June 18, 2010
JOSEPH BURKE AND TIMOTHY BURKE, PLAINTIFFS-APPELLANTS, AND NANCY BURKE, PLAINTIFF,
SEA POINT REALTORS, THOMAS MEYER AND PATRICIA MEYER, DEFENDANTS-RESPONDENTS, AND DZINTARS ABELITE (BOTH INDIVIDUALLY AND IN HIS CAPACITY AS GUARDIAN OF ALFREDS NIKMANIS, AN INCAPACITATED PERSON), DEFENDANT.
On appeal from the Superior Court of New Jersey, Law Division, Ocean County, Docket No. L-928-06.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted February 23, 2010
Before Judges Carchman and Ashrafi.
Following an earlier, successful appeal reinstating their lawsuit, Burke v. Sea Point Realtors, 400 N.J. Super. 398 (App. Div. 2008), plaintiffs presented their evidence to a jury on claims of consumer fraud and tortious interference with a prospective economic advantage. They alleged they lost anticipated profits when their high bid to purchase a house under the supervision of the Chancery Division of the Superior Court, Probate Part, was rejected in favor of the bid of defendant realtors, who were also the listing agent on the property. At the conclusion of plaintiffs' evidence, the Law Division dismissed their claims under Rule 4:37-2(b), reasoning that plaintiffs had not produced admissible evidence of their alleged damages. Plaintiffs now appeal, and we affirm.
Our previous opinion recited some of the relevant facts:
Alfreds Nikmanis was the owner of real property in Brick Township. In light of his deteriorating physical and mental condition, his friend of many years, defendant Dzintars Abelite commenced an action, pursuant to N.J.S.A. 3B:13-1 to -31 and R. 4:86-1 to -6, for a declaration that Nikmanis was incapacitated and unable to manage his affairs. On May 19, 2005, a judgment was entered that appointed Abelite as the guardian of Nikmanis's person and property.
Abelite (the guardian) thereafter concluded that it was in Nikmanis's best interests to sell the Brick Township property and engaged [defendant] Sea Point [Realtors] as his listing agent. Sea Point received a number of offers, and the guardian thereafter filed an action in the Probate Part, pursuant to R. 4:94-1 to -7, seeking approval to sell the property to [defendants Thomas and Patricia Meyer].
In his verified complaint, the guardian alleged that the property was purchased by Nikmanis in 1999 for $113,000 and was unencumbered. He asserted that the Meyers' offer was the highest and urged its approval. . . . [T]he guardian's papers did not make clear the existence of a relationship between the Meyers and Sea Point. And, because of the limited class of persons given notice of the application, the application went unopposed and was apparently not further scrutinized by the Probate judge, who granted the guardian's application without explanation.
Upon learning of the Probate judge's determination, plaintiffs commenced this Law Division action -- against the guardian, the Meyers and Sea Point -- seeking damages based upon what they claim, among other things, was a fraudulent scheme to discourage buyers and to make the property available to the Meyers at the lowest possible price. Plaintiffs asserted: that the guardian's submission to the Probate judge was inadequate and failed to disclose the Meyers-Sea Point relationship; that the guardian's failure to give notice to them and the other disappointed offerors of the probate proceedings precluded deeper scrutiny of the guardian's submission; and that the Meyers, in their role as listing agent, discouraged potential purchasers by indicating that the property had many problems as a way of keeping down the amount of any bids received.
By way of separate motions, all defendants obtained summary judgment. The Law Division judge essentially based his rulings on the fact that plaintiffs never entered into an enforceable contract with the guardian, and that plaintiffs had no standing to be heard in the Probate Part, or, stated another way, that the Probate judge's approval of the sale of the property to the Meyers was conclusive. [Burke, supra, 400 N.J. Super. at 400-01.]
