NJ Supreme Court Rules Refund Provision Does Not Extend to All CFA Violations

NJ Supreme Court Rules Refund Provision Does Not Extend to All CFA Violations

In DeSimone v. Springpoint Senior Living, Inc. (A-37-22/087891) (Decided January 10, 2024), the Supreme Court of New Jersey held that the refund provision set forth in N.J.S.A. 56:8-2.11 does not provide relief for all Consumer Fraud Act (CFA) violations. Rather, it is limited solely to the food-related misrepresentations expressly proscribed in Section One of Chapter 347, codified at N.J.S.A. 56:8- 2.9.

Facts of DeSimone v. Springpoint Senior Living, Inc.

Plaintiff William DeSimone brought a class-action suit against defendant Springpoint Senior Living, Inc. (Springpoint). DeSimone alleged that Springpoint violated the CFA with regard to representations about its entrance fee refund policy and sought the return of “all monies received or collected from” them by Springpoint. Plaintiffs relied on N.J.S.A. 56:8-2.11 in seeking that relief.

Codified at N.J.S.A. 56:8-2.9 to -2.13, Chapter 347, also known as the “Truth in Menu Act,” broadened protections for New Jersey consumers by expanding what constitutes an “unlawful practice” to include misrepresentations of the identity of food. Chapter 347 also created a refund remedy, which provides that “[a]ny person violating the provisions of the within act shall be liable for a refund of all moneys acquired by means of any practice declared herein to be unlawful.”

Springpoint moved to dismiss, arguing that N.J.S.A. 56:8-2.11 applies only to misrepresentations regarding food, as outlined in Chapter 347, and not to violations of other CFA provisions. The trial judge denied Springpoint’s motion, stating that she could not “ignore the precedential cases” that the Plaintiffs cited. According to the trial judge, those cases “broadly appl[ied] the refund provision.” The Appellate Division denied leave to appeal.

NJ Supreme Court’s Decision in DeSimone v. Springpoint Senior Living, Inc.

The New Jersey Supreme Court disagreed. It held that the refund provision is limited in scope and that N.J.S.A. 56:8-2.11 provides relief only to victims of food-related fraud as identified in Chapter 347 and does not extend to all CFA violations. “Here, the alleged conduct deals with misrepresentations of a senior living facility’s entrance fee, not food,” Justice Douglas M. Fasciale wrote. “Because those allegations are unrelated to misrepresentations of the ‘identity of food,’ plaintiffs are not entitled to a full refund of their entrance fees under N.J.S.A. 56:8-2.11.”

In reaching its decision, the New Jersey Supreme Court first analyzed the text of Chapter 347’s refund provision, focusing on the plain meanings of “within” and “declared herein.” According to the Court, the use of those terms suggests that N.J.S.A. 56:8-2.11 is limited in application to the provisions of Chapter 347.

In support, the New Jersey Supreme Court noted that in other supplementary CFA statutes, the New Jersey Legislature has used similar language to that found in N.J.S.A. 56:8-2.11 — “the within act” — to explicitly distinguish those supplementary acts from the CFA in its entirety. It further emphasized that Chapter 347 is not the only conduct-specific supplementary statute to provide additional rights and remedies, including consumer refunds. “If the refunds authorized in each supplementary statute applied to the CFA at large, there would be no need for multiple refund provisions,” Justice Fasciale wrote.

The New Jersey Supreme Court next turned to the claims at issue in the case. It noted that the Plaintiffs allege that Springpoint engaged in deceptive advertising practices and provided misleading disclosure statements regarding Springpoint’s return policy of resident entrance fees under its “90% refundable plan.” Because none of the Plaintiffs’ allegations are related to misrepresentations of food, the Court found that the claims are not governed by N.J.S.A. 56:8-2.9 and the refund provision in -2.11 does not apply. The New Jersey Supreme Court entered partial summary judgment in defendants’ favor, dismissing with prejudice the part of plaintiffs’ complaint that sought refund damages under N.J.S.A. 56:8-2.11. It then remanded the matter for further proceedings.

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