JOSEPH DIRENZO VS. STEVEN KATCHENÂ (L-1990-10, SOMERSET COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE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-0329-14T1
JOSEPH DIRENZO,
Plaintiff-Appellant,
v.
STEVEN KATCHEN and
RAYMOND BROOKS,
Defendants-Respondents,
and
ANTHONY GALATI, FIRST
INTERSTATE FINANCIAL CORPORATION,
AMERICA'S FIRST ABSTRACT,
INC., PREMIER MORTGAGE
SERVICES, L.L.C., and
CARDINAL FINANCIAL COMPANY,
Defendants.
_______________________________________________
Argued May 9, 2017 – Decided August 1, 2017
Before Judges Messano, Espinosa and Grall.
On appeal from the Superior Court of New
Jersey, Law Division, Somerset County, Docket
No. L-1990-10.
Patrice R. Ianetti argued the cause for
appellant.
Brian J. Levine argued the cause for
respondent Steven Katchen.
Brian Boyle argued the cause for respondent
Raymond Brooks (Maria A. Arena, attorney; Ms.
Arena and Mr. Boyle, on the brief).
PER CURIAM
In an effort to stave off the dire financial circumstances
faced by his nephew, Antonio Galati, plaintiff Joseph DiRenzo
agreed to purchase Galati's home (the property) with a mortgage
arranged by defendant Steven Katchen, a licensed mortgage broker.
Defendant Raymond Brooks attended the closing, ostensibly as a
representative of the title insurance agency, America's First
Abstract, Inc. (AFA). Galati was to receive $60,000 from the
closing, make payments on the loan and retain beneficial use of
the property until he could buy it back. Instead, Galati received
far less money, the loan went into default and plaintiff paid
carrying charges on the property until he eventually sold it at a
loss.
Plaintiff filed suit against Katchen and Brooks, alleging
legal and equitable fraud, violations of the Consumer Fraud Act,
N.J.S.A. 56:8-1 to -204 (the CFA), negligent misrepresentation,
civil conspiracy, breach of fiduciary duty, and professional
negligence against Brooks. In pre-trial motions, Katchen sought
partial summary judgment dismissing the CFA claims against him;
2 A-0329-14T1
Brooks sought an order striking plaintiff's expert report and
granting summary judgment on the CFA claims against him.
After construing the CFA's provision prohibiting punitive
damage and counsel fee awards against "a [licensed] real estate
broker, broker-salesperson or salesperson," N.J.S.A. 56:8-19.1,
and concluding Katchen was such a licensed professional, the motion
judge quoted N.J.S.A. 56:8-19.1 in denying Katchen's motion
without prejudice:
[I]n order for the CFA to not apply to Katchen,
Katchen has the burden of demonstrating that
he . . . "[h]ad no actual knowledge of the
false, misleading or deceptive character of
the information; and . . . [m]ade a reasonable
and diligent inquiry to ascertain whether the
information is of a false, misleading or
deceptive character."
The motion judge rejected Brooks' contention that title
producers were "learned professionals" to whom the CFA did not
apply. See, e.g., Plemmons v. Blue Chip Ins. Servs., Inc., 387
N.J. Super. 551, 561-63 (App. Div. 2006) (explaining this exception
to the CFA). He wrote, "[T]itle producers are within the
definition of real estate brokers and thus included in the
exception to the learned professional rule set out in N.J.S.A.
56:8-19.1." The judge also rejected Brooks' argument that he
served only as a notary public at the closing, stating, "Brooks
signed as the settlement agent on a number of the closing documents
3 A-0329-14T1
. . . . This . . . alone creates issues of material fact regarding
Brooks' role in the sale of the subject property." The judge
denied Brooks' motion without prejudice.
A bench trial ensued, spanning fourteen days over nine months
before a different Law Division judge. At the conclusion of
plaintiff's case, both defendants moved for involuntary dismissal.
See R. 4:37-2(b). For reasons stated in his oral decision, the
judge entered two orders dismissing plaintiff's complaint as to
Katchen and Brooks.
Plaintiff appeals, asserting the trial judge applied the
wrong standard in evaluating the sufficiency of the evidence as
to each cause of action.1 We affirm in part, reverse in part,
and remand for further proceedings consistent with this opinion.
I.
