From Casetext: Smarter Legal Research

Cardo Windows, Inc. v. Kensington Windows, Inc.

United States District Court, D. New Jersey
Dec 1, 2003
Civil No. 01-4929 (JBS) (D.N.J. Dec. 1, 2003)

Opinion

Civil No. 01-4929 (JBS).

December 1, 2003

Kenneth Goodkind, Esquire, Tracy Siebold, Esquire, FLASTER GREENBERG, P.C., Cherry Hill, New Jersey, Attorney for Plaintiff Cardo Windows, Inc.

James Dial, Esquire, REED SMITH, L.L.P., Princeton, New Jersey, Attorney for Defendant Kensington Windows, Inc.


OPINION


Between 1991 and 1995, plaintiff Cardo Windows, d/b/a Castle, the Window People of New Jersey, ("Castle") purchased windows from defendant Kensington Windows to re-sell them and install them in consumers' homes. This action is based on the decision of Kensington Windows on November 20, 2000 to require payment of shipping costs prior to supplying replacement parts as of January 1, 2001. Previously, Kensington Windows, which continued to service the windows installed by Castle during the 1991 to 1995 period, paid the shipping costs for replacement parts as a "courtesy" even though its "Limited Lifetime Warranty" included a "freight collect" provision.

Presently before this Court are the cross-motions of the parties for summary judgment. The Court has considered the arguments of the parties and for the reasons stated herein, will grant defendant Kensington Windows' motion for summary judgment in part as to the tortious interference and Consumer Fraud Act claims in Counts III and IV of the Complaint and will deny it in part as to the breach of contract and breach of covenant of good faith and fair dealing claims in Counts I and II, and will deny plaintiff Castle's cross-motion for summary judgment as to all claims. Thus, the breach of contract claim of Count I and the breach of covenant of good faith and fair dealing claim of Count II will proceed in the normal course to trial.

I. BACKGROUND

From 1991 through 1995, plaintiff Castle purchased approximately two-million dollars in windows from defendant Kensington Windows to re-sell and install into the homes of its customers. (Siebold Cert., Ex. A, Cardillo Dep. at 17:22-18:17, 37:6-22, 41:4-22.) For each sale, Castle faxed an order to Kensington Windows, received back a confirmation fax, and then later received an invoice and delivery slip when the windows were delivered. (Id. at 38:17-25.) Kensington Windows' Vice President of Operations, Charles Wetmore, says that most windows were also shipped with a warranty that read, in pertinent part:

THIS WARRANTY EXTENDS TO ANY PERSON WHO WAS AN OWNER OF THE PROPERTY IN WHICH THE WINDOWS WERE LOCATED AT THE TIME THE WINDOWS WERE INSTALLED. . . .
If your window or any part thereof is defective in a manner covered by this Warranty, deliver the window or defective part (if by mail, postage prepaid) to the address below along with proof of the date of installation.
If the defect is covered by this Warranty, we will replace the defective part with a new part at our cost (except as provided herein), in accordance with this Warranty, and deliver the new part or the window with the new part to you within sixty (60) days of receipt of the defective window or part, freight collect.

(Dial Cert., Ex. E (emphasis added); Siebold Cert., Ex. C, Wetmore Dep. at 13:3-24.) He admits that every window sold to Castle was not accompanied by an actual written document describing this warranty, but asserts every window sold by Kensington Windows was covered by the warranty. (Id.) He says that the warranty was provided to Castle so that Castle could decide either to pass the warranty onto the customer as written or to provide its own warranty containing additional coverage. (Id. at 12:14-25.)

