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Nobrega v. Edison Glen Associates

January 21, 2000

EILEEN NOBREGA, FRANK AND ANNA SCALISE, SALVATORE APUZZIO, JR., DORIS AND KWONG AU, SAMUEL BASKINGER, BONNIE BERTUCCI, BRUCE AND RACHEL BINKOWITZ, WILLIAM BLUESTONE, YVONNE BRIX, PATRICIA BUSH, ROLAND AND BETTY CHANG, JIM AND CHUEN CHU, ALICJA CIOBANU AND PAUL SZOTT, CORNELL AND FRAN COCO, DAN AND CONNIE COLON, ROSE MARY CORRALES, ALAN AND BARBARA COSCARELLI, SCOTT AND CHRISTY DAVIS, ELAINE DELORENZO, DIANE DIGIULIO, ARLENE AND BARRY FINK, STEVEN AND KATHLEEN FUSCHETTI, ELIZABETH GOMEZ, WORSELEY AND ULA GREENIDGE, HARRY GRIEFER, MICHAEL AND TERESA HAMMALAK, ANDRE AND MERITTA HERSCOVICI, MARILYN AND GEORGE HIGGINS, LINDA IONTA, STEPHEN E. AND AMY S. KANE, ARLENE KAPLAN, IRWIN, BARRY AND MURIEL KESHNER, CAROLYN B. KILPONEN, BILL AND TERRY KONCAR, FRANK KOWALEWSKI, ALBERT AND JEAN KUCHINSKAS, THERESA LEONARDIS, JOHN AND PHYLLIS MAFFUCCI, JOSEPH AND CELIA MANDEL, NATHAN AND MOLLY MARKO, ESTHER MULLALY, TERESA O'HARA, LEONARD OLEN, VICTORIA MONTANINO ORTIZ, OSCAR AND LOIS PANNELLA, AUDREY PRESS, SUSAN PUHAN, DONNA RANDO, YVES ROC, SCOTT ROSMARIN, KENNETH G. SABLE, MARK AND MIRTA SMOLAR, ZAIDA AND ANGEL SOTOLONGO, KATHRYN STANCO, STEWART THOMPSON, VINCENT AND CAROLYN VARCA, ANDREW AND CAROLYN VITTORIA, LARRY AND ARLEEN WEISENSTEIN, DANA ZAIFERT AND EDWARD ZIMMERMAN,
PLAINTIFFS-APPELLANTS, V.
EDISON GLEN ASSOCIATES, A NEW JERSEY PARTNERSHIP, ARIE HALPERN, DAVID HALPERN, FRED HALPERN, JACK HALPERN, MURRAY HALPERN, SAM HALPERN, JOSEF PARADIS, HENRY STEIN, ESTATE OF HARRY WILF, JOSEPH WILF, ERIC ROSENBAUM, AND PAUL VISSER,
DEFENDANTS-RESPONDENTS.



Before Judges Pressler, Landau and Ciancia.

The opinion of the court was delivered by: Pressler, P.J.A.D.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued October 19, 1999

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

In Strawn v. Canuso, 140 N.J. 43 (1995), the Supreme Court imposed upon residential developers and their agents the obligation, both as a matter of common-law duty and under the Consumer Fraud Act, N.J.S.A. 56:8-1 to -20, to disclose to prospective purchasers of new residential construction those adverse off-site conditions known to them but not readily observable to buyers that materially affect the subject of the sale. In response to Strawn and less than five months after the opinion was issued, the Legislature adopted the New Residential Construction Off-Site Conditions Disclosure Act, N.J.S.A. 46:3C-1 to -12 (Disclosure Act), which severely limits the scope of the disclosure obligation and applies those limitations retroactively to all real estate transactions consummated before its effective date except those in which a claim of actionable non-disclosure was made prior to the date Strawn was decided.

The Disclosure Act, however, expressly excepts from its reach the obligation to make those disclosures respecting off-site conditions that are imposed by the Planned Real Estate Development Full Disclosure Act, N.J.S.A. 45:22A-21 to -56; the Air Safety and Zoning Act of 1983, N.J.S.A. 6:1-80 to -88; and "any other statutory provision." N.J.S.A. 46:3C-10d. The primary issue before us is whether "any other statutory provision" includes the provisions of section 2 of the Consumer Fraud Act, N.J.S.A. 56:8-2. Since we conclude that it does and hence that the Disclosure Act preserves intact the rights of real estate purchasers afforded by the Consumer Fraud Act, we need not decide in this action whether the retroactivity provision of the Disclosure Act passes constitutional muster.

Because this action was dismissed on the basis of a motion made under R. 4:6-2(e) (failure to state a claim upon which relief can be granted), only minimally converted into a summary judgment action under R. 4:46-2 by the submission of certifications, and since no discovery had ever been apparently engaged in, much of the factual background has remained undeveloped. The facts, as they come before us, viewed indulgently to plaintiffs, see, e.g., Printing Mart-Morristown v. Sharp Electronics, Corp., 116 N.J. 739, 746 (1989); Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995), may, therefore, be briefly stated. Plaintiffs are the purchasers of condominium units in a condominium project in Edison, New Jersey, known as Edison Glen Terrace and developed and sponsored by defendant Edison Glen Associates, a New Jersey partnership. The individually named defendants are the partners or the estates of deceased partners. The plaintiffs bought their respective units directly from the developer-sponsor between 1987 and 1991, the bulk of the sixty units here in issue having been purchased between 1987 and 1989.

