Consumer Fraud Act can apply to statements other than at point of sale.

First Quality Carpets, Inc. v. Kirschbaum, 2012 VT 41 (Burgess, J.)

The Kirschbaums appeal the ruling of the Civil Division in favor of First Quality in a dispute over carpet installed in 2007.  The Kirschbaums argue that the civil division erred in awarding First Quality attorney’s fees under  9 V.S.A. § 4007(c) of the Prompt Pay Act because that section of the statute authorizing attorney’s fees recovery effectively expired in 1996 pursuant to a sunset provision included in the Act.  Alternatively, the Kirschbaums argue that because they withheld payment to First Quality in good faith, they were entitled to a directed verdict and that First Quality should not have been awarded attorney’s fees under § 4007(c). Finally, the Kirschbaums argue that the court erred in denying their counterclaim under the Consumer Fraud Act.  We affirm in all respects.

We hold section 4007(c) remained in effect after June 30, 1996, and reject the Kirschbaums’ argument that the court erred in denying their motion for a directed verdict on First Quality’s Prompt Pay Act claim.  The court’s findings as to the Kirschbaums’ bad faith are supported by the record.  The court relied on two particular instances of less-than-straightforward dealing to conclude that the Kirschbaums had no good faith basis to withhold payment.

To establish a claim under the CFA, a plaintiff must prove three elements: “(1) there must be a representation, practice, or omission likely to mislead the consumer; (2) the consumer must be interpreting the message reasonably under the circumstances; and (3) the misleading effects must be ‘material,’ that is, likely to affect the consumer’s conduct or decision with regard to a product.” The Kirschbaums argue that the court misinterpreted the CFA to apply only to statements made at the point of sale .  They assert that the CFA covers both sales as well as services provided after the point of sale, and that First Quality violated the CFA by failing to “disclose the extent of the installation of the defective carpeting” and “by refusing to replace all of the defective carpeting or repair defective seams.”  Material misrepresentations may be made either at the time of sale, or in the course of services provided after the point of sale.”[¶ 19 ] Jordan v. Nissan N. Am., Inc., 2004 VT 27, ¶ 5, 176 Vt. 465, 853 A.2d 40 (stating that to prove third element of consumer fraud plaintiff must show that “the misleading representation was material in that it affected the consumer’s purchasing decision”.) However the civil division did not reinterpret this third element of consumer fraud in denying the Kirschbaums’ claim.  Rather, its ruling rested on the factual determinations that First Quality made no misleading statements at any point regarding the defective carpeting and that, in any event, the Kirschbaums did not rely on any such statements in making decisions regarding their purchase.