Investigators from the Office of the Attorney General and the Lyndhurst Police Department conducted an undercover operation to ensnare unregistered home improvement contractors.  As part of the operation, investigators posed as the owners of a home that suffered flood damage after Hurricane Irene.  Investigators responded to advertisements for home improvement services and invited contractors to the house to provide an estimate.  Contractors who responded who were not registered with the State were subsequently charged with fourth degree crimes.  If convicted, the contractors face up to 18 months in state prison.

Under N.J.S. 56:8-136, commonly known as the Contractors’ Registration Act, any contractor in New Jersey who advertises their services publicly must register annually with the State.  As part of the registration, the contractor must show that they maintain an office in New Jersey with an actual street address, and must show proof of liability insurance of at least $500,000.  The act further provides that any person who knowingly violates the act is guilty of a fourth degree crime.

As a result of the sting, fourth degree criminal charges were filed by the Bergen County Prosecutor’s Office against eight different contractors from various towns around New Jersey, including Sparta, Kearny, Hackensack, Hasbrouck Heights, North Arlington, Cranford, Wayne, and Annandale.   The State claims that some of these contractors came to the home to provide estimates without even bringing a tape measure.  However, there is no indication of whether a tape measure is necessary to provide an estimate.  In fact, many experienced contractors can tell the rough size of a room without the use of a tape measure.

One thing that should be noted, which has not been noted by law enforcement authorities, is that there is not necessarily any correlation between whether a contractor is registered with the State and whether that contractor provided an honest bid for the job and provides honest services.  The fact that the Contractors’ Registration Act makes it an indictable crime for a contractor to fail to register with the State is proof of nothing more than the over-criminalization of our society.   So, there are potentially honest contractors, who do honest work and provide honest bids, now facing criminal charges for the mere act of not registering.

Anyone charged with a crime in New Jersey should contact New Jersey criminal defense lawyer Nace Naumoski for representation.

In Czar, Inc. v. Heath, decided today by the Supreme Court of New Jersey, the Court held that a contractor engaged to design and install a kitchen during the building of a new home was subject to the New Jersey Consumer Fraud Act.  A New Jersey consumer fraud lawyer or New Jersey construction lawyer can help both individuals and businesses in lawsuits related to the building of new homes or the renovation of existing homes.

The Legislature amended the Consumer Fraud Act in 2004 to expand its application to contractors who are engaged in the business of making or selling home improvements.  The Amendments made the Consumer Fraud Act applicable to all individuals and entities engaged in remodeling, altering, renovating, repairing, restoring, modernizing, moving, demolishing, or otherwise improving or modifying of the whole or any part of any residential or non-commercial property.

However, the Consumer Fraud Act specifically exempts from its provisions any contractors who are engaged in the building of new homes, and are therefore required to register under the New Home Warranty Act.  The Supreme Court reasoned that the purpose of this exclusion was because individuals and entities who were governed by the New Home Warranty Act were already subject to a registration and insurance requirement and a regulatory mechanism that provided recourse to homeowners.

In this case, the Heaths engaged a general contractor to build a new home for them in Florham Park.  After much of the home had been completed, the Heaths engaged Czar, Inc. to design the kitchen, to move some of the plumbing and electrical fixtures, and to build and install custom kitchen cabinets.  Before Czar, Inc. completed the work, a dispute arose and the Heaths refused to pay Czar, Inc. the full contract price.  Czar, Inc. sued the Heaths for breach of contract and the Heaths sued Czar, Inc. under, among others, the Consumer Fraud Act.  At the trial of the case, Czar, Inc. argued that it was engaged in the building of a new home, and therefore was not subject to the Consumer Fraud Act.  The Heaths argued that Czar, Inc. was engaged in making home improvements, and therefore was subject to the Consumer Fraud Act.

The Supreme Court examined both the Consumer Fraud Act (including the 2004 Amendments) and the New Home Warranty Act, and determined that the two Acts were intended by the legislature to create a seamless, harmonious protective scheme.  The Supreme Court noted that both the courts and the legislature have been engaged in expanding the protections offered to consumers under the Consumer Fraud Act.  If the Court were to accept Czar, Inc.’s argument, the homeowners would essentially be left without a remedy.  On the one hand, Czar, Inc. was not registered with the New Home Warranty Act and did not provide to the Heaths the warranty required of builders under that Act.  On the other hand, Czar, Inc. argued that it should not be subject to the Consumer Fraud Act because it was engaged in building a new home, as defined in the New Home Warranty Act.  The Court refused to read the two statutes in a manner that would leave some contractors subject to neither statute.  Therefore, the Court decided that Czar, Inc. was not engaged in building a new home, and was therefore subject to the provisions of the Consumer Fraud Act.

This case illustrates that both homeowners and contractors must navigate a complicated regulatory system that involves multiple statutes when involved in a lawsuit dealing with home improvements or the building of a new home.  A New Jersey consumer fraud lawyer or a New Jersey construction lawyer can help individuals and businesses understand the applicable statutes and regulations.