ABDM PROPERTIES, LLC VS. BOHDAN O. MEUSZ(L-0272-16, SOMERSET COUNTY AND STATEWIDE) ( 2017 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court."
Although it is posted on the internet, this opinion is binding only on the
parties in the case and its use in other cases is limited. R.1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-4556-15T4
ABDM PROPERTIES,
LIMITED LIABILITY
COMPANY,
Plaintiff-Appellant,
v.
BOHDAN O. MEUSZ, NANCY
A. BERLS-MEUSZ, ALAN
GEORGE FROSS, COLDWELL
BANKER REAL ESTATE
SERVICES LLC, d/b/a
COLDWELL BANKER RESIDENTIAL
BROKERAGE, COLDWELL BANKER
RESIDENTIAL REAL ESTATE LLC,
BRUCE ZIPF,1 CLARKE TOOLE and
CHARLOTTE SEARS,
Defendants-Respondents.
________________________________________________________________
Argued May 23, 2017 – Decided August 23, 2017
Before Judges Espinosa and Suter.
On appeal from Superior Court of New Jersey,
Law Division, Somerset County, Docket No. L-
0272-16.
Rajeh A. Saadeh argued the cause for
appellant.
1
Incorrectly impleaded as "Bruce Zipp."
Alan R. Levy argued the cause for
respondents Bohdan O. Meusz and Nancy A.
Berls-Meusz (Weiss & Weiss, LLC, attorneys;
Mr. Levy and Michael Weiss, of counsel and
on the brief).
Marisa R. De Feo argued the cause for
respondents Alan George Fross, Coldwell
Banker Real Estate Services, LLC, Coldwell
Banker Residential Real Estate, LLC, Bruce
Zipf, Clarke Toole and Charlotte Sears (Saul
Ewing LLP, attorneys; Ms. De Feo, Francis X.
Riley, III, and Caitlin P. Strauss, on the
brief).
PER CURIAM
Defendants filed motions to dismiss the complaint of
plaintiff ABDM Properties LLC pursuant to Rule 4:6-2(e). Plaintiff
appeals from orders granting both motions that dismissed its
complaint with prejudice. Following our plenary review of the
dismissal for failure to state a claim under Rule 4:6-2(e), Rezem
Family Assocs., LP v. Borough of Millstone, 423 N.J. Super. 103,
114 (App. Div.), certif. denied, 208 N.J. 368 (2011), we reverse
and remand.
I.
Defendants Bohdan Meusz and Nancy Berls-Meusz (Sellers) owned
residential property in Bridgewater that they listed for sale with
defendants Coldwell Banker Real Estate Services LLC (Coldwell
Banker) and Alan George Fross, the listing real estate agent.
After purchasing the property, plaintiff discovered certain
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defects and brought this suit against Sellers, Fross, and the
"Coldwell Banker Defendants": Coldwell Banker, Coldwell Banker
Residential Real Estate LLC (CBRRE), and three managing members
of CBRRE: Bruce Zipf, Clarke Toole, and Charlotte Sears (Managing
Members).
The complaint asserted claims of consumer fraud, common law
fraud and fraudulent concealment of a latent defect against all
defendants, based on the following allegations:
Fross and Coldwell Banker are licensed by the State of New
Jersey as a salesperson and real estate company, respectively.
Zipf, Toole and Sears are managing members of CBRRE.
Sellers executed a Seller's Disclosure Statement (SDS) and
represented the information they provided was accurate and
complete. They "did not disclose any defects in the real
property's foundation." Plaintiff reviewed the SDS and entered
into a contract, dated August 16, 2015, to purchase the property.
During the home inspection, plaintiff observed the "property's
crawlspace was physically and visually inaccessible because the
access point thereto was secured by a plywood panel that was
screwed shut." Fross refused access to the crawlspace and
"represented to [p]laintiff and the home inspector that there were
no inspection issues or defects beyond the plywood panel that
concealed the . . . crawlspace." Prior to the closing, plaintiff
3 A-4556-15T4
"returned to the . . . property to remove the plywood panel," but
"was unable to access the interior of the dwelling . . . because
[Fross] removed the lockbox and . . . keys to said dwelling."
