Wednesday, August 18, 2010

Pregnancy Discrimination Case Against New Jersey Diner

We filed suit on behalf of a client who worked at a diner as a server and overnight shift manager for a period of 14 months. After the client became visibly pregnant, the owners of the diner began to reduce her hours from over 40 hours per week to 10 to 15 hours per week, and eventually she was no longer scheduled to work.

A complaint was filed with the EEOC, which found that the Diner discriminated against the client as a result of her pregnancy. The case was later filed in the District Court of New Jersey alleging sex discrimination under Title VII and the New Jersey Law Against Discrimination. The diner alleges that the plaintiff was terminated based on work performance, which is a main defense in almost all employment discrimination cases

Despite the Diner's adamant position from the beginning of the case that they did not discriminate against the plaintiff, the matter was resolved and they agreed to compensate the plaintiff in a confidential settlement agreement.

Saturday, February 27, 2010

Consumer Fraud Case Against Home Improvement Contractor

Homeowners filed suit under the NJ Consumer Fraud Act against a Bergen County Home Improvement contractor (HIC). Homeowners agreed to have the HIC purchase the cabinets from large cabinet manufacturer and install them. The cabinets and installation costs about $17,000. After the cabinets were installed, the homeowners refused to pay the balance of the contract (about $11,000) alleging that the cabinets were defective. The HIC then sued the homeowners in the Special Civil Part of the Superior Court. The homeowners retained a larger law firm and an attorney who charged them $3000 as an initial fee at an hourly rate of $420 per hour for a case in which the balance of the purchase price was only $11,000. That attorney filed an answer with a counterclaim alleging violation of the New Jersey Consumer Fraud Act (CFA). The firm was working on a settlement whereby the homeowners would put up the balance of the money owed ($11,000) into an escrow, and the HIC would them replace some cabinet doors. The homeowners then retained our office as substituted counsel.

We reviewed the case and accepted it with no money from the client, as she indicated she could not afford to pay any further attorneys fees. We enter into a retainer agreement whereby the client's legal fees ($245 per hour) would be paid if the case is settled and funds are received from the other side. Most attorneys do not take these types of cases without a retainer deposit. But we were confident in the case and the high likelihood that our legal fees would be paid from funds received.

After reviewing the case, we concluded that the CFA was violated by the contractor. In addition, we concluded that the manufacturer of the cabinets may have also violated the CFA with respect to supplying defective cabinets. Consequently, we filed a motion to transfer the case from the Special Civil Part to the Law Division, which has no monetary limit for recovery. The motion was granted over the opposition of the HIC. We then filed a motion to file a more expansive answer and counterclaim than the one filed by the prior law firm. We also filed a motion to add the cabinet maker as a defendant. The motions were granted. Subsequently, after a brief period of discovery, we filed a well researched brief for summary judgment – asking the court to declare that the defendants violated the CFA. After the brief was filed, the cabinet manufacturer and the HIC entered into negotiation with our office. A settlement agreement was finally reached. In that settlement, the homeowners did not have to pay the balance of the $11,000, did not have to return the cabinets, and in addition, the homeowners received an additional $5000 on top of all that. Moreover, the cabinet makers and the HIC paid us a portion of our attorneys' fees. While we lost thousands of dollars in attorneys' fees litigating the case, we were thrilled to have the case concluded the way it did- the client did not have to pay the $11,000 balance, paid us no money up front, got to keep the cabinets, and in addition got an extra $5000 on top of all that. The prior law firm had an agreement to charge them $420 per hour win or lose

Bad Faith Claim Against Large Auto Insurer for Denial of Claim

On behalf of a client, we sued one of the largest auto insurance companies in the United States. The case involved a client whose BMW was stolen and recovered the next day with significant portions of the interior missing and/or damaged. The very next day, the client contacted the police and then the insurer and filed a claim. The insurer took possession of the vehicle and later had their "expert" examine it. The expert concluded that since the BMW was equipped with an anti-theft device (a transponder) it could not have been moved/started without the assigned key, nor could the ignition lock be tampered with in order to start the vehicle. HINT: That plaintiff stole his own vehicle or gave the key to someone who did!!

The car was insured for theft and vandalism. The vehicle was declared a total loss. The insurer denied the claim based on their "expert” report. However, the insurer did pay off the balance of loan on our client's vehicle. But then, it attempted to collect from our client the entire amount it paid to the bank. When that didn’t work, the insurer attempted to recover the money it paid to the bank from our client through a collection agency.