By our earlier opinion, we reversed the grant of summary judgment dismissing all of plaintiffs' claims.*fn1 We concluded the Probate court's approval of the sale was not binding on plaintiffs in this case because they were not given notice and were not parties to the Probate proceedings. Id. at 408. Referring to the absence of disclosure in the Probate court regarding the Meyers' "self-dealing," we also concluded that the decision of that court "may have rested on misinformation." Id. at 405, 408. We remanded plaintiffs' claims for trial in the Law Division. Id. at 409.
After remand, the guardian settled with plaintiffs, and Nancy Burke withdrew as a plaintiff. Joseph and Timothy Burke proceeded to trial before a jury against Sea Point and the Meyers.
In their case-in-chief, plaintiffs presented evidence that they sought to buy the property because its listed price of $235,000 was favorable for its neighborhood, and they intended to occupy the house for some time and then resell it for a profit. They made an offer of $241,900, which was the highest of five bids, but they later learned that their offer had not been accepted and that the guardian had presented defendants' offer of $236,000 to the Probate court for approval.
Defendants had argued that their second-highest offer was better than plaintiffs' because their offer did not include a mortgage contingency clause and also because it accepted the property "as is." Plaintiffs responded to these points by presenting evidence that they had a pre-approval letter from a mortgage lender in the amount of $218,000, which showed they would satisfy the mortgage contingency clause in their offer, and they had experience in construction and could do repairs themselves on any defects of the house.
Plaintiffs' several attempts to prove the profit they hoped to earn were met with objections by the defense, and the trial court sustained each objection. The court noted that plaintiffs lacked a witness who was qualified to testify about the value of the property and the cost of repairs that were necessary, which they had to prove to calculate their alleged lost profits.
At the close of plaintiffs' case, defendants moved to dismiss the complaint under Rule 4:37-2(b) for failure of plaintiffs to prove all the essential elements of their claims. The court ruled that plaintiffs had presented a prima facie case on liability, but they had not presented evidence from which the jury could rationally determine their "ascertainable loss" under the Consumer Fraud Act, N.J.S.A. 56:8-19, or their damages on the common law claim of intentional interference with a prospective economic advantage. Therefore, the court dismissed plaintiffs' claims with prejudice.
On appeal, plaintiffs argue that the trial court erred in excluding their proffered evidence to establish the value of the property. They allege their damages were the difference between that value and their offered price of $241,900.
First, they contend the trial court should have admitted the testimony of plaintiff Joseph Burke that he believed the property was worth $280,000 to $285,000. The trial court sustained the defense objection and instructed the jury to disregard Burke's opinion about the value of the property. Plaintiffs cite N.J.S.A. 2A:83-1 and argue that Burke's lay opinion testimony was admissible. That statute provides in relevant part:
In any action or proceeding for the acquisition or sale of land, or any interest or interests therein, or on review of the assessment for taxes of any real property, or in any action or proceeding in the Tax Court, any person offered as a witness in any such action or proceeding shall be competent to testify as to sales of comparable land, including any improvements thereon, contiguous or adjacent to the land in question, or in the vicinity or locality thereof, or otherwise comparable, from information or knowledge of such sales, obtained from the owner, seller, purchaser, lessee or occupant of such comparable land, or from information obtained from the broker or brokers or attorney or attorneys who negotiated or who are familiar with or cognizant of such sales, which testimony when so offered, shall be competent and admissible evidence in any such action or proceeding. [N.J.S.A. 2A:83-1.]
Contrary to plaintiffs' argument, the statute does not refer to lay opinion testimony. The purpose of its enactment was to supersede case law that applied the hearsay rule to exclude testimony about comparable sales of land. N.J. Sports & Exposition Auth. v. Cariddi, 84 N.J. 102, 105 (1980) (citing as the prior case law Essex County Park Comm'n v. Brokaw, 107 N.J.L. 110 (E. & A. 1930)); N.J. Sports & Exposition Auth. v. Koziol, 172 N.J. Super. 219, 222 (App. Div.) (same), certif. denied, 85 N.J. 95 (1980); see also N.J. Highway Auth. v. Rue, 41 N.J. Super. 385, 390 (App. Div.), certif. denied, 22 N.J. 340 (1956) (intent of N.J.S.A. 2A:83-1 was to "abolish the hearsay rule . . . and to permit hearsay evidence of other sales of similar properties to be received as competent ").
