Award for consumer fraud damages and associated attorney fees vacated when no “causal link” found between the violation of the consumer fraud act and the damages suffered by the homeowners.

This case dealt with a dispute when a homeowner stopped making payments to the contractor who was constructing a first-floor extension and second-floor addition. The contractor filed suit, and the homeowner counter-claimed for costs to repair the contractor’s work and for violations of the Consumer Fraud Act ("CFA"). The court awarded damages to repair the contractor’s deficient work and $15,000 in damages as the homeowners’ ascertainable loss for the contractor’s violations of the CFA. The $15,000 was trebled to $45,000 and counsel fees of $65,664. On appeal, although the contractor admitted to certain regulatory violations of the CFA, the Appellate Division found that there was no proof that those particular violations resulted in an ascertainable loss, noting that there must be a “causal link” between the violation of the CFA and the damages suffered by the homeowners. The Appellate Division vacated the $45,000 awarded for CFA damages, and the $65,664.63 attorney fee award was remanded for re-evaluation by the trial judge. Although the Appellate Division stated that an ascertainable loss was not necessary in order for attorney fees to be awarded where there was a CFA violation, the level of success is a factor to be considered when making such an award and that, since part of the verdict was being reversed, the level of success achieved by the homeowners had changed and, therefore, the amount of attorney fees to be awarded may change as well.

Case Law Alert - 1st Qtr 2011