Court Opinion

ID: 4531694
Source: CourtListenerOpinion
Date Created: 2020-05-05 14:08:14.833703+00
Date Added: 2024-06-11T09:27:08.279920
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
                               APPROVAL OF THE APPELLATE DIVISION
        This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the
     internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.

                                                        SUPERIOR COURT OF NEW JERSEY
                                                        APPELLATE DIVISION
                                                        DOCKET NO. A-0554-18T1

NICOLE PELLEGRINO MULLER
and CAROL PELLEGRINO,

         Plaintiffs-Respondents,

v.

FRED ALLEN BUILDERS, FRED
ZAPPOLO, STANLEY'S HOME
IMPROVEMENT, LLC, and
SHELDON FLEISCHMAN,

         Defendants,

and

JEFF SANDS,

     Defendant-Appellant.
_____________________________

                   Submitted March 30, 2020 – Decided May 5, 2020

                   Before Judges Sumners and Geiger.

                   On appeal from the Superior Court of New Jersey, Law
                   Division, Gloucester County, Docket No. L-0289-16.
            Law Offices of Jonathan J. Sobel, attorneys for
            appellant (Jonathan J. Sobel, of counsel and on the
            briefs).

            Puff & Cockerill, LLC, attorneys for respondents
            (Ronald P. Sierzega, on the brief).

PER CURIAM

      Defendant Jeff Sands appeals from a bench trial verdict and counsel fee

award in favor of plaintiffs Nicole Pellegrino Muller and her mother, Carol

Pellegrino. He also appeals from an order denying his motion for a new trial

and reconsideration. For the following reasons, we reverse the judgment entered

against Sands that awarded plaintiffs treble damages and attorneys' fees under

the Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -20.

                                       I.

      This matter began when plaintiffs decided to add a bedroom to the rear of

their home. They contacted Stanley's Home Improvement, LLC (Stanley's)

regarding the project. After scheduling an appointment, plaintiffs met with

Sands at their residence where he introduced himself as Stanley's vice president.

      During the meeting, Sands observed the area where the work was to be

performed, took notes, discussed financing, and explained that someone else

would provide an estimate. Sands also gave plaintiffs a "sales pitch," stating

                                                                        A-0554-18T1
                                       2
Stanley's had been in business for "many years," stood "by their work," and

maintained "a terrific reputation."

       After meeting with a different contractor, plaintiffs decided to hire

Stanley's. Through email, Pellegrino Muller and Sands discussed financing, the

type of work to be performed, and having defendant Fred Zappolo come to

plaintiffs' residence to provide an estimate. In October 2014, plaintiffs met with

Zappolo at their residence where he introduced himself as Stanley's foreman.

       Soon after the meeting, Zappolo provided plaintiffs with an initial written

estimate that culminated in a July 2015 agreement under the terms of which

plaintiffs would pay $28,000 in return for construction of the addition, which

was to be completed in nine weeks. The two-page agreement is printed on Fred

Allen Builders 1 stationary. It is not signed by either plaintiff or Sands. In

September 2015, plaintiffs made a $1400 payment and agreed in writing with

Zappolo to add a door to the project for an additional $1000. Work then

commenced on the addition.

       As time passed, plaintiffs became increasingly concerned with the quality

of work and whether the project would be completed within the agreed upon

1
    Fred Zappolo was the owner of Fred Allen Builders.
                                                                         A-0554-18T1
                                        3
nine-week time frame. On December 29, 2015, Pellegrino Muller expressed her

concerns to Sands via email, stating: "[Sands] I'm over 12 weeks and $20,000

into this project and I have a mess off the back of my house. [Zappolo] doesn't

seem to have answers on where we are and when things will be completed."

Sands did not respond. Two days later, Pellegrino Muller emailed Sands a

second time, asking if there was "someone [she] can speak to at Stanley's about

this project." Once again, Sands did not respond.

      On January 5, 2016, Pellegrino Muller emailed Sands a third time, noting

that Sands was listed as vice president of Stanley's with the Better Business

Bureau and requesting contact information for Stanley's owner. That same day,

Sands responded: "I have been out of the business for over a year and Stanley['s]

is no longer in business. You are dealing directly with [Zappolo] on this. I will

try to help." Sands had no further contact with plaintiffs.