Castle's C.E.O. Chris Cardillo, though, says that Castle never received a written warranty from Kensington Windows, (Siebold Cert., Ex. A, Cardillo Dep. at 43:25-48:14), but that he believed that every window was covered by a warranty under which Kensington Windows would provide replacement parts free of all charges, including shipping charges, for the life of the window, (id. at 47:16-49:23). He says that this "is a basic understanding in the industry," (id. at 48:7-10), so that when someone at Kensington Windows told him that Kensington Windows would provide the parts, and Castle would have to provide the labor," he understood that all replacement parts would be shipped free of charge, (id. at 47:21-48:14, 53:23-54:8). For this reason, Castle provided a written warranty to each homeowner guaranteeing the quality of the window unit and the insulated glass for the life of the window and provided that all replacement parts and labor needed to install the parts would be provided free of all charges. (Siebold Cert., Ex. B, Arce Dep. at 33:7-34:7; Dial Cert. Supp., Ex. A.)

It is uncontested that initially, Castle had no trouble obtaining replacement parts from Kensington Windows. When notified by a homeowner of a problem, Castle would determine what replacement part was necessary and would fax a "remake order form" to Kensington Windows with all necessary information. (Siebold Cert., Ex. A, Cardillo Dep. at 66:16-67:4, 99:12-103:13;Id., Ex. B, Arce Dep. at 30:1-32:2.) Kensington Windows then sent the replacement part to Castle, free of charge. (Id. at 31, 32.) In 1995, Castle stopped purchasing windows from Kensington Windows, but Kensington Windows continued to supply replacement parts for the previously-installed windows. (Siebold Cert., Ex. A, Cardillo Dep. at 79:10-14.)

On November 20, 2000, though, the "Management Staff" of Kensington Windows sent a memo to Castle and approximately twenty-four other distributors of its products describing a new procedure for obtaining replacement parts which would become effective January 1, 2001. (Siebold Cert., Ex. D, McDermott Dep. at 39:7-40:6; Dial Cert., Ex. A.) The memo explained that distributors would be required to send their warranty claims on a "replacement parts order form" and include payment in advance for the replacement part and for its shipping cost. (Id.) Only if payment was made in advance would Kensington Windows process the order and ship the replacement part to the distributor. (Id.) Then, the distributor could return the defective part to Kensington Windows and, if Kensington Windows found that it was defective, the distributor would receive reimbursement for the part from Kensington Windows. (Id.) Kensington Windows would not reimburse the distributor for the shipping costs as "[a]ll postage/transportation costs remain the responsibility of the dealer/distributor and/or Covered Owner." (Id.)

In the memo, Kensington Windows explained that it had been "processing and delivering warranty products/parts at our expense for quite some time now . . . as a courtesy," but that it found that it was "no longer able to absorb the costs associated with continuing this practice." (Id.) Kensington Windows' Vice President of Finance, James Cosharek, testified that this new warranty procedure was one of a number of measures that the company implemented to reduce its costs. (Siebold Cert., Ex. E, Cosharek Dep. at 66:3-67:1.) According to Cosharek, the procedure would cut costs in two ways. First, it would cut all costs of shipping; second, it would cut replacement costs for parts that were either not defective or were not parts from a windows sold by Kensington Windows. (Id. at 66:3-67:1.)

Kensington Windows immediately received a number of complaints about the new policy, (Siebold Cert., Ex. E, Cosharek Dep. at 64:19-65:8), so on January 12, 2001, sent another memo to the distributors to "offer the following option in addition to the process previously described (in lieu of advance payment of warranty products/parts)," (Dial Cert., Ex. B). Under the alternative procedure, if the distributor had the homeowner complete a certain form and if the distributor paid shipping costs in advance, then Kensington Windows would ship the replacement part to the homeowner without requiring payment in advance for the part itself. (Id.) Kensington Windows made clear that:

Please Note: Under both options, shipping handling charges must be paid in advance before warranty replacement parts will be manufactured.

(Id. (emphasis in original)). If the part could be shipped by FedEx, the minimum shipping and handling charge would be $40.00; if the part needed to be crated or shipped by truck, the minimum charge would be $50.00. (Id.)

