On December 1, 1972 plaintiffs Vincent and Joanne Neveroski purchased a home in Bayville, New Jersey, from Alfred and Marion Blair. Some four months after they took possession the Neveroskis found that the house was so infested with termites that they were compelled to vacate the premises. Therein lies the genesis of this litigation.
The Neveroskis alleged in their complaint that although it was represented to them that the premises were free of termites it was known that the situation was to the contrary and that the house had suffered extensive termite damage. The Neveroskis named as defendants the sellers (Blairs), the
service company that had treated the premises for termites and had certified before the closing that they were free thereof (W. T. Grant), the real estate broker which handled the sale of the property (Blue Ribbon), and the mortgage company that issued the mortgage on the house (Larson Mortgage Co.). Larson impleaded the Porter Company, Ltd., appraisers, upon which it had relied in issuing the mortgage. The Neveroskis charged that defendants deceived them as to the condition of the premises and sought rescission of their purchase, cancellation of their mortgage, damages and other relief on the grounds of fraud, negligence, breach of warranty and breach of contract. Ultimately their claim for relief was reduced to damages. Plaintiffs also sought treble damages from defendants pursuant to the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1 et seq. (act). The Blairs cross-claimed against W. T. Grant for failing to properly exterminate the termites and for treble damages under the act. Numerous cross-claims for contribution and indemnification were also filed.
At the conclusion of the testimony the trial judge dismissed defendants Larson and Porter from the case. Thereafter the judge, sitting without a jury, rendered an oral opinion pursuant to which a judgment was entered in favor of the Neveroskis as follows:
(1) against the Blairs and Blue Ribbon in the amount of $5,000 jointly and severally for fraudulent concealment of the termite condition, and an alternative judgment against the Blairs in the same amount on a theory of breach of contract;
(2) against W. T. Grant and Blue Ribbon Realty jointly and severally for $15,000 plus attorneys' fees of $2,000 and costs of suit on the ground that defendants engaged in deceptive practices contrary to the Consumer Fraud Act. The trial judge denied contribution between defendants on this count.
The Blairs were awarded damages on their cross-claims against W. T. Grant as follows:
(1) pursuant to their claim under the Consumer Fraud Act, the sum of $3,270 (representing three times the total service charge under
the termite service contract between the Blairs and W. T. Grant) plus attorneys' fees of $1,500 and costs of suit;
(2) pursuant to their negligence claim, any amount up to $5,000 to the extent that the Blairs actually pay any or all of the $5,000 for which they had been held liable to the Neveroskis.
The following chronology of events will help to elucidate the somewhat confused state of the record:
November 1971 The Blairs noticed termites in their living room.
November 6, 1971 The Blairs signed a contract with W.T. Grant for termite treatment priced at $1,090, which came to a total cost of $1,485.76, including installment contract interest. In the same month two men representing W. T. Grant treated the home.
March 1972 The Blairs experienced another episode of termites and called W. T. Grant. A few weeks later a representative came and again treated the premises.
June 1972 The Blairs signed a contract to sell their property to the Neveroskis for $21,900. The contract was drawn by Larry Williams of Blue Ribbon Realty and contained the following clause:
It is agreed that at the sellers expense the premises shall be subject to a termite inspection and report by a reputable company and in the event of a positive report the seller shall bear the cost of all remedial action that may be necessary and further a copy of the report whether it be negative or positive shall be submitted to the buyer.
July 1972 John Hooyman, president of Blue Ribbon, who did not know of the W.T. Grant termite service contract, asked the Eastern Exterminating Company to inspect the property. We accept the testimony of Robert Howe, the owner of Eastern, that after the property was inspected he called Blue Ribbon and told them that Eastern had found extensive termite damage at the Blairs' home and would not certify it because another company had done work there. Hooyman admitted that Blue Ribbon never informed the Neveroskis about Eastern's findings.
Alfred Blair also called Larry Williams and told him the results of Eastern's inspection. After Williams told Hooyman about the W. T. Grant contract, Hooyman called that company and asked them to inspect and certify the property.
July 11, 1972 The W. T. Grant representative, Kenneth Foley, sent a letter addressed "To Whom It May Concern," which read:
Based on a careful visual inspection of all accessible areas and on sounding of all accessible structural members, there is no evidence of termite infestation or other wood destroying insects infesting the subject property at the present time.
If such infestation previously existed, it has been corrected.
At trial Foley admitted that in fact no inspection of the Blairs' house was conducted at the time the letter was sent. He stated he relied on the fact that the house had been treated in March and that the person who called him about reinspection told him there had been no problems since that time.
December 1, 1972 The closing between the Blairs and the Neveroskis took place. The Neveroskis were represented by an attorney procured for them by Blue Ribbon. The Neveroskis had visited the house several times but had not noticed termite damage. At the closing no mention was made to them of any such problem. However, they were aware of the termite service contract with W. T. Grant.
March 1973 The Neveroskis experienced some problem with insects after they moved in. In March, termites twice swarmed throughout the house. The Neveroskis contacted W. T. Grant but could not obtain immediate service. When they felt they could no longer wait, they hired Terminex, Inc. to treat the premises for $260.
At trial, the testimony as to the extent of damage to the house was conflict- ing. Plaintiff produced two contractors whose estimates of the cost of necessary repairs ranged from $10,500 to $13,000. Blue Ribbon's expert estimated damages at $500 to $1,000. The trial judge fixed the cost of repairs at $5,000.
Blue Ribbon's common law liability*fn1
Blue Ribbon contends that the trial judge's conclusion holding it liable to the Neveroskis for failing to disclose latent termite infestation was not supported by sufficient
credible evidence and was contrary to the holding of Weintraub v. Krobatsch ...