      Two days later, Pellegrino Muller and Zappolo discussed, through email,

payments made to date, the work to be completed, and reasons for the delay. At

that point, only the footings, foundation, and two exterior walls had been

constructed. Zappolo never returned to plaintiffs' residence to complete the

project.

                                                                         A-0554-18T1
                                        4
        On March 7, 2016, plaintiffs filed a four-count complaint against

defendants Fred Allen Builders, Zappolo, Stanley's, Sheldon Fleischman

(Stanley's owner), and Sands, asserting claims for: (1) breach of contract (count

one); (2) violation of the covenant of good faith and fair dealing count (count

two); (3) violation of the CFA (count three); and (4) fraud (count four). Sands

filed a pro se answer. The other named defendants defaulted.

        In December 2017, Sands moved for summary judgment.               Plaintiffs

opposed the motion. The trial court denied the motion.

        On March 19, 2018, the court conducted a one-day bench trial on

plaintiffs' CFA claim against Sands. 2 Plaintiffs, their expert witness Philip

Aliano, and Sands—who appeared pro se—testified.

        Plaintiffs' testimony recounted the facts set forth above. Pellegrino Muller

testified that plaintiffs paid a total of $21,000 on the July 2015 agreement. When

asked whether she was concerned that the agreement was printed on Fred Allen

Builders stationary, Pellegrino Muller responded, "No, I had no reason to think

that I wasn't dealing with Stanley's."

        Plaintiffs further testified the work remained incomplete and that it was

deteriorating.    Pellegrino Muller noted plaintiffs contacted Aliano Brothers

2
    Plaintiffs abandoned their other causes of action against Sands.
                                                                           A-0554-18T1
                                          5
Contractors for an estimate "to finish and repair" the addition. Aliano provided

plaintiffs with a proposal for $39,600 in October 2016.

      During cross-examination, plaintiffs acknowledged that Sands was not

present when they entered into the July 2015 agreement nor anytime thereafter

when the work was performed. Plaintiffs also acknowledged they never met

with Sands regarding the design of the work; they did not hire Sands to perform

the work; the agreement does not include Sand's name; and they did not pay any

money directly to Sands.      They further acknowledged that Sands was not

involved in obtaining any of the permits for the project.

      Plaintiffs then called Aliano, a general contractor and co-owner of Aliano

Brothers Contractors, as a witness. The court qualified Aliano "as an expert in

the field of general construction, house renovations and additions." Aliano

testified he was contacted by plaintiffs for an estimate to complete the work they

originally contracted Stanley's for. After having visited plaintiffs' residence,

Aliano concluded that "[a] lot of the work had to be redone." According to

Aliano, his October 2016 proposal for $39,600 reflected the cost to repair and

complete the addition plaintiffs originally sought to construct.

      Sands testified he has been in the catering business for approximately

thirty-five years. He stated that during the summer of 2014, he "was out of work

                                                                         A-0554-18T1
                                        6
for a short period of time" and, as a favor, drove Fleischman around to run

errands. Sands further stated that when he met with plaintiffs in September

2014, Fleischman "could not get out of the car" because he was "unwell," "so

reluctantly [Sands ] went into [plaintiffs'] house" on Fleichman's behalf. Sands

explained he gave his "email information to [p]laintiffs because [Fleichman] has

no computer and it was an easier way for [plaintiffs] to contact [Fleichman] . . .

that's all [he] did as far as passing on the information from there." Sands

indicated he secured a job in the catering field that same month, where he has

worked ever since. Sands testified he "was not on [Fleischman or Zappolo's]

payroll"; "held no officer positions"; "wasn't an agent or representative" for

Stanley's or Fred Allen Builders; was not paid any money by any of the other

defendants; and did not receive any W-2 or 1099 forms from either company.

      On June 15, 2018, the court held a proof hearing as to the defendants in

default. Pellegrino Muller again recounted the same facts. Plaintiffs noted they

sought treble damages and an award of attorneys' fees.

      On June 21, 2018, the court issued an oral decision, finding Sands violated

the CFA. The court found Pellegrino Muller "to be extremely credible," finding

her testimony to be candid, reasonable, consistent, accurately recollected, and

                                                                         A-0554-18T1
                                        7
non-evasive. The court recognized, however, that Pellegrino Muller "had an

interest in the outcome of the case."