For about a month and a half, Castle sent warranty claims to Kensington Windows with payment for shipping costs, (Siebold Cert., Ex. A, Cardillo Dep. at 80:15-23), but it refused to complete the new replacement part forms which required the homeowner's name, address, and phone number, (Siebold Cert., Ex. B, Arce Dep. at 35:14-36:20). Mr. Arce testified that it d[id]n't make any sense to me" to give "my customer's information . . . It's not like you are going to go out there and do the service." (Id. at 36:1-5.) Kensington Windows initially serviced some of the orders, but soon stopped because of Cardo's failure to follow the new procedure. (Id. at 36:14-20.)

On September 27, 2001, Castle filed this civil action in the New Jersey Superior Court, Special Civil Part, in Burlington County, New Jersey, alleging that Kensington Windows breached the warranty contract and its implied covenant of good faith and fair dealing and tortiously interfered with Castle's prospective economic advantage when it instituted its new warranty policy. (Complaint.) On October 19, 2001, Kensington Windows removed the action to this Court, asserting diversity jurisdiction pursuant to 28 U.S.C. § 1332. (Notice of Removal.) On April 16, 2002, Castle filed an Amended Complaint, adding the allegation that Kensington Windows violated the New Jersey Consumer Fraud Act ("NJCFA"), N.J.S.A. § 56:8-1-116. (Amended Complaint at 6.) On April 30, 2003, the parties filed the present cross-motions for summary judgment.

II. DISCUSSION A. Summary Judgment Standard for Cross-Motions

Summary judgment is appropriate when the record "show[s] that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). A dispute is "genuine" if "the evidence is such that a reasonable jury could not return a verdict for the non-moving party." See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A fact is "material" if it might affect the outcome of the suit under applicable rule of law. Id.

In deciding whether there is a disputed issue of material fact, the court must view the evidence in favor of the non-moving party by extending any reasonable favorable inference to that party; "the nonmoving party's evidence `is to be believed, and all justifiable inferences are to be drawn in his favor.'" Hunt v. Cromartie, 526 U.S. 541, 552 (1999) (quoting Liberty Lobby, 477 U.S. at 255). The nonmoving party "may not rest upon the mere allegations or denials of" its pleading and must present more than just "bare assertions, conclusory allegations or suspicions" to show the existence of a genuine issue. Fed.R.Civ.P. 56(e);Gans v. Mundy, 762 F.2d 338, 341 (3d Cir. 1985). The threshold inquiry is whether there are "any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Liberty Lobby, 477 U.S. at 250.

The standard by which the court decides a summary judgment motion does not change when the parties file cross-motions.Weissman v. United States Postal Serv., 19 F. Supp. 2d 254 (D.N.J. 1998). When ruling on cross-motions for summary judgment, the court must consider the motions independently, Williams v. Philadelphia Hous. Auth., 834 F. Supp. 794, 797 (E.D. Pa. 1993),aff'd, 27 F.3d 560 (3d Cir. 1994), and view the evidence on each motion in he light most favorable to the party opposing the motion. See Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).

B. Analysis

In the present cross-motions for summary judgment, Kensington Windows asserts that summary judgment must be granted in its favor for four reasons: (1) Castle has no standing to sue for a breach of the warranty contract because it is not a party or a third-party beneficiary to the contract; (2) Castle cannot sue based on an implied covenant of good faith and fair dealing claim because there is no contract between Kensington Windows and Castle to imply the covenant into; (3) Castle has not shown that Kensington Windows tortiously interference with its prospective economic relations because it has not shown that Kensington Windows acted intentionally; and (4) Castle cannot sue under the New Jersey Consumer Fraud Act because it is not a "consumer" within the meaning of the Act. Castle opposes Kensington Windows' motion for summary judgment, arguing that Kensington Windows has not provided a basis for summary judgment and that summary judgment should instead be granted in its favor.

