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Timothy Holt and Paula Holt v. William Laube

December 12, 2011

TIMOTHY HOLT AND PAULA HOLT, PLAINTIFFS-APPELLANTS,
v.
WILLIAM LAUBE, LISA LAUBE, GRANDVIEW OUTDOOR SERVICES AND
CHARLES ARNONE, D/B/A PRECISION CONSULTANTS, PRUDENTIAL RELOCATION, DEFENDANTS, AND RONALD DUNN, JOHN SWEENEY, COLDWELL BANKER AND PRIMACY CLOSING CORP., DEFENDANTS-RESPONDENTS.



On appeal from the Superior Court of New Jersey, Law Division, Morris County, Docket No. L-2358-08.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued September 27, 2011

Before Judges Messano, Yannotti and Espinosa.

Plaintiffs Timothy Holt and Paula Holt appeal from orders entered in this action granting summary judgment in favor of defendants Primacy Closing Corp. (Primacy), Ronald Dunn (Dunn), John Sweeney (Sweeney), and Coldwell Banker (Coldwell). Plaintiffs also appeal from an order denying their motion for leave to file an amended complaint. We affirm.

I.

This action arises from the following facts. Defendants William Laube and Lisa Laube (the Laubes) owned certain real property in the Township of Montville (Township). In 2000 to 2001, Grandview Landscape Services, Inc. (GLS), an entity in which Sweeney and Dunn had ownership interests, replaced retaining walls on the Laubes' property. In October 2002, Kyle Russell, a Coldwell real estate agent, inspected the property and analyzed the condition and future marketability of the property. Russell did not identify any visible problems with the property. On October 17, 2002, Coldwell listed the property for sale.

On October 20, 2002, the Laubes completed and signed a Seller's Disclosure Statement (SDS), in which they asserted, among other things, that all of the retaining walls on the property were replaced in 2000-2001. In the section of the SDS entitled "Additions/Remodels," the Laubes responded "No" to the question "Have you made any additions, structural changes, or other alterations to the property?" Because they answered "No" to that question, the Laubes did not respond to the following question, which required them to state whether they had obtained "all necessary permits and approvals" and whether "all work [was] in compliance with building codes[.]"

At or around this time, plaintiffs were informed that the Laubes wanted to sell their home. Plaintiffs contacted the Laubes directly and arranged to visit the property. Plaintiffs were pleased with the property and wanted to buy it. They contacted their broker, Pam Houston of Re/Max Realty, and asked her to prepare a contract for the purchase of the property. On October 21, 2002, plaintiffs signed a purchase offer, and plaintiffs were provided with the Laubes' SDS for their review.

In November 2002, plaintiffs engaged Precision Consultants (Precision) to inspect the property. Charles Arnone (Arnone), a licensed home inspector for Precision, issued a report dated November 23, 2002. In his report, Arnone did not identify any structural problems with the walls supporting the patio or the front steps.

In December 2002, the Laubes transferred title to the property to Primacy. The Laubes also executed an affidavit of title, in which they stated, among other things, that they owned the property since 1999, and that "[n]o additions, alterations or improvements [had] been made to the property since June 1999[.]" In the affidavit of title, the Laubes also indicated that they had "always obtained all necessary permits and certificates of occupancy."

In January 2003, Primacy transferred title to the property to plaintiffs. Plaintiffs were provided with a complete copy of the Laubes' SDS. On January 28, 2003, Primacy executed an affidavit of title, which stated that Primacy owned the property since December 17, 2002. Primacy also executed a disclosure statement which stated that it was "a relocation company, ha[d] not lived in the property, and [made] no representations, guarantees or warranties regarding the property or its condition."

According to plaintiffs, in June 2003, a portion of the retaining wall on the right side of the property began to collapse. Plaintiffs contacted the Laubes, who gave them Sweeney's name. Plaintiffs contacted Sweeney and asked him to perform certain repairs to the retaining walls. Sweeney performed the work at a cost of about $8,000.

