August 3, 2012
JOEL H. MOSKOW AND CAROL MOSKOW, PLAINTIFFS-APPELLANTS,
K. HOVNANIAN AT JACKSON, LLC,
On appeal from the Superior Court of New Jersey, Law Division, Ocean County, Docket No. L-256-11.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued: May 2, 2012
Before Judges Axelrad, Sapp-Peterson and Ostrer.
Putative class action plaintiff home buyers appeal from summary judgment dismissal of their complaint against the developer alleging common law fraud, negligent representation, negligence, breach of the implied covenant of good faith and fair dealing, and violations of the New Jersey Recording, Consumer Fraud, and Retirement Community Full Disclosure Acts. Plaintiffs had alleged that defendant improperly inflated the purchase price of their home based on the inclusion of upgrade decorator credits in the deed consideration, resulting in a higher tax assessment. We affirm substantially for the reasons stated by Judge E. David Millard in his written opinion appended to the order.
Defendant, K. Hovnanian at Jackson, LLC, is the developer of a
community known as Four Seasons at Metedeconk Lakes in Jackson, New
Jersey (the community), which consists of approximately 785
single-family homes. Plaintiffs Joel and Carol Moskow*fn1
are individuals who purchased a single-family home from
defendant in the community. This appeal arises out of that sale.
On or about March 6, 2006, plaintiffs entered into a contract of sale with defendant to purchase their new home. The purchase price for the property reflected in the sales agreement was $400,950. It is undisputed that defendant offered plaintiffs a sales incentive of $10,771.25, reducing the purchase price to $390,178.75. At that time, defendant agreed to give plaintiffs a $2,000 friends and family credit toward decorator selections at closing.
On October 26 and 27, 2006, plaintiffs and defendant executed three supplemental agreements to the purchase agreement: (1) an amendment; (2) a decorator selection credit addendum; and (3) a financing credit addendum. The amendment increased the $390,178.75 purchase price of the property to $429,913.75 to account for $39,735 of "decorator selections, options, custom changes, and upgrades" that plaintiffs had chosen. The amendment then excluded from the deed price nonrealty items, such as the "refrigerator, washer, dryer, [and] icemaker[,]" totaling $1460, and noted that "the purchase price to be reflected on the deed" was $428,453.75.
As reflected in the decorator selection credit addendum, defendant agreed to provide plaintiffs with a $37,735 credit toward the decorator selections and upgrades they had chosen, "[i]f Buyer satisfies all the conditions set forth in paragraph 2[.]" In pertinent part, paragraph two required plaintiffs to close title by the end of October 2006, use defendant's affiliates, K. Hovnanian American Mortgage, LLC (Hovnanian Mortgage) and Eastern Title Agency, Inc. (Eastern Title), to obtain a purchase money mortgage and title insurance, respectively.
In the financing credit addendum, the parties agreed that if plaintiffs satisfied all conditions, defendant would provide them with a $6,532.13 financing credit to be applied to closing costs. The financing credit addendum contained the same conditions as those set forth in the decorator selection credit addendum. Both the decorator selection credit addendum and the financing credit addendum provided that plaintiffs could select any lender or title company of their choice.
Plaintiffs purchased title insurance from Eastern Title and obtained a $300,000 mortgage from Hovnanian Mortgage. Plaintiffs submitted an initial mortgage application on October 6, 2006 and a final mortgage application on October 31, 2006. The uniform residential loan application submitted and signed by plaintiffs reflected the purchase price of the property was $429,913.75, and stated:
Each of the undersigned specifically represents to Lender . . . that: (1) the information provided in this application is true and correct as of the date set forth opposite my signature and that any intentional or negligent misrepresentation of this information contained in this application may result in civil liability, including monetary damages, to any person who may suffer any loss due to reliance upon any misrepresentation that I have made on this application, and/or in criminal penalties including, but not limited to, fine or imprisonment or both under the provisions of Title 18, United States Code, Sec. 1001, et seq.
During the process, Hovnanian Mortgage had the property appraised by Central State Appraisal Services, LLC, which determined the value of plaintiffs' property as of October 17, 2006 was $441,000.
Plaintiffs closed title on the property on October 31, 2006. The purchase price listed on the deed and affidavit of consideration, as agreed to in the amendment to the purchase agreement, was $428,453.75. The HUD-1 uniform settlement statement signed by the parties at closing, as well as the closing statement prepared by defendant and signed by plaintiffs, reflected the contract sales price as $428,453.75, and indicated that defendant provided plaintiffs at closing with the family and friends, decorator selection, and financing credits. Joel certified that because plaintiffs were credited with $37,735, they never "paid" that amount, and they therefore paid a total of $390,718.75 for the property, exclusive of closing costs.