This Court has considered the arguments of the parties and will, for the following reasons, grant Kensington Windows' motion in part as to Counts III and IV, deny Kensington Windows' motion in part as to Counts I and II, and deny Castle's cross-motion in its entirety. Thus, the breach of contract claim of Count I and the breach of covenant of good faith and fair dealing claim of Count II will remain for disposition at trial.

1. Breach of contract claim

The principal issue regarding Castle's breach of contract claim is whether Castle has standing to sue for breach of contract. Kensington Windows argues that Castle does not have standing to sue for breach of contract because the contract at issue is the printed warranty issued with Kensington's windows, and Castle was neither a party to, or a third-party beneficiary of, that warranty contract because it states that Kensington windows are "warranted to you, the original property owner(s)," and never mentions Castle in any way. (See Dial Cert. Ex. E; Siebold Cert., Ex. C, Wetmore Dep. at 13:3-24.) Castle, though, asserts that Kensington Windows' reliance on the warranty is misplaced because the regardless of whether or not the printed form warranty created a contract, Kensington Windows was required "to supply replacements to Castle at no cost for parts or shipping" under a contractual relationship that was premised on their original window purchase agreements and was supplemented by "oral agreements (along with some confirmatory writings), course of dealing, and trade custom and usage." (Pl. Br. at 22; Pl. Reply at 1). This Court finds that a reasonable factfinder could conclude that the agreement at issue here incorporated a free shipping term from the course of dealing of the parties and their usage of trade.

A plaintiff has standing to sue for breach of contract if it is a party to the contract, Rocco v. N.J. Transit Rail Operations, Inc., 330 N.J. Super. 320, 344 (App.Div. 2000), or if it is a third party beneficiary to the contract, meaning that it was the "intent and contemplation" of the contracting parties to enter the contract for the benefit of the plaintiff, Grand St. Artists v. General Electric, 19 F. Supp. 2d. 242, 253 (D.N.J. 1998);Broadway Maintenance Corp. v. Rutgers, 90 N.J. 253, 259 (1982). Though, Kensington Windows consistently argues that the "only contract" at issue in this case is its printed "Lifetime Limited Warranty" which ran to the original property owner," (see Def. Reply at 2; see also Dial Cert. Ex. E), Castle was a direct party to contracts for sale with Kensington Windows. Between 1991 and 1995, Castle purchased approximately two-million dollars worth of windows "on an invoice-by-invoice basis" from Kensington Windows, for resale to its customers. (Siebold Cert., Ex. A, Cardillo Dep. at 17:22-18:17, 37:6-22, 41:4-22; Def. Reply at 3.) For each sale, Castle faxed an order to Kensington Windows, and received in return an invoice, a confirmation fax, a delivery slip, and the ordered window. (Id. at 38:17-25.) The Court thus finds that Castle and Kensington Windows entered into contracts for the sale of custom windows from 1991 to 1995.

The Court also finds that the provision of a limited warranty was an element of consideration for these contracts, and not an "extra-contractual service" as Kensington characterizes it. (See Def. Reply at 3.) Castle paid for the windows and, in return, Kensington Windows provided a product manufactured according to Cardo's specifications and a limited warranty for the lifetime of the window. Kensington Windows' Vice President of Operations, Charles Wetmore, testified that every window sold by Kensington Windows was covered by the warranty and that the warranty provided value to Castle, as Castle was given the opportunity to decide whether to pass the warranty protection directly to the consumer or to encompass it in a broader warranty service. (Siebold Cert., Ex. C, Wetmore Dep. at 12:14-13:24.) Castle agreed that the warranty coverage made Kensington's product more appealing and was a "critical factor in Castle's decision to do business with [Kensington Windows]." (Pl. Br. at 7.)

