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Strawn v. Canuso

Decided: February 22, 1994.

JOANNE STRAWN, GERALD L. STRAWN, TRACEY A. STRAWN AND BRANDON M. STRAWN, BY THEIR GUARDIAN AD LITEM, JOANNE STRAWN, RUSSELL C. BURTON AND BRETT C. BURTON, BY HIS GUARDIAN AD LITEM, RUSSELL C. BURTON, WILLIAM HELBLING, ANTHONY ALVAREZ, RITA ALVAREZ, LISA ALVAREZ, JOHN M. GAVEN, SR., ANNETTE M. GAVEN, AND JOHN M. GAVEN, JR., YOUNG D. KIM, JULIA S. KIM, AND PATRICK KIM AND ROY KIM BY THEIR GUARDIAN AD LITEM, YOUNG KIM, ALBERT WILLIAMS, EVELYN WILLIAMS, AND STEPHEN WILLIAMS, PLAINTIFFS-APPELLANTS, CROSS-RESPONDENTS, AND MARIE C. INCOLLINGO, ANTHONY F. INCOLLINGO, MICHELLE M. INCOLLINGO, NANCY ANN INCOLLINGO, FRANK CARNOT, RAEFFAELA CARNOT, WILLIAM DENNIS, JACQUELINE DENNIS, NICOLE M. DENNIS AND FARRAH D. DENNIS, BY THEIR GUARDIAN AD LITEM, JACQUELINE DENNIS, MICHAEL POWELL, AMY POWELL AND MOLLY POWELL, BY THEIR GUARDIAN AD LITEM, DOROTHY POWELL, MICHAEL J. VITARELLI, SR., LOIS A. VITARELLI AND JACQUELINE VITARELLI, LESLIE VITARELLI, MICHAEL VITARELLI, JR., BY THEIR GUARDIAN AD LITEM LOIS VITARELLI, CHRISTOPHER CONTI, ELAYNE CONTI, DANA MARIE CONTI AND GINA CHRISTINE CONTI, BY THEIR GUARDIAN AD LITEM ELAYNE CONTI, EUGENE E. JARON, ANN T. JARON, KATHLEEN A. JARON, STEPHEN M. JARON, PAUL M. KRAMER, PATRICIA G. KRAMER, BY THEIR GUARDIAN AD LITEM PATRICIA KRAMER, SANDY OBLENA, ESTRELLA OBLENA, NATHANIEL OBLENA, AND MICHAEL OBLENA BY THEIR GUARDIAN AD LITEM SANDY OBLENA, ANTHONY CHAPMAN, CATHARINE CHAPMAN, DAVID CHAPMAN AND ADRIANE CHAPMAN BY THEIR GUARDIAN AD LITEM CATHARINE CHAPMAN, JAY AGNES, JACQUELINE AGNES, ROBERT LEWIS, CELINE LEWIS, AND STEPHANIE LEWIS, BY HER GUARDIAN AD LITEM ROBERT LEWIS, TRUDY BECMER, EDMUND BECMER, DEBRA MURACA, FRANK MURACA, DAVID BARD, RUTH BARD, HOWARD FRIEDMAN, MARIANO A. PINIZZOTTO, AND MARIE ROSE PINIZZOTTO BY HER GUARDIAN AD LITEM MARIANO A. PINIZZOTTO, CHESTER A. RIDDICK, JR., CARMELITA D. RIDDICK, TODD RIDDICK, AND ALLEN RIDDICK, BY HER GUARDIAN AD LITEM CARMELITA D. RIDDICK, MARTIN V. GOLDSTEIN, PATRICIA M. CORSON, FREDERICK E. CHINK, MARIA P. CHINK, BY HER GUARDIAN AD LITEM FREDERICK E. CHINK, RICHARD J. NELSON AND MARY ANN NELSON, ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS,
v.
JOHN B. CANUSO, SR., JOHN B. CANUSO, JR., CANETIC CORPORATION AND CANUSO MANAGEMENT CORPORATION, DEFENDANTS-RESPONDENTS, AND FOX & LAZO INC., DEFENDANTS-RESPONDENTS, CROSS-APPELLANTS, AND JOCAN, INC., WEICHERT REALTORS, JOHN DOE (ONE) THROUGH JOHN DOE (TWENTY) AND DOE CORPORATION (ONE) THROUGH DOE CORPORATION (TWENTY), DEFENDANTS



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

Coleman, Thomas and Levy. The opinion of the court was delivered by Coleman, P.J.A.D.

