Court Opinion

ID: 9707258
Source: CourtListenerOpinion
Date Created: 2023-08-26 02:06:58.699408+00
Date Added: 2024-06-11T18:20:36.996222
License: Public Domain

HANDLER, J.,
dissenting.
I agree with the majority that the trial court’s instructions intimated, if not fully explained, that an omission of a material fact requires knowledge, and, further, that a “misrepresenta*528tion” could consist of an “incomplete” statement, i.e., omitted material facts. I also agree that the instructions did not delineate or differentiate adequately between a violation of the Consumer Fraud Act (“Act”) for a misrepresentation consisting only of incorrect facts and a violation for knowingly omitting a material fact. However, although the deficiency in the instructions would appear to be more than technical or insubstantial, in the context of the evidence in this case, it did not have the capacity to mislead or confuse the jury. The jury’s answers to the interrogatories were based on the fair and complete presentation of the evidence. Those answers clearly indicated that defendant Cape May Greene, Inc. (“CMG”) was found liable only for misstating facts, not for omitting any. Because an “omission” was not involved in the misleading statement, that obviated the need to delineate the difference between the two kinds of misstatements or to determine whether the statement was made with knowledge or intent to deceive.
The Act prohibits “deception” and “misrepresentation” in connection with the sale or advertisement of merchandise without regard to the state of mind of the seller. Fenwick v. Kay Am. Jeep, Inc., 72 N.J. 372, 377, 371 A.2d 13 (1977); N.J.S.A. 56:8-2. The Act neither elucidates nor defines those terms. We have stated that the “prime ingredient of deception” is the “capacity to mislead.” Fenwick, supra, 72 N.J. at 378, 371 A.2d 13; see In re Shack, 177 N.J.Super. 358, 363, 426 A.2d 1031 (App.Div.), certif. denied, 87 N.J. 352, 434 A.2d 95 (1981); cf. N.J.S.A. 2C:20-4 (creation or reinforcement of false impression or failure to correct false impression that deceiver previously created or reinforced constitutes deception). A misrepresentation imports falsity or inaccuracy. See, e.g., N.J.S.A. 51:11-1 (defines misrepresentation as “any manifestation by words or other conduct by one person to another that, under the circumstances, amounts to an assertion not in accordance with the facts”); N.J.S.A. 51:4-23, and certainly encompasses an untrue statement of fact. Black’s Law Dictionary 1152 (4th ed. 1968). Those terms, then, may be contrasted with a *529statement that misleads merely because of the failure to include material facts. N.J.S.A. 56:8-2; Webster’s Ninth New Collegiate Dictionary 823 (1987). With respect to such statements, the Act expressly requires knowledge or scienter as a basis for liability. It does not require such a showing for a violation through a misrepresentation consisting only of inaccurate or false facts.
The critical issue then is whether the jury fairly, actually, and with adequate understanding determined that CMG had made a misrepresentation consisting only of inaccurate or false facts. I conclude that the jury did. The jury answered the trial court’s two special interrogatories as follows:
Would the average consumer understand the term “insulated aluminum windows” to refer only to the glass or to the entire window unit? (Check one)
Only the glass
Entire window unit X
Would the average consumer understand the term “insulated windows” to refer only to the glass or to the entire window unit? (Check one)
Only the glass
Entire window unit X
The significance of those answers is that they demonstrate that the jury expressly determined that the representation made by CMG concerning “insulation” referred only to the “entire window unit,” that is, the window with its frame. That being so, CMG’s representation about “insulation” could mean only that the “entire window unit” was insulated. Because the “entire window unit” was not insulated, that statement was one containing inaccurate facts, not one that omitted any material fact. I thus agree substantially with Judge Brody’s dissent below that the jury’s answers effectively resolve the matter of liability under the Consumer Fraud Act. 243 N.J.Super. 590, 622, 581 A.2d 91.
*530I read none of the opinions in this case — the majority of the Appellate Division below, which the Court now adopts, the dissent of Judge Brody, and the concurrence of Justice Stein— to suggest that CMG’s representation was not a statement that consisted of inaccurate and false facts. No opinion disputes that the jury found that CMG’s phrases “insulated aluminum windows” and “insulated windows” referred to the “entire window unit,” and not only to the glass or window panes. In short, the phrases constitute assertions containing false facts because they inaccurately stated to the average consumer that the entire window unit was insulated when, in fact, only the glass or window pane, not the surrounding aluminum frame, was insulated. See Barry v. Arrow Pontiac, Inc., 100 N.J. 57, 69 & n. 6, 494 A.2d 804 (1985) (test is whether advertisement would mislead average consumer); Shack, supra, 177 N.J.Super. at 365, 426 A.2d 1031 (deceptiveness of advertisement measured by understanding of “average consumer”); cf. Southwest Sunsites, Inc. v. FTC, 785 F.2d 1431, 1435 (9th Cir.1986) (Federal Trade Commission relies on consumer’s reasonable behavior in determining deception), cert. denied, 479 U.S. 828, 107 S.Ct. 109, 93 L.Ed.2d 58 (1986); American Home Prods. Corp. v. FTC, 402 F.2d 232, 236 (6th Cir.1968) (word defined in terms of average consumer’s interpretation).