Before summarizing the evidence at trial, we explain the
principles that inform the proper disposition of a motion for
involuntary judgment and our review of that decision. Rule 4:37-
2(b) provides:
After having completed the presentation of the
evidence on all matters other than the matter
of damages (if that is an issue), the
1
Plaintiff makes no argument regarding dismissal of his equitable
fraud claim. An issue not briefed is deemed waived on appeal.
N.J. Dept. of Envtl. Prot. v. Alloway Twp., 438 N.J. Super. 501,
505-06 n.2 (App. Div.), certif. denied, 222 N.J. 17 (2015).
4 A-0329-14T1
plaintiff shall so announce to the court, and
thereupon the defendant, without waiving the
right to offer evidence in the event the
motion is not granted, may move for a
dismissal of the action . . . on the ground
that upon the facts and upon the law the
plaintiff has shown no right to relief.
Whether the action is tried with or without a
jury, such motion shall be denied if the
evidence, together with the legitimate
inferences therefrom, could sustain a judgment
in plaintiff's favor.
"If the court, '"accepting as true all the evidence which supports
the position of the party defending against the motion and
according him the benefit of all inferences which can reasonably
and legitimately be deduced therefrom,"' finds that '"reasonable
minds could differ,"' then '"the motion must be denied."'" ADS
Assocs. Grp., Inc. v. Oritani Sav. Bank, 219 N.J. 496, 510-11
(2014) (quoting Verdicchio v. Ricca, 179 N.J. 1, 30 (2004)
(quoting Estate of Roach v. TRW, Inc., 164 N.J. 598, 612 (2000))).
"An appellate court applies the same standard when it reviews a
trial court's grant or denial of a Rule 4:37-2(b) motion for
involuntary dismissal." Id. at 511 (citing Fox v. Millman, 210
N.J. 401, 428 (2012)).
"[T]he judicial function here is quite a mechanical one. The
trial court is not concerned with the worth, nature or extent
(beyond a scintilla) of the evidence, but only with its existence,
viewed most favorably to the party opposing the motion." Dolson
5 A-0329-14T1
v. Anastasia, 55 N.J. 2, 5-6 (1969). The "criteria set forth in
Dolson . . . are particularly applicable to complex transactions
wherein fraud or other inequitable conduct is charged because in
such instances the facts are peculiarly within the possession and
knowledge of the parties charged with the improper conduct."
Zucker v. Silverstein, 134 N.J. Super. 39, 50 (App. Div. 1975).
"Ordinarily, the dismissal motion should be denied if the
plaintiff's case rests upon the credibility of a witness."
Pressler & Verniero, Current N.J. Court Rules, comment 2.1 on R.
4:37-2 (2017) (citing Ferdinand v. Agric. Ins. Co. of Watertown,
N.Y., 22 N.J. 482, 494 (1956)). However,
when the trial court's dismissal is dependent
upon its acceptance of the credibility of a
key witness . . . , the dismissal is
sustainable only where the witness's testimony
"is clear and convincing, not incredible in
the light of general knowledge and common
experience, not extraordinary, not
contradicted in any way by witnesses or
circumstances, and so plain and complete that
disbelief of the story could not reasonably
arise in the rational process of an ordinarily
intelligent mind . . . ."
[Cameco, Inc. v. Gedicke, 299 N.J. Super. 203,
213 (App. Div. 1997) (quoting Ferdinand,
supra, 22 N.J. at 494), aff'd in part, mod.
in part, 157 N.J. 504 (1999) (emphasis
added).]
The trial judge relied in part upon a case that embodies this
rare exception to Dolson's broad imperative, Caliguire v. City of
6 A-0329-14T1
Union City, 104 N.J. Super. 210, 212 (App. Div. 1967), aff'd, 53
N.J. 182 (1969). In that case, a child died when he fell from a
rope allegedly suspended from a tree on property owned by the
city. A city police officer testified on the plaintiff's case
that he regularly patrolled the area and had never seen a rope
suspended from the tree, nor had anyone informed him of its
existence. Id. at 214. The judge granted the defendant-city's
motion for involuntary dismissal, and the plaintiff appealed.
Ibid.
