On appeal from Superior Court of New Jersey, Law Division, Monmouth County, L-881-01.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Payne, Sapp-Peterson and Messano.
Plaintiff Martin Brodsky, the owner with his wife Allison of a home located in Morganville, New Jersey, appeals from a judgment for compensatory and punitive damages in the total amount of $456,118, entered against him on the counterclaims of the Brodsky's builder, W.B. Associates, and a principal of that entity, Harry Kantor, alleging tortious interference with a prospective business advantage and both intentional and negligent infliction of emotional distress. He also appeals from an order of summary judgment that dismissed plaintiffs' complaint. Harry Kantor and W.B. Associates cross-appeal from the trial judge's grant of a remittitur on the compensatory and punitive damage awards for emotional distress, his denial of pre-judgment interest on the punitive damage portion of the award, and his determination to award only a portion of the attorneys' fees sought by cross-appellants. We reverse the judgment against Martin Brodsky, finding it to be unsupported in fact and law, and for that reason, do not address the merits of the cross-appeal.
In a complaint filed in the matter, the Brodskys, along with the other named plaintiffs,*fn3 alleged that they had contracted with W.B. Associates for the construction of custom- built homes in a development known as Winding Brook in Morganville after being informed by defendants*fn4 that the "lots were adjacent to, bordered upon or were in close proximity to a dairy farm." In fact, the alleged "dairy farm" was a minimum security correctional facility, housing approximately 125 inmates from the East Jersey State Prison. In their complaint, plaintiffs alleged:
[S]ince purchasing the properties in question and living in the homes, plaintiff[s] have been exposed to noise and profanity emanating from the prison grounds, disturbance by the prison flood lights that illuminate their yards and homes, from the presence of inmates in and about the property and neighborhood when they have escaped from the facility or when they need to repair fencing along the property and they have suffered from the distress caused by having to live in such close proximity to an inmate prison facility with all of the inherent dangers and risks associated herewith.
Plaintiffs sought damages for the diminution of value of their properties and emotional distress on various legal theories including common law fraud, violation of the Consumer Fraud Act, N.J.S.A. 56:8-1 to -20, negligence, and breach of an implied warranty of habitability. Additionally, in three counts, plaintiffs sought damages only against builders W.B. Associates and Harry Kantor based upon breach of contract, fraud in the inducement and breach of warranty. In a final count, Martin Brodsky alleged that realtor Ted Kantor, Harry Kantor's son, had tortiously interfered with Brodsky's contractual relationships by advising prospective purchasers not to retain Brodsky in connection with their property purchases. Defendants answered plaintiffs' complaint, and defendants W.B. Associates and Harry Kantor asserted the counterclaims that we previously described.
In June 2001, defendants moved to dismiss the counts of plaintiffs' complaint alleging undisclosed proximity to the prison for failure to state a claim upon which relief could be granted, arguing that compliance with the New Residential Real Estate Off-Site Conditions Disclosure Act (Disclosure Act), N.J.S.A. 46:3C-1 to -12, as construed in Nobrega v. Edison Glen Assocs., 167 N.J. 520 (2001), exonerated them from liability. Plaintiffs opposed the motion by submission of briefs, certifications and documentary evidence. The motion judge described plaintiffs' claims as set forth in their complaint and certifications as follows:
Plaintiffs contend that W.B. Associates and Harry Kantor both individually and as agents, servants and employees of W.B. Associates, Inc. and Vintage Communities and Ted Kantor, [Century] 21 Mack Morris Agency intentionally and negligently made certain statements and representations to each of these purchasers to induce them to buy their homes.
Plaintiffs allege that the defendants represented to the plaintiffs that they should buy lots in the development known as Winding Brook because the lots were in close proximity to, bordered upon and were adjacent to a dairy farm - no one knew that they were attended to, the cows were attended to by prisoners, - and would be a gateway to a final construction site consisting of million dollar homes. Who knew that a million dollar home was a jail?
Plaintiffs maintain that they were informed that the property zoning was restricted and that its use in the future would only be a dairy farm. Plaintiffs claim that Mr. Kantor told them that Marlboro Psychiatric Hospital, located on the other side of the dairy farm property, was closing.
