Hundred East Credit Corp. v. Eric Schuster Corp.

515 A.2d 246, 212 N.J. Super. 350
CourtNew Jersey Superior Court Appellate Division
DecidedSeptember 11, 1986
StatusPublished
Cited by101 cases

This text of 515 A.2d 246 (Hundred East Credit Corp. v. Eric Schuster Corp.) is published on Counsel Stack Legal Research, covering New Jersey Superior Court Appellate Division primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hundred East Credit Corp. v. Eric Schuster Corp., 515 A.2d 246, 212 N.J. Super. 350 (N.J. Ct. App. 1986).

Opinion

212 N.J. Super. 350 (1986)
515 A.2d 246

HUNDRED EAST CREDIT CORPORATION, PLAINTIFF,
v.
ERIC SCHUSTER CORPORATION, DEFENDANT-THIRD PARTY PLAINTIFF-RESPONDENT,
v.
NORTH AMERICAN PHILIPS CORP. AND PHILIPS BUSINESS SYSTEMS, INC., THIRD PARTY-DEFENDANTS-FOURTH PARTY-PLAINTIFFS-APPELLANTS,
v.
DATA SYSTEMS OF NEW JERSEY, INC., AND JOHN FITZSIMONS, FOURTH PARTY-DEFENDANTS.

Superior Court of New Jersey, Appellate Division.

Argued February 4, 1986.
Decided September 11, 1986.

*352 Before Judges GAULKIN, DEIGHAN and STERN.

Nicholas L. Ribis argued the cause for appellants (Ribis, McCluskey, Graham & DeCotiis, attorneys; Nicholas L. Ribis and Richard E. Dorl, a member of the New York Bar, of counsel; George C. Jones and Brian D. Spector, on the brief).

*353 Howard Stern argued the cause for respondent (Stern, Steiger, Croland & Conway, attorneys; John J. Stern and Edward P. D'Alessio, on the brief).

The opinion of the court was delivered by GAULKIN, J.A.D.

North American Philips Corp. and Philips Business Systems, Inc. (hereinafter jointly referred to as "Philips") appeal from a judgment in favor of Eric Schuster Corporation (Schuster) awarding treble damages and attorneys' fees and costs pursuant to N.J.S.A. 56:8-1 et seq., commonly known as the Consumer Fraud Act (Act).

Schuster's claims, pleaded both under the Act and in common law fraud, arose out of its 1976 purchases from Philips of a P-142 disc unit and a P-143 disc drive (peripherals) to expand the capacity of a P-359 computer which Schuster had bought from Philips in 1974. After a bench trial, the trial judge found[1] that at the time of the 1976 sales Philips knew that production of the P-350 line of computers, including the P-359, "would end some time in 1976" but nevertheless "continued to market and sell the computers ... in an organized, systematic plan to liquidate the inventory of P-350 line computers so as to avoid sustaining a loss of profits on these items." The judge further found that at the time Philips sold the peripherals neither Schuster nor the "consuming public" had been informed of the imminent discontinuance of the P-350 line. Discontinuing manufacture of the P-350 series in 1976 meant that Schuster *354 was "unable to accomplish the objectives which motivated its purchases in the first instance." The judge concluded that Philips' conduct was fraudulent and also constituted "unconscionable commercial practices" within the meaning of N.J.S.A. 56:8-2. He found compensatory damages of $199,506.50 and, pursuant to N.J.S.A. 56:8-19, awarded treble damages of $598,519.50 and attorneys' fees and costs of $154,760.65.

I.

Philips first argues that the Act "was not meant to apply to the sale of merchandise for use in business operations" but rather "was intended for the protection of the consumer in the context of the personal, family or household use of goods and services." We find the contention unpersuasive.

N.J.S.A. 56:8-2 declares to be an unlawful practice

[t]he act, use or employment by any person of any unconscionable commercial practice, deception, fraud, false pretense, false promise, misrepresentation, or the knowing concealment, suppression, or omission of any material fact with intent that others rely upon such concealment, suppression or omission, in connection with the sale or advertisement of any merchandise or real estate, or with the subsequent performance of such person as aforesaid, whether or not any person has in fact been misled, deceived or damaged thereby.

