NJ Supreme Court Narrowly Defines “Aggrieved Consumer.” End Of The Road For One Type Of “No Injury” Class Action?

by: Peter J. Gallagher (@pjsgallagher) (LinkedIn)

I have written a number of times about New Jersey's Truth in Consumer Contract, Warranty and Notice Act (TCCWNA). (Here, here, and here for example.) This statute, which was largely ignored after it was enacted in 1981, became increasingly popular in recent years as part of so-called no injury class actions. (So-called mostly by defense counsel, not plaintiff's counsel.) Its popularity may now have come to an end, however, because the New Jersey Supreme Court recently issued its opinion in the highly-anticipated case, Spade v. Select Comfort Corp., which answered two questions certified to it by the U.S. Circuit Court of Appeals for the Third Circuit, one of which appears to hamper, at the very least, the ability of plaintiffs to sue for alleged violations of the act.

By way of brief background, the TCCWNA was enacted to prevent deceptive practices in consumer contracts by prohibiting the use of illegal terms or warranties. It provides:

No seller . . . shall in the course of his business offer to any consumer or prospective consumer or enter into any written consumer contract . . . or display any written . . . notice or sign . . . which includes any provision that violates any clearly established legal right of a consumer or responsibility of a seller . . . as established by State or Federal law at the time the offer is made . . . or the . . . notice or sign is given or displayed.

To state a claim under the TCCWNA, a plaintiff must prove four elements: (1) that it is a consumer; (2) that defendant is a seller; (3) that the seller offered a consumer contract containing a provision that violated a legal right of the consumer or a responsibility of the seller; and (4) that it was an "aggrieved consumer." Any party found to have violated the TCCWNA is liable for a civil penalty of not less than $100, actual damages, or both, and reasonable attorneys' fees and court costs.

The questions certified to the Supreme Court in Spade arose out of two cases that had been consolidated by the district court. Each involved plaintiffs who ordered furniture pursuant to contracts that violated certain regulations promulgated by New Jersey's Division of Consumer Affairs. The regulations require, among other things, that furniture sellers deliver furniture to customers by or before the promised delivery date or provide written notice that they will not be able to do so. Sellers must also provide notice to the purchaser that if the delivery is late, the consumer has the option of canceling the order and receiving a full refund, or agreeing to accept delivery at a specified later date. The regulations also prohibit sellers from including certain language in their contracts, such as "all sales final," "no cancellations," and "no refunds." In Spade, plaintiffs alleged that the contracts they entered into with defendants did not contain language required by these regulations, contained language prohibited by these regulations, or both. Notably, however, plaintiffs received their furniture deliveries on time.

Continue reading “NJ Supreme Court Narrowly Defines “Aggrieved Consumer.” End Of The Road For One Type Of “No Injury” Class Action?” →

NJ Supreme Court: If Borrower Abides By Terms Of Settlement Agreement, Lender Must Modify Mortgage

by: Peter J. Gallagher (@pjsgallagher) (LinkedIn)

Lawsuits arising out of foreclosures and mortgage modifications are common. (Even more common than lawsuits about gyms or health clubs if you can believe that.) Nearly every day there is a decision from the Appellate Division arising out of a residential foreclosure. Most of these fall into the same category — borrower defaults and loses home through foreclosure then challenges lender's standing to foreclose after the fact — but some are more interesting. That was the case with GMAC Mortgage, LLC v. Willoughby, a decision released yesterday by the New Jersey Supreme Court involving a mortgage modification agreement entered into to settle a foreclosure lawsuit.

Almost two years ago, I wrote a post about Arias v. Elite Mortgage, a lawsuit over the alleged breach of a mortgage modification agreements. In that case, borrowers entered into a mortgage modification agreement with their lenders that included a Trial Period Plan ("TPP"). As the name suggests, a TPP requires borrowers to make reduced monthly payments in a timely manner for a trial period, after which, if they make the payments, the lender agrees to modify their mortgage. In Arias, the Appellate Division held, as a matter of first impression, that if a borrower makes the trial payments under the TPP, the lender must modify the mortgage, and if it doesn't, the borrower can sue for breach. However, the holding was purely academic because the borrower in that case failed to make one of the trial payments in a timely manner so it could not sue.

In GMAC Mortgage, the New Jersey Supreme Court faced a similar situation with a much less academic result.