Sellers and Fross "refused to grant [p]laintiff access to the . . .
property after" the inspection and prior to the closing date.
After purchasing the property, plaintiff removed the plywood
blocking the crawlspace, which revealed "several defects with
the . . . property's foundation that weaken the structural
integrity of the dwelling thereon and may cause its structural
failure," including "rotted and severely water damaged floor
joists, joists with wood destroying insect damage, a lack of any
footing for the inner walls of the foundation, and an organized
and widespread and improper use of cinder blocks to support the
joist system."
Defendants filed a motion in lieu of an answer to dismiss the
complaint pursuant to Rule 4:6-2(e). At oral argument on the
motion, counsel for Sellers acknowledged that all facts alleged
in the complaint were deemed to be true. Counsel for the rest of
the defendants similarly limited her arguments to the sufficiency
of the allegations.
II.
On a motion to dismiss pursuant to Rule 4:6-2(e), courts must
"search[] the complaint in depth and with liberality to ascertain
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whether the fundament of a cause of action may be gleaned even
from an obscure statement of claim." Printing Mart-Morristown v.
Sharp Elecs. Corp., 116 N.J. 739, 746 (1989) (citation omitted).
All facts alleged in the complaint must be accepted as true, ibid.,
and plaintiffs are afforded "every reasonable inference of fact."
Major v. Maguire, 224 N.J. 1, 26 (2016) (quoting Printing Mart,
supra, 116 N.J. at 746). "[I]f necessary," the plaintiff is given
an "opportunity . . . to amend." Ibid. (quoting Printing Mart,
supra, 116 N.J. at 746); see Hoffman v. Hampshire Labs, Inc., 405
N.J. Super. 105, 116 (2009) (noting dismissal under Rule 4:6-2(e)
is ordinarily without prejudice to allow the plaintiff to amend
the complaint).
In examining the legal sufficiency of the pleading, we are
"limited to . . . the facts alleged on the face of the complaint."
Printing Mart, supra, 116 N.J. at 746. This means we may consider
the "allegations in the complaint, exhibits attached to the
complaint, matters of public record, and documents that form the
basis of a claim" when evaluating a motion to dismiss. Banco
Popular N. Am. v. Gandi, 184 N.J. 161, 183 (2005) (quoting Lum v.
Bank of Am., 361 F.3d 217, 222 n.3 (3d Cir.), cert. denied., 543
U.S. 918, 125 S. Ct. 271, 160 L. Ed. 2d 203 (2004)).
If a court deciding a Rule 4:6-2(e) motion is presented with
and does not exclude "matters outside the pleading," the motion
5 A-4556-15T4
must "be treated as one for summary judgment and disposed of as
provided by [Rule] 4:46, and all parties shall be given reasonable
opportunity to present all material pertinent to such a motion."
R. 4:6-2. However, "a court may consider documents specifically
referenced in the complaint 'without converting the motion into
one for summary judgment.'" Myska v. N.J. Mfrs. Ins. Co., 440
N.J. Super. 458, 482 (App. Div. 2015) (quoting E. Dickerson & Son,
Inc. v. Ernst & Young, LLP, 361 N.J. Super. 362, 365 n.1 (App.
Div. 2003), aff'd, 179 N.J. 500 (2004)), certif. dismissed as
improvidently granted, 224 N.J. 523 (2016).
III.
In this case, the only documents referenced in the complaint
were the SDS and the contract entered into by the parties on August
16, 2015. Those documents were submitted in support of defendants'
motions. However, defendants also supported their motions with a
certification from Fross and documents not referenced in the
complaint: the property's listing report and a letter between
counsel following attorney review that modified the sales contract
(Modified Sales Contract Letter).
We summarize relevant parts of the documents submitted in
support of the motion:
The property's listing report stated it was for sale "AS IS"
and "No repairs will be done by the owners. Buyers will be
6 A-4556-15T4
responsible for all [Certificates of Occupancy]."