Plaintiffs did not seek to elicit the type of testimony that the statute made admissible. Burke was not asked about comparable sales of other houses in the vicinity. He was simply asked to give his opinion of the resale value of the subject property. He concededly was not qualified to give expert opinion testimony on real estate values. While the statute applies to both experts and lay witnesses, see White v. State Bd. of Tax Appeals, 123 N.J.L. 350, 353 (Sup. Ct. 1939), it did not replace N.J.R.E. 701 and 702 regarding admissible opinion testimony. Plaintiffs must still satisfy those rules of evidence to present opinion testimony about value of the property.
"A lay witness may give an opinion on matters of common knowledge and observation." State v. Bealor, 187 N.J. 574, 586 (2006) (quoting State v. Johnson, 120 N.J. 263, 294 (1990)). The value of real estate is not a matter of common knowledge but usually requires the testimony of expert witnesses. See, e.g., Jacobitti v. Jacobitti, 263 N.J. Super. 608, 613 (App. Div. 1993), aff'd, 135 N.J. 571 (1994). Cf. Penbara v. Straczynski, 347 N.J. Super. 155, 162 (App. Div. 2002) (owner of an item of personal property is usually competent to testify about an estimate of its value). In Rue, supra, 41 N.J. Super. at 389, while applying the statute cited by plaintiffs to testimony of an expert, we also held that a lay witness was not qualified to testify as to his opinion of the dollar value of the land.
Here, like in Rue, plaintiffs presented no evidence to establish the basis of Burke's estimate of the value of the property as $280,000 to $285,000. He only mentioned one sale in the neighborhood to a friend. That limited knowledge was not enough to qualify Burke to offer a reliable opinion about the value of the subject property. We conclude that the trial court did not abuse its discretion in excluding Burke's proffered lay opinion testimony. See State v. Simon Family Enters., L.L.C., 367 N.J. Super. 242, 257 (App. Div. 2004) (abuse of discretion standard of review applicable to evidentiary ruling).
Later in the trial, plaintiffs cited N.J.S.A. 2A:83-1 again in attempting to present evidence of comparable sales that defendant Patricia Meyer had compiled in suggesting the listing price of $235,000 for the property. The defense again objected, and the trial court sustained the objection.
Although N.J.S.A. 2A:83-1 and N.J.R.E. 803(b) (statement by party opponent) were sufficient to answer any hearsay objection to plaintiffs' proffer, we conclude the trial court did not abuse its discretion in excluding the evidence. Because the determination of the listing price of property is not the same as an appraisal of its value, the evidence was subject to exclusion under N.J.R.E. 403 because its probative value was substantially outweighed by the potential of confusion of a crucial issue before the jury.
Even if Patricia Meyer's comparable sales report might have been admitted, its exclusion was harmless. R. 2:10-2. Its probative value was minimal compared to the actual market activity on the property. Plaintiffs made the highest bid of $241,900 among five interested buyers. Our cases have said the realities of the market rather than unsupported opinions are the best evidence of value. See Bowen v. Bowen, 96 N.J. 36, 49-50 (1984); Glen Wall Assocs. v. Wall Twp., 6 N.J. Tax 24, 29-30 (1983), aff'd, 6 N.J. Tax 448 (App. Div. 1984). That observation is particularly apt when the unsupported opinion is that of a listing sales agent rather than a qualified appraiser. Without some admissible and reliable evidence that the property had a higher value than their own highest bid, exclusion of Meyer's comparable sales information was not of "such a nature to have been clearly capable of producing an unjust result." R. 2:10-2.
