Opinion ID: 2326624
Heading Depth: 1
Heading Rank: 5

Heading: Defendant's Counterclaim for CFA Relief

Text: Plaintiff's petition for certification argues that this Court should reverse the Appellate Division's judgment affirming the defendant's entitlement to damages on its CFA counterclaim. Plaintiff's argument on appeal has two components: one based on the adequacy of defendant's CFA proofs and the other relating to the technical requirements for CFA liability. We begin our analysis with the arguments concerning the adequacy of defendant's proofs. In considering the CFA claim, the trial court based its findings almost exclusively on the opinions of defendant's expert that plaintiff has challenged both as being untimely and as representing a net opinion. The facts that give rise to plaintiff's timeliness argument are not seriously disputed. Defendant first served its expert's report at the close of business on the last day permitted for discovery. That report, attached to correspondence from counsel referring to an amendment to interrogatory answers, was two pages long, was not on letterhead that would reveal the author's business or professional identity, and did not refer to any recognized standards or relevant experience of the author. It was, however, accompanied by a copy of the expert's C.V. Plaintiff's motion to strike the report or to cure the asserted prejudice caused by the late delivery of the report by extending the time within which plaintiff might serve a responsive expert's report was denied. The record reflects that plaintiff's motion to extend discovery was referred to, and denied by, the Civil Presiding Judge. Because there had been a lengthy period of time after the discovery end date during which the parties had continued to exchange information but during which plaintiff had not sought relief relating to the expert's report, the court found that plaintiff could not demonstrate exceptional circumstances as is required for an extension of discovery following fixing of a trial date. See R. 4:24-1(c). At trial, it became clear that defendant's expert had only limited experience relating to the purchase of janitorial or paper supplies and only anecdotal information purporting to be relevant to contracting between for-profit suppliers and non-profit entities. He identified no standards relevant to any of the matters in dispute, referred to no general or specific pricing guides, and offered no comparative analyses that related to any of the products that were in issue. Nonetheless, he offered opinions based on his experience and testified about his unsupported belief that there are industry standards governing maximum price ranges that should be charged to non-profits. Moreover, the expert opined about what the prices should have been for items without providing or relying upon any information about what the specific products were, what prices plaintiff paid for those items, or at what price plaintiff or any other vendor listed and sold them at the time the products were sold to defendant. Nonetheless, the expert testified that the prices charged by plaintiff for some or all of the goods it sold to defendant were excessive. As part of his testimony, the expert identified three items that he concluded were examples of instances in which plaintiff did not deliver the item that was ordered, but substituted an inferior item of lesser, albeit unquantified, value. In general, we apply an abuse of discretion standard to decisions made by our trial courts relating to matters of discovery. Bender v. Adelson, 187 N.J. 411, 428, 901 A.2d 907 (2006). That is, [w]e generally defer to a trial court's disposition of discovery matters unless the court has abused its discretion or its determination is based on a mistaken understanding of the applicable law. Rivers v. LSC P'ship, 378 N.J.Super. 68, 80, 874 A.2d 597 (App.Div.) (citing Payton v. N.J. Turnpike Auth., 148 N.J. 524, 559, 691 A.2d 321 (1997)), certif. denied, 185 N.J. 296, 884 A.2d 1266 (2005). As it relates to extensions of time for discovery, appellate courts, including this Court, have likewise generally applied a deferential standard in reviewing the decisions of trial courts. See, e.g., Szalontai v. Yazbo's Sports Cafe, 183 N.J. 386, 396-97, 874 A.2d 507 (2005); Rivers, supra, 378 N.J.Super. at 82-83, 874 A.2d 597. But see Tucci v. Tropicana Casino & Resort, Inc., 364 N.J.Super. 48, 51, 834 A.2d 448 (App.Div.2003) (holding trial court's dismissal of complaint with prejudice due to late-filed expert report was abuse of discretion under circumstances); Smith v. Schalk, 360 N.J.Super. 337, 344-46, 823 A.2d 65 (App.Div.2003) (reversing trial court order permitting extension of discovery). Applying that standard, we would not, on this record, interfere with the court's decision to deny plaintiff's motion for an extension of time for preparation of an expert to counter defendant's late-filed expert report. Nonetheless, we reach a different conclusion as it relates to the trial court's rejection of plaintiff's motion to strike the expert's report and testimony on net opinion grounds. To be sure, we apply the same deferential approach to a trial court's decision to admit expert testimony, reviewing it against an abuse of discretion standard. See, e.g., Kuehn v. Pub Zone, 364 N.J.Super. 