In section 8 of the SDS, covering "STRUCTURAL ITEMS," Sellers
disclosed they were aware of the following past or present
structural issues: (1) "movement, shifting, deterioration, or
other problems with walls or foundations"; (2) "cracks or flaws
in the walls or foundation"; and (3) "water leakage or mold in the
house." They also disclosed there were "repairs or other attempts
to control the cause or effect of" these problems. Where the form
asked for more detail, they wrote, "some cracks in wall from winter
shifting – need spackle" and "mold in window remediated by 911
restoration June 2010."
Paragraph 36 of the sales contract provided:
[Plaintiff] is purchasing the property/home as
is. No inspections will be conducted and the
[plaintiff] is responsible for [the
Certificate of Occupancy]. [Plaintiff] will
do any and all repairs. . . . There are no
other contingencies for the purchase of the
property.
The Modified Sales Contract Letter included the following:
Notwithstanding the foregoing, [plaintiff]
represents that he and/or it completed all
inspections as desired by [plaintiff] during
attorney review [and] as such, no further
inspections are required.
In his certification, Fross stated he was "an independent
contractor associated with Coldwell Banker" and "not an employee
of" either Coldwell Banker or CBRRE, and "do[es] not personally
7 A-4556-15T4
know, and ha[s] never spoken with" any of the Managing Members
"regarding any matter, including the [p]roperty."
Following oral argument, the trial court entered two orders
granting defendants' motion and dismissing plaintiff's complaint
with prejudice under Rule 4:6-2(e), finding
[T]he property was explicitly sold as is
without any warranties as to its conditions.
And, moreover, despite initially waiving
an inspection, [plaintiff] did complete an
inspection, at least in part, and represented
to all parties that the inspection was
conducted and sufficient for [its] purposes.
[(Emphasis added).]
IV.
The underlined portion of the trial court's statement relied
on the property's listing report and the Modified Sales Contract
Letter, documents that were not referenced in the complaint.
Therefore, defendants' motions were subject to the standard
governing summary judgment motions. R. 4:6-2; see, e.g., R.K. v.
D.L., 434 N.J. Super. 113, 121 (App. Div. 2014) ("[B]ecause the
court decided defendant's Rule 4:6-2(e) motion after it considered
factual allegations made by the parties in certifications outside
the pleadings, it was required to apply the standard governing
summary judgment motions in Rule 4:46-2(c)." (citing Roa v. Roa,
200 N.J. 555, 562 (2010))).
8 A-4556-15T4
Although the materials relied upon by the trial court required
the application of Rule 4:46-2 to the motion, it is not evident
from the trial court's decision that the summary judgment standard
was applied, particularly as to the principle that the evidence
is to be viewed in the light most favorable to the non-moving
party. Rather, the trial court appeared to conclude that the
allegations in the complaint failed as a matter of law based on
statements in documents not referenced in the complaint.
"When used in connection with the sale of real property, 'as
is' generally means the purchaser is acquiring real property in
its present state or condition." K. Woodmere Assocs., L.P. v.
Menk Corp., 316 N.J. Super. 306, 316 (App. Div. 1998). "The term
implies real property is taken with whatever faults it may possess,
and that the grantor is released of any obligation to reimburse
purchaser for losses or damages resulting from the condition of
the property conveyed." Id. at 317. A related legal principle
is the doctrine of "caveat emptor," or "buyer beware," which
"dictates that in the absence of express agreement, a seller is
not liable to the buyer or others for the condition of the land
existing at the time of transfer." T & E Indus. v. Safety Light
Corp., 123 N.J. 371, 387 (1991).
However, courts have consistently declined to apply the
caveat emptor doctrine where there has been concealment or
9 A-4556-15T4
nondisclosure of a latent defect. See, e.g., id. at 400 ("[W]e
would not countenance a doctrine of 'buyer beware' in the context
of fraudulent concealment of infestation of property . . . .");
N.J. Dep't of Envtl. Prot. v. Ventron Corp., 182 N.J. Super. 210,
227-28 (App. Div. 1981) (holding "caveat emptor should not apply"
where there has been "nondisclosure . . . of latent, not patent,
defects" by a seller), modified on other grounds, 94 N.J. 473(1983).