Joel also certified that he and his wife obtained the mortgage through defendant's affiliate "since [defendant] wanted us to close prior to the sale of our existing home and as an incentive [defendant] provided us with the financing credit. We did this for [defendant's] benefit to close on our new home before its year end." Moreover, he certified as to the events surrounding the closing:
On the date of the closing, there were more than two hundred purchasers waiting in the lobby, hallways and conference rooms at [defendant's] closing agent, Eastern Title, to close on various [defendant] properties.
The closing process was rushed to accommodate the substantial number of closings. . . . There was no opportunity for us to question the documents provided by [defendant] at the closing.
According to Joel's certification, Jackson Township performed a property tax reevaluation in 2008, and plaintiffs as well as other homeowners in the community experienced an increase in their property assessment. Moreover, he certified that defendant had occasionally included the decorator selection credit amount in the consideration for other buyers, notwithstanding that those purchasers "did not use its affiliated mortgage company and paid cash for the property but did obtain title insurance through the affiliated title company."
In January 20ll, plaintiffs filed a putative class action complaint on behalf of themselves and other current and future property owners seeking damages from defendant. They alleged that defendant's "inclusion of the credits in the Deed consideration amount is illusory and results in an artificial inflated value of the property by fictitiously representing a purchase price that includes illusory credit amounts." Plaintiffs thus alleged that the Jackson Township Tax Assessor used the "inflated and arbitrary consideration" recorded on the deeds to establish the fair market value of the properties in the community for tax assessment purposes. Accordingly, plaintiffs claimed that as a direct result of the purchase price listed in the deed, they and other members of the community had been "paying excessive property taxes on the property." Plaintiffs alleged violations of the Consumer Fraud Act (CFA), N.J.S.A. 56:8-l to -20 (count one), fraud (count two), negligent misrepresentation (count three), negligently caused economic loss (count four), breach of the implied covenant of good faith and fair dealing (count five), and breach of the New Jersey Retirement Community Full Disclosure Act, N.J.S.A. 45:22A-1 to -20 (count six).
On May 6, 2011, in lieu of an answer, defendant filed a motion to dismiss plaintiffs' complaint pursuant to Rule 4:6-2(e), or in the alternative, a motion for summary judgment pursuant to Rule 4:46. Plaintiffs filed a cross-motion for partial summary judgment, seeking a determination that defendant violated the Recording Act, N.J.S.A. 46:15-1.1 to -11. At oral argument on July 8, 2011, plaintiffs' attorney argued that by including the value of the decorator credit in the purchase price on the deed, defendant inflated the price, resulting in a higher tax assessment. He claimed defendant violated the Recording Act because "the Statute clearly applies only to consideration paid or to be paid, and [defendant] was not and did not get paid anything for the credits, the decorator selection credits." Plaintiffs' attorney acknowledged that "if I cannot demonstrate that there was a violation of the Recording Act, the rest of the Counts clearly -- the consumer fraud Count, the negligence, all the other Counts after that are hinged and linked to a violation of the Recording Act."
By written opinion and order of the same date, Judge Millard denied plaintiffs' motion for partial summary judgment, granted defendant's motion for summary judgment, and dismissed plaintiffs' complaint with prejudice. Judge Millard found the value of decorator credits was within the definition of consideration, and was lawfully included in the purchase price. He thus found defendant's actions did not constitute consumer fraud, common law fraud, negligent misrepresentation, negligence, a breach of the implied covenant of good faith and fair dealing, or a violation of the New Jersey Retirement Community Full Disclosure Act. Judge Millard further held that plaintiffs were unable to show they suffered damages as a result of defendant's alleged misconduct. This appeal ensued.
On appeal, plaintiffs argue:
THE LOWER COURT'S JULY 8, 2011 ORDER MUST BE REVERSED BECAUSE DECORATOR UPGRADES NOT PAID FOR BY THE GRANTEE DO NOT CONSTITUTE CONSIDERATION TO BE INCLUDED ON THE RECORDED DEED PURSUANT TO N.J.S.A. 46:15-5(c). POINT II
THE LOWER COURT'S JULY 8, 2011 ORDER MUST BE REVERSED BECAUSE PLAINTIFFS' COMPLAINT ASSERTS VIABLE CAUSES OF ACTION AS A MATTER OF FACT AND LAW.
