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Helmar v. Harsche

December 26, 1996


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

Approved for Publication December 26, 1996. As Corrected December 24, 1996. Second Correction January 13, 1997.

Before Judges Muir, Jr., Kleiner, and Coburn. The opinion of the court was delivered by Kleiner, J.A.D.

The opinion of the court was delivered by: Kleiner

The opinion of the court was delivered by


Defendants Walter Harsche and Weichert Realtors appeal from a judgment entered after a jury verdict which determined that defendants had committed consumer fraud, proscribed by the Consumer Fraud Act, N.J.S.A. 56:8-1 to -20, and were liable to plaintiff Cheryl N. Helmar for $5,450. The verdict was trebled by the Judge to $16,350, as required by N.J.S.A. 56:8-19. Plaintiff's three-count complaint alleged that defendants committed fraud, consumer fraud, and were negligent in the sale of real estate. Plaintiff's fraud complaint was summarily dismissed on a pre-trial motion. At the Conclusion of the trial, based on special interrogatories, the jury determined that although defendants were twenty-five percent negligent, plaintiff, "by the acts of others," was seventy-five percent negligent. Plaintiff was thus denied damages on her negligence claim. The jury determined, however, that defendants had committed consumer fraud.

Prior to trial, defendants sought leave to name plaintiff's attorney in the real estate transaction as a third-party defendant. Defendants argued that the attorney was negligent and sought indemnification and contribution under the Joint Tortfeasors Contribution Law, N.J.S.A. 2A:53A-1 to -5, and an assessment of negligence under the Comparative Negligence Act, N.J.S.A. 2A:15-5.1 to-5.3. Defendant's motion was denied, and the matter proceeded to trial.

At the close of plaintiff's case, and again at the close of all evidence, defendants sought dismissal of plaintiff's complaint. Both motions were denied. After the jury verdict, defendants moved for judgment notwithstanding the verdict and, alternatively, for a new trial. Again, both motions were denied.

After the trial, plaintiff's counsel sought an award of counsel fees, filing fees, and reasonable costs of suit, pursuant to N.J.S.A. 56:8-19. Although counsel fees were awarded in a sum substantially less than requested, the trial Judge denied the application for filing fees and reasonable costs of suit.

Defendants appeal, contending that the motion Judge erred when he denied defendants' motion to file a third-party complaint and that the trial Judge erred when he denied the following motions: defendants' motion for a dismissal of plaintiff's complaint at the close of plaintiff's case; defendants' motion to dismiss at the close of all evidence; defendants' motion for judgment notwithstanding the verdict; and defendants' alternative motion for a new trial.

We conclude that the motion Judge erred when he denied defendants' motion to join plaintiff's former attorney as a third-party defendant, and that this error had a negative impact on the entire trial, thus necessitating a reversal of the judgment and a remand for a new trial on all issues.

Plaintiff cross-appeals, contending that the trial Judge erred in reducing her application for attorneys' fees and in denying her filing fees and reasonable costs of suit. Because of our decision on defendants' appeal, we need not address plaintiff's cross-appeal.


In the spring of 1988, plaintiff, a widow, living in Willingboro and operating a pet grooming business on East Camden Avenue in Moorestown, noticed a Weichert Realtors sign on a triplex across the street from her business. Plaintiff inquired about the property, and defendant Harsche, a real estate agent employed by defendant Weichert, advised plaintiff that the asking price for the triplex was $135,000. Harsche also told plaintiff that the present owner occupied the first floor unit and rented the second and third floor units. After several Discussions, Harsche and the listing agent showed the property to plaintiff, who was accompanied that day by a friend, Linda Crim.

An exterior staircase led to a hallway on the second floor. An interior staircase from that hallway provided the only access to the third floor apartment. The owner *fn1 and the listing agent stayed on the first floor while plaintiff, Crim, and Harsche viewed the second and third floor apartment units. While in the third floor unit, Crim asked Harsche whether a fire escape was needed. According to plaintiff,

[Harsche] went into a closet and there was a metal ladder in the closet. . . . He brought it out. He took it over to the window and he showed us how you hook it on the window and you throw it over and you would climb down this ladder if there was a fire.