It is true that in 1995, Castle stopped purchasing windows from Kensington Windows. (Siebold Cert. Ex. A, Cardillo Dep. at 79:10-14.) However, it is clear that the "lifetime" warranty protection in the initial purchase agreements was promised to continue past the lifetime of the purchasing relationship between Castle and Kensington Windows. In fact, it did continue, as Kensington supplied replacement parts to Castle for no charge through 2000 and wrote to "previous . . . distributors of Kensington Windows" in the November 2000 memo to explain the change in warranty procedure from that point forward. (Id. at 79:10-14; Dial Cert., Ex. A.)

The contract at issue here, thus, is not simply a contract for the provision of warranty services. The contracts at issue are those which were created each time Castle purchased a window from Kensington Windows, and received the window and the lifetime limited warranty in exchange. These contracts were "transactions in goods" governed by the Uniform Commercial Code. See N.J.S.A. 12A:2-102; see also In re Merritt Logan, Inc., 901 F.2d 349, 361 (3d Cir. 1990). They were also contracts to which Castle was a direct party, providing it standing to sue in this matter.

N.J.S.A. 12A:2-102 provides:

Unless the context otherwise requires, this Chapter applies to transactions in goods; it does not apply to any transaction which although in the form of an unconditional contract to sell or present sale is intended to operate only as a security transaction nor does this Chapter impair or repeal any statute regulating sales to consumers, farmers or other specified classes of buyers.

As contracts for the sale of goods, the purchase agreements are governed by the Uniform Commercial Code, which provides that the terms of a contract may be explained or supplemented by the parties' course of dealing, course of performance, and usage of trade. See U.C.C. 1-205, 2-208; see also Cumberland County Improvement Auth. v. GSP Recycling Co., Inc., 358 N.J. Super. 484, 496 (App.Div. 2003); Flavorland Indus., Inc. v. Schnoll Packing Corp., 167 N.J. Super. 376, 380 (App.Div. 1979).

U.C.C. 1-205(1) defines "course of dealing" as:

a sequence of previous conduct between the parties to a particular transaction which is fairly to be regarded as establishing a common basis of understanding for interpreting their expressions and other conduct.

U.C.C. 1-205(2) defines "usage of trade" as:

any practice or method of dealing having such regularity of observance in a place, vocation or trade as to justify an expectation that it will be observed with respect to the transaction in question . . .

U.C.C. 1-205(3) provides:

A course of dealing between parties and any usage of trade in the vocation or trade in which they are engaged or of which they are or should be aware give particular meaning to and supplement or qualify terms of an agreement.

U.C.C. 2-208(1) provides:

Where the contract for sale involves repeated occasions for performance by either party with knowledge of the nature of the performance and opportunity for objection to it by the other, any course of performance accepted or acquiesced in without objection shall be relevant to determine the meaning of the agreement.

The parties have not disputed that they followed the same general warranty procedure between 1991 and 2000. If a homeowner had a problem with a window that Castle purchased from Kensington Windows, Castle would send Kensington Windows a "remake order form" with the appropriate information, and would then receive the replacement part from Kensington Windows free of all charges, including all shipping charges. (Siebold Cert., Ex. A, Cardillo Dep. at 66:16-67:4, 79:10-14, 99:12-103:13; id., Ex. B, Arce Dep. at 30:1-32:2.) Kensington Windows recognized that this was its practice in the November 2000 memo, stating that "[a]s a courtesy to you, Kensington Windows Inc. has been processing and delivering warranty products/parts at our expense for quite some time now," but that it could not longer "absorb the costs associated with continuing this practice." (Dial Cert., Ex. A.) A reasonable factfinder could conclude based on this evidence that the warranty procedure, including free shipping costs, qualified as a course of dealing of the parties and was incorporated into their agreement.

