97 N.Y.2d 53 (2001)
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Consumer protection laws can apply to real estate transactions when a seller engages in a pattern of deceptive practices that extend beyond the simple sale of property to include consumer services.
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Summary
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The New York City Department of Consumer Affairs (DCA) sued Better Homes Depot and its president, Eric Fessler, alleging deceptive practices in violation of the City’s Consumer Protection Law. Better Homes marketed substandard properties at inflated prices, promised repairs that were often incomplete, and steered buyers to affiliated attorneys and contractors. The Court of Appeals held that while the simple sale of a house isn’t covered by the Consumer Protection Law, the DCA had jurisdiction because Better Homes offered a “package” of services inextricably intertwined with the real estate sale, including deceptive representations about FHA approval and threats to withhold deposits.
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Facts
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Better Homes Depot purchased, repaired, and resold homes in New York City, marketing its activities through newspaper advertisements and flyers. The DCA filed suit based on grievances from dissatisfied customers, alleging a pattern of deceptive practices. Better Homes allegedly showed potential buyers substandard properties at inflated prices, often representing them as foreclosures offered “below market value.” They promised to perform repairs, which were often done poorly or not at all. Better Homes also discouraged buyers from hiring their own attorneys, steering them to attorneys with ties to the company, and falsely claiming FHA approval of lawyers and contractors. The complaint also alleged threats to keep deposits if buyers hesitated due to the properties’ condition.
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Procedural History
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The DCA sued Better Homes and Fessler in Supreme Court. Defendants moved to dismiss, arguing that homes are not “consumer goods or services” and that the DCA lacked the capacity to sue. Fessler argued that he should not be held personally liable without allegations of personal gain. The Supreme Court sustained the complaint against Better Homes but dismissed it against Fessler. The Appellate Division modified and dismissed the complaint against both defendants. The Court of Appeals reversed, reinstating the complaint against both Better Homes and Fessler.
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Issue(s)
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1. Whether the activities of Better Homes Depot involve “consumer goods or services” within the meaning of the New York City Consumer Protection Law, thus giving the DCA jurisdiction.r
2. Whether defendant Fessler can be subjected to personal liability when the complaint does not allege that he participated in the wrongful conduct for his individual benefit.
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Holding
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1. Yes, because Better Homes Depot engaged in a pattern of deceptive practices that extended beyond the simple sale of real property to include a package of consumer services that were