New Jersey Lemon Law Lawyer Blog

The New Jersey Consumer Fraud Act and individual liability.

The definitional section of the New Jersey Consumer Fraud Act is straightforward. The Act to persons. The New Jersey Supreme Court has explained that the Act is wide ranging remedial legislation and should be liberally interpreted to effectuate its remedial purposes. Despite the plain language of the statute and the express statements made by the New Jersey Supreme Court, there have been various businesses and/or individuals have argued that the New Jersey Consumer Fraud Act did not apply to them. There are some exceptions to the application of the New Jersey Consumer Fraud Act, however, these exceptions are limited. Generally, lawyers, utilities and hospitals are exempt from the New Jersey Consumer Fraud Act. The primary reason that these particular businesses are exempt from the New Jersey Consumer Fraud Act is that they have their self-contained regulatory bodies. As an example, lawyers are regulated by the Supreme Court and not the Consumer Fraud Act.

There have been cases which have interpreted the seller’s of real estate, individual sellers, to be exempt from the wide ranging penalties of the New Jersey Consumer Fraud Act.
The New Jersey Supreme Court recently decided a case that held the definitional section of the Act is self-explanatory in that it applies to all persons. This means that if you individually sell a particular product, you will be subject to the provisions of the New Jersey Consumer Fraud Act if you are a person. A person could be an individual or a legal fiction such as a corporation. In Lyle Real v. Radir Wheels, Inc. and Richard Conklin, the individual defendant, Richard Conklin, argued that he was not subject to the penalties of the New Jersey Consumer Fraud Act and that he is exempt from liability. The Appellate Division dismissed the case but ultimately the Supreme Court held that since he is a person under the Act, he is subject to the restrictions of the New Jersey Consumer Fraud Act.

This interpretation of the New Jersey Consumer Fraud Act has wide ranging implications. I would estimate that the significant implication is with regard to the sale of real estate. If the seller of the home misrepresents immaterial fact or fails to advise the purchasers of a material fact with the intent to deceive, there would be liability under the New Jersey Consumer Fraud Act.

CARTON AND RUDNICK

There is an internet news release indicating that Daimler will honor warranty claims and Lemon Law Claims.

Hopefully we will get some specifics and provide another update.

Carton and Rudnick

Continue reading " Lemon Law and Bankruptcy: Update " »

What is a consumer to do when a major manufacturer declares a bankruptcy?

Many people are asking this question in light of the anticipated bankruptcy of General Motors and the currently filed bankruptcy of Daimler Chrysler. Many consumers and vehicle purchasers feel that they are without an option with regard to making a claim for breach of warranty or Lemon Law under New Jersey or any other law. There are various other claims associated with the sale of a vehicle which do not necessarily require the presence of the manufacturer as the defendant. There are various claims which a purchaser of a vehicle can make against the seller of a vehicle. In the case which the seller and the manufacturer are bankrupt and there are still remaining claims against the finance company, assuming it was financed through the selling dealership. Quite frequently, the finance companies are holders of the retails on the sales contract and are subject to the holder rule. The holder rule requires that the holder of the paper, usually a finance company, is subject to all claims that the purchaser of the automobile will have against the seller. In addition, the holder of the paper would have all the defenses that the seller of the automobile would have.
So hypothetically, if an individual were to purchase a vehicle from a Chrysler dealer and the dealer was still on business, the plaintiff would have most of his claims against the selling dealer as well as the finance company, if the appropriate steps were taken. The exception to this would be the Lemon Law claim since New Jersey Lemon Law applies to new car dealers only. There are various other theories which could potentially be made against the finance company which have been demonstrated by New Jersey case law. In Lotito v. Mercedes Benz, the court held that because of the close proximity and nature of identities between the finance company and the manufacturer, the plaintiff in essence has the same or substantially similar claims against the finance company as it would against the manufacturer due to the nature and extent of the relationship between these parties.

Continue reading " Lemon Law and Bankruptcy: What to Do? " »

It is not uncommon for the very employees upon whom the dealership relies to have complaints with upper management or ownership. My experience over the years has demonstrated that the dealership employees were subject to the same type of “trickery” to which the consumers are subject. In my experience, it is still common for the upper level management and/or ownership to implement schemes or plans, intentionally or unintentionally so, that reduce the commissionable gross proceeds for the salesman. The salesman and a large portion of the dealership employees rely upon the basic profit on the sale and financing of automobiles. I have seen cases where the dealerships have violated the pay plans by claiming various alleged “fictitious” costs. It is these costs when added to the initial cost of the automobile which reduces the gross commissionable proceeds for the dealership employees.

As an example, if a dealership acquired a vehicle at auction for $5,000 and it is placed on the books at $9,000, in my opinion, the salesman has been denied the appropriate profit on the increased cost of the vehicle.

Further, hypothetically, if a dealership principal owned companies which supplied the gap or other after market products, what would the appropriate costs be attributable to this product? The “captive” company could price a product wherein there is no profit for the dealership, thus funneling of the profits into the subsidiary which is owned and controlled by the dealership principals and/or management team. In my opinion, the sales staff or the employees have a claim against the ownership for this type of conduct.

The New Jersey Supreme Court has demonstrated in the case of Wilson vs. Hess that it is the obligation for all parties to a contract to perform it fairly and in good faith. It is this failure to perform a contract in good faith which results in the imposition of the possibility of damages. In the Wilson case, the franchisor, Hess, was alleged to have set the prices up in such a manner to drive the franchisees out of business. I guess in a perfect world, a franchisor is free to set whatever price they want to charge to the franchisee. However, New Jersey Courts imply an obligation to act in good faith.

Many complaints from salesmen over the years include the dealership failing to reveal the method and manner in which the pay is calculated, failing to disclose the amount of charge backs, failing to disclose the appropriate cost of the vehicles and various products sold and failing to comply with the written pay plans. The causes of action under New Jersey Law range from breach of contract and fraud to lack of good faith and fair dealings. If you feel you have been treated improperly by a dealership, feel free to contact the law firm of Carton and Rudnick.