      In contrast, the court "did not find [Sands] to be credible." The court

explained that his testimony was "inconsistent" and "did not make sense." It

noted, "[h]e said he received no money, but he's taking [Fleischman] around on

business appointments and then he's actually going in and conducting the

business appointment itself and he was listed as vice president." The court did

not find Sands' testimony that "he wasn't a friend of Mr. Fleischman and only

an acquaintance, he was not working, and he was not paid at all," to be credible.

As to his claim that someone else listed his name as vice president with the

Better Business Bureau, the court noted Sands persuaded he sold "this job" to

plaintiffs during "his initial meeting with them."

      The court determined that Sands violated the CFA, finding that he was

"absolutely and totally involved" because he conducted himself as an agent of

Stanley's and Fred Allen Builders; was the contact person as evidenced by the

emails; went to plaintiffs' house; discussed the financing; indicated Zappolo

would be the foreman and provided his contact information. Although Sands

"did not sign the contract itself," the court found Sands "engaged in

                                                                        A-0554-18T1
                                        8
unconscionable commercial practices" through "misrepresentations," taking

"affirmative steps," and acting "by way of omission."

      After finding the defaulted defendants also violated the CFA, the court

held all defendants are jointly and severally liable and awarded treble damages

of $181,800. That amount was calculated by trebling the sum of $60,600,

comprised of the $21,000 plaintiffs paid to Zappolo defendants and the $39,600

estimate to repair and complete the addition.

      The court also awarded plaintiffs attorneys' fees in the amount of

$19,264.47, apportioning $13,864.23 against Sands and the remaining $5,400.24

against the defaulted defendants. The court did not make findings regarding the

reasonableness of the hours billed, the hourly rate charged, or other relevant

factors, and simply noted it was "satisfied from the Affidavit of Services that

those figures are correct as stated in the order for judgment."

      A judgment reflecting those rulings was entered on June 21, 2018. Sands,

now represented by counsel, moved for a new trial, reconsideration, or

remittitur. The court issued an order and written decision denying the motion.

The court concluded that plaintiffs demonstrated Sands violated the CFA by

"clear and convincing evidence" and plaintiffs "suffered an ascertainable loss."

The court reiterated its credibility findings and described Sands' description of

                                                                        A-0554-18T1
                                        9
his relationship with the other defendants as "not plausible." The court found

there was no miscarriage of justice because sufficient credible evidence

supported its decision. The court also denied Sands' alternative request for

remittitur, stating "[t]he decision in this matter does not shock the conscience of

the court, but is based on the evidence presented." This appeal followed.

      On appeal, Sands argues the trial court erred by:        (1) finding Sands

violated the CFA; (2) imposing individual liability against Sands; and (3)

imposing attorneys' fees against Sands. We agree.

                                        II.

      Our scope of review following a bench trial is limited. An appellate court

will "not disturb the factual findings and legal conclusions of the trial judge

unless [it is] convinced that they are so manifestly unsupported by or

inconsistent with the competent, relevant and reasonably credible evidence as to

offend the interests of justice[.]" Seidman v. Clifton Sav. Bank, 205 N.J. 150,

169 (2011) (second alteration in original) (quoting In re Trust Created By

Agreement Dated Dec. 20, 1961, 194 N.J. 276, 284 (2008)). "A trial court's

interpretation of the law and the legal consequences that flow from established

facts are not entitled to any special deference." Manalapan Realty, L.P. v. Twp.

                                                                          A-0554-18T1
                                       10
Comm. of Manalapan, 140 N.J. 366, 378 (1995) (citations omitted). We review

those legal assessments de novo. Ibid.