We concluded that the plaintiff failed to prove a necessary
element of the case, i.e., the city had actual knowledge the rope
was on its property. Id. at 216. We rejected plaintiff's
contention that, although the officer's testimony was
uncontroverted, it was not conclusive, because his credibility was
an issue for the jury to decide. Id. at 217. Relying on Ferdinand,
supra, 22 N.J. at 494, we said,
[w]here, as here, the uncontradicted testimony
of a witness is unaffected by any conflicting
inferences to be drawn from it and is not
improbable, extraordinary or surprising in its
nature, and no other ground exists for
hesitating to accept it as the truth, we
cannot conclude that the trial judge erred in
doing so. . . . While, as plaintiff argues,
he was not conclusively bound by [the
officer's] testimony we believe the trial
judge could properly accept it as factually
true -- not because [the officer] was called
as a witness by the plaintiff, but because it
7 A-0329-14T1
was the only testimony offered on the subject
of defendant's knowledge of the rope swing on
its property.
[Id. at 218-19.]
Lastly, "[i]f the plaintiff's case requires the support of
expert testimony, the failure to adduce it will require dismissal."
Pressler & Verniero, supra, comment 2.3 on R. 4:37-2; see also
Smith v. Keller Ladder Co., 275 N.J. Super. 280, 284-86 (App. Div.
1994) (affirming dismissal when plaintiff's expert's opinion was
sole proof of necessary element and was stricken as a net opinion).
With these principles in mind, we turn to the evidence at
trial.2
II.
Galati purchased the property in 1999, and Katchen was the
loan originator for the mortgage. Thereafter, Galati refinanced
2
Plaintiff argues the trial judge erroneously dismissed his CFA
claims and his professional negligence claim against Brooks by
ignoring the motion judge's prior decisions, which he contends
were law of the case. This specific argument lacks sufficient
merit to warrant extended discussion in a written opinion. R.
2:11-3(e)(1)(E). "[A] denial of summary judgment is always
interlocutory, and never precludes the entry of judgment for the
moving party later in the case." Hart v. City of Jersey City, 308
N.J. Super. 487, 498 (App. Div. 1998) (citing Johnson v. Cyklop
Strapping Corp., 220 N.J. Super. 250, 257 (App. Div. 1987), certif.
denied, 110 N.J. 196 (1988)); see also Gonzales v. Ideal Tile
Importing Co., Inc., 371 N.J. Super. 349, 356 (App. Div. 2004)
(holding that a denial of summary judgment "decides nothing and
merely reserves issues for future disposition"), aff’d, 184 N.J.
415 (2005), cert. denied, 546 U.S. 1092, 126 S. Ct. 1942, 163
L. Ed. 2d 857 (2006).
8 A-0329-14T1
the property three times, and on each occasion, Katchen arranged
the mortgage loan. In March 2007, Galati experienced financial
difficulties and sought Katchen's help again. However, Katchen
told Galati his credit was too poor and suggested he find someone
with better credit to help him. Galati called plaintiff, saying
he needed someone to "sign" for him to secure funds from the equity
in his home. Plaintiff agreed to meet Galati, and one hour later,
Galati and Katchen arrived at plaintiff's home.
Katchen proposed that Galati transfer the house to plaintiff
after plaintiff secured a $460,000 mortgage. Galati would receive
$60,000 in cash from the arrangement, which he would use to pay
the mortgage, taxes, and related expenses for the next year. At
the end of one year, plaintiff would transfer the property back
to Galati or to a corporation he controlled.
Galati testified that Katchen explained the entire plan to
plaintiff. When plaintiff asked Katchen if he needed an attorney,
Katchen told him no, because it was a "family matter," and Katchen
would take care of it. Plaintiff did not sign a mortgage
application or anything else at the meeting. There was no written
agreement for sale or any written agreement detailing the terms
of plaintiff's and Galati's agreement. After the meeting,
plaintiff and Galati had no contact with Katchen until the closing.
9 A-0329-14T1
On April 24, 2007, the mortgagee filed a foreclosure action
against the property; the closing took place the next day at the
property. Karinn Van Pelt, a real estate agent and title producer
who owned AFA, testified AFA was the "settlement agent," whose job
it was to ensure the title and closing documents were correct and
to "sign off" when the closing was funded. According to Van Pelt,
AFA only had one employee, who was not a title producer, so she
hired independent contractors to attend real estate closings.