In an examination under oath conducted by the insurer (held before our client retained counsel), the insurer's rep (a Special Investigative Unit investigator; i.e., "fraud investigator") conduced a scorched earth examination literally accusing our client of fraud and theft, without even a shred of evidence. Our client has never been in trouble with the law before, is married with two children and otherwise lived a law-abiding life.

The insurer then referred our client's claim to the New Jersey Office of Insurance Fraud for criminal prosecution.

We sued the insurer on behalf of our client for breach of contract, bad faith refuel to pay a valid claim, violation of the New Jersey Consumer Fraud Act, and various other claims. (We also sued the collection agency for violation of the Fair Debt Collection Practice Act). A full scale research was conducted on the reason for denying the claim. We found similar denials on the web and articles denouncing the practice of denial of auto theft claims on the sole basis that a vehicle cannot be stolen with the same particular anti theft device as plaintiff's vehicle. The insurer, however, took the smart way out and negotiated a settlement before any depositions were conducted, and prior to the court deciding our motion. The settlement, however, was more than 10 times what the insurer would have paid had it not denied the claim. Denying a claim without a legitimate reason other than a self-serving report from a paid "expert" regularly retained by the insurance company is a prime example of bad faith.

Insurance companies must abide by their own insurance policies and agreements with their policyholders. Many insurers have a good record of honest business practice, but many are downright dishonest and will make any excuse to deny a claim, and will conduct an "investigation" only to look for evidence to deny a claim. This particular insurer may have believed that the vehicle could not have been stolen and recovered without using the assigned key. But beliefs must be backed by reasonable proof. An insurer cannot deny coverage based on a mere belief, or a "hunch.". We are not saying that this particular insurer (which we cannot name because of a confidential settlement agreement) was dishonest. But they were wrong to deny the claim without evidence of wrongdoing.

The New Jersey Unfair Claims Settlement Practices and other laws and regulations require insurers to conduct a fair and honest investigation prior to the denial of claim. If after a fair and honest investigation, the insurer concludes that it must deny the claim relying on documents, information, tectimony, etc., demonstrating a justifiable ground for denial (fraud, for example), then the insurer is well within its right to deny coverage. However, if the insurer denies a claim based merely on the belief that "there was no way the vehicle could be stolen without the key," then the insurer failed to conduct a fair investigation under consumer protection regulations, and acts in bad faith in denial of claim.

Tuesday, February 16, 2010

Wrongful Death Case Caused by Accidental Shooting

In a case that was tried before a jury in the Superior Court of New Jersey, our client, an 18 year-old student, was accidentally shot and killed by his 20 year-old cousin at the cousins’ house while the cousin was mishandling a loaded revolver. (It appears that the cousin was sitting on his bed holding the revolver and examining it, and while doing so, the gun went off causing the bullet to strike our client in the back causing his death). The police later searched the cousin’s room and found three other revolvers as well as drugs. The cousin was later arrested and charged with reckless manslaughter and various other drug charges. However, he was acquitted of the reckless manslaughter charge but found guilty of “negligent assault,” weapon possession and the drug charges and was sentenced to 5 years imprisonment. After repeatedly failing to offer any sums of money more than 10% of the face amount of its policy, the homeowners' insurer (High Point Insurance) was offered its entire policy as the jury was to decide the case.

Case Against Subsidiary of World's Largest Garbage Collection Company For Violation of the New Jersey Consumer Fraud Act

The plaintiff, a small restaurant, was a tenant in a shopping mall. Under a provision in the restaurant's lease, the mall itself was responsible for collecting and disposing of the restaurant's waste. However, over a period of 4 years, the restaurant's owner received invoices from an outside waste company-the defendant. The owner kept on paying the invoices believing that the waste was being removed by this company. However, after a few years, the restaurant's owner found out that the mall itself had been collecting and disposing of the waste, and it did not hire the outside company to do so.

The owner had no reason to question the invoices sent by the outside garbage company, as the invoices contained very detailed statements of charges, including the address and location for service, the size of the waste containers being picked up, and even the amount of fuel surcharge for the particular garbage truck used to haul the waste.

It turns out that the invoices were fraudulent. The outside garbage company never even set foot in the restaurant's property to haul their waste. The outside garbage company collected nearly $20,000 from the restaurant. The waste company, a subsidiary of a very large national and international waste collection company, claimed that it was a mistake.

On behalf of the restaurant, we sued the waste collection company alleging violation of the New Jersey Consumer Fraud Act. After a few months of litigation, the case settled in mediation for an amount several times the total amount of the invoices plus reasonable attorneys' fees.