Courts have also refused to enforce "as is" or "no warranties"
clauses to defeat concealment of latent defects claims. In
Weintraub v. Krobatsch, 64 N.J. 445, 447, 455 (1974), the Supreme
Court held sellers could be liable for not disclosing a cockroach
infestation, even though the sales contract stated "that the
purchasers had inspected the property and were fully satisfied
with its physical condition, that no representations had been made
and that no responsibility was assumed by the seller as to the
present or future condition of the premises." Similarly, in the
context of the sale of a horse, we held that "as is" and "no
warranties" clauses in a contract "were not intended to insulate
[sellers] against their misrepresentations or their concealment
of information they were required to disclose." Richie & Pat
Bonvie Stables, Inc. v. Irving, 350 N.J. Super. 579, 588 (App.
Div. 2002). "One who engages in deliberate concealment may not
10 A-4556-15T4
urge that his victim should have been more circumspect or astute."
Correa v. Maggiore, 196 N.J. Super. 273, 281 (App. Div. 1984).
This exception to caveat emptor "rests upon modern concepts
of justice and fair dealing which recognize that purposeful
concealment can be as destructive as an affirmative false
statement." Ibid. Under this principle, "a seller of real estate
or a broker representing the seller would be liable for
nondisclosure of on-site defective conditions if those conditions
were known to them and unknown and not readily observable by the
buyer." Strawn v. Canuso, 140 N.J. 43, 59 (1995) (citing
Weintraub, supra, 64 N.J. at 454-55); see also Johnson Mach. Co.
v. Manville Sales Corp., 248 N.J. Super. 285, 306 (App. Div. 1991)
(observing New Jersey common law "imposes a duty on a seller of
real property to affirmatively disclose to the buyer a latent
defective condition material to the transaction").
Here, the complaint alleges structural defects were hidden
behind the secured plywood panel; Sellers concealed the defects;
Fross made a misrepresentation in stating there were no inspection
issues behind the plywood and denied plaintiff access to inspect.
These allegations adequately pled a concealment of latent defects
claim. We therefore conclude the trial judge erred in dismissing
the complaint with prejudice on this basis.
11 A-4556-15T4
V.
We next address the claims against CBRRE and the Managing
Members. The complaint alleges defendants Zipf, Toole and Sears
were each "a managing member of" CBRRE and CBRRE, an LLC, "was the
member of" Coldwell Banker, which is also an LLC.
It is "fundamental . . . that a corporation is a separate
entity from its shareholders, and that a primary reason for
incorporation is the insulation of shareholders from the
liabilities of the corporate enterprise." Richard A. Pulaski
Constr. Co. v. Air Frame Hangars, Inc., 195 N.J. 457, 472 (2008)
(quoting N.J. Dept. of Envtl. Prot. v. Ventron Corp., 94 N.J. 473,
500 (1983)). Thus, "[e]xcept in cases of fraud, injustice, or the
like, courts will not pierce a corporate veil." Ibid. (alteration
in original) (quoting Ventron, supra, 94 N.J. at 500).
The corporate veil can be pierced upon "a finding that the
parent so dominated the subsidiary that it had no separate
existence but was merely a conduit for the parent." Ventron,
supra, 94 N.J. at 501. "Even in the presence of corporate
dominance, liability generally is imposed only when the parent has
abused the privilege of incorporation by using the subsidiary to
perpetrate a fraud or injustice, or otherwise to circumvent the
law." Ibid.The complaint does not allege CBRRE or Managing Members in
12 A-4556-15T4
any way "abused the privilege of incorporation by using" Coldwell
Banker "to perpetrate a fraud or injustice, or otherwise to
circumvent the law." Ibid. Nor did it allege Coldwell Banker
"was either a fraud or a sham, or that it had failed to observe
the requisite corporate formalities." Pulaski, supra, 195 N.J.
at 473. Simply put, plaintiff never pled the necessary factual
allegations in its complaint to support piercing-the-corporate-
veil liability against CBRRE or Managing Members.