She explained that before a closing, the mortgage broker
should explain the HUD-1 statement3 to the borrower, review the
"package" she prepared and answer any questions. For plaintiff's
closing, Van Pelt got the "package" from the lender, First
Interstate Financial, and gave it to Brooks on the day of the
closing.
Van Pelt hired Brooks, a licensed title producer, and
repeatedly testified he was simply a notary, whose job it was to
witness the closing. However, she also acknowledged there were
numerous places in the closing documents where Brooks signed as
3
"The HUD-1 Settlement Statement is a document that lists all
charges and credits to the buyer and to the seller in a real estate
settlement, or all the charges in a mortgage refinance."
https://www.consumerfinance.gov/ask-cfpb/what-is-a-hud-1-
settlement-statement-en-178/ (last visited 7/14/17). According
to Van Pelt, the purpose of the HUD-1 statement is "to know who's
paying who."
10 A-0329-14T1
"settlement agent." Van Pelt stated she used a notary who was
also a licensed title producer because her insurance underwriter
preferred that.
Plaintiff, Galati, Katchen and Brooks were the only people
present at the closing. Galati recognized Brooks from a prior
refinance closing. Brooks told plaintiff where to sign, but
otherwise provided no explanation of the documents. Plaintiff
admittedly asked no questions because he trusted Brooks and Katchen
as "professional people."
Plaintiff signed a mortgage application at the closing that
was dated March 27, 2007. Katchen signed the form, indicating he
obtained plaintiff's application by "mail." The application
contained several inaccuracies, including plaintiff's marital
status and the extent of his education. The application listed
the purchase price of the property as $455,000, the loan amount
as $409,500, and cash from the borrower as $45,910.17. Plaintiff
also signed a second loan application dated April 25, 2007, with
the same information.
Plaintiff signed two different HUD-1 statements at the
closing. Although both listed the sales price as $455,000, there
were slight differences in the mortgage amount, the payoff amount
for Galati's existing mortgage and the amount of cash due from
borrower, i.e., plaintiff. According to plaintiff, no one told
11 A-0329-14T1
him to bring any money to the closing, and he did not bring any.
In one HUD-1 statement, the "cash to seller" was $70,972.60; in
the other HUD-1, it was $58,716.31. AFA paid Premier Mortgage,
Katchen's company, $11,252.
Galati did not receive any money at the closing, but about
two weeks later, he received a check for $11,943.11 from AFA.
Galati repeatedly called Katchen to ask where the rest of his
money was, and Katchen told him he would look into the problem,
but Galati never received any more money.
After the closing, Van Pelt repeatedly called Katchen to
obtain proof of the check received from the borrower, because the
loan could not be funded without the check. Katchen told her to
"relax," and claimed he had the funds. Still, Van Pelt wanted
proof and ultimately contacted Katchen's assistant, Damian Fumero,
who, eventually faxed a copy of a bank check to her. Van Pelt
produced a copy of a check for $40,000, payable to Galati and
drawn on Wachovia Bank.
Fumero denied ever seeing the Wachovia check or that he had
spoken to Van Pelt about it. An internal security officer for
Wells Fargo, Wachovia's successor in interest, testified that
Wachovia never issued the check, nor was it ever presented to the
bank for payment. Van Pelt acknowledged the loan should not have
12 A-0329-14T1
closed because of discrepancies on the HUD-1 and because plaintiff
never tendered the necessary funds.
Plaintiff was initially unaware Galati did not receive
$60,000, and found out one month later when Galati told him that
he had not received the money. Plaintiff loaned Galati more money,
but Galati soon defaulted on payments under the new mortgage and
moved out of the property. Plaintiff started making the payments
and eventually listed the house for sale with Katchen's wife,
realtor Patricia Grish-Katchen. Plaintiff relisted the property
several times thereafter with different agents until it finally
sold in April 2013 for $325,000.
After an extensive N.J.R.E. 104 hearing, the judge qualified
James Reilly as an expert in real estate transactions "through the
lens of a settlement agent, a licensed title producer, or notary."