The New Jersey Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 et seq., (the Act) in pertinent parts, provides as follows:

The act, use or employment by any person of any unconscionable commercial practice, deception, fraud, false pretense, false promise, misrepresentation, or the knowing, concealment, suppression, or omission of any material fact with intent that others rely upon such concealment, suppression or omission, 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. (Emphasis added)

Further, the Act provides for recovery of damages as follows:

Any person who suffers any ascertainable loss of moneys or property, real or personal, as a result of the use or employment by another person of any method, act, or practice declared unlawful under this act or the act hereby amended and supplemented may bring an action or assert a counterclaim therefore in any court of competent jurisdiction. In any action under this section the court shall, in addition to any other appropriate legal or equitable relief, award threefold the damages sustained by any person in interest. In all actions under this section, including those brought by the Attorney General, the court shall also award reasonable attorneys' fees, filing fees and reasonable costs of suit.

N.J.S.A. 56:8-19.
A “person is defined under the Act as “any natural person or his legal representative, partnership, corporation, company, trust, business entity or association, and any agent, employee, salesman, partner, officer, director, member, stockholder, associate, trustee or cestuis que trustent thereof…”. N.J.S.A. 56:8-1(d) (emphasis added).

“Merchandise” is defined under the Act as “… any objects, wares, goods, commodities, services or anything offered, directly or indirectly to the public for sale…” N.J.S.A. 56:8-1(c).

The Home Improvement Practices were promulgated by the Attorney General Office’s Division of Consumer Affairs to “implement the provisions of the Consumer Fraud Act… by providing procedures for the regulation and content of home improvement contracts and establishing standards to facilitate enforcement of the requirements of the Act.” N.J.A.C. 13:45A-16.1(a).

“Home improvement" is defined as the “remodeling, altering, painting, renovating, restoring demolishing, or modernizing of residential or noncommercial property or the making of additions thereto, and includes, but is not limited to, the construction, installation, replacement, improvement, or repair of … central heating and air conditioning equipment… [etc.].” N.J.A.C 13:45A-16.1A (emphasis added).

A “Home improvement contract" is defined as “an oral or written agreement between a seller and an owner of residential or noncommercial property … for the payment of home improvements made in, to, or upon such property, and includes all agreements under which the seller is to perform labor or render services for home improvements, or furnish materials in connection therewith. Id.

“”Seller” is defined as a person engaged in the business of making or selling home improvements ….“ Id.

Acts defined as “Unlawful” under the Home Improvement Practices include, but not limited to, failure to have a written contract (contract must be in excess of $500); misrepresentation of material used (brand, quality, size, etc); bait-and-switch schemes; failure to ensure required building permit; failure to furnish copy of final inspection when construction is completed and before final payment; failure to furnish written copy of guarantee or warranty in a specific, clear and definite language;

A Consumer is entitled to Recovery under the CFA even if there is no showing of an Ascertainable loss

In Cox v. Sears, Roebuck & Company, 138 N.J. 2, 17, 22 (1994), the seminal case for interpretation of the Act, the New Jersey Supreme Court stated that to violate the CFA, a person must commit an “’unlawful practice’” which falls into three (3) general categories: (1) affirmative acts, (2) knowing omissions and (3) regulation violations. Id. at 17 (emphasis added). According to the Court, the first two are found in the language of N.J.S.A. 56:8-2 and the third is based on regulations enacted under N.J.S.A. 56:8-4. Id. (citations omitted). When the alleged consumer-fraud violation consists of an affirmative act, intent is not an essential element and the plaintiff need not prove that the defendant intended to commit an unlawful act.” Id. at 17-18. (citing Chattin v. Cape May Green, Inc., 124 N.J. 520, 522 (1991). However, according to the Court, intent is an element where the consumer fraud consists of an omission. Id.

With respect to regulation violation, the third category of unlawful acts, the Court also stated that “intent is not an element of the unlawful practice, and the regulations impose strict liability for such violations. Id. at 18 (citations omitted)(emphasis added). Proof of any of the three (3) categories of unlawful acts –affirmative acts, knowing omission or regulation violations- is “sufficient to establish unlawful conduct under the [CFA],” according to the Court. Id. at 19.
As to damages, the Court stated that an award of treble damages and attorneys’ fees are mandatory under the CFA if the consumer proves both an unlawful practice and an ascertainable loss. However, even without the showing of an ascertainable loss, a consumer is entitled to reasonable attorneys’ fees and costs if the plaintiff can prove that the defendant committed an unlawful practice under the CFA. Id.