Kensington Windows asserts that this Court should not consider two documents presented as evidence of usage of trade because they were not produced until March 28, 2003, eight days after Kensington served its notice of intent to file this motion. (Def. Reply at 4 (challenging Cardillo Cert, Exs. A, B)). The documents are letters from individuals at Napco Window Systems and Dove Vinyl Windows, and each indicates that it is "common practice" for warranted parts to be shipped free of charge for the term of the warranty.
The Court need not determine whether this information was presented in a timely manner because the course of dealing of these parties is undisputed and clearly shows that Kensington Windows shipped warranted parts free of charge from 1991 through 2000. This evidence of usage of trade thus only provides further support to Castle's claim.

Kensington Windows, though, argues that the explicit terms of their agreement included a "freight collect" term which overrides any course of dealing between the parties. U.C.C. 1-205(4) provides:

The express terms of an agreement and an applicable course of dealing or usage of trade shall be construed wherever reasonable as consistent with each other; but when such construction is unreasonable express terms control both course of dealing and usage of trade and course of dealing controls usage of trade.
See N.J.S.A. 12A:1-205(4).

A reasonable factfinder could conclude that the "freight collect" term in the limited warranty was an express term of the parties' agreement. It was sent to Castle when windows were purchased and was part of the consideration for the agreement. (Siebold Cert., Ex. C, Wetmore Dep. at 13:3-24.) On the other hand, a reasonable factfinder could conclude that it was not an express term of their agreement because Kensington did not send the form to Castle until the window had been paid for and shipped, (id.), if it was sent at all, (Siebold Cert., Ex. A, Cardillo Dep. at 43:25-48:14).

Kensington Windows also has presented evidence from which a factfinder could conclude that, if the "freight collect" term was an express term in the agreement, and if Kensington waived the term by providing free shipping costs from 1991 through 2000, Kensington revoked its waiver of the "freight collect" term by issuing its November 2000 and January 2001 memoranda. U.C.C. 2-209(5) provides:

A party who has made a waiver affecting an executory portion of the contract may retract the waiver by reasonable notification received by the other party that strict performance will be required of any term waived, unless the retraction would be unjust in view of a material change of position in reliance on the waiver.

A reasonable factfinder could find that the memoranda were sufficient to revoke a waiver of the term, but a reasonable factfinder could also conclude that Kensington Windows' expected Castle to rely on the warranty coverage as it had been provided from 1991 through 2000, (Siebold Cert., Ex. C, Wetmore Dep. at 12:14-25), and that Castle in fact relied on the coverage to formulate its warranty, (id., Ex. A, Cardillo Dep. at 65:19-21).

The Court thus finds that questions of fact remain as to plaintiff's breach of contract claim because a reasonable factfinder could conclude that the agreement incorporated the general practice of the parties during the 1990s and that it was breached when Kensington changed its warranty service. The extent of damages suffered by Castle by such a breach likewise remains a question of fact. Castle has shown that the new shipping costs totaled forty dollars per order at a minimum and that it is generally required to submit warranty claims for thirty percent of its two-million dollars of windows purchased from Kensington Windows. (Siebold Cert., Ex. A, Cardillo Dep. at 50:20-53:3, 41:4-22; Dial Cert., Ex. B.) Castle initially paid such costs for its warranty claims, and has since incurred costs for processing its claims elsewhere. (Id. at 80:15-23.)

Therefore, because questions of fact remain, this Court will deny the parties' motions for summary judgment as to the breach of contract claim in Count I.

2. Breach of covenant of good faith and fair dealing

Kensington Windows next seeks summary judgment on Castle's claim that it breached the implied covenant of good faith and fair dealing implied into their agreement by "unilaterally changing the warranty program" to "impos[e] charges and burdens" on Castle after it had "received all the benefits of the deal, having been paid in full" by Castle. (Pl. Br. at 30, Pl. Reply at 10-11.)

Kensington Windows' only argument on this claim is based on its position that there was no contractual arrangement between these parties. It is clear that "[i]n the absence of a contract, there can be no breach of an implied covenant of good faith and fair dealing." Noye v. Hoffman-LaRoche, 238 N.J. Super. 430, 434 (App.Div. 1990). However, here, the Court has found that there was a contract, and thus, there was an implied covenant of good faith and fair dealing.

