New Jersey Appellate Court Confirms Consumer Fraud Act Claims Are Not Preempted by Timeshare Laws
- Alexander J. Kemeny
- Apr 22
- 3 min read
Appellate Division Decision Affirms Consumer Act Protections in Real Estate Transactions
The New Jersey Appellate Division upheld a trial court's ruling in Keona Palmer, et al. v. Flagship Resort Development Corp., affirming that claims under the Consumer Fraud Act (CFA) are not preempted by similar claims brought under the Real Estate Timeshare Act (RETA). The case involved multiple plaintiffs who alleged that Flagship Resort Development Corp. engaged in fraudulent sales practices when selling timeshares, misleading buyers about the value, resale potential, and financial benefits of their purchases.
Key Findings of the Court Decision
Fraudulent Sales Practices – The plaintiffs argued that Flagship Resort’s sales representatives made false promises during timeshare presentations, leading them to believe their purchases were sound investments with resale potential. However, the purchase agreements contained disclaimers contradicting these claims.
Parol Evidence Rule – The defendant contended that the parol evidence rule barred plaintiffs from introducing evidence of fraudulent misrepresentations. The court rejected this argument, ruling that fraud in the inducement is an exception to the parol evidence rule, allowing plaintiffs to present evidence of deceptive sales tactics.
CFA and RETA Claims Can Coexist – The defendant argued that CFA claims should be preempted by RETA, asserting that RETA was the more specific statute governing timeshare transactions. The appellate court disagreed, holding that the CFA applies broadly and supplements other consumer protection statutes rather than being displaced by them. The court found no direct and unavoidable conflict between the CFA and RETA, allowing claims under both statutes to proceed.
Damages Awarded – The jury awarded damages to the plaintiffs under both statutes. The trial court trebled damages under the CFA and awarded attorney’s fees and prejudgment interest, ultimately entering judgment against the defendant for $1,668,423.88.
Defendant’s Appeal Denied – The appellate court upheld the trial court’s rulings, reaffirming that fraudulent misrepresentations in timeshare sales can be challenged under both the CFA and RETA.
This decision reinforces the broad applicability of the New Jersey Consumer Fraud Act in protecting consumers from deceptive business practices, even when other statutes like RETA govern specific industries.
This appellate decision could have significant implications for future cases, particularly those involving timeshare sales and consumer protection laws in New Jersey. Here are some key potential impacts:
1. Strengthened Consumer Fraud Act Protections
By affirming that New Jersey Consumer Fraud Act (CFA) claims are not preempted by similar claims under the Real Estate Timeshare Act (RETA), this decision reinforces the broad applicability of the CFA. Courts may continue to apply the CFA alongside other consumer protection laws, ensuring that individuals can pursue multiple legal avenues when businesses engage in fraudulent practices.
2. Increased Scrutiny on Timeshare Industry Practices
Timeshare developers and marketers in New Jersey will likely face greater legal exposure when making misleading claims. The ruling confirms that sales misrepresentations—especially those about resale value, financial benefits, and long-term costs—can be challenged under both statutes. This could lead to stricter compliance measures and more cautious sales tactics in the industry.
3. Parol Evidence and Fraud Exception Clarification
The decision upheld the trial court’s ruling that fraud in the inducement is an exception to the parol evidence rule, allowing plaintiffs to introduce evidence of deceptive oral promises made during sales presentations. Future cases involving consumer contracts with similar disclaimers may reference this ruling to argue that fraud cannot be shielded by fine-print contract terms.
4. Broader Application of Consumer Protection Laws
Other industries beyond timeshares—such as real estate transactions, financial services, and high-pressure sales environments—may see this case cited as persuasive precedent when courts analyze whether different consumer protection statutes can be invoked together. It reinforces the principle that businesses cannot sidestep consumer fraud liability simply because a more specific regulatory statute exists.
5. Potential Increase in Litigation Against Timeshare Developers
Given the large damages awarded—including treble damages, attorney’s fees, and prejudgment interest—this ruling may encourage more consumers to challenge misleading timeshare sales tactics. Developers could face an uptick in lawsuits, compelling them to adjust their business practices or settlement strategies to mitigate risk.
6. Clearer Guidance for Trial Courts on RETA vs. CFA Conflicts
Trial courts now have appellate guidance clarifying that RETA does not override CFA protections. Future disputes involving consumer fraud within the timeshare industry will likely rely on this decision to argue that both statutes can be applied concurrently, influencing case strategy and judicial reasoning.
This ruling ultimately reinforces strong consumer protections and ensures that deceptive business practices—especially in the timeshare industry—can be challenged under multiple legal frameworks.
The New Jersey business transaction attorneys and real estate attorneys at Kemeny, Ramp & Renaud, LLC are available to assist you. Contact us at (732) 853-1725 to learn more.
