On January 11, 2024, the Supreme Court of New Jersey issued an opinion in DeSimone v. Springpoint Senior Living, et al., 256 N.J. 172 (2024), limiting the applicability to the Consumer Fraud Act’s refund provision, N.J.S.A. 56:8-2.11, to food-related misrepresentations.
DeSimone, was a class action lawsuit against the defendant who owned and operated several retirement communities. The representative plaintiff was the executor of the estate of his decease mother, who had lived in one of the defendant’s retirement communities. The defendant charged monthly service fees, in addition to fees for activities, incidentals and medical care. The defendant also charged its residents with an entrance fee, which varied depending on which facility and accommodation unit the resident chose. The defendant also advertised a “90% refundable plan” upon election to pay a higher entrance fee. The plan provided that 90% of the entrance fee, less certain deductions for medical care, would be refunded to the resident’s estate upon their death. The plan was subject to restrictions contained in the “Residence & Care” agreement issued by the defendant.
The plaintiff’s family paid for the decedent to move to one of the defendant’s facilities in 2009. She passed away in 2010. The plaintiff was only returned approximately 50% of the entrance fee paid. The defendant informed plaintiff that the “Residence & Care” agreement provided that the 90% payment was calculated on the lesser of the entrance fee paid by the decedent; or the entrance fee paid by the subsequent resident. In plaintiff’s case, the subsequent resident of the decedent’s unit paid a lower entrance fee.
The plaintiffs claimed the defendant violated the CFA by burying the “lesser than” valuation of the refund policy on page 20 of the agreement and because it failed to disclose that it would actively offer substantial discounts to entice prospective residents to purchasing a unit. For relief the plaintiffs sought the full funds they would have been entitled to under the 90% refund, as well as a refund of all monies paid for the rental of the unit and services rendered by the defendant pursuant to N.J.S.A. 56:8-2.11.
The Supreme Court engaged in a contextual analysis of the statute to determine the plaintiffs’ entitlement to a full refund pursuant to the CFA. The language of the refund provision itself indicated that violations of the provisions of “the within act” shall be liable for a refund of the money acquired through an act “declared herein” to be unlawful. The Court found the plain meaning of the section sufficient to limit the applicability of the provision to Chapter 347 of the CFA, dealing with food sales. It noted that the phrase “the within act” was used throughout the CFA as limiting language to distinguish the different sections of the act. The Court also referenced other chapters of the Act which contained separate refund provisions and reasoned that if the Legislature intended N.J.S.A. 56:8-2.11 to apply throughout the CFA, then these other provisions would be redundant. Lastly, the Court noted that a broad application of the refund provision would result in damages awards disproportionate to the actual harm caused by the violation of the Act.
As such, the Supreme Court held that N.J.S.A. 56:8-2.11 is specifically limited to food-based violations under Chapter 347 of the CFA.
The DeSimone decision can be found here.
For additional questions, please contact Philip D. Priore, Esq. and/or Scott J. Tredwell, Esq.
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