Pomerantz Paper Corp. v. New Community Corp.
75 U.C.C. Rep. Serv. 2d (West) 157, 25 A.3d 221, 207 N.J. 344 (2011)
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Rule of Law:
Under the Uniform Commercial Code (UCC), the parties' established course of dealing dictates the method of reasonable notification for non-delivery of goods, and a claim under the Consumer Fraud Act cannot be sustained by expert testimony that amounts to an inadmissible net opinion unsupported by factual evidence or industry standards.
Facts:
- For approximately 15 years, Pomerantz Paper Corporation sold paper, janitorial, and building supplies to New Community Corporation, a non-profit.
- The parties' practice was for Pomerantz to create a delivery slip from New Community's purchase order, with Pomerantz employees placing a check mark next to items as they were loaded.
- Upon delivery, a New Community employee would sign the slip, but the goods were unpacked after the driver left.
- New Community employees would then place a second check mark next to items on their copy of the slip as they were unpacked to confirm receipt.
- New Community's Director of Environmental Services testified that items were missing from shipments on a regular basis.
- When items were missing, the Director's regular practice was to telephone Pomerantz's Vice President to report the shortages.
- Pomerantz's Vice President conceded that he received these telephone calls from New Community about items missing from shipments.
- In 2004, the business relationship ended when Pomerantz accused New Community of failing to pay invoices totaling approximately $700,000.
Procedural Posture:
- Pomerantz Paper Corporation filed a breach of contract suit against New Community Corporation in the New Jersey Superior Court, Law Division (trial court).
- New Community Corporation filed a counterclaim alleging violations of the Consumer Fraud Act (CFA).
- Following a bench trial, the trial court largely found for New Community, concluding Pomerantz failed to prove delivery on its contract claim and awarding New Community treble damages on its CFA counterclaim.
- Pomerantz appealed to the New Jersey Superior Court, Appellate Division (intermediate appellate court).
- The Appellate Division affirmed the trial court's finding of a CFA violation but reversed on the contract claim, holding that the UCC required New Community to provide written notice of non-delivery and remanded for a calculation of damages.
- Both parties filed petitions for certification, which were granted by the Supreme Court of New Jersey (highest court).
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Issue:
Under the Uniform Commercial Code, is a buyer obligated to provide written notice of non-delivery when the parties' course of dealing established oral notification, and can a Consumer Fraud Act claim for unconscionable pricing be proven by expert testimony that lacks a factual basis or established methodology?
Opinions:
Majority - Justice Hoens
No. The UCC does not impose a mandatory written notice requirement for non-delivery of goods where the parties’ course of dealing has established a different, reasonable method of notification, such as telephone calls. Furthermore, an expert's testimony amounts to an inadmissible net opinion if it is a bare conclusion unsupported by factual evidence, industry standards, or a discernible methodology, and it cannot be the basis for a Consumer Fraud Act violation. The appellate court erred in imposing a written notice requirement on the buyer that is not found in the UCC. The statute and the parties' lengthy course of dealing demonstrate that their system of oral notification via telephone was reasonable and sufficient. The trial court's factual findings regarding this course of dealing should have been given deference. Regarding the fraud counterclaim, the trial court erred by admitting and relying on the defendant's expert testimony. The expert's opinion about acceptable pricing markups for non-profits was an impermissible 'net opinion' because it was based on personal belief, not objective data, industry standards, or any other factual support. Since the entire CFA claim was predicated on this inadmissible testimony, the claim fails for want of sufficient credible evidence of an ascertainable loss.
Analysis:
This decision reinforces the primacy of the 'course of dealing' between commercial parties under the UCC, clarifying that courts should not superimpose rigid notification requirements where the parties have established their own reasonable practices. It also serves as a strong gatekeeper against statutory fraud claims based on weak evidence by rigorously applying the net opinion rule. The ruling prevents claims of unconscionable pricing from proceeding based on an expert's subjective or speculative beliefs, demanding instead that such claims be grounded in objective, verifiable data and standards. This protects merchants from fraud liability based on unsubstantiated opinions about the reasonableness of their prices.
