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Jacobs v. Syndicat Des Coproprietaires Chateau Beauvallon

April 27, 2009


On appeal from Superior Court of New Jersey, Chancery Division, Essex County, Docket No. C-149-07.

Per curiam.


Submitted September 29, 2008

Before Judges Skillman, Collester and Grall.

Plaintiffs Roger B. Jacobs and Robin Hodes Jacobs appeal from an order by Judge Harriet Klein dismissing their complaint against defendants, residents of Canada, on the ground of forum non conveniens. Defendants cross-appeal from the denial of their motion to dismiss for lack of jurisdiction. We affirm the dismissal of the complaint based on forum non conveniens.

The central facts are not in dispute. Plaintiffs are long-time residents of West Orange who planned a vacation to Quebec in August 2005. Searching the internet, they located a website advertising Chateau Beauvallon in Mont-Tremblant, Quebec, which was about 180 kilometers northwest of Montreal and two kilometers from the entrance to a well-known ski resort. The website provided a toll-free "800" telephone number for further information. Plaintiffs called and were directed to Keith Brown, who indicated he was a representative of both Chateau Beauvallon and the developer, Syndicat. Brown told plaintiffs Chateau Beauvallon was not ready for occupancy but invited them to consider the purchase of a condominium unit as an investment. He directed them to an item in a recent issue of a regionalized edition of the Wall Street Journal which plaintiffs received at their home. The advertisement stated Chateau Beauvallon was a member of the Small Luxury Hotel Association, and the development was to consist of seventy-one condominium units with one, two, or three bedrooms.

Plaintiffs spoke with Brown on numerous occasions during August 2005 about purchasing a unit. They assert that Brown told them Chateau Beauvallon was on a small lake suitable for swimming and that row boats and pontoons would be available for use. They received promotional materials picturing Chateau Beauvallon in front of a large lake with an abutting dock and listing boating and fly-fishing as amenities. The official website of Small Luxury Hotels of the World also stated that Chateau Beauvallon offered "water sports of all sorts."

Brown arranged a site visit for plaintiffs in early September 2005, while the property was still under construction. On their arrival he showed them the units available for sale as well as a mock-up of a model unit. He added that the property would be listed in the "Small Luxury Hotel" group listing. He also said that based on his knowledge of real estate in the area, unit owners could expect a positive cash flow from the onset and an annual appreciation of more than ten percent. He also gave plaintiffs an analysis and projection done by KPMG, an accounting firm hired by the developer, which estimated for a two-bedroom unit annual owner revenue in Canadian dollars of $29,912 with operating cash flow of $3,138 and direct costs of $10,075.

After their visit, plaintiffs decided to purchase unit 202 because of its proximity to the lake. They received in the mail a "Final Prospectus" which described the hotel and gave detailed information about investing in a unit. Under the heading "Risk Factors" was the following statement: "Prospective purchasers are cautioned there is significant risk that actual revenue and actual costs may vary perhaps materially from the result projected. There is absolutely no guarantee that the projections will be received in whole or in part."

The Final Prospectus described Chateau Beauvallon as "a four-season condominium resort hotel on a five-acre site beside Lake Beauvallon in Mont-Tremblant, Quebec." While the facilities listed an indoor and outdoor swimming pool as well as other amenities, there was a statement that "Lake Beauvallon is a private lake owned by an adjacent landowner and to which unit holders and hotel guests have no legal right of access."

Plaintiffs agreed to the purchase, and transaction documents sent to their West Orange home included a contract for purchase of unit 202, a two-bedroom unit, for $458,788 including furnishings. The contract contained a clause stating that its acceptance "shall be governed by, and construed in accordance with, the laws of the province of Quebec and the laws of Canada applicable thereto." Plaintiffs signed the contract on August 25, 2005, and it was accepted by defendants on August 30, 2005. Thereafter, plaintiffs signed a power of attorney to purchase the unit for $398,860 subject to a mortgage arranged by defendants in the amount of $299,145. Closing documents received in December 2005, included a document of sale and mortgage documents, as well as a "pool lease" which contained a clause specifying that it was governed by the laws of the province of Quebec.

Over the course of the next few months plaintiffs experienced losses from their investment contrary to the representations made by Brown and the KPMG projections. They wrote to the general manager of Chateau Beauvallon on April 7, 2006, but received no satisfactory response. Accordingly, they attended the General Special Meeting of owners on June 3, 2006, in Quebec to express their dissatisfaction. They state that at that meeting they learned for the first time that Brown's representations were false and that as unit owners they had no right of use to Lake Beauvallon.

On May 14, 2007, plaintiffs filed their complaint in New Jersey alleging misrepresentation, fraud, breach of contract, and violations of the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1 to 56:12-70. They alleged that the likelihood of profit from their unit was exaggerated; that Brown misrepresented to them that the hotel owned, leased or had extensive access to the lake; and that they suffered losses from defendants' mismanagement. They sought damages of $450,000 in Canadian dollars plus $20,000 in U.S. dollars. On July 3, 2007 defendants filed a motion to dismiss the complaint on alternative grounds of lack of personal jurisdiction and forum non conveniens. In her written opinion, Judge Klein dismissed the complaint based upon forum non conveniens, and she later denied plaintiffs' motion for reconsideration. The appeal and cross-appeal followed.

Forum non conveniens is an equitable doctrine, and its application is left to the sound discretion of the trial judge. Kurzke v. Nissan Motor Corp. in U.S.A., 164 N.J. 159, 165 (2000). Accordingly, we will not intervene to substitute judgment absent a clear abuse of discretion. Civic Southern Factors Corp. v. Bonat, 65 N.J. 329, 332 (1974). The essence of forum non conveniens is that a court may decline jurisdiction "whenever the ends of justice indicate a trial in the forum selected by the plaintiff would be inappropriate." D'Agostino v. Johnson & Johnson, Inc., 225 N.J. Super. 250, 259 (App. Div. 1988), aff'd, 155 N.J. 491 (1989). A plaintiff's choice of forum is generally given deference, absent defendant showing significant hardship. Civic Southern, supra, 65 N.J. at 333. Accordingly, to obtain a dismissal based on the doctrine, a defendant must demonstrate that "serious ...

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