On appeal from the Superior Court of New Jersey, Law Division, Sussex County, Docket No. L-482-00.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted September 19, 2007
Before Judges Payne, Sapp-Peterson and Messano.
Plaintiffs Michael and Laura Mazza appeal from a series of orders granting summary judgment to defendants Daniel L. McCarthy III, the Federal Home Loan Mortgage Corp. (the FHLMC), Cendant Asset Services (Cendant), and Remax Renown Realty and its agent, Arthur Meola, (collectively, Remax). The dispute arises from plaintiffs' purchase of property located at 121 Leland Trail in Hopatcong (the Property) from the FHLMC in December of 1998. We have considered the arguments plaintiffs raise in light of applicable legal standards and we affirm.
Although the facts surrounding the case are somewhat complicated, they are, in large measure, undisputed. In January 1998, the owners of the Property, John and Margaret O'Connell, entered into a contract of sale with Wolf and Bernadette Schinzel, who were represented by McCarthy, an attorney-at-law.
The O'Connell's mortgage loan with the FHLMC was in foreclosure proceedings at the time.
The original contract for sale reduced the price of the home from $127,500 to $116,500 "in order for buyers to take over septic." The Schinzels, however, had the septic system inspected and in his report the inspector indicated, "no malfunction noted." This resulted in an addendum to the contract for sale drafted by McCarthy that included the following language:
Buyers previously had the septic system inspected by their home inspector and find same to be in satisfactory working order. Therefore, the septic system will be accepted in "as is" condition.
The Schinzels moved into the Property before the closing and lived there until June 1998; during that time, they experienced no problem with the septic system.
In the interim, the attorney for the O'Connells, Karen Ermel, wrote to FHLMC's processing agent, Capstead, Inc., urging approval of a "short sale."*fn1 In her letter, Ermel noted the O'Connells had "experienced substantial, constant problems" with the septic system, and while other systems in the immediate neighborhood had been replaced, their system had not.*fn2 The request for a "short sale" was denied, but this mattered little because the Schinzels could not obtain mortgage financing and the sale was canceled.
By June 1998, the FHLMC had completed its foreclosure and listed the Property with K.C. Lausch Realty (Lausch), which prepared a "Broker Market Analysis/Price Opinion." That report noted that the "[f]ormer owner" - the O'Connells - "had expressed fear that [the] septic [system] may not pass test."
In July 1998, another contract for the sale of the Property was executed by the FHLMC and prospective purchasers Darryl and Sheila Price. The septic system was again inspected, and the report indicated that the system was in working order, though it noted that "no excavation was undertaken to reveal underground components of the system." The report also suggested "that the top of the septic tank be uncovered to discover exactly what type of tank is present." For reasons unexplained by the record, the Price transaction did not close.
On December 8, 1998, using Remax as their agent, plaintiffs entered into a contract to purchase the Property and retained McCarthy to represent them in that transaction as well as in the sale of their home. The contract required plaintiffs to accept the property "as is" at the time of closing, but permitted plaintiffs to inspect the property and cancel the contract if the inspection revealed "material deficiencies."
Later that month, plaintiffs retained Peter Juzwin, trading as Hopatcong Home Inspection, Juzwin Inc., to test the septic system and furnish a report. Juzwin's report included several opinions regarding the present condition of the system and several caveats regarding its future operational viability. For example, while Juzwin concluded "[t]he system appeared to be adequately serving the disposal needs of this home at the time of inspection," he also noted that since the testing did not include any excavation of the site, "no conclusion as to the type or condition of the underground components of this disposal system can be made at this time." Juzwin noted that since the house had been vacant for several months, "[i]t [was] difficult to recreate normal operational conditions for stress" on the system and he recommended additional tests be performed. Lastly, he noted that the septic system's tank and lid "both show[ed] signs of corrosion" and, given the fact that it was an "older unit," plaintiffs "should not expect unlimited use from th[e] system and should budget for repairs or replacement."
Plaintiff Michael Mazza testified in depositions that he read the report, understood it, and discussed it with McCarthy. They attempted to gain some concessions from the FHLMC regarding repair to the septic tank's lid and the installation of baffles to the system. On December 18, 1998, McCarthy forwarded a letter to the FHLMC's closing attorney requesting these repairs. Although it is not ...