In Cox, the homeowner sought the services of Sears, Roebuck & Company (“Sears) to renovate his kitchen. 138 N.J. at 7. A written contract was entered into by Sears and the homeowner, which required Sears to remove the old cabinets and install new ones and to install a vinyl floor, a countertop, a sing and faucet, wallpaper, a microwave hood, garbage disposal and an additional electrical outlet. Id. at 8. The homeowner signed a repair contract agreement and financed the entire costs. Id. at 7. Sears promised the homeowner “’satisfaction guaranteed or your money back.” Id.

The homeowner became dissatisfied with Sears’ work relating to the microwave hood and vent, the cabinets and the vinyl flooring, and made several telephone calls to Sears. Id. A Sears’ repairman made four (4) trips to the homeowner’s home to address the problem. The homeowner then retained counsel and Sears made no further repairs to the kitchen. Id. The homeowner, without making any payments, then sued Sears for breach of contract, and Sears counterclaimed for the full contract price totaling $8,795.69. Id. at 8.

At trial, evidence was introduced that “Sears’ work was deficient in that the resulting appearance of the renovations was unattractive, that Sears' rewiring of the kitchen was incomplete and substandard, and that Sears ' work failed to comply with building and electrical codes and home-repair regulations. The microwave hood was installed in a lopsided manner and contained a large crack. The door to the microwave slammed shut if not held open. The wallpaper did not cover all wall areas and did not line up evenly with the cabinets. The wood coloring of the cabinets and the trim did not match, and one cabinet had cracks in it. The glue in the cabinet joints was visible and the joints were not clean. Sears improperly re-installed the moldings so that they were not flush to the ceiling or walls. The vinyl flooring buckled, and Sears did not install cove molding to keep it in place. The garbage-disposal unit leaked. The microwave vents recirculated exhaust back into the house instead of outside…” Id. at 8-9 (emphasis added).

In addition, at trial, the homeowner introduced evidence that, inter alia, a building permit was required for the removal of old cabinets and installation of new ones. Id. at 9. However, no building or electrical permit had ever been requested or issued for the homeowner’s residence before, during or after Sears’ work in the homeowners’ kitchen. Id.

A jury returned a verdict in favor of the homeowner on his claim for breach of contract and violation of the CFA and awarded damages of $6,830. Id. at 10. The trial court, however, granted Sears JNOV motion and entered a no cause verdict concluding that the homeowner failed to prove any ascertainable loss, and “continued to enjoy the use of Sears’ labor and materials since the installation.” Id. at 11. The trial court also denied the homeowners’ requested attorneys’ fees of $56, 840.57 concluding that since the homeowner did not prove a loss, he was not entitled to any attorneys fees.” Id. The Appellate Division affirmed.

The Supreme Court, however, reversed and remanded the case for entry of its judgment. Id. at 14, 25. The Court held that Sears’ conduct did constitute an unlawful practice and that the homeowner suffered a loss caused by Sears’ violation of the Act. The Court also concluded that the homeowner was entitled to recover attorneys’ fees, filing fees and cost under the CFA, irrespective of whether an ascertainable loss was demonstrated. Id. at 14 (emphasis added).

Applying the foregoing principles, the Court agreed with the jury’s finding and concluded that “Sears’ noncompliance with the Home Improvement Practice regulations constitutes a clear violation of the [CFA].” Id. at 19. The Court further stated that:

The regulations are in place to prevent precisely the poor-quality work that characterized Sears' performance in this case and to protect consumers such as Cox, even though such sloppy workmanship falls short of an unconscionable commercial practice. For instance, the jury could have concluded that although several permits were required, none was obtained for plaintiff's renovations. Although no statute or regulation requires a home-repair contractor to obtain all permits for an owner, N.J.A.C. 13:45A-16.2(a) 10i does provide that no contractor may begin work until he or she is sure that all applicable permits have been issued. Sears, by beginning work without checking for permits, disregarded the regulation and therefore violated the Act. Moreover, once a permit is obtained, a code inspector will inspect the residence periodically and issue a Certificate of Continued Occupancy to conform to the municipality's inspection process. Because no permit was ever issued for the Cox home, no inspections took place and no certificate was issued. In that regard, Sears violated N.J.A.C. 13:45A-16.2(a) 10ii, which requires a contractor to give the owner a copy of an inspection certificate before final payment is due and before the contractor asks the owner to sign a completion slip. In addition, plaintiff presented evidence to support an inference that Sears had asked him to sign a certificate-of-completion form before the work had been completed, a violation of N.J.A.C. 13:45A-16.2(a) 6v.

Id. at 20.

The Court concluded that the homeowner met the requirement of the CFA by proving that Sears committed an unlawful practice, which consisted of “Sears’ violation of the CFA’s regulations relating to permits, inspections, and certificates.” Id. at 21-22. The Court also concluded that “Sears’ failure to comply with the Home Improvement Practices regulations visited an ascertainable loss on plaintiff.” Id. at 22.