As a result, all of plaintiff's claims against CBRRE and
Managing Members are dismissed without prejudice.
VI.
Plaintiff's consumer fraud claims are governed by the
Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -206, which requires
proof of three elements: "1) unlawful conduct by defendant; 2) an
ascertainable loss by plaintiff; and 3) a causal relationship
between the unlawful conduct and the ascertainable loss."
D'Agostino v. Maldonado, 216 N.J. 168, 184 (2013) (quoting Bosland
v. Warnock Dodge, Inc., 197 N.J. 543, 557 (2009)).
Unlawful conduct under the CFA includes
[t]he act, use or employment by any person of
any unconscionable commercial practice,
deception, fraud, false pretense, false
promise, misrepresentation, or the knowing,
concealment, suppression, or omission of any
material fact with intent that others rely
upon such concealment, suppression or
13 A-4556-15T4
omission, in connection with the sale or
advertisement of . . . real estate.
[N.J.S.A. 56:8-2.]
"An offense arises under the [CFA] from an affirmative act,
an omission, or a violation of an administrative regulation."
Gennari v. Weichert Co. Realtors, 148 N.J. 582, 605 (1997). An
affirmative misrepresentation must be "material to the transaction
and . . . a statement of fact, found to be false, made to induce
the buyer to make the purchase." Id. at 607.
A.
The CFA does not apply to "the non-professional, casual seller
of real estate." Zaman v. Felton, 219 N.J. 199, 223 (2014). In
fact, the Supreme Court "has never applied the CFA against a non-
professional, who does not advertise real estate services to the
public, based upon his or her purchase of residential real estate
for personal use or as an investment." Ibid. The allegations
are, therefore, insufficient to support a CFA claim against Sellers
as a matter of law, and that claim against them is dismissed
without prejudice.
B.
We next consider the CFA claim against the remaining
defendants, Fross and Coldwell Banker. They argue the trial
court's consideration and reliance upon documents not referenced
14 A-4556-15T4
in the complaint did not convert their motions into summary
judgment motions; a dismissal with prejudice was proper on the
documentary evidence that was submitted; and, in any event, the
pleadings failed to state a claim upon which relief can be granted.
The fatal deficiency they allege in the CFA count is that it
"fails to specifically identify any alleged misrepresentation by
the Coldwell Banker Defendants," a description that omits Fross.2
Coldwell Banker does not argue the complaint suffers from a similar
deficiency as to Fross and, significantly, alleges no deficiency
either in pleading or evidence regarding the ascertainable loss
and causal relationship elements of a CFA claim. Those arguments
are, therefore, deemed waived in this appeal. See Gormley v.
Wood-El, 218 N.J. 72, 95 n. 8 (2014); Drinker Biddle & Reath LLP
v. N.J. Dept. of Law & Pub. Safety, 421 N.J. Super. 489, 496 n.5
(App. Div. 2011) (claims not addressed in merits brief deemed
abandoned); Pressler & Verniero, Current N.J. Court Rules, comment
3 on R. 2:6-2 (2017).
Unlike an individual seller, Fross is not immune from a CFA
claim. See Mango v. Pierce-Coombs, 370 N.J. Super. 239, 254 (App.
Div. 2004) (noting "a broker may be liable under the CFA").
The complaint alleges Fross "represented to [p]laintiff and
2
Defendants identify the "Coldwell Banker Defendants" as
Coldwell Banker, CBRRE and the Managing Members.
15 A-4556-15T4
the home inspector that there were no inspection issues or defects
beyond the plywood panel that concealed the . . . property's
crawlspace." As noted, the complaint also alleges this statement
was false. Because this was certainly a statement of fact material
to the transaction, the complaint adequately pled this element of
the CFA claim.