Under New Jersey law, every contract contains an implied covenant of good faith and fair dealing. Wade v. Kessler Inst., 172 N.J. 327, 340 (2002) (citing Wilson v. Amerada Hess Corp., 168 N.J. 236, 244 (2001); Bak-A-Lum Corp. v. Alcoa Bldg. Prod., 69 N.J. 123, 129-30 (1976)). Under this covenant, "neither party shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract." Wade, 172 N.J. at 340 (quoting Bak-A-Lum, 69 N.J. at 129 (internal quotations omitted)). A plaintiff must show evidence of bad faith or ill motive to establish a claim for breach of the covenant of good faith and fair dealing. Wade, 172 N.J. at 341 (quoting Wilson, 168 N.J. at 251); Seidenberg v. Summit Bank, 348 N.J. Super. 243, 261 (App.Div. 2002).

Questions of fact remain as to this claim. A reasonable factfinder could conclude that Kensington Windows justifiably thought that it could change its warranty procedure without harming the rights of Castle under the contract, as its form warranty provided that "freight [was] collect." However, a reasonable factfinder could also conclude that Kensington Windows, after it had received two-million dollars in orders from Castle, and did not anticipate any further income from Castle as it had not purchased windows since 1995, sought, in bad faith, to obstruct Castle's ability to receive its bargained-for warranty coverage by imposing costs and burdens that would deter Castle from submitting warranty claims.

As a result, this Court will deny both motions for summary judgment as to the good faith and fair dealing claim of Count II.

3. Tortious interference with prospective economic advantage claim

The parties next seek summary judgment on Castle's claim that Kensington Windows tortiously interfered with its prospective economic advantage. To establish a claim for tortious interference with a prospective economic advantage relations, the plaintiff must establish:

(1) a reasonable expectation of economic advantage,

(2) that the defendant's actions were malicious in the sense that the harm was inflicted intentionally and without justification or excuse,
(3) a reasonable probability that the plaintiff would have obtained the anticipated economic benefit, and

(4) that the injury caused the plaintiff damage.

Weil v. Express Container Corp., 360 N.J. Super. 599, 613-614 (citing Printing Mart-Morristown v. Sharp Elec. Corp., 116 N.J. 739, 751-52 (1989)).

Castle has not shown a reasonable expectation of economic advantage that Kensington Windows maliciously interfered with. "Fundamental to this cause of action is the requirement that the claim be directed against defendants who are not parties to the contractual relationship." Id. at 614. In other words, to establish a claim for tortious interference, plaintiff must point to an economic relationship with a third party that defendant intentionally and maliciously interfered with. Castle has not.

Castle asserts that forty percent of its business is generated through referrals and repeat business, and that Kensington Windows must have known that such business may be affected if the warranty procedure were changed. Castle, though, has not presented any evidence that indicates that its referral business has been affected by the change. Moreover, Castle has not presented any evidence that indicates that Kensington Windows acted with intention and malice to affect such future business. As explained supra, section II.B.2, there is evidence from which a reasonable factfinder could conclude that Kensington changed its policy either to cut costs or to obstruct future warranty claims. However, there is no evidence that indicates that Kensington Windows changed its policy in order to interfere with Castle's future business with homeowners.

Therefore, this Court will grant defendant Kensington Windows' motion, and deny plaintiff Castle's cross-motion, for summary judgment as to the tortious interference claim.

4. New Jersey Consumer Fraud Act claim

Kensington Windows next seeks summary judgment on Castle's New Jersey Consumer Fraud Act claim, arguing that Castle cannot avail itself of the protections of the Act because it is not a "consumer" under the Act.