That conclusion renders harmless any error in the trial court’s instructions. In context, the jury’s answers to the interrogatories did not depend on the fine legal distinction between a violation resulting from the omission of facts and one resulting from inaccurate facts. Rather, the jury essentially was asked, “What did CMG promise when it stated that its homes contained ‘insulated windows’ or ‘insulated aluminum windows’?” By responding that CMG had stated that the entire window unit was insulated, the jury in effect determined that CMG promised its consumers that they would have “insulated aluminum windows” — windows and frames included. That was a false statement because it contained inaccurate facts, not because it omitted material facts. Cf. Fenwick, *531supra, 72 N.J. at 378, 371 A.2d 13 (failure of advertisement to disclose mileage of used car more than omission of material fact and constitutes deception or unconscionable commercial practice as defined by implementing regulations; thus, no showing of intent required to prove violation).
The Court, in relying on the majority opinion below, responds that the “capacity to mislead” is a characteristic of both false factual statements and omissions, and that the jury’s answers to the interrogatories did not specify whether the capacity to mislead flowed from an affirmative misstatement of fact in the phrase “insulated windows” or an omission therefrom. 243 N.J.Super. at 602, 581 A.2d 91. In my view, the jury was not required to specify whether the deception inhered in omitted or misstated facts because it had already determined that the deception amounted to misstated facts.
The concurring opinion goes farther than the Court. It would construe the Act to require knowledge or intent to mislead with respect to both kinds of statements, those that contain false facts and those that omit material facts; only if misrepresentations are so materially deceptive and their capacity to mislead so apparent would proof of intent be unnecessary. Ante at 526-527, 591 A.2d at 946-947. I find no basis for an interpretation that would, at least with respect to misrepresentations consisting of statements with false or inaccurate facts, make the Act less protective of consumer interests by insisting on proof of knowledge when none is now required; Further, I find no warrant to apply such a distinction in this case where the jury necessarily found that the statement had the capacity to mislead the average consumer.
Under the circumstances, the question that intrigues the majority — whether the jury found the brochure misleading due to an “omission” of material fact or a misrepresentation — need not be posed. The question was effectively subsumed and mooted by the jury’s answers to interrogatories: it obviously concluded that CMG’s statements were ones with incorrect *532facts, not ones that omitted facts. Hence, the jury did not have to consider the question of scienter because no showing of the seller’s mental state is required when it makes such a misrepresentation.
In addition, a misrepresentation consisting of inaccurate facts is not converted into a statement that omits material facts merely because additional, clarifying facts can be added to neutralize or correct the inaccurate facts. E.g., Hyland v. Zuback, 146 N.J.Super. 407, 415, 370 A.2d 20 (App.Div.1976) (boat repairman who informed customer that repairs were progressing as planned but neglected to mention that the cost would vastly exceed the original estimate made a misrepresentation because statement had capacity to mislead consumer into believing original cost estimate would not be changed); cf. Southwest Sunsites, Inc., supra, 785 F.2d 1431 (representation that particular land was suitable for use as a homesite, farm, or ranch inaccurately portrayed the practical and economic suitability of land for those uses); Continental Wax Corp. v. FTC, 330 F.2d 475 (2d Cir.1964) (product named “Continental Six Month Floor Wax” falsely represented characteristics of product because product did not last as effective floor covering for period of six months); Country Tweeds, Inc. v. FTC, 326 F.2d 144 (2d Cir.1964) (seller's use of testing company’s report comparing seller’s fabric to “Best Quality Cashmere produced to date” falsely represented that testing company had tested rival fabric and found it to be best quality cashmere produced to date). To require that a “misrepresentation” must consist of a statement that cannot be corrected by additional facts in order to be considered an affirmative misstatement of facts, as implied by the majority, would obliterate the statutory distinction between a misrepresentation consisting of false facts and the omission of material facts. I recognize that a different case may present itself when there has been no affirmative description of the characteristics of the product in dispute. That is not the case here because the jury found that CMG had conveyed false information in its affirmative description of the windows. *533Because the Act is designed to protect consumers against such misrepresentations, I would give plaintiffs the benefit of the verdict.
Therefore, I dissent.
CLIFFORD and STEIN, JJ., concurring in the result.
For affirmance — Justices CLIFFORD, POLLOCK, O’HERN, GARIBALDI and STEIN — 5.
HANDLER, J., dissents.