With respect to the calculation of damages, the Court disagreed with the Appellate Division’s conclusion that since Cox did not spend money to repair or finish the work, he incurred no loss. Id. The Court stated that that interpretation is contrary to the CFA’s remedial purpose. Id. The Court stated that “traditionally, to demonstrate a loss, a victim must simply supply an estimate of damages, calculated within a reasonable degree of certainty. The victim is not required actually to spend the money for the repairs before becoming entitled to press a claim. Id. (citations omitted). The Court therefore concluded that Cox loss amounted to the cost of repairing the kitchen, $6,830.00, as the jury found, trebled to $20,490. Id. at 23-24.

However, the Consumer must show a bona fide claim of ascertainable loss before case goes before jury

In Weinberg v. Sprint Corp., 173 N.J. 233 (2002), our Supreme Court established that in order to proceed with a CFA claim, a private plaintiff only need present a bona fide claim for an ascertainable loss, defined as a loss that is capable of withstanding a motion for summary judgment because it “raises a genuine issue of fact requiring resolution by the factfinder.” Id. at 251, 281. That is, a consumer is not required to prove an ascertainable loss in order to survive a motion for summary judgment, but to bring forth evidence sufficient to raise a genuine issue of material fact as to the ascertainable loss. The Court stated that “[t]o say that a plaintiff must present a claim of ascertainable loss to have standing under the Act does not require that the claim ultimately prove successful. A claim may be unsuccessful for any number of reasons even though it was brought in good faith and has support in the facts. Requiring a plaintiff ultimately to prove an ascertainable loss in order to obtain injunctive relief is too difficult a standard and would deter, rather than encourage, private causes of action, in contravention of the legislative scheme. Thus, although we perceive a claim of ascertainable loss to be an essential element for a private cause of action under the Act, that does not mean that only a plaintiff who successfully proves ascertainable loss may have access to the Act's remedies of equitable relief and attorneys' fees.” Id. at 251.
Moreover, reaffirming its earlier decision in Cox, supra, the Court held that “the plaintiff with a bona fide claim of ascertainable loss that raises a genuine issue of fact requiring resolution by the factfinder would be entitled to seek also injunctive relief when appropriate, and to receive an award of attorneys' fees, even if the plaintiff ultimately loses on his damage claim but does prove an unlawful practice under the Act.” 138 N.J at 253 (original italics).

In Thiedemann v. Mercedes-Benz, USA, LLC, 183 N.J. 234 (2005), our Supreme Court, stated that “[t]o raise a genuine dispute about such a fact, the plaintiff must proffer evidence of loss that is not hypothetical or illusory. It must be presented with some certainty demonstrating that it is capable of calculation, although it need not be demonstrated in all its particularity to avoid summary judgment.” Id. at 248.

In Bosland v. Warnock Dodge, Inc., 197 N.J. 543, 559 (2009), our Supreme Court stated that “[t]he CFA does not demand that a plaintiff necessarily point to an actually suffered loss or to an incurred loss, but only to one that is ‘ascertainable.’” Id. at 559.

The Cox court concluded that the plaintiff's ascertainable loss for defendant's shoddy home improvement work included the projected repair costs. Cox, supra, 138 N.J. at 24. “To demonstrate a loss, the plaintiff must supply an estimate of damages, calculated within a reasonable degree of certainty. Id. at 22. “… In the home improvement context, a plaintiff's loss is measured by the cost of repairing the defendant's errors. Id at 22-23. See also, Furst v. Einstein Moomjy, Inc., 182 N.J. 1, 10, 860 A.2d 435 (2004)( “when a merchant violates the [CFA] by delivering defective goods and then refusing to provide conforming goods, a customer's ascertainable loss is the replacement value of those goods.”).

In Cox, the Court concluded (after reviewing plaintiff’s trial expert testimony) that plaintiff’s “ascertainable loss amounted to the cost of repairing his kitchen, $6,830, as the jury found.” 138 N.J. at 23. This amount was then trebled to $20,490 under the CFA. Id. at 23-24.

In sum, a CFA claim could be alleged against a contractor or other home improvement merchants, where the home improvement practices were violated. However, in order for the consumer to recover, she must suffer a loss. If a loss cannot be shown, the case will be dismissed on summary judgment. If a loss is shown, and the case proceeds to trial, the consumer can recover reasonable attorneys’ fees and costs even if she fails to convince the jury of her loss, so long as her claim was bona fide. If she does prove a loss proximately caused by the CFA violation, then she is entitled to treble damages as well as reasonable attorneys’ fees.