Reilly explained that a buyer must bring the amount set forth on
line 303 of the HUD-1 to the closing, and, failing to do so, the
closing must be adjourned. He read from a HUD-1 in evidence,
where Brooks signed under the following statement: "The HUD-1
settlement, which I have prepared, is a true and accurate account
of this transaction. I have caused or will cause the funds to be
disbursed in accordance with this statement." Both HUD-1 forms
in evidence explained it was a "crime to knowingly make false
statements . . . on this . . . form." Reilly acknowledged,
13 A-0329-14T1
however, that the lender's instructions provided to Brooks did not
require proof of funds. Reilly distinguished a notary's
obligations from that of a settlement agent, and opined that,
although Brooks was AFA's independent contractor, he was acting
as settlement agent because a settlement agent is "any entity
involved in the settlement process."
III.
Plaintiff contends the judge consistently misapplied the
standards governing disposition of a Rule 4:37-2(b) motion by
misconstruing our holding in Caliguire. We agree.
For example, in discussing the fraud claim, the judge cited
inconsistencies in Galati's testimony, and between his and
plaintiff's testimony, and said, "this testimony is as it was in
Calaguire, contradictory, improbable, and surprising, such that
the Court can draw a conflicting inference and has hesitation in
accepting its truth on its face." Noting "multiple versions of
the agreement" between plaintiff and his nephew, the judge
concluded "much of [the testimony] falls within the category as
defined by Caliguire as improbable and certainly surprising."
However, Caliguire permits a judge to accept "uncontradicted
testimony" from a witness, which if not "improbable, extraordinary
or surprising," may remove the issue of credibility from the jury
and permits the judge to decide the issue based upon that
14 A-0329-14T1
uncontradicted testimony alone. Caliguire, supra, 104 N.J. Super.
at 218 (emphasis added). When that testimony is "the only
testimony offered" by the plaintiff to prove an essential element
of the case, id. at 219, dismissal is appropriate under Rule 4:37-
2(b).
In Ferdinand, upon which we relied in Caliguire, the Court
clearly stated that where people of "reason and fairness may
entertain differing views as to the truth of the testimony," such
testimony must go to the jury. Ferdinand, supra, 22 N.J. at 494.
In short, the judge misapplied the holding in Caliguire, which had
no relevance to the evaluation of conflicting testimony offered
by plaintiff in this case.
We need not cite other instances where the judge made
inappropriate credibility determinations because they are
irrelevant to our consideration of this appeal. That is so
because, as already noted, our standard of review requires us to
examine the evidence ourselves and apply the extremely indulgent
standard set forth in Rule 4:37-2(b). ADS Assocs., supra, 219
N.J. at 511. We do that now with respect to the various causes
of action in plaintiff's complaint.
A.
To establish legal fraud, a plaintiff must prove "(1) a
material misrepresentation of a presently existing or past fact;
15 A-0329-14T1
(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." Banco
Popular N. Am. v. Gandi, 184 N.J. 161, 172-73 (2005) (quoting
Gennari v. Weichert Co. Realtors, 148 N.J. 582, 610 (1997)). It
was in considering the evidence regarding fraud that the judge's
misunderstanding of Caliguire's holding caused the most mischief.
Applying the proper standard under Rule 4:37-2(b), the
evidence demonstrated Katchen told plaintiff that Galati would
receive $60,000, which would be sufficient to carry the costs of
the loan on the property for one year. The judge believed these
were only aspirational statements, not misrepresentations of
presently existing facts, because no appraisal had been done on
the property. However, Katchen had secured mortgages for the
property many times in the past, most recently six months earlier,
in October 2006, and presumably knew the balance of the existing
mortgage on the property. Plaintiff was entitled to a reasonable
inference that Katchen represented he could secure a loan for
enough money to pay off the existing mortgage and net $60,000 to
Galanti, all without plaintiff tendering any money at all.
Moreover, at closing, Katchen knew Galati would not receive
$60,000. Yet, Katchen processed the loan and received his
commission. His actions thereafter implicitly reflect knowledge
16 A-0329-14T1
of the fraud. "The fact that no affirmative misrepresentation is
made does not bar relief predicated on a claim of fraud. Silence
in the face of an obligation to disclose may be fraud, since the
suppression of truth when it should be disclosed is equivalent to
an expression of a falsehood." Baldasarre v. Butler, 254 N.J.
Super. 502, 521 (App. Div. 1992), aff'd in part, rev'd in part,
132 N.J. 278 (1993). Although plaintiff adduced no proof regarding
the professional standards required of a mortgage broker, there
was evidence that the loan closed only because of
misrepresentations about the funds received from plaintiff. It
is axiomatic that someone in Katchen's position had a duty to
disclose the shortfall rather than process the closing and receive
a fee.