The condominium property is located in close proximity, namely, within two miles, of two sites contaminated by hazardous substances and, pursuant to the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C.A. §9601 to 9675, listed by the United States Environmental Protection Agency (EPA) on the National Priority List for cleanup, rendering them so-called Superfund sites. The first, a site formerly used by Renora, Inc., was placed on the Superfund list in 1982, prior to the construction of the condominium project, as the result of EPA's determination that its storage containers for hazardous waste had deteriorated, permitting the discharge of lethal toxins into the soil and groundwater. The second site, owned by Chemical Insecticide Corporation, was placed on the Superfund list in 1990, after EPA determined that arsenic and other hazardous substances used in its manufacturing processes had leached into the soil and groundwater as a result of its illegal dumping of these materials on the property.

Plaintiff Eileen Nobrega, the purchaser of one of the units and the president of the condominium association, asserted that sometime in 1992 or 1993, she first began to hear rumors of contamination on the nearby industrial sites. She further asserted that sometime in 1993 or 1994, she had information that some of the unit owners who wished to sell were experiencing untoward difficulties in doing so. At about that time, she claims, not only had the resale of units come "to a virtual halt," but also defendants had removed the remaining unsold units, about one hundred, from the sales market, resorting to the strategy of reserving them for rental to transients. The damages claim is based on the substantial depreciating effect on the value of the condominium units resulting from the proximity of the two Superfund sites, a depreciation estimated by their appraiser as an average of forty percent of what the market value should reasonably have been. After futile discussions and negotiations with defendants, plaintiffs finally consulted counsel, and this complaint was filed in May 1997.

The gravamen of the complaint is simply that defendants knew of the existence of the two Superfund sites, that plaintiffs did not, and that defendants owed them the duty of disclosure of that material fact before they bought their respective units. Five of the six counts of their initial complaint were based on apparent common-law causes of fraud and misrepresentation variously pleaded. The remaining count pleaded a cause of action under the Consumer Fraud Act, alleging that "[t]he Defendants have employed unconscionable commercial practices and/or fraud or other unlawful acts in connection with the sale and/or advertising of the units at the Condominium in violation" of the Act.

Defendants' motion to dismiss on the pleadings was based on their assertion that under the Disclosure Act, they were immunized, and retroactively so, from all liability for non-disclosure of hazardous off-site conditions. They relied on the scheme of the Disclosure Act, which is to require persons who own, lease or maintain a potentially dangerous off-site condition as enumerated by the Act *fn1 to provide the municipal clerk of each municipality in which such a condition exists a list of those conditions and their location on a form to be adopted by the Commissioner of Community Affairs by September 1996, i.e., within one year after the effective date of the Act, and to update the list as of August 31 of each succeeding year. N.J.S.A. 46:3C-5. In addition, the Commissioner of Environmental Protection is required to provide the municipal clerks with lists of such off-site conditions that are within its jurisdiction and within the same time periods. N.J.S.A. 46:3C-6. The sole obligation of the seller of new residential construction is to provide the prospective purchaser with a notice, in a statutorily prescribed formulation, of the availability of lists of off- site conditions in the municipal clerk's office and the buyer's right to cancel the contract within five days after its execution. N.J.S.A. 46:3C-8 and -9. The seller is, moreover, completely immunized from liability for non-disclosure provided the statutory notice is given notwithstanding the fact that the lists have not yet been compiled by the municipal clerk, the municipal clerk has not yet received the lists or made them available, or there is any error or omission in the list. N.J.S.A. 46:3C-10a. Finally, N.J.S.A. 46:3C-10c contains the retroactivity provision we have referred to, and N.J.S.A. 46:3C-10d contains the exception for the other statutes to which we have also referred.

Although the trial judge agreed with defendants that the Disclosure Act effectively barred the plaintiffs' common-law claims, he was initially of the view that the consumer fraud claims survived. He reversed himself, however, on defendants' motion for reconsideration, concluding that not having been specifically referred to by N.J.S.A. 46:3B-10d, the Disclosure Act was intended to override the Consumer Fraud Act. Plaintiffs appeal. We reverse.

We recognize that an ambiguity respecting the Disclosure Act's intended scope may result from the verbiage of N.J.S.A. 46:3C-10d, which provides in full that:

The provisions of P.L.1995, c. 253 (C.46:3C-1 et seq.) shall not be interpreted to affect the disclosure requirements for conditions off-site contained in "The Planned Real Estate Development Full Disclosure Act," P.L. 1977, c. 419 (C. 45:22A- 21 et seq.), the "Air Safety and Zoning Act of ...


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