Coleman

The crucial and novel issues raised in this class action litigation are whether (1) a builder and selling brokers of new homes have a duty to disclose to potential buyers the existence of a nearby closed landfill, (2) consumer fraud claims should be tried before a jury, and (3) class action certification should have been granted. We conclude that under the circumstances, a duty to disclose exists and class action certification should have been granted. An advisory jury should try the consumer fraud claims.

On May 5, 1987, plaintiffs filed a class action complaint on behalf of between 150 and 200 families who purchased homes in Voorhees Township, Camden County, near a closed landfill. The homes are located in a development known as the Woods of Voorhees and Las Brisas, which is an extension of the Alluvium development. The complaint alleges, among other things, that the market value of the homes was diminished at the time of purchase due to their close proximity to the closed Buzby Landfill, suspected of containing toxic waste. The complaint also alleges common law fraud, negligent misrepresentations and concealment, and violations of the New Jersey Consumer Fraud Act.

Defendants-respondents John B. Canuso, Sr., John B. Canuso, Jr., two officers of Canuso Management Corporation, and Canetic Corporation, were the builders of the homes. Canetic Corporation also marketed the homes during 1984 and early 1985. Defendant-respondent Fox & Lazo, Inc. Realtors was the selling broker from early 1985 through August 1, 1986. Thereafter, the homes were marketed by defendant Weichert Realtors through 1987.

Although plaintiffs filed a motion for class action certification on October 16, 1987, the decision denying the motion was not rendered until March 5, 1991, followed by an order entered on July 16, 1991. The same application was denied again in 1992. Eventually, the Judge granted summary judgments dismissing all claims of seven families: Alvarez, Burton, Gaven, Helbling, Kim, Strawn and Williams. The Judge also ruled that all claims of each plaintiff-family should be severed from the claims of all other

plaintiffs and the remaining nineteen plaintiff-families awaiting trials on common law fraud and Consumer Fraud Act claims are entitled to jury trials on both claims. The seven plaintiff-families whose cases have been dismissed entirely have appealed, and defendant Fox & Lazo has cross-appealed from the order which permits a jury trial on the Consumer Fraud Act claims.

I Factual Assertions

A. Advertisements for the Homes.

The homes involved in this protracted litigation were constructed in the early to mid 1980's near the eastern boundary of a 56 acre landfill known as the Buzby Landfill. The gravamen of the litigation requires us to focus on whether any reasonable basis existed to require defendants to disclose the existence of the landfill. Since appellants' complaint was dismissed on summary judgment motions, we must examine the facts in a light most favorable to the plaintiffs. Ruvolo v. American Cas. Co., 39 N.J. 490, 499, 189 A.2d 204 (1963).

None of the plaintiff-appellant families knew about the existence of the landfill at the time they purchased their homes. Defendant Canuso, Sr., on the other hand, allegedly knew about the landfill while it was still operational and before the homes were built. Defendants utilized sales promotion brochures, newspaper advertisements and a fact sheet to sell the homes. The brochures described the Woods of Voorhees as follows: "Here you can own an exciting John B. Canuso home in the midst of a heavily treed forest." A brochure for Las Brisas stated it was a continuation of the 600 acre Alluvium development of "large gracious homes in harmony with the gently rolling, wooded terrain . . . . The sense of tranquility, of unity, of harmony with nature transcends the desire to succeed. Bold fresh designs coupled with the enhancing of the environment by preserving and unifying the inherent beauty of the forest, make Alluvium a community, not just an address. And now the bold dream continues with Las Brisas." Some of the plaintiffs allege that one of the brochures stated the residents

could go "hiking in the woods." We have not been able to locate a legible copy of this statement in the appendix.

During the spring of 1985, the Philadelphia Inquirer newspaper carried an advertisement for the Woods which depicted two children running toward a home. A caption in bold print stated "Daddy's Home." Underneath the caption, the following appeared: "You can enjoy the contentment and satisfaction of knowing your children are growing in the healthy, fresh, country air of this ideal wooded community." The brochures emphasized the existence of off-site amenities such as country clubs and shopping malls. However, neither the brochures, the newspaper advertisements nor any sales personnel mentioned that a landfill is located within half a mile of some of the homes. Each appellant-family asserts that it relied upon the brochures and the advertisements in purchasing its home.