Plaintiff recalled that Crim asked, "why does that replace a fire escape," and Harsche responded that "he had talked to the fire marshal and that the fire marshal said that that was okay . . . that was all you needed . . . instead of a fire escape." According to plaintiff, she and Crim specifically asked Harsche, "does this apartment need a fire escape," and he answered, "no."

Plaintiff and Crim both remembered asking Harsche whether it was necessary to have "any kind of a license to run an apartment house," and again he answered in the negative. Plaintiff testified that Harsche explained to her that since there were only three units in the building, one of which would be owner-occupied, plaintiff would be "in a special category" and would not be considered "a professional landlord." Harsche also represented to plaintiff that the property was zoned for triplex use.

Plaintiff testified that Harsche assisted her in a financial analysis to determine whether she would be able to afford the property and meet her prospective mortgage obligation. Harsche also assisted plaintiff in completing a mortgage application. Once it was determined that, with two rental incomes derived from the second and third floor units in the triplex, plaintiff would be able to meet her mortgage obligation, plaintiff made an offer to purchase the property for $125,000. The offer was accepted.

Plaintiff signed the contract of sale, prepared by defendants, on April 11, 1988. Paragraph fifteen provided: "Seller makes no representation concerning existing zoning ordinances except that Seller's use of the property is not presently in violation of any ordinances and that the present use as a triplex may be continued."

Another disclaimer appeared in paragraph nineteen of the contract:

This contract is entered into by Seller and Buyer based upon their independent knowledge of the value of the property and their full understanding of the meaning of all the provisions of this Contract and not on any representations made by either of them to the other, or by the real estate broker or brokers involved.

The broker(s) named in this Contract, their personnel and associates have been acting as agents only for the Seller, and are not to be held liable either to Seller or Buyer for the performance or non-performance of any of the terms of this Contract. Seller and Buyer agree that they are entering into this Contract without any reliance upon any representations or statements which may have been made by personnel or associates of the realty firm(s).

According to plaintiff, Harsche told her to retain an attorney to review the contract and attend the closing "for my own safety." Plaintiff thereafter retained Louis Colaguori, Esq., although a formal retainer agreement was never prepared for plaintiff's signature. Colaguori had been admitted to practice law in 1972 and had handled over 100 residential real estate transactions. He added an addendum to the contract requiring the seller to supply plaintiff with copies of the leases. At trial, Colaguori testified that he was aware of the Uniform Fire Code and the Hotel and Multiple Dwelling regulations *fn2 but did not check to insure that plaintiff's property complied with them because "I thought that it was not within the terms of my understanding with [plaintiff]." He also testified that plaintiff never mentioned the layout of the house, the third floor unit, or the chain ladder.

Plaintiff also retained Eagle Home Inspection, which inspected the property on April 13, 1988, and issued a report. The report included the caveat that it "does not constitute a code inspection and should not be considered as such."

Plaintiff's mortgage commitment contained the following requirement: "the property is to comply with all applicable laws and code enforcement requirements, and your attorney is to certify same." Plaintiff, however, never shared this document with her attorney. Colaguori testified that he never certified that the property complied with laws and code requirements. At the closing, on June 1, 1988, no one requested a copy of the required certification. Although a title insurance policy was obtained from the Stewart Title Guaranty Company, the policy excluded "any law . . . or governmental regulation . . . restricting or regulating or prohibiting the occupancy, use or enjoyment of the land, or regulating the character . . . of any improvement now or hereafter erected on the land, . . . or the effect of any violation of any such law . . . or governmental regulation."

On May 15, 1992, plaintiff's triplex was inspected by a representative of the Department of Community Affairs, Bureau of Housing Inspection. A report based on that inspection and an order were issued on August 3, 1992. Plaintiff was ordered to abate twenty-one different code violations, including: providing a second means of egress from the third floor apartment; making improvements to the entrance doors; installing an automatic fire suppression system and a fire separation ceiling in the basement; providing handrails on stairways; and various other repairs and improvements.

Thereafter, plaintiff filed a complaint against defendants alleging fraud, consumer fraud, and negligence. At trial, plaintiff explained why she blamed defendants but not her attorney, and others, such as the ...

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