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Petrillo v. Bachenberg

Decided: April 13, 1993.


On appeal from the Superior Court of New Jersey, Law Division, Hunterdon County.

Michels, Baime and Wallace. The opinion of the court was delivered by Michels, P.J.A.D.


Plaintiff Lisa Petrillo appeals (1) from a judgment of the Law Division entered on a jury verdict awarding defendants William G. Bachenberg, Jr., William G. Bachenberg, Jr., Trustee and "The Trust" (hereinafter collectively referred to as Bachenberg) damages in the sum of $16,000 plus prejudgment interest and (2) from an order denying her motion for a new trial in this action to recover the return of a real estate deposit.

In 1987, the Rohrer Construction Company (Rohrer) entered into a contract to sell a parcel of land in Union Township, Hunterdon County, New Jersey. The property was located near Route 78 and was in close proximity to the headquarters of Foster Wheeler, a major employer in northern Hunterdon County. Rohrer, in contemplation of the sale, ordered percolation tests in accordance with the contract. A percolation test "is intended to demonstrate the fact or lack of fact that a particular strata in the soil is permeable so that it would hopefully support the design and installation of a septic system." The percolation tests were performed by Heritage Consulting Engineers (Heritage), which prepared two reports: one, in September 1987, indicating that one "acceptable" percolation test was obtained, and the other, in November 1987, indicating a second "acceptable" test. Heritage had begun many other additional tests, but discontinued most of them as soon as it observed that two test locations were likely to be successful. Only two passing tests were required in Union Township.

The sale for which the Heritage tests were performed was never consummated and Rohrer then listed the property for sale with defendant realtor Bachenberg & Bachenberg, Inc., of which defendant William A. Bachenberg, Jr. was a principal. Defendant Bruce Herrigel, Esq. had been the attorney for

Rohrer in connection with the 1987 contract for the sale of the Union Township property. When Rohrer listed the property for sale with Bachenberg, Herrigel sent Bachenberg a two-page report, purporting to be the results of the percolation tests conducted by Heritage. However, the two-page report consisted of one page from the September 1987 tests and one page from the November 1987 tests. It thus appeared that two passing tests were obtained out of seven attempts, instead of two passing tests out of thirty attempts.

In December 1988, Bachenberg and his partner, defendant John A. Matthews (Matthews), purchased the Union Township property at a sheriff's sale for $70,000. In February 1989, plaintiff contacted Bachenberg about purchasing the property for a day-care center. During negotiations, Bachenberg gave plaintiff the mismatched two-page Heritage report forwarded to him by Herrigel. Plaintiff offered the asking price of $160,000. On June 26, 1989, the parties executed a contract of sale for the property, and plaintiff paid Bachenberg a deposit of $16,000. Subsequent to the execution of the contract of sale, Bachenberg agreed to a request by plaintiff for an additional forty-five days from the date of the contract to satisfy herself that the soil was appropriate for a septic system for her intended use of the property and at an acceptable cost. This agreement was memorialized by Herrigel's letter to plaintiff's attorney Bertram J. Latzer, Esq., dated July 10, 1989, which read, in pertinent part, as follows:

We accept and approve your proposal to have the contingency period include a 45-day contingency to satisfy the buyer that the soil is appropriate for septic system for the intended use at an acceptable cost and that there is sufficient water for that use. The understanding will be that the contingency period shall not be extended and that that 45-day contingency period will run concurrently with the first 45-days of the contingency.

On the advice of her attorney, plaintiff chose not to rely on the 1987 Heritage percolation reports, and instead hired her own engineering firm, Canger and Cassera, to perform percolation tests. In turn, Canger and Cassera hired Gerald Perricone (Perricone), a consulting geotechnical engineer, to perform the

tests and to evaluate the feasibility of a septic system on the property. Perricone was unable to obtain a single passing percolation test. As a result, Perricone concluded that the property was "not suitable to support [an] on-site sewerage disposal system." When asked at trial to reconcile his results with the Heritage reports, Perricone testified that the two passing tests obtained by Heritage were anomalies, reflecting conditions in "one small area," and were not based on a representative soil profile. In August 1989, Perricone submitted his report to plaintiff.