The New Jersey Consumer Fraud Act was designed to protect "consumers." Kugler v. Romain, 58 N.J. 522, 535-39 (1971). The "strongest case for relief" is presented by "the poor, the naive and the uneducated," but business entities may be seek relief under the Act, provided they are "consumers." Id.;City Check Cashing, Inc. v. National State Bank, 244 N.J. Super. 304, 309 (App.Div. 1990). To be considered a "consumer," the business entity must be "one who uses (economic) goods, and so diminishes or destroys their utilities." Id. (quotingHundred East Credit Corp. v. Eric Schuster, 212 N.J. Super. 350, 355 (App.Div. 1986). As a result, if the business entity purchases merchandise for its use in business operations, it is a consumer, Hundred East, 212 N.J. Super. at 355, but if the business entity purchases the merchandise at wholesale to sell at retail, it is not, City Check, 244 N.J. Super. at 309. The business who resells the product does not "diminish or destroy the utility of the [product] and therefore [does] not consume it." Id.

The Consumer Fraud Act provides, in pertinent part:

The act, use or employment by any person of any unconscionable commercial practice, deception, fraud, false pretense, false promise, misrepresentation, or the knowing, concealment, suppression, or omission of any material fact with intent that others rely upon such concealment, suppression or omission, in connection with the sale or advertisement of any merchandise or real estate, or with the subsequent performance of such person as aforesaid, whether or not any person has in fact been misled, deceived or damaged thereby, is declared to be an unlawful practice. . . .

N.J.S.A. § 56:8-2.

Here, Castle is not a "consumer" as it does not dispute that it bought Kensington Windows' product to re-sell it to homeowners. There is no question that Castle does not "diminish or destroy the utility" of the windows, as it has argued that it "adds the value of installation services" to the product. (See Pl. Br. at 37.) Thus, Castle cannot assert the claim of a "consumer" under the New Jersey Consumer Fraud Act.

This Court, therefore, will grant Kensington Windows' motion, and deny Castle's cross-motion, for summary judgment on the New Jersey Consumer Fraud Act claim in Count IV.

III. CONCLUSION

For the reasons stated herein, the Court will grant defendant Kensington Windows' motion for summary judgment in part as to the tortious interference and Consumer Fraud Act claims in Counts III and IV of the Complaint and will deny it in part as to the breach of contract and breach of covenant of good faith and fair dealing claims in Counts I and II, and will deny plaintiff Castle's cross-motion for summary judgment in full. The breach of contract claim and breach of covenant of good faith and fair dealing claim will proceed to trial in the normal course.

The accompanying Order is entered.

ORDER

THIS MATTER having come before the Court on the cross-motions of the parties for summary judgment, [Docket Item 31-1], and the Court having considered the parties' submissions, and for the reasons set forth in the Opinion of today's date;

IT IS on this ____ day of November, 2003, hereby

ORDERED that defendant Kensington Windows, Inc.'s motion for summary judgment be, and hereby is, GRANTED IN PART as to the tortious interference claim in Count III and the Consumer Fraud Act claim in Count IV of plaintiff's Complaint, and DENIED IN PART as to the breach of contract claim in Count I and the breach of covenant of good faith and fair dealing claim in Count II; and IT IS FURTHER ORDERED that the cross-motion of plaintiff Cardo Windows, Inc., d/b/a Castle, the Window People of New Jersey, for summary judgment be, and hereby is DENIED.


Summaries of

Cardo Windows, Inc. v. Kensington Windows, Inc.

United States District Court, D. New Jersey
Dec 1, 2003
Civil No. 01-4929 (JBS) (D.N.J. Dec. 1, 2003)
Case details for

Cardo Windows, Inc. v. Kensington Windows, Inc.

Case Details

Full title:CARDO WINDOWS, INC., ASSOCIATES, INC., d/b/a, CASTLE THE WINDOW PEOPLE OF…

Court:United States District Court, D. New Jersey

Date published: Dec 1, 2003

Citations

Civil No. 01-4929 (JBS) (D.N.J. Dec. 1, 2003)