301, 319-21, 835 A.2d 692 (App.Div.2003) (concluding that expert had sufficient training and experience to offer opinions on security requirements relating to taverns), certif. denied, 178 N.J. 454, 841 A.2d 92 (2004). Our Rules have fixed, clear guidelines that govern the admissibility of expert opinions and against which trial courts must make their evaluations. See N.J.R.E. 702, 703. Expert testimony must be offered by one who is qualified as an expert by knowledge, skill, experience, training, or education to offer a scientific, technical, or . . . specialized opinion that will assist the trier of fact, see N.J.R.E. 702, and the opinion must be based on facts or data of the type identified by and found acceptable under N.J.R.E. 703. Of particular importance for this appeal, a court must ensure that the proffered expert does not offer a mere net opinion. See Polzo v. Cnty. of Essex, 196 N.J. 569, 583, 960 A.2d 375 (2008); Buckelew v. Grossbard, 87 N.J. 512, 524, 435 A.2d 1150 (1981). That is, an expert's bare opinion that has no support in factual evidence or similar data is a mere net opinion which is not admissible and may not be considered. See Polzo, supra, 196 N.J. at 583, 960 A.2d 375; Buckelew, supra, 87 N.J. at 524, 435 A.2d 1150; see also State v. Townsend, 186 N.J. 473, 494, 897 A.2d 316 (2006); In re Yaccarino, 117 N.J. 175, 196, 564 A.2d 1184 (1989). The admissibility rule has been aptly described as requiring that the expert give the why and wherefore that supports the opinion, rather than a mere conclusion. See Polzo, supra, 196 N.J. at 583, 960 A.2d 375 (quoting Townsend, supra, 186 N.J. at 494, 897 A.2d 316); Rosenberg v. Tavorath, 352 N.J.Super. 385, 401, 800 A.2d 216 (App. Div.2002); Jimenez v. GNOC, Corp., 286 N.J.Super. 533, 540, 670 A.2d 24 (App. Div.), certif. denied, 145 N.J. 374, 678 A.2d 714 (1996). As an example, our Appellate Division has rejected a trial court's reliance on an expert's personal rule of thumb regarding fair market valuation as violating Rule 703. Alpine Country Club v. Borough of Demarest, 354 N.J.Super. 387, 395-96, 807 A.2d 257 (App.Div.2002) (concluding that expert's rule of thumb approach was neither based on any accepted methodology used by other appraisers nor referenced or adopted by authoritative texts or case law). Applying these standards, our Appellate Division has concluded that a trial court may not rely on expert testimony that lacks an appropriate factual foundation and fails to establish the existence of any standard about which the expert testified. Dawson v. Bunker Hill Plaza Assocs., 289 N.J.Super. 309, 323-25, 673 A.2d 847 (App.Div.) (concluding that expert opinion lacked basis in facts sufficient to be more than guess or conjecture), certif. denied, 146 N.J. 569, 683 A.2d 1164 (1996); see, e.g., Suanez v. Egeland, 353 N.J.Super. 191, 203, 801 A.2d 1186 (App. Div.2002) (concluding that trial court erred because expert demonstrated no foundation established by scholarly literature or persuasive judicial decisions). Similarly, if an expert cannot offer objective support for his or her opinions, but testifies only to a view about a standard that is personal, it fails because it is a mere net opinion. As the Appellate Division has held: It is insufficient for . . . [an] expert simply to follow slavishly an accepted practice formula; there must be some evidential support offered by the expert establishing the existence of the standard. A standard which is personal to the expert is equivalent to a net opinion. [ Taylor v. DeLosso, 319 N.J.Super. 174, 180, 725 A.2d 51 (App.Div.1999) (citations omitted).] Comparing the opinions offered by defendant's expert with these fundamental requirements, we cannot escape the conclusion that the opinions were nothing more than the expert's personal views. Certainly the two-page summary report that the expert prepared is devoid of any clue as to its basis and lacks any suggestion about the expert's support for the conclusions that he intended to offer at trial. Looking beyond the report and considering the testimony that the expert offered during the trial, the opinions he gave were not supported by any basis sufficient to be admissible under our Rules of Evidence. See N.J.R.E. 703. To be sure, the witness opined at some length about his experiences and his impressions, but his essential testimony about acceptable markups in sales to non-profit purchasers lacked any foundation of the sort required for admissibility. There is no suggestion that there are handbooks, manuals, treatises, articles or trade publications that would support the opinions about accepted profit margins for sales to non-profit entities. Nor is there any reference to price books, pricing guidelines, material manuals, or similar information that might have supported the opinions that the prices plaintiff charged for any particular product were unreasonable. There was a limited effort to make a comparison to the same or similar products offered for sale by other suppliers, but no basis on which to draw the conclusions offered that the prices were excessive or that the products were not as represented. In the end, the expert offered a series of personal views that were net opinions and therefore not worthy of consideration. By rejecting plaintiff's motion in limine and by permitting defendant's expert witness to testify, the trial court erred. That error led the