffs asserted that Swim-Well violated the CFA by, among other things, failing to include the start and end dates in the pool-construction contract. The plaintiffs moved for partial summary judgment, and notably, Swim-Well did not cross-move on that claim. The trial court concluded Swim-Well committed a technical violation of the CFA by failing to include the relevant dates in the contract, but also concluded there was a genuine issue of material fact as to whether the plaintiffs suffered an ascertainable loss as a result of that violation.

After the plaintiffs completed their presentation of evidence at trial, Swim-Well moved for involuntary dismissal under Rule 4:37-2(b) to dismiss the CFA claim, which the trial court granted, finding the "plaintiffs had failed to make a prima facie showing that Swim-Well's technical violation of the CFA caused an ascertainable loss." The trial court subsequently denied the plaintiffs' motion for attorney fees. The Appellate Division reversed the trial court's denial of attorney fees, concluding that, under Weinberg, "the CFA does not require a factfinder's resolution of the issue of ascertainable loss in order for plaintiffs to prevail on their claim for attorneys' fees."

New Jersey Supreme Court decision

The New Jersey Supreme Court reversed the Appellate Division and found the trial court properly denied the plaintiffs' motion for attorney fees. The court reasoned that the trial court's grant of involuntary dismissal at the close of the plaintiffs' evidence had the same effect as if Swim-Well had filed a successful motion for summary judgment. The court highlighted the critical distinction between this case and Weinberg: Swim-Well never actually filed a motion for summary judgment on the plaintiffs' CFA claim. Instead, Swim-Well chose to wait and see whether the plaintiffs could satisfy their burden at trial. By implication, the court limited the applicability of Weinberg to cases in which a defendant does not prevail on its own motion for summary judgment.

What this means for Consumer Fraud Act defendants

This decision has significant ramifications for CFA defendants. Going forward -- and especially when faced with an allegation of a technical violation of the CFA, such as the claim against Swim-Well -- a defendant should carefully consider whether filing a motion for summary judgment on the CFA claim is still appropriate. Before Perez, a company likely was responsible for an award of attorney fees to a plaintiff unless successful on its own motion for summary judgment. In light of Perez, a defendant may now be able to avoid paying a plaintiff's attorney fees by refraining from filing its own motion for summary judgment on the CFA claim, and then successfully having the plaintiff's claim dismissed pursuant to Rule 4:37-2(b) before the end of trial by demonstrating plaintiff did not suffer an ascertainable loss as a result of the technical violation.

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