A Recent New Jersey Appellate Division Decisions, Which Has Been Approved for Publication, Holds That the Sale of Customized Goods or Services May Be a “Sale of Merchandise” Under the New Jersey Consumer Fraud Act.
A tow truck operator alleged that a manufacturer failed to timely deliver a functional, custom-built tow truck for its business operation. Six months after the contractual due date, the manufacturer attempted delivery of a tow truck with significant problems including non-operating forks. After the manufacturer’s fourth delivery attempt, Plaintiff believed the situation to be “hopeless,” rejected delivery and demanded return of a $10,000.00 deposit. The manufacturer refused return of the deposit. Plaintiff then brought suit for, among other things, breach of contract under the Uniform Commercial Code (UCC), N.J.S.A. 12A:2-101, et seq., and violation of the New Jersey Consumer Fraud Act (CFA), N.J.S.A. 56:8-1, et seq.
The trial court granted summary judgment to the manufacturer on all claims. It dismissed Plaintiff’s contract claim finding no breach because the manufacturer delivered a tow truck, regardless of whether it operated properly. It also dismissed Plaintiff’s CFA claims, reasoning that a customized “tow truck was not something available ‘to the public for sale,’ N.J.S.A. 56:8-1(c).” Plaintiff appealed. In All The Way Towing, LLC v. Bucks County International, Inc., et al., Docket No. A-4825-15T2 (N.J. App. Div. Jan. 9, 2018), the Appellate Division reversed, holding that the trial court applied incorrect legal principles to both claims and failed to consider facts in a light most favorable to Plaintiff.
Addressing the contract claim, the Appellate Division succinctly stated that the “record reveals a central factual dispute as to whether the tow truck conformed to the contract and that dispute alone precludes summary judgment.” Id. at 5. Regarding Plaintiff’s CFA claim, the Appellate Division rejected the lower court’s determination that the tow truck was “not available to the public for sale” when the manufacturer specifically tailored it to Plaintiff’s needs. Id. at 6-7. While recognizing “unique circumstances” of prior decisions where “complex” goods or services were exempt from CFA claims, citing Finderne Mgmt. Co. v. Barrett, 402 N.J. Super. 546 (App. Div. 2008) and Princeton Healthcare Sys. v. Netsmart N.Y., Inc., 422 N.J. Super. 467 (App. Div. 2011), the Appellate Division held that such theory did not apply to this case. Rather, it found that “[w]hile it may be true that defendants engaged in considerable efforts to create the tow truck in question, it hasn’t been shown there was anything more ‘complex’ about this tow truck than any other.” Id. at 8.
The Appellate Division did not reach the precise questions presented in Finderne Mgmt. Co. and Princeton Healthcare Sys., i.e. whether the sale of complex items constitutes the sale of merchandise to the public under the CFA. Nevertheless, it cast doubt on the reach of the theory that the complexity of a given product may cause it to fall outside of the CFA’s definition of “merchandise.” Sellers, manufacturers and consumers should be aware that goods or services are not removed from the umbrella of New Jersey’s CFA solely because they were custom-tailored to the buyer’s needs.