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Parsi Investment, LLC v. Township of Galloway


October 6, 2010


On appeal from Superior Court of New Jersey, Law Division, Atlantic County, Docket No. L-1888-08.

Per curiam.


Submitted September 7, 2010

Before Judges Grall and Alvarez.

Plaintiff, Parsi Investment, LLC, appeals from a grant of summary judgment in favor of defendant Township of Galloway.*fn1 Plaintiff purchased vacant land from Galloway Township at auction. After purchase, plaintiff learned that the percentage of unusable wetlands and buffer included in the parcel is greater than that reflected in the Township's appraisal and the wetlands map included in that appraisal. Claiming reliance upon the appraisal, plaintiff filed a complaint seeking rescission or reformation of the contract or damages based on equitable fraud and unjust enrichment.

On appeal, plaintiff claims to have established a prima facie case of mutual mistake that precludes a grant of summary judgment. After considering plaintiff's arguments in light of the record and giving plaintiff the benefit of all favorable inferences available, Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995), we have concluded that plaintiff's arguments lack sufficient merit to warrant more than the brief discussion that follows. R. 2:11-3(e)(1)(E).

The appraisal report was made with the following general assumptions:

4. The information provided by others is believed to be reliable. However, no warranty is given for its accuracy.

5. All engineering is assumed to be correct. The sketches, plot plans and drawings included in this report are included only to assist the reader in visualizing the property.

6. It is assumed that there are no hidden or other unapparent conditions in the property, subsoil or structures which would render them more or less valuable. No responsibility is assumed for such conditions or for engineering which would be required to discover them. . . .

The appraised value of the "32.73 Acre[]" parcel was $982,000. The appraiser accounted for the fact that approximately fifty-five percent of the property was unusable due to wetlands and applicable buffer restrictions. He did that by reducing the per-acre value of the subject property below comparable sales involving properties with a smaller percentage of wetlands. Although the appraisal did not purport to represent the value of usable portions of the property, the appraiser acknowledged that the value he assigned was based, in part, on the size of the unusable area and would have varied if the wetlands map provided to him showed a larger or smaller area impacted by wetlands.

The wetlands map the appraiser used was included in the appraisal report. The map warns:

This map is for demonstration purposes only and was not developed in accordance with National Map Accuracy Standards. Any use of this product with respect to accuracy and precision shall be the sole responsibility of the user. The map was developed, in part, using New Jersey Department of Environmental Protection Geographic Information System (GIS) digital data, in conjunction with the Atlantic County Office of Geographic Information Systems, but this secondary product has not been verified by NJDEP and is not state authorized.

The geodetic accuracy and precision of the GIS data contained in this map has not been developed nor verified by a professional licensed land surveyor and shall not be nor is intended to be used in matters requiring delineation and location of true ground horizontal and/or vertical controls.

Finally, the contract of sale incorporates nineteen conditions of sale. The eighteenth condition disclaims any promise as to value that might be implied from the Township's appraisal. It states:

The property to be sold is vacant land and is sold "as is." The Township of Galloway does not make any claims or promises about the condition or value of any property included in this sale. The Buyer, by making a bid, is representing that it has inspected the property and relies on its own inspection and any rights, which may be provided for in other parts of this condition.

The law governing mutual mistake is clear. The doctrine plaintiff invokes "applies when a mistake was mutual in that both parties were laboring under the same misapprehension as to [a] particular, essential fact." Bonnco Petrol, Inc. v. Epstein, 115 N.J. 599, 608 (1989) (internal quotations omitted). In Bonnco, the Court followed the doctrine of mutual mistake articulated in Section 152 of the Second Restatement of Contracts. Ibid.; Restatement (Second) of Contracts § 152 (1981).

Section 152(1) provides:

Where a mistake of both parties at the time a contract was made as to a basic assumption on which the contract was made has a material effect on the agreed exchange of performances, the contract is voidable by the adversely affected party unless he bears the risk of the mistake under the rule stated in § 154.

Section 154 provides two rules governing allocation of the risk that are fatal to plaintiff's claims:

A party bears the risk of a mistake when

(a) the risk is allocated to him by agreement of the parties, or

(b) he is aware, at the time the contract is made, that he has only limited knowledge with respect to the facts to which the mistake relates but treats his limited knowledge as sufficient . . . .

Applying the principles of the Restatement to the facts of this case, it is not necessary to consider whether both parties were operating under the same mistake about the value of the property. Even if there was a mutual mistake, the Township is entitled to judgment as a matter of law because the eighteenth condition incorporated in the contract of sale, which is set forth above, unmistakably allocates any risk as to the value of the property to plaintiff. Thus, paragraph (a) of Section 154 bars plaintiff's reliance on mutual mistake.

Similarly, the evidential materials submitted on the motion for summary judgment would compel a jury to find that plaintiff's reliance on mutual mistake is barred by paragraph (b) of Section 154. The appraisal upon which plaintiff allegedly relied includes a caveat that encompasses the wetlands map and that map also includes a caveat. Those caveats, also quoted above, warn of potential inaccuracies regarding the size of the usable area stated in the appraisal of the property. In the face of those warnings, a reasonable jury would have to conclude that plaintiff was "aware . . . that he ha[d] only limited knowledge with respect" to the precise size of the area restricted by wetlands and the applicable buffer zone and treated that knowledge as sufficient.


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