On appeal from Superior Court of New Jersey, Law Division, Hunterdon County.
Motion for Reconsideration Granted June 6, 1995. Opinion after Reconsideration Decided July 19, 1995. Approved for Publication July 19, 1995
Before Judges Dreier, Villanueva and Wefing. The opinion of the court was delivered by VILLANUEVA, J.A.D.
The opinion of the court was delivered by: VILLANUEVA
These two interlocutory appeals arising out of the same lawsuit involve a 45-foot setback restriction contained in a 1969 zoning board of adjustment variance approval for property that was granted when that property was subdivided. The property is currently owned by plaintiff John F. Aldrich (plaintiff or Aldrich). Commonwealth Land Title Insurance Company (Commonwealth) appeals pursuant to leave granted from a partial summary judgment on the issue of policy coverage entered in favor of Aldrich and Richard R. and Alexandra Hawrylo (the Hawrylos).
In the second appeal by Cohn R. Hazeltine, Esq., and the law firm of Shackleton, Hazeltine & Bishop (the Hazeltine defendants), the Hazeltine defendants appeal pursuant to leave granted from a partial summary judgment in favor of the Hawrylos on the issue of whether the Hazeltine defendants had a duty to disclose the existence of the setback restriction.
On November 10, 1989, plaintiff purchased oceanfront property -- Lot 3, Block 18.29 on the official tax map of Long Beach Township -- from the Hawrylos for $785,000. The Hawrylos had purchased the subject premises from Anthony and Mary Louise DeSimone on October 10, 1985. Plaintiff and the Hawrylos both had their titles insured by Commonwealth.
Plaintiff was in the process of preparing to raze the existing structure and build a larger dwelling on the premises when he learned that at the time the property was subdivided in 1969, the Long Beach Board of Adjustment granted the then-owner a variance from one portion of a Township ordinance and imposed, as a condition, that any future dwelling built on the subject oceanfront lot have a 45-foot setback from the southerly line of the lot. Aldrich did not know of this condition when he purchased the property and was not able to build his desired house. The Hawrylos concede that they were aware of the restriction at the time of the sale to plaintiff; however, they contend they were informed by the Hazeltine defendants and Commonwealth that the set-back restriction was invalid so they did not have to disclose it to Aldrich.
Plaintiff originally brought an action in the Chancery Division to, among other things, compel the issuance of a building permit. Plaintiff also made a claim under his policy of title insurance from Commonwealth to compel it to indemnify plaintiff for the loss. Commonwealth denied plaintiff's claim stating that the zoning variance restriction was excluded from coverage under the policy.
The Chancery Division Judge found that the variance restriction was not enforceable against plaintiff since plaintiff had neither actual nor constructive notice of the zoning variance and of the condition contained therein. However, the Appellate Division reversed the trial court, stating that:
In 1969, the Long Beach Township Planning Board approved a three-lot subdivision of a parcel fronting on Long Beach Boulevard and running east to the Atlantic Ocean. As part of the subdivision process, the Board of Adjustment granted a variance reducing from 20 feet to 15 feet the minimum width of part of an easement for access from the Boulevard to the two interior lots. The variance was granted subject to conditions, one of which required the southerly 45 feet of the new ocean front lot to remain open and free of structures.
When plaintiff bought the ocean-front lot in 1989, he was unaware of the restriction on building within the southerly 45 feet. We hold that plaintiff is nevertheless bound by the restriction, but also that plaintiff may apply to the Board of Adjustment and/or to the Law Division for relief. We therefore reverse the summary judgment granted to plaintiff by the Chancery Division Judge.
After receiving that decision, plaintiff apparently did not further pursue his attempt to obtain a building permit without the set-back restriction, but instead brought this action for money damages against several defendants, including the Hawrylos and Commonwealth. The Hawrylos brought a third party complaint against Commonwealth.
Plaintiff then moved for summary judgment. The court granted a partial summary judgment in favor of plaintiff and the Hawrylos against Commonwealth on the issue of policy coverage, but denied plaintiff's and Hawrylos' summary judgment motion as to the issue of Commonwealth's alleged negligence. We granted Commonwealth's motion for leave to appeal.
Also as part of this action, the Hawrylos brought a third party complaint against the Hazeltine defendants, who represented the Hawrylos at the time of their purchase of the property from the DeSimones in 1985. The Hawrylos claim that they relied on advice from the Hazeltine defendants that they did not have an obligation to disclose to a purchaser the existence of the restriction because it was invalid. The Hazeltine defendants brought a motion for summary judgment against the Hawrylos who responded with a cross-motion for summary judgment. The court granted partial summary judgment against the Hazeltine defendants "on the issue of breach of duty [to disclose] only. The Hawrylos' motion for summary judgment as to proximate cause of damage is denied." We granted the Hazeltine defendants leave to appeal the partial summary judgment in favor of the Hawrylos against them.
Commonwealth appeals on two grounds: (1) the trial court's finding that the policy provided coverage was erroneous because violations of zoning ordinances or variances are specifically excluded in the policy; and (2) the trial court's order in favor of the Hawrylos was also erroneous because they were not in title at the time of the law suit and any title warranties made by them were knowingly false.
It is well established that:
A title insurance policy is a contract of indemnity under which the insurer for a valuable consideration agrees to indemnify the insured in a specified amount against loss through defects of title to, or liens or ...