B. The Buzby Landfill.

The land used for the landfill was owned by RCA and Voorhees Township. The landfill was operated between 1972 and 1978 by the Buzby Brothers. The landfill was primarily used as a dumping ground for vegetative waste, municipal refuse, liquid septage and solid waste. Despite the stated purposes, there is evidence that it was also used for the disposal of chemical waste. A hazardous waste site investigation conducted by the federal Environmental Protection Agency (EPA) in May 1980 is part of the evidence plaintiffs rely upon to establish the presence of hazardous waste in the landfill.

This EPA report contains the assertion that RCA, which owned other property adjacent to the eastern end of the landfill, intended to build a number of homes on this eighty-five acre tract, each with its own well for drinking water. The author commented that "[h]omes constructed so close to a landfill that accepted industrial waste is poor planning. The potential for a future Love Canal exists at this site."

Although the landfill was not registered to accept chemical industrial waste, the New Jersey Department of Environmental Protection and Energy (NJDEPE) received reports from people who had seen tankers of chemicals dumping their loads there. Indeed, a 1979 aerial photograph of one area of the RCA-owned portion appeared to show twenty to thirty unidentified fifty-five gallon drums at the site. Furthermore, the Buzby Brothers wrote letters dated May 1971 and March 1972 to RCA indicating their objection to the delivery of industrial chemicals to the landfill for dumping. The Buzby Brothers were fined in 1977 for unspecified violations.

Additionally, the record contains a number of memoranda from various NJDEPE divisions and the EPA concerning the environmental status of the Buzby Landfill. In 1981 the NJDEPE formulated an "Emergency Action Plan" to clean up the Buzby Landfill site. That document noted that "[t]he type and volume of waste disposal in the landfill is unknown. Disposal of industrial waste at the site is reported by the New Jersey Department of Environmental Protection." Sampling of the surface water and lake sediments from two nearby lakes revealed "trace" levels of heavy metals and organic pollutants. The same "trace" levels were found in groundwater well samplings. The contamination levels of the soil were unknown, as were the extent of off-site gas migration and the hazard of leachate infiltration. Air, water and soil monitoring was recommended and housing developments were cautioned not to have groundwater wells until water safety had been established.

In March 1983 Steven Croce, a Site Manager of the NJDEPE's Bureau of Site Management, visited the landfill and "the property owned by the Alluvium Development Company (southeast of the landfill property)." He did not see or smell contamination on the lake which was part of the Alluvium development, even though sampling of the lake water in 1980 showed high metal concentration in the lake sediment.

Another site visit in May 1984, however, revealed gas leaks in the RCA gas venting system at the landfill, and "a steady stream of liquid flowing into the nearby marsh area and down stream lakes" off the southern face of the Voorhees Township portion of the landfill.

In January 1985 the landfill was visited again by officials from the NJDEPE Water Resources Division. They observed leachate seeping from the RCA portion of the landfill into one of the downstream lakes. This seepage took the form of "a thick black liquid" or "orange colored with an oily, scummy surface." Immediate sampling of the lakes for pollutants was recommended "[d]ue to the possibility of severe contamination of these lakes, and the new housing development[s]."

The Mayor of Voorhees Township was advised by the NJDEPE in a letter dated September 8, 1985, that groundwater, sediment and surface water samples from the landfill and downgradient lakes southeast of the site indicated the presence of hazardous waste constituents in the groundwater and marsh sediments; additional sampling would be done. The NJDEPE cautioned: "It would be appropriate to advise any prospective home buyers (for the area near the landfill) who contact your office that investigations are underway and will continue to determine levels of contamination, the source(s) of the contamination, and any health/environmental impacts related to contaminated zones."

On September 3, 1986, two investigators from the NJDEPE and two from the Camden County Health Department did a methane gas migration survey around the perimeter of the landfill. They found methane gas migration as far as 100 feet away from the landfill's fence. This placed the gas in the backyards of some of the 0 proposed or built homes. They suggested that repair of the faulty RCA gas venting system which was not expected to be accomplished until December 1987.

In August 1991 the U.S. Department of Health and Human Services, Public Health Service Agency for Toxic Substances and Disease Registry (ATSDR), ...


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