      The CFA affords "relief to consumers from 'fraudulent practices in the

market place.'" Lee v. Carter-Reed Co., 203 N.J. 496, 521 (2010) (quoting Furst

v. Einstein Moomjy, Inc., 182 N.J. 1, 11 (2004)). The CFA provides relief to

"[a]ny 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." N.J.S.A. 56:8-19. "Thus, to

state a claim under the CFA, a plaintiff must allege each of three elements: (1)

unlawful conduct by the defendants; (2) an ascertainable loss on the part of the

plaintiff; and (3) a causal relationship between the defendants' unlawful conduct

and the plaintiff's ascertainable loss." N.J. Citizen Action v. Schering-Plough

Corp., 367 N.J. Super. 8, 12-13 (App. Div. 2003). Prevailing plaintiffs are

entitled to treble damages for losses resulting from the violations, as well as the

"award [of] reasonable attorneys' fees, filing fees and reasonable costs of suit. "

N.J.S.A. 56:8-19.

      "An 'unlawful practice' contravening the CFA may arise from (1) an

affirmative act; (2) a knowing omission; or (3) a violation of an administrative

regulation."   Dugan v. TGI Fridays, Inc., 231 N.J. 24, 51 (2017) (citing

                                                                          A-0554-18T1
                                       11
Thiedemann v. Mercedes-Benz USA, LLC, 183 N.J. 234, 245 (2005); Cox v.

Sears Roebuck & Co., 138 N.J. 2, 17 (1994)). "The language of the CFA

specifically identifies a variety of affirmative acts, including 'deception, fraud,

false pretense, false promise, [and] misrepresentation,' and it also identifies as

actionable 'the knowing[] concealment, suppression or omission of any material

fact,' if intentional, N.J.S.A. 56:8-2." Allen v. V and A Bros., Inc., 208 N.J.
114, 131 (2011) (alterations in original).

      "[A]n affirmative misrepresentation is 'one which is material to the

transaction and which is a statement of fact, found to be false, made to induce

the buyer to make the purchase.'" Mango v. Pierce-Coombs, 370 N.J. Super.
239, 251 (App. Div. 2004) (quoting Ji v. Palmer, 333 N.J. Super. 451, 462 (App.

Div. 2000)). A statement is material if:

            (a) a reasonable person would attach importance to its
            existence in determining a choice of action . . . ; or (b)
            the maker of the representation knows or has reason to
            know that its recipient regards or is likely to regard the
            matter as important in determining his choice of action,
            although a reasonable man would not so regard it.

            [Palmer, 333 N.J. Super. at 462 (alteration in original)
            (quoting Restatement (Second) of Torts § 538(2) (Am.
            Law Inst. 1977)).]

      "A showing of intent is not essential if the claimed CFA violation is an

affirmative act or a regulatory violation, but such a showing is necessary if the

                                                                          A-0554-18T1
                                       12
claimed violation is an omission pursuant to N.J.S.A. 56:8-2." Dugan, 231 N.J.

at 51 (citations omitted).

                                       III.

      The evidence adduced at trial does not support the trial court's

determination that Sands violated the CFA by personally engaging in an

unconscionable business practice.       After scheduling an appointment with

Stanley's, plaintiffs met with Sands at their residence in September 2014.

Plaintiffs testified that Sands introduced himself as Stanley's vice president and

that, during the meeting, Sands observed the area where the work was to be

performed; "took notes"; discussed financing; explained another person would

have to come out to provide an estimate; and delivered a "sales pitch." Then,

through email, Pellegrino Muller and Sands discussed financing, the type of

work to be performed, and having Zappolo come out to provide an estimate.

      The evidence shows that plaintiffs and Sands had no further contact until

December 29, 2015, when Pellegrino Muller emailed Sands, expressing concern

about the slow, substandard work and sought contact information for Stanley's

owner. Sands informed Pellegrino Muller that he had "been out of the business

for over a year," "Stanley['s] is no longer in business," and she would be "dealing

                                                                          A-0554-18T1
                                       13
directly with [Zappolo] on this." Although Sands stated he would "try to help,"

he had no contact with plaintiffs thereafter.