Coldwell Banker argues the "alleged misconduct of the other
[d]efendants" cannot "sustain the claims against the Coldwell
Banker Defendants." We disagree.
The complaint alleges Fross "was employed by" Coldwell
Banker. This allegation provides a basis for the application of
the doctrine of respondeat superior, rendering Coldwell Banker
liable for Fross's misrepresentation "if, at the time of the
occurrence, [he] was acting within the scope of his . . .
employment." Carter v. Reynolds, 175 N.J. 402, 408-09 (2003).3
The pleading is therefore adequate to support a CFA claim
against Coldwell Banker.
VII.
Common law fraud consists of five elements: "(1) a material
3
Fross certified he was "an independent contractor associated
with Coldwell Banker." If that is the case, Coldwell Banker can
be held liable for Fross's fraud if it "direct[ed] or
participate[d] in" it. Baldasarre v. Butler, 132 N.J. 278, 291
(1993).
16 A-4556-15T4
misrepresentation of a presently existing or past fact; (2)
knowledge or belief by the defendant of its falsity; (3) an
intention that the other person rely on it; (4) reasonable reliance
thereon by the other person; and (5) resulting damages." Allstate
N.J. Ins. Co. v. Lajara, 222 N.J. 129, 147 (2015) (quoting Banco
Popular, supra, 184 N.J. at 172-73). Put differently, "legal
fraud consists of a material representation of a presently existing
or past fact, made with knowledge of its falsity and with the
intention that the other party rely thereon, resulting in reliance
by that party to his detriment." Jewish Ctr. of Sussex Cty. v.
Whale, 86 N.J. 619, 624 (1981).
Defendants have targeted the fourth element of the fraud
claim, "reasonable reliance," as inadequately pled. "Without
reasonable reliance on a material misrepresentation, an action in
fraud must fail." Triffin v. Automatic Data Processing, Inc., 394
N.J. Super. 237, 249 (App. Div. 2007).
Sellers argue plaintiff made two factual allegations to
support its fraud claim against them: (1) Sellers failed to
disclose problems with the property's foundation on the SDS; and
(2) Sellers refused to give plaintiff access to the crawlspace
during the home inspection. At oral argument before the trial
court, Sellers' counsel explicitly stated that, for the purpose
of the motion, they were "not disputing the facts as alleged in
17 A-4556-15T4
the complaint." They argued the allegations were insufficient to
allege "justifiable reliance." On appeal, however, Sellers argue
"these allegations are either disproven by documentary evidence
or contradicted by plaintiff's own allegations."
The remaining defendants argue the complaint fails to allege
"a single fact upon which to base a common law fraud claim against"
Coldwell Banker and also argue the claim was properly dismissed
against Fross. They contend "[p]laintiff cannot plausibly
establish that it relied upon Fross' alleged misrepresentation
regarding the lack of any defects in the foundation in light of
the [SDS] which does disclose defects therein." (Emphasis in
original).
Defendants' arguments conflate the adequacy of the pleading
tested by a Rule 4:6-2(e) motion, with the weighing of evidence
undertaken in an analysis under Rule 4:46-2(c).
To survive a Rule 4:6-2(e) motion, the plaintiff only had to
allege facts which, if proven, would sustain a judgment in its
favor. In contrast, "[t]o defeat a motion for summary judgment,
the opponent must "'come forward with evidence" that creates a
genuine issue of material fact.'" Cortez v. Gindhart, 435 N.J.
Super. 589, 605 (App. Div. 2014) (citation omitted), certif.
denied, 220 N.J. 269 (2015).
Although the summary judgment standard should have been
18 A-4556-15T4
applied here, the arguments were made based on the adequacy of the
pleadings. At least for the purpose of their motions, no defendant
disputed the factual allegations made in the complaint. We decline
to hold plaintiff to a Rule 4:46-2(c) standard when defendants did
not challenge the adequacy of its proofs measured against that
standard.