A. CONSUMER FRAUD.
i. BY ARTIFICIALLY INFLATING THE VALUE OF THE PROPERTIES, THE DEFENDANT MISLED THE JACKSON TOWNSHIP TAX ASSESSOR PROXIMATELY CAUSING PLAINTIFFS TO OVERPAY THEIR TAXES.
B. FRAUD AND NEGLIGENT MISREPRESENTATION.
C. NEGLIGENTLY CAUSED ECONOMIC LOSS.
D. BREACH OF THE IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING.
E. RETIREMENT COMMUNITY FULL DISCLOSURE ACT.
THE LOWER COURT'S JULY 8, 2011 ORDER MUST BE REVERSED BECAUSE THE LOWER COURT FAILED TO APPLY THE STANDARDS IN ADDRESSING A MOTION FOR SUMMARY JUDGMENT AND THERE ARE QUESTIONS OF MATERIAL FACT THAT PRECLUDE GRANTING SUMMARY JUDGMENT IN FAVOR OF DEFENDANT. POINT IV
THE LOWER COURT'S JULY 8, 2011 ORDER MUST BE REVERSED BECAUSE DISCOVERY IS INCOMPLETE AND DEFENDANT'S MOTION FOR SUMMARY JUDGMENT IS NOT RIPE FOR ADJUDICATION.
THE LOWER COURT'S JULY 8, 2011 ORDER MUST BE REVERSED BECAUSE PLAINTIFFS ARE ENTITLED TO PARTIAL SUMMARY JUDGMENT.
Summary judgment is granted when "the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law." R. 4:46-2(c). To determine whether there is a genuine issue of fact, a judge must decide whether "the competent evidential materials presented, when viewed in the light most favorable to the non-moving party, are sufficient to permit a rational factfinder to resolve the alleged disputed issue in favor of the non-moving party." Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). "If there exists a single, unavoidable resolution of the alleged disputed issue of fact, that issue should be considered insufficient to constitute a 'genuine' issue of material fact for purposes of Rule 4:46-2."
Ibid. Thus, "when the evidence is so one-sided that one party must prevail as a matter of law, the trial court should not hesitate to grant summary judgment." Ibid. (internal quotation marks and citation omitted).
When reviewing the grant of summary judgment, we apply the same standard as the trial court. Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608 (1998). We first decide whether there was a genuine issue of fact, and if there was not, we decide whether the trial court's ruling on the law was correct. Ibid. Additionally, "[b]are conclusions in the pleadings, without factual support in tendered affidavits, will not defeat a meritorious application for summary judgment." U.S. Pipe & Foundry Co. v. Am. Arbitration Ass'n, 67 N.J. Super. 384, 399-400 (App. Div. 1961). The legal conclusions of the trial court are reviewed de novo, without any special deference. Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995).
We first dispose of plaintiffs' procedural challenges to the grant of summary judgment in Points III and IV. Plaintiffs contend the trial court failed to consider and accept as true that some purchasers received free upgrades even though they did not use defendant's affiliated companies for financing and title insurance. Additionally, plaintiffs contend there are numerous questions of material fact that preclude granting summary judgment in defendant's favor. We disagree.
It is undisputed plaintiffs used defendant's affiliate companies. In a class action, the putative class representative must be able to "fairly and adequately protect the interests of the class[.]" Laufer v. U.S. Life Ins. Co. in N.Y., 385 N.J. Super. 172, 181 (App. Div. 2006) (internal quotation marks and citation omitted). In setting forth a claim, "only the putative class representative is required to satisfy any applicable standing requirement." Id. at 186. Unnamed plaintiffs "'need not make any individual showing of standing [in order to obtain relief], because the standing issue focuses on whether the plaintiff is properly before the court, not whether . . . absent class members are properly before the court.'" Ibid. (alteration in original) (quoting Lewis v. Casey, 518 U.S. 343, 395, 116 S. Ct. 2174, 2201, 135 L. Ed. 2d 606, 646 (1996) (Souter, J., concurring in part, dissenting in part)).
Plaintiffs are unable to maintain a viable cause of action against defendant as a matter of law. Accordingly, as the standing of the class representative is the threshold requirement, the fact that other unnamed plaintiffs potentially could make out a claim is irrelevant. As the facts with respect to plaintiffs are undisputed, the trial judge did not err in granting summary judgment.
Plaintiffs next argue that because defendant has not filed an answer and discovery has not been conducted, summary judgment should not have been granted. This argument is without merit.
