Principals of a company can be individually liable for a consumer fraud violation upon proof of personal participation in the particular regulatory violations at issue.

This case dealt with personal liability of a home improvement contractor under the Consumer Fraud Act (“CFA”). In this case, the trial court dismissed the individual defendants and only imposed liability upon the corporate entity for the CFA violations. The damages (totaling $130,000) were trebled pursuant to the CFA and, when combined with the breach of contract damages of $100,000, resulted in a total verdict against the corporate entity of $490,000. On appeal, the Appellate Division reversed the trial court’s decision to dismiss the individual owners from the case and remanded the matter back to the trial court. The court indicated that with regard to the CFA claims, the principals could be held to be individually liable upon proof of personal participation in the particular regulatory violations at issue. If such personal participation is found on remand, the owners of the company will also be liable (in addition to the company) for payment of the portion of the verdict attributable to the CFA violation. A petition for certification was granted by the Supreme Court on or about October 19, 2010.

Case Law Alert - 1st Qtr 2011