Czar, Inc. v. Heath

966 A.2d 1008, 198 N.J. 195, 2009 N.J. LEXIS 68
CourtSupreme Court of New Jersey
DecidedMarch 18, 2009
DocketA-114 September Term 2007
StatusPublished
Cited by21 cases

This text of 966 A.2d 1008 (Czar, Inc. v. Heath) is published on Counsel Stack Legal Research, covering Supreme Court of New Jersey primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Czar, Inc. v. Heath, 966 A.2d 1008, 198 N.J. 195, 2009 N.J. LEXIS 68 (N.J. 2009).

Opinions

Justice HOENS

delivered the opinion of the Court.

This appeal presents us with a novel question about the scope and application of the Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -20. In short, we are required to decide whether a contractor hired by a homeowner to design and install a kitchen and to perform certain other interior work in a new home then being built for the homeowner by a different contractor, was engaged in new home construction or was instead performing home improvements. The homeowners argue that the kitchen and interior work constituted home improvements, thus subjecting the contractor to suit pursuant to the CFA because of the 2004 amendments to that statute, see N.J.S.A 56:8-136 to -152, regulating the work of home improvement contractors. The contractor contends that any work performed as part of building a new home is excluded from the definition of home improvements that is utilized by the CFA and that the homeowners’ claim is governed instead by the New Home Warranty and Builders’ Registration Act, N.J.S.A. 46:3B-1 to -20.

Because the several statutes relied upon by the parties, and the regulations promulgated pursuant to each of them, were designed to be understood and applied as an integrated scheme of protections for homeowners, and because adopting plaintiffs analytical approach might leave these homeowners without the remedy that the Legislature intended be available to them, we conclude that plaintiff, which neither acted as the general contractor nor qualified as a builder of new homes, was engaged in the business of home improvements and subject to the remedies of the CFA.

[198]*198I.

The facts that are germane to our analysis of this issue are relatively few. Defendants JoAnne and Thomas Heath, Sr., contracted with a general contractor to build a new home for them in Florham Park. After much of the home had been completed, they hired plaintiff Czar, Inc., to design the kitchen, which included relocating the plumbing and electrical fixtures, to build and install custom kitchen cabinets, and to perform other interior work, consisting of the installation of interior doors, a front door, window casings, and decorative moldings throughout the house.

Before plaintiff completed the work, a dispute arose and defendants refused to pay plaintiff the full contract price for services and work that plaintiff had performed. Plaintiffs complaint, filed in Essex County, demanded that defendants pay $80,296.96, representing the balance of the original contract price of $153,296.96, together with interest and costs. Plaintiffs complaint alleged that it had performed by building the custom kitchen cabinets and that defendants breached the contract by preventing plaintiff from delivering and installing the cabinets, and thus completing its work.

At approximately the same time, the Heaths filed their complaint in Morris County, claiming that Czar, Inc. had failed to perform its work according to the terms of the contract, that the work that it had performed was neither workmanlike nor completed on time, and that the kitchen cabinets in particular were not what had been promised. In their complaint, the Heaths asserted that they were entitled to relief based upon nine separate causes of action, including breach of contract, negligence, fraud, consumer fraud, negligent infliction of emotional distress, conversion, breach of the implied covenant of good faith and fair dealing, unjust enrichment, and unlawful possession of goods for which the Heaths had already paid.

The parties consented to having the complaint filed by the Heaths transferred to Essex County and consolidated with the complaint that Czar, Inc. had previously filed, after which it [199]*199proceeded as a counterclaim. When the parties appeared for trial, plaintiff moved in limine to dismiss defendants’ CFA count. Central to the arguments between the parties was their dispute about the true nature of plaintiff’s work. Defendants asserted that the work was properly categorized as home improvements, and thus governed directly by the CFA, while plaintiff argued that its work was simply part of the construction of a new home, and therefore specifically excluded from the CFA.

The trial court, after hearing testimony from witnesses that it deemed necessary to its decision on the motion, dismissed the CFA claim. In support of its order, the court found that the work to be performed by plaintiff under the contract was “essential to the construction of a new residence.” As a result, the court concluded that plaintiff’s services were properly classified as the “construction of a new residence” rather than the performance of home improvements. Relying on language in the home improvement regulations promulgated pursuant to the CFA that excluded new residential construction, see N.J.A.C. 13:45A-16.1A, the court concluded that defendants could not seek CFA remedies against plaintiff.

The Appellate Division, in a published opinion, reversed. Czar, Inc. v. Heath, 398 N.J.Super. 133, 939 A.2d 837 (App.Div.2008). In its view, the exemption for construction of a new residence found in the home improvement regulations, see N.J.AC. 13:45A-16.1A, did not apply to the work performed by plaintiff. Czar, Inc., supra, 398 N.J.Super. at 135, 939 A.2d 837. In part, the panel relied on the undisputed facts that “plaintiff was not the general contractor hired to construct a new residence, did not install or build any structural improvements in the home, but rather contracted directly with defendants for the installation of custom kitchen cabinets, a front door, interior doors, and certain moldings.” Id. at 138, 939 A.2d 837.

In addition, the panel based its decision on its analysis of the applicable statutes and regulations, concluding that they could only be understood if all of them were read “in pan materia [, an [200]*200analysis that] results in a harmonious and effective remedy for homeowners.” Id. at 139, 939 A.2d 837. The panel reasoned that because the statutory remedies applicable to new home builders would not be available to correct work done by a separately-retained contractor who merely performs his work in a new home, plaintiff’s theory would deprive defendants of protections to which they were entitled. Id. at 138-39, 939 A.2d 837.

As a part of its consideration of the issues, the court distinguished two earlier Appellate Division decisions, see Messeka Sheet Metal Co. v. Hodder, 368 N.J.Super. 116, 124-25, 845 A.2d 646 (App.Div.2004) (concluding that subcontractor could not be subject to homeowner’s claim pursuant to home improvement regulations); Splash of Tile, Inc. v. Moss, 357 N.J.Super. 143, 154, 814 A.2d 648 (App.Div.) (suggesting broad interpretation of new home construction exclusion), certif. denied, 176 N.J. 430, 824 A.2d 159 (2003), concluding that neither directly addressed the essential questions presented in this dispute.

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Czar, Inc. v. Heath
966 A.2d 1008 (Supreme Court of New Jersey, 2009)

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Bluebook (online)
966 A.2d 1008, 198 N.J. 195, 2009 N.J. LEXIS 68, Counsel Stack Legal Research, https://law.counselstack.com/opinion/czar-inc-v-heath-nj-2009.