"[S]ummary judgment can be reversed where the case was not ripe for a summary judgment determination because discovery, though proceeding in a timely fashion, was incomplete." Scott v. Salerno, 297 N.J. Super. 437, 447 (App. Div.), certif. denied, 149 N.J. 409 (1997). However, "[t]he filing of a cross-motion for summary judgment generally limits the ability of the losing party to argue that an issue raises questions of fact, because the act of filing the cross-motion represents to the court the ripeness of the party's right to prevail as a matter of law." Spring Creek Holding Co. v. Shinnihon U.S.A. Co., 399 N.J. Super. 158, 177 (App. Div.), certif. denied, 196 N.J. 85 (2008).
Although the motions arose early in the litigation process, plaintiffs never asserted that the case was not ripe for summary judgment, and instead filed a cross-motion for partial summary judgment on the Recording Act issue. At oral argument, plaintiffs' attorney acknowledged that the rest of the claims hinged on the outcome of that issue. By filing a cross-motion for summary judgment and voluntarily subjecting themselves to the motion, plaintiffs waived the argument that facts were in dispute and the case was not ripe for adjudication. Therefore, plaintiffs acknowledged that the issue was ripe for adjudication, and when the court found that defendant's conduct did not constitute a Recording Act violation, the judge properly granted summary judgment.
We turn now to plaintiffs' Points I and V. Plaintiffs argued to the trial court that defendant violated the Recording Act by unlawfully inflating the consideration recited in the deeds and establishing higher purchase prices for homes in the community by including free upgrades. They urged that decorator upgrades not paid for by the grantee do not constitute consideration to be included on the recorded deed pursuant to N.J.S.A. 46:15-5(c), and claimed they were entitled to partial summary judgment as a matter of law. They also claimed that defendant's practice "manipulat[ed] the fair market values of the properties to the detriment of the homeowners" in violation of the Recording Act, thus constituting a violation of the CFA.
Judge Millard rejected these arguments. He found the value of decorator credits was within the definition of consideration under both the statute and administrative regulations. The judge explained:
The Court is satisfied that Defendant's offer of credits and incentives in return for use of Defendant's affiliates for closing services is permitted by RESPA. Such arrangements are clearly "things of value" to the seller and should be included in the purchase price reflected on the deed, in accordance with the Recording Act. In addition, the definition of "consideration" at N.J.A.C. 18:16-1.1 requires that all real property improvements, including upgrades, be included in the stated deed consideration. As such, Defendant acted lawfully in using $428,453.75 as the purchase price on the deed.
N.J.S.A. 46:15-5(c) defines "consideration" under the Recording Act as follows:
"Consideration" means, in the case of any deed, the actual amount of money and the monetary value of any other thing of value constituting the entire compensation paid or to be paid for the transfer of title to the lands, tenements or other realty, including the remaining amount of any prior mortgage to which the transfer is subject or which is to be assumed and agreed to be paid by the grantee and any other lien or encumbrance thereon not paid, satisfied or removed in connection with the transfer of title.
The Administrative Code further defines "consideration" in the context of realty transfer fees to specifically include the cost of improvements and upgrades on new construction:
"Consideration" means, in the case of any deed, the actual amount of money and the monetary value of any other thing of value constituting the entire compensation paid or to be paid for the transfer of title to the lands, tenements or other realty, including:
3. The entire purchase price of both land and real property improvements including real property upgrades on all new construction. [N.J.A.C. 18:16-1.1.]
Both the statute and the regulations define "new construction" as "any conveyance or transfer of property upon which there is an entirely new improvement not previously occupied or used for any purpose." N.J.S.A. 46:15-5(g); N.J.A.C. 18:16-1.1. "Real property upgrade" is defined as "an item of incremental cost above the cost of standard construction grade or builder's model which must be included in the amount of consideration stated in a deed of conveyance." N.J.A.C. 18:16-1.1.
As recognized by the trial judge, under N.J.S.A. 46:15-5(c), the term consideration can include not only the "actual amount of money" but also the "monetary value of any other thing of value" constituting the entire compensation paid or to be paid. Although plaintiffs did not actually pay an "actual amount of money" for the property upgrades, they did receive a monetary value in exchange for non-monetary benefits. Including the value of the decorator selection credit in the purchase price is consistent with the definition of consideration under N.J.S.A. 46:15-5(c) because the $37,735 was the "monetary value" that plaintiffs paid through completing the sale expeditiously and using defendant's affiliate companies for financing and title insurance in accordance with the contract and addenda.