We also reject the judge's conclusion that no reasonable
person could find plaintiff's reliance upon Katchen's
misrepresentation or silent affirmance was reasonable, because
plaintiff, who had engaged in previous real estate transactions,
signed documents that reflected the need to bring money to the
closing. See Walid v. Yolanda for Irene Couture, Inc., 425 N.J.
Super. 171, 181-82 (App. Div. 2012) (explaining reliance as
prerequisite for fraud claim). However, where one party to an
oral agreement trusts the other party to reduce it to writing, he
may expect it will be drawn accurately in accordance with the oral
17 A-0329-14T1
understanding between them. Peter W. Kero, Inc. v. Terminal
Constr. Corp., 6 N.J. 361, 369 (1951); see also Bonnco Petrol,
Inc. v. Epstein, 115 N.J. 599, 611 (1989) (when terms of an oral
agreement are not accurately reflected in writing, "it matters
little that they [the plaintiffs] failed to read the agreement
carefully before signing"). We reverse the dismissal of
plaintiff's fraud claim against Katchen.
As to Brooks, there was no evidence of an affirmative
misrepresentation regarding Galati's receipt of $60,000, or any
evidence that Brooks was aware of the plan. However, plaintiff
contends Brooks deliberately misrepresented the accuracy of the
figures on the HUD-1 form, specifically, the lack of any funds
from plaintiff. We agree.
Reilly testified that Brooks was the settlement agent and had
a duty to make sure the HUD-1 form was accurate, including making
sure that the amount of money on line 303 of the form, i.e., "cash
from borrower," was correct. Plaintiff, however, did not rely
upon this misrepresentation nor did he suffer any damages from
Brooks' misrepresentation. After all, he knew he brought no money
to the closing, and yet he received title to the property without
paying for it. As a result, plaintiff adduced insufficient proof
of fraud as to Brooks. We affirm the dismissal of the fraud claim
against Brooks.
18 A-0329-14T1
In arguing the judge wrongfully dismissed his CFA claims,
plaintiff essentially relies on the rulings made by the motion
judge, which, he argues, demonstrated he had established a prima
facie case of statutory violations. As noted above, these
arguments lack any merit.
However, much of what we have said about the evidence of
common law fraud applies equally to plaintiff's CFA claims. In
dismissing plaintiff's CFA claim against Katchen, the judge once
again misconstrued Calaguire's holding and made numerous
credibility findings based upon contradictory testimony. As to
Brooks, he determined no reasonable person could conclude he acted
as settlement agent, despite the fact that Brooks signed as such
on numerous documents.
N.J.S.A. 56:8-19 provides a remedy to "[a]ny person who
suffers any ascertainable loss of moneys or property, real or
personal, as a result of the use or employment by another person
of any method, act, or practice declared unlawful under this act
. . . ." "An ascertainable loss under the CFA is one that is
'quantifiable or measurable,' not 'hypothetical or illusory.'"
D'Agostino v. Maldonado, 216 N.J. 168, 185 (2013) (quoting
Thiedemann v. Mercedes-Benz U.S.A, L.L.C., 183 N.J. 234, 248
(2005)).
19 A-0329-14T1
"The CFA requires a plaintiff to prove 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.'" Id. at 184 (quoting Bosland
v. Warnick Dodge, Inc., 197 N.J. 543, 557 (2009)). "There is no
precise formulation for an 'unconscionable' act that satisfies the
statutory standard for an unlawful practice. The statute
establishes a 'broad business ethic' applied 'to balance the
interests of the consumer public and those of the sellers.'" Ibid.
(quoting Kugler v. Romain, 58 N.J. 522, 543-44 (1971)).
A violation of the CFA can arise in three different settings,
only two of which are important here. Gennari, supra, 148 N.J.
at 605. An affirmative misrepresentation, even if unaccompanied
by knowledge of its falsity or an intention to deceive, is
sufficient. Ibid. (citing Strawn v. Canuso, 140 N.J. 43, 60
(1995)). An omission or failure to disclose a material fact, if
accompanied by knowledge and intent, is also sufficient to violate
the CFA. Ibid. (citing Cox v. Sears Roebuck & Co., 138 N.J. 2,
18 (1994)). Moreover, "causation under the CFA is not the
equivalent of reliance. . . . To establish causation, a consumer
merely needs to demonstrate that he or she suffered an
ascertainable loss 'as a result of' the unlawful practice." Lee
20 A-0329-14T1
v. Carter-Reed Co. L.L.C., 203 N.J. 496, 522 (2010) (citations
omitted) (quoting N.J.S.A. 56:8-19).
