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Ferrell v. America's Dream Homes

August 4, 2010


On appeal from the Superior Court of New Jersey, Law Division, Essex County, Docket No. L-792-04.

Per curiam.


Argued March 15, 2010

Before Judges Rodríguez, Yannotti and Chambers.

Plaintiffs Raymond R. Ferrell (Raymond) and Lissa Jean Ferrell (Lissa) appeal several summary judgment orders that dismissed their complaint against defendants Paul DeBellis (Paul), Paul DeBellis, Jr. (Junior), and America's Dream Homes, Inc. (ADH). We affirm.

These are the pertinent facts, viewed in the light most favorable to plaintiffs. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 523 (1995). Plaintiffs, who were looking for a new home, viewed property in the Highwood Park Estates development in West Orange. Highwood Park was "built into a mountain," meaning that many of the yards dropped off down the mountainside. Junior spent time walking the site with plaintiffs, who later asked if it would be possible for something to be done to "make their yard more usable." To accommodate plaintiff's request, Junior spoke to the head of ADH's construction division, who said that a retaining wall was necessary to enlarge the usable space.

Eventually, plaintiffs signed a contract to purchase the home for $495,595, including a $50,000 "lot premium." Junior explained that the premium "had nothing to do with the location or the square footage of the lot. It strictly had to do with building the retaining wall." Section 14.1 of the contract concerned the issue of merger, stating that the "deed of conveyances shall constitute [the] final and complete agreement between [ADH] and [plaintiffs], and all rights of the parties shall merge in [the] deed." Section 17.1 provided that ADH would not be liable for any damages plaintiffs might incur as a result of a delay in closing, which was estimated to occur on June 30, 2000. However, should issuance of the certificate of occupancy take longer than 180 days after the estimated closing date, plaintiffs could receive a full refund and void the contract. In accordance with Section 18.1, the contract and attached exhibits constituted the "entire and only agreement" between plaintiffs and ADH. Any change to the agreement had to be written, signed by both parties, dated, and subject to attorney review.

Defendants' attorney wrote a letter to plaintiffs' attorney, informing him that the $50,000 was "exclusively for the retaining wall "behind the proposed home and that plaintiffs could "consult with the site engineer and/or their architect to confirm the information on the retaining wall cost apportionment." ADH was required to ensure that properties in the development had no greater than a 2:1 slope, subject to approval by West Orange. Shortly thereafter, Junior sent a letter to plaintiffs, enclosing a site plan of their property, labeled "Exhibit A1," and confirming that ADH's "architectural department designed [the] home on the property to allow for the most usable land area." Raymond signed the letter and Exhibit A1, which showed the 2:1 slope commencing just beyond the end of the deck and patio and running to a line of trees and the retaining wall at the back of the property. On a later date, he signed a drawing labeled "Exhibit A," which depicted the site plan, a front elevation of the home, and floor plans. The site plan showed a hand-drawn chain link fence bordering the retaining wall. Junior wrote to plaintiffs confirming and approving Exhibits A and A1. He represented that their home would be constructed in accordance with the drawings, and that the "retaining wall [would] be constructed based on Exhibit A1 specifications."

Plaintiffs wrote back to Junior in part to "express [their] concern and expectations regarding the backyard of the property." They stated that July 28, 2000, was the "drop dead date" for closing on their new home because the sale of their old home was to close on the same date. Junior responded that, due to difficulties in obtaining cabinets, the estimated closing date would be August 21, 2000, and that that grading of the backyard would be completed "in accordance with Schedule A."

Plaintiffs objected to the August 21 closing date, claiming that Junior had verbally agreed to the July 28 date and never informed them of the delay until this letter. They stated that they "relied materially" on their agreement for a July 28 closing. Plaintiffs agreed to postpone the closing until no later than August 15, 2000, after which they would "hold [defendants] liable for any and all damages sustained." Plaintiffs also complained that defendants' "failure to follow-up with our requests to meet at the site to discuss the discrepancies between the retaining wall as agreed to in Exhibit A-1 and as currently and incompletely constructed." They stated that defendants' commitment to construct the wall as per Exhibit A was inadequate and insisted that they "agree[d] to purchase this property based upon the level yard size represented to us." Plaintiffs further stressed that they would "seek to enforce this agreement."

