New Jersey Appellate Court Overturns Consumer Fraud Jury Verdict

A three-judge New Jersey state appellate panel reversed a trial court judgment in favor of two plaintiffs’ New Jersey Consumer Fraud Act (CFA) claim against a large national bank, finding that there was no “causal connection” between the purported “misrepresentations and omissions” made by the bank’s predecessor and the homeowners’ decision to purchase their residence.

As background, the plaintiffs filed suit against a large national bank, claiming that its predecessor had purportedly made various misrepresentations and omissions to a township planning board in order to secure approval to build a new section of a residential development community.  The plaintiffs purchased a home in an already-developed section of the community and experienced flooding caused by the construction of the new section.  The predecessor bank had allegedly “concealed engineering plans” which indicated that several lots on the already-developed section, including the plaintiffs’ lot, would need to be regraded to prevent flooding from the new development.

To succeed on their CFA claim, the plaintiffs were required to prove three elements: “(1) unlawful conduct by defendant; (2) an ascertainable loss by plaintiff; and (3) a causal relationship between the unlawful conduct and the ascertainable loss.”  The plaintiffs argued that if the predecessor bank had disclosed its engineering plans, the township would not have approved the new construction, the developer would not have purchased and built on the land, and the plaintiffs’ home would not have flooded.  The plaintiffs won at trial, but they appealed because they were not satisfied with the court’s determination of the measure of damages on their CFA and common law trespass claims, among other reasons.  The bank cross-appealed.

The appellate panel vacated the judgment in favor of plaintiffs on their CFA claim.  The court noted that when homeowner plaintiffs do not receive or rely on any misrepresentation made by defendants, there is no nexus between plaintiffs’ purchase of the house and the defendants’ conduct or lack thereof.  Here, because the bank did not contact the plaintiffs or make any misrepresentations or omissions to them, there was no “causal relationship between the unlawful conduct and the ascertainable loss.”  Further, the court found that the plaintiffs’ suggested connection to the large bank was too attenuated: there was no evidence purporting to prove that the land would have been purchased and built on by someone else if the developer had declined to purchase the property. Thus, the plaintiffs’ CFA claim could not succeed.

The court overturned the jury verdict on the CFA claim and remanded the plaintiffs’ common law trespass claim for further proceedings.

The case is Martin v. Bank of America, Superior Court of New Jersey, Appellate Division, Docket No. A-2128-15T4.