On August 22, 1989, based on the Perricone report, plaintiff's counsel wrote to Herrigel advising that plaintiff considered the contract of sale to be "null and void". At trial, plaintiff explained her reason for voiding the transaction as follows:

Well, because for my use it's extremely important that the perc tests be good and that I could put a suitable septic system on the land for my use, and it was crucial, so there was no way that I could go on with this according to what my engineers told me.

Plaintiff further testified that the mismatched two-page Heritage report had been a significant inducement to her entering into the contract of sale. However, she had decided to obtain her own tests "due to the importance of having a septic system that worked well" in view of the fact that she proposed to use the property for a day-care center.

In an apparent attempt to satisfy plaintiff's concerns and to salvage the transaction, Bachenberg hired Heritage to design a septic plan that would be suitable for plaintiff's proposed use of the property. Bachenberg obtained the county's approval for the design. Throughout the fall of 1989, while rejecting the new design, plaintiff proposed that Bachenberg allow her to perform additional percolation tests at the places where the 1987 tests had been successful. Bachenberg refused plaintiff's overtures.

In February 1990, after Bachenberg refused to return her $16,000 deposit, plaintiff instituted this action against Bachenberg in his individual, corporate and trustee capacities and

against Herrigel in his capacity as trustee of the deposit monies paid to Bachenberg. Plaintiff charged the Bachenberg defendants generally with breach of contract in failing to return the $16,000 deposit, concealment, fraud and conspiracy. She charged Herrigel with breach of contract and breach of his fiduciary duties as an attorney. Subsequently, plaintiff amended her complaint to charge Bachenberg with violating New Jersey's Consumer Fraud Act by concealing the fact that the property had previously failed numerous percolation tests thereby rendering the property unsuitable for its intended use. Plaintiff filed a second amended complaint to name Matthews as a defendant and to charge Herrigel additionally with concealment of information concerning the percolation tests. All defendants denied responsibility to plaintiff and Bachenberg counterclaimed seeking to retain the $16,000 deposit on the ground that plaintiff breached the contract of sale.

The trial court dismissed all claims against Herrigel and the concealment claims against Bachenberg during trial. At the Conclusion of all the evidence, the jury in answer to special interrogatories, found that: (1) plaintiff had a right to terminate the contract as a result of the testing performed by her experts; (2) plaintiff acted in good faith in relying upon her expert's opinion that the soil was not suitable for a septic system, but that she did not terminate the contract; (3) plaintiff breached the contract by failing to act in good faith in obtaining all necessary tests and approvals, and (4) Bachenberg was entitled to keep the $16,000 deposit. The jury also found that Bachenberg did not misrepresent important and significant facts by giving plaintiff the mismatched two-page Heritage percolation report or conceal important and significant facts knowingly with the intent that plaintiff rely on them. The trial court, therefore, molded the verdict and entered judgment in favor of Bachenberg against plaintiff in the sum of $16,000 with interest. Plaintiff's motion for a new trial was denied and this appeal followed.

Plaintiff seeks a reversal of the judgment and the order denying her motion for a new trial, and requests the entry of

judgment in her favor on the breach of contract claim. She also seeks a reversal and a remand for a new trial on all other issues. She contends essentially that: (1) the cancellation of the contract was based on the uncontradicted factual findings of her expert that the soil would not support a septic system for a day care center and, therefore, judgment should have been entered in her favor at the close of the evidence; (2) neither her request for additional testing, which was rejected by Bachenberg, nor her refusal to accept Bachenberg's septic design constituted a waiver of her right to void the contract and the trial court's charge concerning waiver was erroneous; (3) the trial court's dismissal of the common law fraud count was erroneous; (4) the trial court erred in dismissing her claim against Herrigel at the Conclusion of her proofs; (5) the trial court's refusal to charge the jury as to Bachenberg's negligence constituted reversible error; (6) the trial court erred in admitting into evidence the Hunterdon County Health Department's approval of Herrigel's septic system design as an exception to the hearsay rule; (7) the jury's finding on special interrogatories that she had the right to unilaterally terminate the contract and that she acted properly in relying upon her expert's report required the entry of judgment in her favor; (8) the jury's verdict was tainted by the trial court's admission of evidence of the Hunterdon County Health Department's ...

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