An "unlawful practice" thus can be committed by "any person" with respect to the sale or advertisement of "any merchandise." "Person" is defined in N.J.S.A. 56:8-1(d) as including

any natural person or his legal representative, partnership, corporation, company, trust, business entity or association, and any agent, employee, salesman, partner, officer, director, member, stockholder, associate, trustee or cestuis que trustent thereof.

"Merchandise" is defined in N.J.S.A. 56:8-1(c) as including

any objects, wares, goods, commodities, services or anything offered, directly or indirectly to the public for sale.

Any "person" who suffers "any ascertainable loss of moneys or property" as a result of any "practice declared unlawful" may bring an action; if successful, the plaintiff "shall" recover treble damages, attorneys' fees and costs of suit. N.J.S.A. *355 56:8-19; Skeer v. EMK Motors, Inc., 187 N.J. Super. 465 (App. Div. 1982).

Nothing in that statutory language suggests that the Act is inapplicable to the sale of merchandise for use in business operations. To the contrary, the language on its face makes the Act applicable to all sales of "merchandise" without regard to its intended use or the nature of the buyer. And a corporation or other business entity is a "person" entitled to sue under the Act. Philips nevertheless urges that the Act is intended to protect "consumers," which, it argues, does not include business entities.

The Act unquestionably was designed to protect consumers. Kugler v. Romain, 58 N.J. 522, 535-39 (1971); New Mea Const. Corp. v. Harper, 203 N.J. Super. 486, 500-502 (App.Div. 1985); Skeer v. EMK Motors, Inc., supra, 187 N.J. Super. at 469-73; Neveroski v. Blair, 141 N.J. Super. 365, 378 (App.Div. 1976). Although "the strongest case for relief" is presented by "the poor, the naive and the uneducated" (Kugler, supra, 58 N.J. at 538), others can qualify as "consumers" as well. The term "consumer" is only occasionally used, and is not defined, in the Act; its generally recognized meaning is "one who uses (economic) goods, and so diminishes or destroys their utilities." Webster's New International Dictionary, 2d edition. That definition has been frequently used by courts in statutory interpretation. See, e.g., J.W. Meadors & Co. v. State, 89 Ga. App. 583, 80 S.E.2d 86, 88 (1954); St. Paul & Tacoma Lumber Co. v. State, 40 Wash.2d 347, 243 P.2d 474, 478 (1952); Union Portland Cement Co. v. State Tax Commission, 110 Utah 135, 170 P.2d 164, 171 (1946); Ex parte Mehlman, 127 Tex.Cr.R. 257, 75 S.W.2d 689, 690 (Ct.Crim.App., 1934).

Surely a business entity can be, and frequently is, a consumer in the ordinary meaning of that term. See, e.g., Bailey Employment System, Inc. v. Hahn, 545 F. Supp. 62 (D.C. Conn.,1982), aff'd 723 F.2d 895 (2d Cir., 1983); Big H. Auto Auction, Inc. v. Saenz Motors, 665 S.W.2d 756 (Tex., 1984); *356 Musil v. Hendrich, 6 Kan. App.2d 196, 627 P.2d 367 (Ct.App., 1981). Since a business entity is also a "person" entitled to recover under the Act, there is no sound reason to deny it the protection of the Act. D'Ercole Sales, Inc. v. Fruehauf Corp., 206 N.J. Super. 11, 23 (App.Div. 1985); cf. Bailey Employment System, Inc. v. Hahn, supra, 545 F. Supp. 62. There is similarly no justification to limit the Act, as urged by Philips, to sales and advertising of merchandise for "personal, family or household use." Such a reading would fly in the face of the statutory definitions of "merchandise" and "person" entitled to sue. Cf.

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515 A.2d 246, 212 N.J. Super. 350, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hundred-east-credit-corp-v-eric-schuster-corp-njsuperctappdiv-1986.