      The trial court found that Sands conducted himself as an agent of Stanley's

and Fred Allen Builders and was listed as Stanley's vice president with the Better

Business Bureau. Being an agent or officer, however, without more, does not

establish an unlawful business practice under the CFA. Instead, to be liable,

plaintiffs were required to prove that Sands engaged in an affirmative act; a

knowing omission; or violated an administrative regulation. Dugan, 231 N.J. at

51. Plaintiffs did not satisfy this requirement.

      On these facts, plaintiffs did not prove that Sands engaged in an unlawful

practice as contemplated by the CFA. The record is devoid of any evidence that

Sands was present when any of the work was performed, involved in the design

of the work, or involved in obtaining any permits for the project. Nor is there

any evidence that Sands participated in a decision by the other defendants to

deviate from the plans or the Construction Code, to stop performing the work,

or to abandon the project. Further, Sands was not present when plaintiffs entered

into the agreement, his name does not appear on the agreement, he did not sign

the agreement, nor did he receive any payments. Indeed, the record shows

                                                                         A-0554-18T1
                                       14
plaintiffs and Sands had no contact for over a year until plaintiffs became

concerned with Zappolo's work.

      The court stated, "Sands sold the project to [plaintiffs] through their

conversation and through his fraudulent representations, he also expressly

implied that he had the ability to get this job done." In order "[t]o constitute

consumer fraud . . . the business practice in question must be 'misleading' and

stand outside the norm of reasonable business practice in that it will victimize

the average consumer." Turf Lawnmower Repair, Inc. v. Bergen Record Corp.,

139 N.J. 392, 416 (1995). The Court has recognized the "distinction between

misrepresentations of fact actionable under the CFA and mere puffing about a

product or a company that will not support relief." Schering-Plough Corp., 367
N.J. Super. at 13 (citing Rodio v. Smith, 123 N.J. 345, 352 (1991)). Applying

this standard, we conclude Sands' sales pitch to plaintiffs that Stanley's had been

in business for many years, stood by their work, and possessed a terrific

reputation, "are not actionable statements of fact within the meaning and

intendment of the CFA." Ibid. Instead, they amount to mere puffery and do not

provide a basis for liability under the CFA. Id. at 14.

      Moreover, Stanley's is a limited liability company. Absent certain limited

circumstances, an employee, member, or officer of a limited liability company

                                                                          A-0554-18T1
                                       15
is not personally responsible for the debts, obligations, liabilities , negligence, or

intentional torts of a limited liability company. See N.J.S.A. 42:2C-30. Other

than engaging in mere puffery, plaintiffs have not shown that Sands personally

made actionable fraudulent statements or engaged in other unlawful acts that

would render him personally liable under the CFA.

      As to Fred Allen Builders, the record does not indicate whether it was a

sole proprietorship, partnership, limited liability company, or corporation.

Nevertheless, there is no evidence that Sands was an owner, general or limited

partner, shareholder, or officer of that entity.

      We recognize that in Allen, the Court held the CFA permits the imposition

of individual liability upon one whose own affirmative acts or knowing

omissions are part of a violation by a corporation. 208 N.J. at 130-33 (citing

N.J.S.A. 56:8-2). The Court made clear, however, that "individuals were not

liable" under the CFA "merely because of the act of the corporate entity." Id. at

132. In order to impose individual liability, the employee or corporate officer

must have personally "engaged in conduct prohibited by the CFA." Ibid. As we

have stated, no such evidence was presented in this case.

      We hold that plaintiffs did not meet their burden of proving that Sands

violated the CFA.      Accordingly, plaintiffs are not entitled to an award of

                                                                             A-0554-18T1
                                         16
damages, much less treble damages from him. See Union Ink Co. v. AT&T

Corp., 352 N.J. Super. 617, 646 (App. Div. 2002) (plaintiffs must prove they

suffered an "ascertainable loss" as the result of an unlawful practice to recover

treble damages under the CFA (quoting N.J.S.A. 56:8-19)). Nor are they entitled

to an award of reasonable attorneys' fees and costs of suit against Sands under

N.J.S.A. 56:8-19. See Furst, 182 N.J. at 21 (prevailing plaintiff is entitled to

recover reasonable attorneys' fees, filing fees, and costs of suit under the CFA

(quotations omitted)); Heyert v. Taddese, 431 N.J. Super. 388, 443 (App. Div.

2013) (same). In view of our ruling, we do not reach the remaining issues raised

by Sands.

      We reverse the judgment for treble damages and attorneys' fees entered

against Sands. Our ruling does not affect the default judgment entered against

the other defendants. The trial court shall enter an amended judgment consistent

with this opinion.

      Reversed.

                                                                        A-0554-18T1
                                      17