Here, applying the indulgent standards under Rule 4:37-2(b),
plaintiff proved Katchen made an affirmative misrepresentation
before the closing and omitted material facts at the closing. The
evidence demonstrated a causal connection between the
unconscionable conduct of Katchen and plaintiff's ascertainable
loss. We reverse dismissal of plaintiff's CFA claim against
Katchen.
As to Brooks, following the completion of testimony, and
apparently at the judge's direction, plaintiff's counsel emailed
defense counsel setting forth the specific causes of action it had
proven as to each defendant. As to Brooks, plaintiff limited his
CFA claim to "knowing omissions." Several weeks later, the parties
appeared before the judge to argue defendants' motions for
involuntary dismissal.4 It is unclear from the argument what
plaintiff's specific CFA claim was against Brooks, however, in his
oral decision, the judge only addressed and rejected plaintiff's
claim that Brooks knowingly omitted telling plaintiff he had to
bring $44,000 to the closing.
4
The parties evidently provided briefs beforehand to the judge,
but they are not part of the appellate record. R. 2:6-1(a)(2).
21 A-0329-14T1
We fail to see any evidence of a "knowing omission" committed
by Brooks. Reilly testified Brooks was not required to see proof
of funds. Plaintiff makes no specific argument to support his CFA
claim beyond conclusory statements without any supporting legal
authority. Miller v. Reis, 189 N.J. Super. 437, 441 (App. Div.
1983). We affirm the dismissal of plaintiff's CFA claim against
Brooks.
B.
Negligent misrepresentation is "[a]n incorrect statement,
negligently made and justifiably relied upon," and may be the
"basis for recovery of damages for economic loss or injury
sustained as a consequence of that reliance." H. Rosenblum, Inc.
v. Adler, 93 N.J. 324, 334 (1983). "Negligent misrepresentation
does not require scienter as an element," and therefore, "it is
easier to prove than fraud." Kaufman v. i-Stat Corp., 165 N.J.
94, 110 (2000).
It was error to dismiss plaintiff's negligent
misrepresentation claim against Katchen because there was evidence
that Katchen misrepresented the consequences of the sale, and
plaintiff relied upon those misrepresentations in agreeing to
close. As to Brooks, plaintiff proved a misstatement on the HUD-
1 form, but, as already noted, he failed to prove any reliance or
22 A-0329-14T1
damages as a result. We affirm dismissal of the negligent
misrepresentation claim against Brooks.
C.
Plaintiff contends the judge erred in dismissing his breach
of fiduciary duty claim against each defendant. However, the
record reflects that plaintiff's counsel advised the judge he was
not pursuing such a claim against Katchen, and, indeed, the judge
never addressed the issue in his decision. There is no indication
that plaintiff ever sought reconsideration of the issue. We
therefore refuse to consider it now for the first time on appeal.
Nieder v. Royal Indemn. Ins. Co., 62 N.J. 229, 234 (1973).
As to Brooks, the judge again focused on inconsistencies
between Van Pelt's testimony, i.e., Brooks was only a notary, and
Reilly's testimony about the role of a settlement agent at closing.
He found plaintiff failed to establish a prima facie case that
Brooks was a settlement agent.
However, plaintiff was entitled to all favorable testimony
and evidence, as well as all favorable inferences drawn therefrom.
Brooks signed the documents as settlement agent and stated under
penalty that the amounts reflected on the HUD-1 statement were
accurate. Reilly testified Brooks had an obligation not to
consummate the closing if the numbers were not accurate, yet, the
closing was consummated.
