News & Noteworthy

Authored - NJ Contract Law Update - The Intersection of Arbitration Law and the Consumer Fraud Act
MARCH 01, 2013

In Harrison v. Jones, ___ N.J.Super. ___, 2013 WL 451991 (N.J.App.Div. Feb. 7, 2013), the Court issued an Opinion that addressed the intersection of arbitration law and the New Jersey Consumer Fraud Act ("CFA"). While the essence of the Opinion involved deference to arbitration decisions, the broad outlines of certain defensive positions that might apply to the CFA were also discussed.

As mentioned previously in Articles in this series, New Jersey courts give great deference to private arbitration awards; just so in Harrison. Harrison also involved the unusual feature of the plaintiff contractor and defendant physician having a unique series of business relationships going beyond the norm; which influenced the arbitrator (and the Court, deferring to the arbitrator, doubly so) to find that most of the contractual dealings were outside the CFA.1

The Opinion recites the following salient facts and conclusions:

  1. Jones and Harrison had a unique personal relationship that transcended their personal dealings, and neither Dr. Jones nor Harrison wanted all of their agreements regarding the construction work to be in writing.
  2. For this reason and others, despite technical violations of the CFA regarding forms of agreements, etc., those technical violations caused no harm.
  3. "Ascertainable harm", as defined in the CFA, is needed to obtain a CFA damages award. None such was found by the arbitrator. On appeal, the Court recited deference principles in an arbitration setting.
  4. Although, the arbitrator, in this author's view, may have erred in not awarding some amount of attorneys fees to Jones for having proved the technical violations (based on cases not cited in the Appellate Division's Opinion), the Court deemed such alleged error beyond the scope of review, under Tretina Printing v. Fitzpatrick and Associates, 135 N.J. 349, 358 (1994).
  5. There was a substantial refund, in effect, due from the contractor (Harrison) to Jones; but those were ordinary contract issues unrelated to the technical CFA violations.

All in all, the theme of deference to private arbitration agreements controlled. As to the CFA, from the Court's discussion of the unique private relationship, we see the outlines of a potential substantive CFA defense. However, because of the procedural posture involving deference to arbitration, one can attribute no more than that to it--just as one cannot attribute much substantively to the ultimate failure to award any attorneys fees (even those related to the technical CFA violations).

The case had started in Court, and then the parties agreed to arbitration. The principal moral of the story is that in order to vindicate your legal rights through an appellate process, you must start and remain in court; because otherwise, rulings in a private arbitration are likely to be upheld under almost any circumstances short of actual bias.

Contact & Legal Disclaimer

Clark Alpert is the author of Guide to New Jersey Contract Law, published by the New Jersey Institute for Continuing Legal Education, originally published in 2007 and updated in November 2011. His updates on New Jersey contract law are based in recent issues and practical methods for addressing similar situations in your practice or business. They are not intended to serve as legal advice. Clark welcomes your questions and comments.

1 The reader may recall (from earlier articles in this series) that the CFA may be the "scariest" contract-substitute claim; since it involves treble damages, attorneys fees, and remedy shortcuts such as the lack of need for intent as to affirmative misrepresentations.

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