Remember: Ascertainable Loss Needed for NJ Consumer Fraud Act Claim

Last week, the Appellate Division upheld the dismissal of a claim under the New Jersey Consumer Fraud Act (CFA) for failure to state a claim upon which relief can be granted.  In Schroeck v. Knight Mgmt. Ins. Servs., the Appellate Court affirmed Judge Willis Currier’s determination that the plaintiff had not suffered an ascertainable loss, as is required by the CFA, and thus could not pursue a CFA claim.

This case arose in the context of a motor vehicle purchase.  The plaintiff purchased a vehicle from ANS Auto Sales in New Jersey through a purchase agreement that included a line item for a $395 fee to the defendant Knight Management Insurance Services, Inc. for “Gap Waiver or Gap Coverage.”  Although the purchase agreement recited that the plaintiff had received and reviewed a copy of the gap coverage product, the plaintiff denied ever seeing such a document.  The gap coverage product provided insurance coverage to the plaintiff, in the event that his vehicle was either totaled or stolen and not recovered, above any amount that his primary insurance carrier would cover for such a loss.  About one month after purchase, the plaintiff’s vehicle was repossessed.

The plaintiff subsequently filed suit under the CFA, alleging that the defendant provided no tangible or intangible benefit to him and that the practice of including the $395 fee for gap coverage insurance was deceptive and unconscionable.  After the trial court initially dismissed the plaintiff’s complaint because the plaintiff did not allege any ascertainable loss, the plaintiff re-filed his complaint, alleging that the $395 charge he paid without receiving a tangible benefit was, in fact, his “ascertainable loss.”  The defendant again filed a motion to dismiss, arguing that because there was no triggering event that would have required the defendant to provide the services for which the plaintiff had paid – i.e., because the plaintiff’s car was repossessed and was not either stolen or totaled – the plaintiff was not entitled to the coverage the product provided.  In other words, the defendant argued that the plaintiff was not entitled to any benefit under the gap insurance product because the requisite factual triggering event had not occurred, and not because there was any violation of the CFA.

The trial court agreed and again dismissed the plaintiff’s complaint.  On appeal, the Appellate Division affirmed, albeit in an unpublished opinion.

This case nevertheless serves as a reminder that a plaintiff seeking to pursue a claim under the CFA must be able to demonstrate that she or he suffered an actual ascertainable loss, and that failure to properly support such a claim is grounds for dismissal.

Tags: , ,


Be the first to leave a reply!

Leave a Comment