23 A-0329-14T1
In F.G. v. MacDonell, 150 N.J. 550, 563-64 (1997), the Court
explained:
The essence of a fiduciary relationship is
that one party places trust and confidence in
another who is in a dominant or superior
position. A fiduciary relationship arises
between two persons when one person is under
a duty to act for or give advice for the
benefit of another on matters within the scope
of their relationship. The fiduciary's
obligations to the dependent party include a
duty of loyalty and a duty to exercise
reasonable skill and care. Accordingly, the
fiduciary is liable for harm resulting from a
breach of the duties imposed by the existence
of such a relationship.
[(Citations omitted).]
Here, plaintiff admittedly never met Brooks before the closing
and, while he trusted Brooks because he was a "professional," it
is difficult to conclude they had a special fiduciary relationship,
or that Brooks had a duty to act for plaintiff's benefit. Reilly
never described the relationship in those terms. We affirm
dismissal of plaintiff's claim that Brooks breached a fiduciary
duty.
D.
We affirm dismissal of plaintiff's civil conspiracy claim.
"[A] civil conspiracy is 'a combination of two or more persons
acting in concert to commit an unlawful act, or to commit a lawful
act by unlawful means, the principal element of which is an
24 A-0329-14T1
agreement between the parties to inflict a wrong against or injury
upon another, and an overt act that results in damage.'" Banco
Popular, supra, 184 N.J. at 177 (quoting Morgan v. Union Cty. Bd.
of Chosen Freeholders, 268 N.J. Super. 337, 364 (App. Div. 1993),
certif. denied, 135 N.J. 468 (1994)). The judge concluded there
was insufficient proof of a civil conspiracy, noting it was
necessary to link Brooks to the alleged plan "hatched by Katchen"
that Galati would realize $60,000 from the sale of the property
and plaintiff would have no financial outlay. We agree.
E.
Lastly, plaintiff argues the judge should not have dismissed
his professional negligence claim against Brooks. Initially, we
reject Brooks' argument that plaintiff abandoned this claim via
the above-referenced, post-testimonial email. Plaintiff's counsel
clearly stated he was pursuing the "[n]egligence" claim against
Brooks, and the judge considered the issue, ultimately concluding
"Reilly's testimony failed to establish the standard of care of a
closing agent." Plaintiff argues, among other things, that Brooks
had a duty to "conduct the closing in a lawful manner in accordance
with the duties of a [s]ettlement [a]gent." We agree.
The judge reached his conclusion because Reilly could not
cite specific regulatory provisions regarding the HUD-1 statement
and failed to provide "his industry's definition of a settlement
25 A-0329-14T1
agent." Clearly, opinions that are nothing more than the expert's
personal views are inadmissible net opinions. Pomerantz Paper
Corp. v. New Cmty. Corp., 207 N.J. 344, 373 (2011). However,
Reilly's testimony was not a net opinion.
He clearly set forth the duties of a settlement agent. He
did so based upon his training, experience and education as a
licensed title producer who had served as a settlement agent at
countless closings. See, e.g., Rosenberg v. Tavorath, 352 N.J.
Super. 385, 399-400 (App. Div. 2002) (reversing order of
involuntary dismissal and concluding the plaintiff's expert was
qualified to render opinions based upon his education,
occupational experience and knowledge acquired over years).
Moreover, Reilly cited an obligation imposed on the settlement
agent by the HUD-1 form itself, i.e., that it was "a true and
accurate account of th[e] transaction," and the settlement agent
had "caused or w[ould] cause the funds to be disbursed in
accordance with this statement." Under the indulgent standard
applicable to a Rule 4:37-2(b) motion, plaintiff demonstrated
Brooks was a "settlement agent" who breached this duty by executing
a false HUD-1 form. Clearly, Brooks' actions were necessary to
consummate the closing, the proximate result of which was
plaintiff's ownership of the property without the expected
concomitant disbursement of $60,000 to Galati. Under the
26 A-0329-14T1
circumstances, it was error to dismiss plaintiff's negligence
claim against Brooks.
IV.
In sum, as to Katchen, we affirm the order dismissing
plaintiff's claims for equitable fraud, breach of fiduciary duty
and conspiracy, all of which were properly dismissed, and reverse
the dismissal of plaintiff's claims for legal fraud, violation of
the CFA and negligent misrepresentation.
As to Brooks, we affirm the order dismissing all plaintiff's
claims, except for negligence. We reverse the order in that
respect.
We remand the matter to the Law Division for further
proceedings consistent with this opinion. We do not retain
jurisdiction.
27 A-0329-14T1