Consumer Fraud Case Against Home Improvement Contractor

by Jay Chatarpaul on Jan. 08, 2015

Consumer Rights Consumer Protection Business  Contract Accident & Injury  Property Damage 

Summary: Consumer Fraud Misrepresentation Contractor

Consumer Fraud Case Against Home Improvement Contractor

We filed suit under the NJ Consumer Fraud Act against a Bergen County Home Improvement contractor (HIC) on behalf of a husband/wife homeowner.  Homeowners agreed to have the HIC purchase the cabinets from a large cabinet manufacturer and install them. The cabinets and installation costs about $17,000. After the cabinets were installed, the homeowners refused to pay the balance of the contract (about $11,000) alleging that the cabinets were defective. The HIC then sued the homeowners in the Special Civil Part of the Superior Court. The homeowners retained a larger law firm and an attorney who charged them $3000 as an initial fee at an hourly rate of $420 per hour for a case in which the balance of the purchase price was only $11,000. That attorney filed an answer with a counterclaim alleging violation of the New Jersey Consumer Fraud Act (CFA). The firm was working on a settlement whereby the homeowners would put up the balance of the money owed ($11,000) into an escrow, and the HIC would them replace some cabinet doors.  That was not acceptable to the homeowners. The homeowners then retained our office as substituted counsel.

We reviewed the case and accepted it with no money from the client,as she indicated she could not afford to pay any further attorneys fees.  We entered into a retainer agreement whereby the client's legal fees  would be paid if the case is settled and funds are received from the other side. Most attorneys do not take these types of cases without a retainer deposit. But we were confident in the case and the high likelihood that our legal fees would be paid from funds received.

After reviewing the case, we concluded that the CFA was violated by the contractor. In addition, we concluded that the manufacturer of the cabinets may have also violated the CFA with respect to supplying defective cabinets. Consequently, we filed a motion to transfer the case from the Special Civil Part to the Law Division, which has no monetary limit for recovery. The motion was granted over the opposition of the HIC. We then filed a motion to file a more expansive answer and counterclaim than the one filed by the prior law firm. We also filed a motion to add the cabinet maker as a defendant. The motions were granted. Subsequently, after a brief period of discovery, we filed a well researched brief for summary judgment – asking the court to declare that the defendants violated the CFA. After the brief was filed, the cabinet manufacturer and the HIC entered into negotiation with our office.  A settlement agreement was finally reached. In that settlement, the homeowners did not have to pay the balance of the $11,000, did not have to return the cabinets, and in addition, the homeowners received an additional $5000 on top of all that. Moreover, the cabinet makers and the HIC paid us a portion of our attorneys' fees. While we lost thousands of dollars in attorneys' fees litigating the case, we were thrilled to have the case concluded the way it did- the client did not have to pay the $11,000 balance, paid us no money up front, got to keep the cabinets, and in addition got an extra $5000 on top of all that. The prior  law firm had an agreement to charge them $420 per hour win or lose.

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