The complaint alleges Sellers "did not disclose any defects
in the . . . property's foundation in the [SDS]" and Fross refused
access to the crawlspace area during the home inspection and
affirmatively represented there were no inspection issues or
defects behind the plywood panel. Although the SDS disclosed
"movement, shifting, deterioration, or other problems with walls
or foundations" and "cracks or flaws in the walls or foundation,"
the detail Sellers provided regarding these issues was "some cracks
in wall from winter shifting – need spackle." This disclosure
cannot fairly be characterized as being so unequivocal as to
preclude any justifiable reliance upon the representation that
there were no inspection issues or defects behind the plywood
panel as a matter of law.
Similarly, if it is proven that Sellers and Fross knowingly
and intentionally concealed the extent of the property's
foundational problems, plaintiff's pursuit of an independent
investigation thereafter does not impede its right to sue them for
19 A-4556-15T4
fraud. See Byrne v. Weichert Realtors, 290 N.J. Super. 126, 137
(App. Div.), certif. denied, 147 N.J. 259 (1996).
Viewing the complaint with the liberality to which it is
entitled, the complaint pled with specificity all five elements
of a common law fraudulent misrepresentation claim against
Sellers, Fross and Coldwell Banker. The dismissal of these claims
is therefore reversed.
VIII.
In Weintraub, supra, 64 N.J. at 455, the Supreme Court
articulated a cause of action based on "deliberate concealment or
nondisclosure of [a] latent [defect] not observable by the
purchasers on their inspection." The elements of this claim are:
"the deliberate concealment or nondisclosure by the seller of a
material fact or defect not readily observable to the purchaser,
with the buyer relying upon the seller to his detriment." Ventron,
supra, 94 N.J. at 503.
Citing the arguments made regarding the other claims, Sellers
argue this claim must be dismissed because plaintiff is unable to
prove it relied upon a deliberate concealment to its detriment.
Fross and Coldwell Banker argue there are no allegations against
them in this count and further, they are unaware of a cognizable
claim for purposeful concealment under the facts alleged. Neither
challenge to the sufficiency of the allegations in the complaint
20 A-4556-15T4
has merit.
The complaint clearly alleges non-minor, material defects:
"rotted and severely water damaged floor joists, joists with wood
destroying insect damage, a lack of any footing for the inner
walls of the foundation, and an organized and widespread and
improper use of cinder blocks to support the joist system." The
defects were not observable to plaintiff because they were behind
a "plywood panel that was screwed shut" and "prevented visual and
physical access to the . . . property's crawlspace." The
complaint also sufficiently alleged detrimental reliance, stating
"[p]laintiff relied on the representations" made by Sellers and
Fross in purchasing the property which had "several defects with
[its] foundation that weaken the structural integrity of the
dwelling thereon and may cause structural failure."
As for the concealment element, the complaint alleges Sellers
and Fross "purposefully concealed [the] latent defective
conditions from [p]laintiff." With respect to Fross, the complaint
alleges he "refused to provide access to the . . . property's
crawlspace," "refused to grant [p]laintiff access to the real
property" between the inspection and the closing, and "represented
to [p]laintiff . . . that there were no inspection issues or
defects beyond the plywood panel." Certainly, this allegation of
physical and verbal conduct sufficiently alleges concealment.
21 A-4556-15T4
With respect to Sellers, the complaint alleges they concealed
the defects by "not disclos[ing] any defects in the . . .
property's foundation in the [SDS]." As we have noted, although
the SDS disclosed some issues with "past or present movement,
shifting, deterioration, or other problems with walls or
foundation," the explanation given on request minimized rather
than disclosed the extent of the issues as alleged in the
complaint. See Ventron, supra, 182 N.J. Super. at 227-28 (finding
that "notice of hazardous chemicals within and adhering as residue
to the industrial buildings did not put the [buyers] on notice of
surface and subsurface contaminants").
These allegations were sufficient to allege a cognizable
claim based on the deliberate concealment of a latent defect that
was not observable on inspection. Therefore, we reverse the
dismissal of count three of the complaint as to Sellers, Fross and
Coldwell Banker.
Reversed and remanded. We do not retain jurisdiction.
22 A-4556-15T4