Shaw v. Shand, 460 N.J. Super. 592 (App. Div. 2019)

Because there was no direct and unavoidable conflict between the Consumer Fraud Act and the regulations governing home inspectors, the CFA applied to home inspectors.

The Appellate Division determined that home inspectors were not historically recognized as “learned professionals” and concluded, because there was no direct and unavoidable conflict between the Consumer Fraud Act (CFA) and the regulations governing home inspectors, the CFA applied to home inspectors.

Prior to Shaw, the complete opposite was the case; the “learned professional exception” rendered the CFA inapplicable to such professional “so long as they [were] acting in their professional capacities. Manahawkin Convalescent v. O’Neil, 426 N.J. Super. 143, 154 (App. Div. 2012). “The initial rationale for the exception is premised on the nature of the professional’s acting as ‘something beyond the ordinary commercial seller of goods or services.’” The exception had been extended to recognize that “uniform regulation of an occupation, where such regulation exists, could conflict with regulation under the CFA,” rendering the latter inapplicable, extending protection to so-called “semi-professionals,” or those whose work was something beyond the ordinary commercial seller of goods or services.

The court’s determination in Shaw, that the learned professional exception does not apply to such “semi-professionals” simply because they are otherwise regulated, and that they remain subject to CFA liability absent a finding that a “direct and unavoidable conflict exists between application of the CFA and application of the other regulatory scheme,” could have a broader effect on other licensed professionals, such as architects and engineers. 450 N.J. Super. at 620. Moreover, the far-reaching scope of the CFA, the availability of treble damages and attorney fees, and the unlikelihood that insurance providers are likely to cover any fraud-based claims will have a profound impact on professional liability litigation, the most predictable being that plaintiff’s attorney will increasingly include CFA claims in their pleadings. This issue will require far more attention from defense attorneys and more coordination with insurance providers, going forward.

 

Case Law Alerts, 2nd Quarter, April 2020 is prepared by Marshall Dennehey Warner Coleman & Goggin to provide information on recent developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. Copyright © 2020 Marshall Dennehey Warner Coleman & Goggin, all rights reserved. This article may not be reprinted without the express written permission of our firm.