trial court to utilize the expert's flawed and unsupported views throughout its analysis of defendant's counterclaim both on liability and damages. That is, the unsupported views expressed by the expert formed the basis on which the trial court relied in making its findings that there is an accepted industry standard that governs the prices that a commercial entity may charge another corporation that operates as a non-profit. That error was compounded because it caused the trial court to overlook the unrebutted testimony from both parties that there had been no agreement as to price save a general one that prices be reasonable. Moreover, notwithstanding the absence of any assertion from defendant's principal that defendant had an expectation about mark-ups consistent with the expert's opinion, the trial court utilized the expert's net opinion to conclude that the prices were commercially unreasonable and unconscionable. Apart from the expert's unsupported and inadmissible view about what a reasonable price might be, there is no evidence that supports relief on defendant's counterclaim. That the evidence in support of defendant's claim is lacking is best demonstrated by the recalculations included in the trial court's revised opinion issued following the cross-motions for reconsideration. The trial court's initial opinion on the damages to be awarded on the counterclaim was based on sales of three products: the vacuums, the locks, and the lock cylinders. In the initial opinion, the trial court referred to other products, including the faucets, not to calculate damages, but to support its conclusion that plaintiff had violated the CFA by employing a bait and switch practice. Following the motions for reconsideration, the trial court conceded that the calculations for the vacuums and the lock cylinders were faulty because there were no outstanding invoices for those products. As a result, the trial court recalculated its damage award by relying on two products: the faucets, which had not originally been quantified, and the locks, which had been part of the basis for the original award. In doing so, the court reasoned that defendant was entitled to relief based on the faucets because it believed that it was ordering and paying for Delta brand faucets and stainless steel faucets but that plaintiff substituted an inferior product. Even so, the court's damages calculation demonstrates the lack of supporting evidence offered by the expert. Rather than calculating damages by evaluating the price for which the product that was provided should have been sold, or by comparing the price of that product with the price of the product promised, the trial court relied on the expert's percentage of markup analysis in making its calculations. The trial court's error is plain from its stated concession that the actual price paid by plaintiff for the faucets was not provided by any party; rather than recognizing that the proofs as to damages failed, the court simply relied on purely speculative impressions provided by defendant's expert. The error as to the calculation for the loss based on the locks is similarly flawed because the trial court relied on the expert's wholly speculative views about what the price should have been. See Polzo, supra, 196 N.J. at 584, 960 A.2d 375 (holding that net opinion is insufficient to satisfy burden of proof); Lane v. Oil Delivery, Inc., 216 N.J.Super. 413, 420, 524 A.2d 405 (App.Div.1987) (remanding and cautioning that proof of damages must not be a matter of speculation). Regardless of whether, in light of the purpose and scope of the UCC, this Court would conclude that the CFA can ever apply to transactions between merchants, we need not address that question because defendant's CFA claim fails for want of sufficient evidence. That is, the practices that the trial court identified as having been CFA violations related to the items, including the faucets, as to which the claim fails for want of proof that defendant suffered an ascertainable loss. See Bosland v. Warnock Dodge, Inc., 197 N.J. 543, 558, 964 A.2d 741 (2009) (requiring plaintiff prove definite, certain and measurable loss to succeed on CFA claim); Thiedemann v. Mercedes-Benz USA, LLC, 183 N.J. 234, 238, 872 A.2d 783 (2005) (holding that failure to produce evidence on which finder of fact could find or infer ascertainable loss should result in summary judgment against plaintiff in CFA claim). In similar fashion, the trial court erred in its conclusion that the prices charged for the locks were unconscionable, and therefore violated the CFA, because that reasoning was supported only by the expert's net opinion on pricing. We are constrained to consider one last aspect of the claims between the parties. Defendant conceded that $15,000 in invoices were due and owing. Using the expert's thirty percent analysis, the trial court reasoned that those invoices must have been overstated by that percentage. In making its findings and conclusions, therefore, the trial court concluded that the true amount owed based on defendant's concession was $10,500 and included that sum in the overall judgment. Because the expert's opinion fails as an impermissible net opinion, however, the trial court had no warrant to accept that opinion and to suppose that the concededly outstanding invoices should be reduced by that percentage.