In response, Paul referred plaintiffs to Section 3.1 of their contract, which stated that the original closing date of June 30 was an estimate and which required plaintiffs "to accept the deed and pay consideration" on the date of completion. With respect to the retaining wall, Paul wrote:

[It] had to be designed by us and approved by the Town of West Orange. The wall that is currently built is exactly what was allowed by the City Engineering Department. Your concern should not be the size or shape of the wall but the fact that we are committed to giving you the exact yard area as specified in your Schedule "A".

Given plaintiffs' apparent dissatisfaction, Paul offered to "consider returning [their] deposit and voiding the contract, provided a decision is made immediately."

In subsequent letters, plaintiffs responded that August 15, 2000 was the "[t]ime is of the essence closing date." They requested a copy of the grading report and noted that they had no concern whatsoever regarding the size, shape or aesthetics of the retaining wall. Their concern was that "the wall be constructed as per our expectations diagramed in Exhibit 1." They asserted that "the wall as is does not conform." "Qualified experts" told them that the wall was unsafe. However, they stated in several letters that they wished to continue with the purchase.

Defendants' lawyer advised plaintiffs that "the wall that was built meets the Contract and Municipal requirements" and "[t]here will be no escrows and based on [plaintiffs] threats of litigation they will be required to execute a General Release to [defendants], which will except usual punch list items and items covered by the Home Owner's Warranty." Plaintiffs' counsel responded that plaintiffs had "solid information" that the wall was noncompliant and that they were overcharged for it. Plaintiffs refused to sign a release and insisted that closing occur within ten days. The exchange of letters continued.

In August 2000, defendants declared plaintiffs in breach of contract based on their failure to proceed to closing and their repeated attempts to add terms to the contract of sale. Three days later, however, defendants said that they would be willing to close as soon as possible, with no escrow, provided plaintiffs would sign a general release. Plaintiffs responded that, although they would not sign a general release, they would "waive the escrow requirement." The next day, plaintiffs announced that they were prepared to close "in accordance with the original terms of the Contract of Sale."

The certificate of occupancy was issued on August 28, 2000. The closing took place on August 29, 2000. Seven days later, plaintiffs conducted a walk-through of the property and created a punch list of items that needed to be corrected. None of the items involved either the rear retaining wall or the yard.

Plaintiffs filed this lawsuit more than three years later, alleging: breach of contract; breach of the implied covenant of good faith and fair dealing; equitable fraud; fraud; punitive damages; violation of the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1 to -20 (CFA); and negligence. They sought compensatory and punitive damages. Defendants answered. A period of discovery commenced.

Plaintiffs hired John S. Stern, an architect, to review their property for defects. Stern found that "[c]ontrary to the documented construction details, changes in relationship and deviation in grading radically limit and reduce the actual usable size of the backyard." Specifically, Stern found that the placement of the chain link fence and trees at the top of the slope reduced the backyard size by half. He also determined that the slope of the yard was "twice as steep or 1:1." This "severely limits the use of the rear yard even if the chain link fence is relocated." Finally, he opined that the retaining wall deviated from construction standards and needed to be replaced.

Plaintiffs also retained Henry R. Naughton, P.E., to examine the backyard and retaining wall. Naughton concluded that: (1) "[t]he as-built chain link fence was not as depicted on Exhibit A1"; (2) the ground slope was 1.6:1, which "exceeded the maximum allowable slope" of 2:1; (3) the height of the retaining wall exceeded seven feet in places; and (4) the wall was improperly constructed because, among other things, it did not appear to include filter fabric and showed evidence of "soil and stone migration." Naughton provided an estimate for adjusting the slope and replacing the rear retaining wall to a height of six feet as required by West Orange regulations. The total cost for a new boulder wall was $211,300.

Naughton provided plaintiffs with a revised estimate "for replacing approximately 60 linear feet of the existing boulder wall with an Allan Block type coherent gravity retaining wall, approximately 13.5 feet in height." The estimate provided for backfill "behind this wall so that essentially, a level rear yard surface, approximately 60 feet in width and 32.5 feet in depth, will exist behind the house to ...

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