Plaintiffs allege that the "dairy farm" is in fact a minimum security facility that houses approximately 125 inmates that were transferred from Rahway State Prison who have less than three years on their sentence[s]. Plaintiffs charge that one-third of the inmates were incarcerated for violent crimes. Plaintiffs contend that these inmates have jobs of repairing the fences that border the plaintiffs' homes and retrieving the cows who often break through the fences. I can just see this.
Plaintiffs assert that the floodlights from the prison shine into their windows and there is often noise and profanity coming from the inmates. Plaintiffs claim a 250 bed drug rehabilitation center has recently been approved for the prison facility and is qualified to house inmates that have less than 18 months left to serve [on] their sentences.
That's an interesting surprise when you buy that kind of house.
A Winter 2000 newsletter circulated by the builder, a copy of which was included with plaintiffs' opposition, purportedly reported upon the ecstatic response of homeowners Debbie and Michael to their home in the development, and included their statement: "We love this property - our home borders a dairy farm where we can look out in the morning and see cows in the pasture." Following argument, defendants' motion was denied by the judge on the ground that plaintiffs had alleged intentional and willful misrepresentation of the use of the adjoining property that was not statutorily immunized.
However, summary judgment was thereafter granted to defendants by a different judge by order dated March 1, 2004. In relevant part, the judge held that defendants' compliance with the statutory disclosure requirements of the New Residential Construction Off-Site Conditions Disclosure Act prevented plaintiffs from asserting causes of action based on the failure to disclose. Additionally, the judge held that plaintiffs had failed to produce evidence to support their claims arising from the construction of their homes; that no warranty of habitability had been breached; that plaintiffs' emotional distress was insufficient to warrant recovery; and that no admissible evidence supported Martin Brodsky's claims of intentional interference with contract by Ted Kantor. However, the judge denied the defendants' motion for sanctions pursuant to N.J.S.A. 2A:15-59.1a(1) for filing frivolous litigation.
Following a settlement between all plaintiffs other than the Brodskys and defendants, trial was held on the counterclaims asserted against Martin Brodsky by W.B. Associates and Harry Kantor. At the trial, the principal evidence introduced in support of counterclaimants' tortious interference with contract action was (1) three or four conversations between Harry Kantor and Martin Brodsky in which Brodsky accused Kantor of fraud, threatened suit, and threatened to disclose the fact that Kantor had a federal felony conviction for bribery in connection with a real estate matter; (2) Brodsky's solicitation of others to join as plaintiffs in the litigation; (3) a series of letters written by Brodsky or his attorney to Harry Kantor or Kantor's attorney seeking settlement of his claims for $300,000 and threatening, if the matter were not resolved, to file suit; (4) a letter from Brodsky to Kantor noting that Kantor was cutting trees along a shared property line, contrary to prior representations that the trees would be preserved as a barrier, and threatening to oppose Kantor's application to rezone undeveloped property from five acres to 1.25 acres, in order to permit its development; and (5) Brodsky's disclosure of the allegations of the complaint.*fn5
In testimony before the jury, Kantor admitted that, in the 1980s, he had pled guilty to paying a $75,000 bribe to a bank official, receiving a two-year probationary sentence with a $5,000 fine, and entering with his partners into a restitution agreement that required payment of $50 million in cash and $20 million in deeds in lieu of foreclosure. Kantor further acknowledged that the information regarding his indictment and guilty plea appeared on the front page of the Asbury Park Press, and he stated that the embarrassment and loss of business caused him to have a breakdown, for which he was treated for a number of days in a psychiatric facility.
By 1991, Kantor had negotiated a resolution of his restitution obligation and had re-commenced his business as a builder, starting up once again "from scratch." By 1992 or 1993, he was "back in the saddle." In 1995 or 1996, he became involved in the Winding Brook development when W.B. Associates purchased the property from its prior owners. Although Kantor admitted that he had conducted a physical investigation of the area prior to the property purchase, and he was aware of the existence of the State-owned Marlboro Psychiatric Hospital, he claimed to have been unaware of the prison until, at an undisclosed time prior to the commencement of Brodsky's allegations of fraud, a property purchaser informed him of its presence, which Kantor then confirmed with the Township.*fn6
Kantor testified additionally that, once the contract between W.B. Associates and the Brodskys was "validated," Brodsky "turned into the customer from hell." His threats of litigation and its basis (termed by Kantor as constituting extortion) and his exposure of Kantor's felony conviction allegedly caused a fall-off of sales in the development that "extended the ...