Plaintiffs allege that other problems with the retaining walls came to light. They retained Allied Engineering Associates (Allied) to evaluate the walls. Allied issued a report dated June 8, 2006, which stated, among other things, that "most of the walls on the property are deficient" with "large gaps between the blocks." Allied's report also stated that "all the walls on the property have to be replaced" as well as the front steps and the landing.

On August 5, 2008, plaintiffs filed a complaint in the Law Division against the Laubes, Dunn, Sweeney, Grandview Outdoor Services (GOS), Coldwell, Prudential, Primacy and Arnone (doing business as Precision). Plaintiffs asserted claims against the Laubes, Dunn, Sweeney, GOS, Arnone, Coldwell and Primacy under the Consumer Fraud Act, N.J.S.A. 56:8-1 to -20 (CFA). They also asserted claims against the Laubes, Coldwell, Prudential and Arnone for negligence and negligent misrepresentation; and claims against all defendants for breach of the implied covenant of good faith and fair dealing and unjust enrichment. In addition, plaintiffs asserted fraud claims against the Laubes, Coldwell, Prudential and Primacy.

On September 14, 2009, with leave of court, plaintiffs filed an amended complaint, which deleted the claims against Prudential. The claims against the Laubes were resolved, and plaintiffs dismissed their claims against Arnone and Precision. The other defendants filed motions for summary judgment, and plaintiffs filed a motion seeking leave to file an amended complaint to substitute GLS for GOS and add a negligence claim against GLS. The trial court granted summary judgment to Dunn and Sweeney, Primacy and Coldwell. The court also denied plaintiffs' motion for leave to file an amended complaint. This appeal followed.

II.

Plaintiffs argue that the trial court erred by granting summary judgment in favor of Dunn and Sweeney on the CFA claims asserted against them. We disagree.

The CFA "is intended to protect consumers from deception and fraud, 'even when committed in good faith.'" Ji v. Palmer, 333 N.J. Super. 451, 461 (App. Div. 2000) (quoting Gennari v. Weichert Co. Realtors, 148 N.J. 582, 604 (1997)). To establish a prima facie case under the CFA, a plaintiff must show "1) unlawful conduct by defendant; 2) an ascertainable loss by plaintiff; and 3) a causal relationship between the unlawful conduct and the ascertainable loss." Bosland v. Warnock Dodge, Inc., 197 N.J. 543, 557 (2009). Unlawful conduct under the CFA can consist of "an affirmative act, an omission, or a violation of an administrative regulation." Gennari, supra, 148 N.J. at 605.

Here, plaintiffs claim that Dunn and Sweeney are liable under the CFA because, when it constructed the retaining walls for the Laubes in 1999, GLS violated the "Home Improvement Practices" regulations promulgated by the Attorney General pursuant to the CFA, which declare certain acts or omissions to be violations of the CFA. N.J.A.C. 13:45A-16.1 to 16.2. Strict liability is imposed for violations of these regulations "regardless of intent or moral culpability[.]" Cox v. Sears Roebuck & Co., 138 N.J. 2, 18-19 (1994).

Plaintiffs allege that Dunn and Sweeney violated N.J.A.C. 13:45A-16.2(a)(10)(i) because they failed to obtain necessary building and construction permits for the work. Plaintiffs additionally allege that Dunn and Sweeney violated N.J.A.C. 13:45A-16.2(a)(3)(iv) by substituting products or materials for those specified in the contract. Plaintiffs claim that Dunn and Sweeney are personally liable for the losses causally related to these regulatory violations because they had ownership interests in GLS.*fn1

Plaintiffs alleged that Dunn and Sweeney violated N.J.A.C. 13:45A-16.2(10)(i) because GLS rebuilt the retaining walls for the Laubes without obtaining the necessary municipal approvals. In support of that contention, plaintiffs relied upon a certification by ...


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