BRYAN J. VOGEL VS. RIDGE CAPITAL DEVELOPMENT, LLC (L-4940-16, HUDSON COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the
internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.

SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-2402-19

BRYAN J. VOGEL and
BRITTANY L. VOGEL,

Plaintiffs-Appellants/
Cross-Respondents,

v.

RIDGE CAPITAL
DEVELOPMENT,
LLC (NJ LICENSE NO.
13VHO7741500) d/b/a RIDGE
RESTORATION, LLC and
STEVEN D'ADDONE,

Defendants-Respondents/
Cross-Appellants.
_________________________

Argued May 10, 2021 – Decided August 4, 2021

Before Judges Sabatino, Currier and Gooden Brown.

On appeal from the Superior Court of New Jersey, Law
Division, Hudson County, Docket No. L-4940-16.

David Leichtman (Leichtman Law PLLC) of the New
York bar, admitted pro hac vice, argued the cause for
 appellants/cross-respondents (Robins Kaplan LLP, and
David Leichtman, attorneys; David Leichtman, of
counsel; Bryan J. Vogel, on the briefs).

Gary T. Steele argued the cause for respondents/cross-
appellants.

PER CURIAM

This appeal and cross-appeal arise out of a bench trial concerning a home

renovation project in Hoboken. For the reasons that follow, the final judgment

is affirmed in part, vacated in part, and the matter is remanded for further

proceedings.

The parties are familiar with the many events and details of this litigation,

and we need not elaborate upon them here. The following brief overview will

suffice. The plaintiff homeowners are Bryan J. Vogel, and his wife Brittany L.

Vogel. Defendants are a contractor, Ridge Capital Development, LLC

("Ridge"), and its principal Steven D'Addone.

The property is a three-story townhouse. Plaintiffs live on the top floor

with their children and rent out the first and second floors to two tenants. The

project in this case involved renovating all three existing floors, plus adding a

fourth floor and a garage.

On March 31, 2014, the parties entered into a contract for the work, at a

negotiated price of $833,929. The contract specified that the "[t]ime limits

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stated in the Contract Documents are of the essence," and called for substantial

completion of the work within 212 days, i.e., by the end of October 2014.

Plaintiffs were concerned about time because they were losing rental income

from the two tenants while construction was taking place, and also incurring rent

costs for their temporary quarters.

The project start was delayed in obtaining permits and also because the

first-floor tenant delayed in moving out. During the course of the work, there

were numerous problems that resulted in many change orders, not all of which

plaintiffs approved. Among many other things, the builder changed the

electrical service from 200 to 300 volts, used substituted products, and made a

variety of other alterations. A pipe burst in February 2015 after a cold spell,

allegedly because the builder had a temporary plywood door that did not keep

out the cold.

For reasons we need not detail here, the project was not finished on time,

and plaintiffs did not move in until early June 2015. They hired a replacement

contractor to finish the work. Plaintiffs paid the builder over $778,000 and

refused to pay about $140,000 in additional sums claimed by the builder for

change orders.

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 Plaintiffs sued defendants in the Law Division for violations of the

Consumer Fraud Act ("CFA"), N.J.S.A. 56:8-1 to -20, breach of contract, and

unjust enrichment. Defendants brought a counterclaim seeking damages and

enforcement of a $53,306 construction lien authorized through arbitration

pursuant to the Construction Lien Law ("CLL"), N.J.S.A. 2A:44A-1 to -38.

Extensive discovery was conducted. The judge sanctioned the defense $27,750

in counsel fees for discovery violations and failing to pre-mark exhibits.

On August 16, 2019, the judge issued a written opinion rejecting all of

plaintiffs' claims. The judge granted defendants a judgment for $53,306 on the

construction lien counterclaim and denied any additional monies. The essence

of her ruling was that the delays and product substitutions were covered by the

various change orders, and that defendants "did not act with a deceitful or

fraudulent purpose" supportive of the CFA claims.

Plaintiffs moved for reconsideration, principally arguing the judge used

the wrong legal standard by requiring them to prove intent to defraud under the

CFA for regulatory violations under N.J.A.C. 13:45A-16.2(a).

On January 22, 2020, the judge issued a second written decision, denying

reconsideration. The judge acknowledged that the wording of her first opinion

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could have been better with respect to concepts of intent, but that nevertheless

defendants were not liable under the CFA or for breach of contract.

In their appeal, plaintiffs primarily challenge the court's misuse of an

intent standard under the CFA, and also the court's adoption of the lien award

without analyzing the merits of that award. They further argue D'Addone should

be personally liable to them. Defendants cross-appeal the discovery sanctions,

and also argue the judge miscalculated the damages on their counterclaim by

applying improper credits in favor of plaintiffs.

Having fully considered the parties' arguments, we vacate the final

judgment and remand for further proceedings. The law is clear that regulatory

violations under the CFA do not require proof of an intent to defraud . Cox v.

Sears Roebuck & Co., 138 N.J. 2, 18-19 (1994) ("In those instances [involving

violations of specific regulations], intent is not an element of an unlawful

practice, and the regulations impose strict liability . . . ."); see also Allen v. V &

A Bros., Inc., 208 N.J. 114, 133 (2011) (citing Cox and stating that "for CFA

purposes, regulatory violations are analyzed in terms of strict liability "). The

court's first opinion mistakenly used the wrong standard and its opinion denying

reconsideration does not cure the problem. Several of the trial court's findings

and conclusions did, in fact, refer to intent concepts.

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 On remand, the court must conduct a regulation-by-regulation analysis of

each claimed violation. Plaintiffs will have to show their trial proofs established

they suffered an "ascertainable loss" for each such violation to recover damages,

as required by N.J.S.A. 56:8-19. See Bosland v. Warnock Dodge, Inc., 197 N.J.

543, 555-57 (2009) (applying the "ascertainable loss" requirement of the CFA

to private claims of regulatory violations); Cf. Spade v. Select Comfort Corp.,

232 N.J. 504, 523-24 (2018) (noting, by analogy, proof of harm in the form of

monetary damages or "adverse consequences" is required for a regulatory

violation under the Truth-in-Consumer Contract, Warranty and Notice Act,

N.J.S.A. 56:12-14 to -18).

We do not set aside the findings on breach of contract or other claims,

which are supported by substantial credible evidence, consistent with the judge's

assessments of witness credibility, and are legally sound. We defer the question

of D'Addone's personal liability to the outcome of the remand.

On remand, the trial court also shall analyze the lien award on its merits,

as called for under the CLL, N.J.S.A. 2A:44A-14. See also Schadrack v. K.P.

Burke Builder, LLC, 407 N.J. Super. 153, 170-71 (App. Div. 2009) ("Even with

an approved lien on file for a sum certain, [the contractor] must still prove its

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entitlement to recovery on the merits, in a post-arbitration judicial

proceeding."). The court should not accept the arbitrator's award at face value.

Lastly, we discern no abuse of discretion in the imposition of discovery

sanctions. See Abtrax Pharm., Inc. v. Elkins-Sinn, Inc., 139 N.J. 499, 512-13

(1995) (recognizing the authority of trial judges over pretrial proceedings and

their "inherent discretionary power to impose sanctions").

On remand, the trial court may in its discretion allow the parties to present

additional proofs and briefing if that will be helpful to the court's analysis.

Counsel shall provide courtesy copies of their appellate submissions if requested

by the trial court. To plan the remand proceedings, the trial court shall convene

a case management conference within thirty days.

Affirmed in part, vacated in part, and remanded. We do not retain

jurisdiction.

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