Next, plaintiffs contend the trial court erred in excluding the two written appraisals that were presented in the Probate court to support the guardian's application for approval of the sale to the Meyers. In the Probate proceedings, the guardian had submitted appraisal reports from two qualified real estate appraisers, John Bonczyk and John Burke (no relation to plaintiffs). Bonczyk appraised the property at $255,000 "as is." Burke appraised it at $252,000, but subject to adjustment for needed repairs that he identified but did not quantify in terms of costs. Plaintiffs proffered these reports in the Law Division trial, arguing that the court should take judicial notice of them under N.J.R.E. 201(b)(4) because they were court records in another proceeding. The trial court correctly sustained defendants' objection and did not admit the reports.
Although the court can take judicial notice that evidence such as a certification or report was in fact presented in another judicial proceeding, the contents of the certification or report are not admissible for their truth under the judicial notice rule of evidence. Laffey v. City of Jersey City, 289 N.J. Super. 292, 307-08 (App. Div.), certif. denied, 146 N.J. 500 (1996); Rwb Newton Assocs. v. Gunn, 224 N.J. Super. 704, 711 (App. Div. 1988). Judicial notice does not dispense with the hearsay rules. Ibid. Plaintiffs could not rely on the appraisals in the Probate court as proof of the value of the property because those reports were hearsay.
Moreover, the judicial notice rule is not appropriate for resolving closely disputed issues at trial. See State v. Downie, 117 N.J. 450, 468, cert. denied, 498 U.S. 819, 111 S.Ct. 63, 112 L.Ed. 2d 38 (1990). "The purpose of judicial notice is to save time and promote judicial economy by precluding the necessity of proving facts that cannot seriously be disputed and are either generally or universally known." State v. Silva, 394 N.J. Super. 270, 275 (App. Div. 2007). The accuracy of the two appraisal reports was not an undisputed fact or one that was generally or universally known.
Finally, plaintiffs argue the trial court erred in rejecting the testimony of appraiser John Burke as satisfying their burden to show the value of the property and hence their losses. After the court sustained the defense objection and declined to admit Burke's appraisal report under the judicial notice rule, plaintiffs subpoenaed Burke to appear and testify at trial.*fn2 Burke testified that he appraised the property at $252,000 but subject to listed, necessary repairs. He stated he did not have expertise in estimating the cost of repairs and, therefore, could not present a net value of the property in its condition "as is."
The trial court concluded the jury had no evidence of the cost of repairs and would have to speculate about the actual value of the property. Consequently, plaintiffs proofs did not establish their lost profits. See J.L. Davis & Assocs. v. Heidler, 263 N.J. Super. 264, 276-77 (App. Div. 1993). We agree with the trial court's ruling. Burke's testimony was insufficient to establish a prima facie case of plaintiffs' losses.
Plaintiffs had the burden of proving damages. Caldwell v. Haynes, 136 N.J. 422, 436 (1994). With respect to the consumer fraud claims, they were required to prove that the allegedly unconscionable commercial practice or deception of the defendants caused them to suffer an "ascertainable loss."
N.J.S.A. 56:8-2 and -19; Thiedemann v. Mercedes-Benz USA, 183 N.J. 234, 248 (2005); Cox v. Sears Roebuck & Co., 138 N.J. 2, 21 (1994). Although plaintiffs were not required to prove their losses with precision or certainty, Totaro, Duffy, Cannova and Co. v. Lane, Middleton & Co., 191 N.J. 1, 14 (2007); Cox, supra, 138 N.J. at 22, they were required to provide to the jury "facts to make a fair and reasonable estimate." Lane v. Oil Delivery, Inc., 216 N.J. Super. 413, 420 (App. Div. 1987). Their evidence of allegedly lost profits was inadmissible, incomplete, and speculative, and no fair and reasonable estimate of plaintiffs' alleged losses could be derived from that evidence.
The trial court correctly dismissed plaintiffs' causes of action. See Dolson v. Anastasia, 55 N.J. 2, 5 (1969); Ritondo v. Pekala, 275 N.J. Super. 109, 115-16 (App. Div.), certif. denied, 139 N.J. 186 (1994).