Continue reading “NJ Supreme Court: If Borrower Abides By Terms Of Settlement Agreement, Lender Must Modify Mortgage” →

Not An Open-Ended Issue: Judge’s Failure To Ask Open-Ended Questions During Voir Dire Is Reversible Error.

by: Peter J. Gallagher (@pjsgallagher) (LinkedIn)

In 2006 and 2007, the Administrative Office of the Courts issued directives addressing jury voir dires. The directives require, among other things, that trial judges ask jurors at least three open-ended questions that are designed to elicit a narrative response to which "appropriate follow up questions [can] be asked." These questions must be "posed verbally to each juror to elicit a verbal response." The purpose of this requirement is to "ensure that jurors verbalize their answers so the court, attorneys and litigants can better assess the jurors' attitudes and ascertain any bias or prejudice, not evident from a yes or no response, that might interfere with the ability of that juror to be impartial." The importance of the Administrative Office's directives was highlighted in two recent decision from the Appellate Division, both of which overturned verdicts rendered by jurors who were not asked at least three open-ended questions during voir dire.

In Heredia v. Piccininni, plaintiff sued after being injured in an automobile accident. Before trial, defendant stipulated liability, thus the only issue for the jury was damages. In advance of jury selection, Plaintiff submitted the following open-ended questions to be asked during voir dire:

What are your feelings regarding the proposition that accidents resulting in serious damage to a vehicle may result in no bodily injuries and accidents resulting in little damage to a vehicle may result in serious bodily injuries?

Describe by way of an example an experience in your life that illustrates your ability to be fair and open-minded in this case.

Who are the two people that you least admire and why?

What would you do about the homeless situation?

What would you do about those without medical insurance?

The court did not include any of plaintiff's proposed questions in the list of questions used during voir dire. Instead, the trial judge asked each juror "multiple biographical questions required by the [Administrative Office]," including how they received their news, what their favorite television shows were, what bumper stickers they had on their cars, and how they spent their time. None of these were open-ended questions. Plaintiff's counsel used two of her six peremptory challenges during jury selection and, at the end of the process, advised the court that the jury was satisfactory.

After trial, the jury returned a verdict of no cause on plaintiff's non-economic losses (e.g., pain and suffering damages) but awarded plaintiff her economic damages, representing the full value of her outstanding medical bills. Plaintiff appealed, arguing, among other things, that the trial judge failed to ask any open-ended questions during voir dire.

Continue reading “Not An Open-Ended Issue: Judge’s Failure To Ask Open-Ended Questions During Voir Dire Is Reversible Error.” →

Reminder to Judges: No talking to jurors during deliberations

by: Peter J. Gallagher (@pjsgallagher) (LinkedIn)

All lawyers know, or should know, that you are not allowed to have ex parte communications with a judge. A similar prohibition applies to judges, who are prohibited from having ex parte communications with jurors after the jury is empaneled. The unforgiving nature of this prohibition was at the forefront of Weber v. Patel, a recent unpublished Appellate Division decision.

Weber was a personal injury case. After hearing the evidence, the jury deliberated for approximately 90 minutes before purporting to return a 4-2 defense verdict. The judge responded: "Not a valid verdict. Five to one or six to zero. You've got to go back." The jury deliberated for a few more hours that day but went home without reaching a verdict. They returned the next morning at which point the judge had an ex parte conversation with them. According to the judge, one of the jurors asked the judge what would happen if they remained deadlocked. The judge responded that he would "worry about that in three days."

The judge told counsel about this conversation after it happened, but then confided that he would not really let the jury deliberate for three more days. Instead, he indicated that if the jury did not reach a verdict by the end of that day, he would likely find the jury "hung" and declare a mistrial. A little more than one hour after the judge spoke with the jurors, however, they returned a unanimous defense verdict.

Continue reading “Reminder to Judges: No talking to jurors during deliberations” →

Borrower Can Sue Lender To Compel Loan Modification (But Only If It Does What It Promised To Do First)

by: Peter J. Gallagher (@pjsgallagher)

A recent published decision from the Appellate Division — Arias v. Elite Mortgage — resolved a question of first impression in New Jersey that is important as the State continues to dig its way out of the credit crisis. The issue in Arias involved mortgage modifications under the federal Home Affordable Mortgage Program, and specifically modifications that involve Trial Period Plan (“TPP”) agreements. As the name suggests, TPP agreements require borrowers who cannot make their regular monthly payments to make agreed upon reduced monthly payments in a timely manner for a trial period. Essentially, it allows borrowers to demonstrate to lenders that if their monthly payments are reduced then they can make their monthly mortgage payments. Accordingly, if they are able to make these payments during the trial period, then the lender agrees to modify their mortgage.

In Arias, Plaintiffs defaulted on their mortgage and then pursued a loan modification with their lender, which included a TPP agreement. However, the lender eventually refused to modify plaintiffs’ mortgage. Plaintiffs argued that this amounted to a breach of the promises the lender made in the TPP agreement, or alternatively, violated the implied covenant of good faith and fair dealing contained in the TPP agreement. The trial court rejected their claims and the Appellate Division affirmed.

Continue reading “Borrower Can Sue Lender To Compel Loan Modification (But Only If It Does What It Promised To Do First)” →