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Tung v. Briant Park Homes

February 6, 1996


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

Approved for Publication February 6, 1996.

Before Judges Pressler, Wefing and A.a. Rodriguez. The opinion of the court was delivered by Rodriguez, A.a., J.A.D.

The opinion of the court was delivered by: Rodriguez

The opinion of the court was delivered by RODRIGUEZ, A.A., J.A.D.

In this case we consider whether a developer who fails to deliver a current public offering statement (POS) on the contract date, as required by the New Jersey Planned Real Estate Development Full Disclosure Act, N.J.S.A. 45:22A-21 to -56 (the Act), is liable to the purchaser for double damages and costs if there is no causal connection between such failure and the losses sustained by the purchaser for breach of the contract. We hold that under those circumstances a developer is not liable for double damages or costs. The judgments under review are affirmed.

Da-Lu Tung signed a contract to purchase a condominium unit from Ralph J. Pocaro for $290,000. Pocaro reserved the right to assign the contract to Briant Park Homes, Inc. (Briant Park) and agreed to refund to Tung the excess of his purchase price over that for which other specified, unsold units would eventually be sold. At the time the first contract was executed, a current POS was not delivered to Tung as required by N.J.S.A. 45:22A-26a(2). The contract was contingent upon delivery of the POS within forty-five days after execution. If the POS was not delivered within that period, Tung would be entitled to a refund of the deposit with accrued interest.

Tung's mortgage lender objected to the refund clause. Tung signed a second purchase contract with Briant Park. By then a current POS had been delivered to Tung. The second contract did not contain a refund clause. However, at Tung's request Briant Park sent him a letter in which it assumed the responsibility for refunding the excess of the purchase price, using the same language as in the first contract. After the transaction closed, Tung learned that a similar unit had been sold for $200,000. He demanded a $90,000 refund from Pocaro and Briant Park. The demand was refused.

Tung sued Pocaro and Briant Park for breach of the refund provisions and Pocaro for violating N.J.S.A. 45:22A-26a(2) by failing to deliver a current POS upon execution of the first contract. Pursuant to N.J.S.A. 45:22A-37a, Tung demanded double damages and attorney fees against Pocaro. In a separate action, Pocaro and Briant Park sued Tung's real estate lawyer, Hugo Pfaltz and the firm of Pfaltz and Woller, P.A., (collectively Pfaltz) for contribution, contributory negligence and indemnification. The two actions were consolidated. Pfaltz moved for dismissal of the complaint. The motion was denied.

Pocaro and Tung moved for summary judgment. The Judge granted Tung summary judgment for $90,000 against Briant Park for breach of the refund clause, but denied damages under the Act. The Judge granted Pocaro's motion for summary judgment dismissing claims against him under the Act. The Judge reasoned that there was a novation of the first contract which relieved Pocaro from any further responsibility and that there was no violation of the Act. All claims against Pfaltz were dismissed.

On appeal, Tung contends that: (1) the Judge should have found that Pocaro violated the Act by executing the first contract prior to the approval of the POS, thus becoming liable for double damages under N.J.S.A. 45:22A-37a; (2) there is a genuine issue of fact as to whether Tung consented to make Briant Park solely responsible for the refund; (3) Pocaro is liable under the first contract because the parties did not intend a novation; and (4) the Judge should have pierced the corporate veil and held Pocaro individually liable for the refund.

In considering Tung's contention that Pocaro was liable for double damages because he violated the Act we are required to "effectuate the legislative intent in light of the language used and the objects sought to be achieved." State v. Maguire, 84 N.J. 508, 514, 423 A.2d 294 (1980). N.J.S.A. 45:22A-26 provides in pertinent part,

a. Unless otherwise exempted:

(2) No developer may dispose of any lot, parcel, unit, or interest in a planned real estate development, unless he: delivers to the purchaser a current public offering statement, on or before the contract date of such Disposition.

Another section, N.J.S.A. 45:22A-37a, provides for "double damages suffered, and court costs expended, including reasonable attorney's fees" to be paid by a ...

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