Plaintiffs argue a closing date does not constitute consideration because no compensation was "paid or to be paid" to them. However, it was of value to defendant to close on the property by October 31, 2006, even though plaintiffs had not yet sold their old home, to reduce the carrying costs on the developer's unsold inventory, which Joel admitted in his certification. Defendant also benefited by plaintiffs' use of their affiliate companies for the mortgage and title insurance. The monetary value to defendant for plaintiff to meet those requirements was set by the parties at $37,735; the parties agreed to this monetary value and that it would be reflected in the deed.
Moreover, the regulations specifically include "real property improvements including real property upgrades on all new construction" in the definition of consideration. N.J.A.C. 18:16-1.1. Here, the decorator upgrades chosen by plaintiffs for their new home were improvements above the cost of the standard model, so they "must be included in the amount of consideration stated in a deed of conveyance." See ibid.
We further note that although the Real Estate Settlement Procedures Act (RESPA) prohibits kickbacks, it authorizes affiliate referrals provided they are not a condition of the sale of the home. 12 U.S.C.A. §§ 2607, 2608. The requirement that plaintiffs use defendant's affiliate companies was not a condition of the sale of the home, but rather a condition to receive a $37,735 credit. Federal case law supports the proposition that a seller may offer an incentive or credit in return for a buyer's agreement to use the seller's affiliate companies for closing services. See, e.g., Yeatman v. D.R. Horton, Inc., 577 F.3d 1329, 1329-30 (11th Cir. 2009) (finding that the option of receiving a discount on closing costs if the buyers used the seller's affiliate as the mortgage lender did not violate RESPA because it was just the "option of a discount" rather than requiring the buyers to do so as a condition of the sale).
Mack-Cali Realty, LP v. Clerk of Bergen Cnty., 25 N.J. Tax 243 (Tax 2009) and Sherman Properties, Inc. v. Mintz, 133 N.J. Super. 322 (Cty. Ct. 1975), relied on by plaintiffs for the principle that statutory consideration does not include indirect benefits or items not paid for by the grantee, are factually and legally inapposite.
In Mack-Cali, the Division of Taxation had taken the position that a "transfer between commonly owned entities always results in some benefit to the grantor and, if that benefit cannot be directly quantified, consideration should be measured by the value of the property transferred." Supra, 25 N.J. Tax at 247. The Tax Court had to determine whether the transfer of real property from Mack-Cali to two limited liability company entities of which Mack-Cali was the sole member, where the consideration referenced in the deed was ten dollars, was exempt from the realty transfer fee pursuant to N.J.S.A. 46:15-10(a). Id. at 245. The court noted that "apart from the stated dollar sums, no other consideration passed from the grantees to MackCali." Id. at 245. The court rejected the Division's imputed consideration argument, finding the statute "does not . . . include an indirect benefit of the kind imputed by the Division," and thus the transactions were exempt from the realty transfer fee. Id. at 247-48. It is undisputed that the parties here are not commonly owned in any respect.
In Sherman, the court held it was improper to impose a realty transfer fee when a corrective deed was recorded due to a defective acknowledgement in the original deed. Supra, 133 N.J. Super. at 325. The court reasoned that the realty transfer fee attaches to consideration, and since the corrective deed was necessary to fix the defective acknowledgement, with no transfer and no consideration exchanged, no realty transfer fee was due. Ibid. Here, the parties exchanged consideration at the time of the issuance of the deed. It is also undisputed that defendant paid the realty transfer fee on the full consideration of $428,453.75 reflected on the deed and closing statement.
Plaintiffs focus most of their argument on an unpublished opinion of the Tax Court, Maude v. Twp. of Jackson, No. 016958-2009 (Tax June 20, 2010), involving a 2009 tax appeal by another resident of the community. That case is not precedential. R. 1:36-3. Moreover, it is distinguishable. Judge Millard amply addressed and rejected plaintiffs' argument that the decision was persuasive authority, finding the holding was limited to that specific case. We merely point out that the Maude case was decided in the correct procedural posture of a property owner's appeal of a municipal property tax assessment to the county board and Tax Court,*fn2 and was decided based on the record presented to the Tax Court judge.
Contrary to plaintiffs' assertion, the case does not stand for the broad proposition that the deed consideration of a property in the community must be limited to the money paid by the buyer. In fact, the Tax Court judge expressly limited the holding to that specific case, stating, "[t]he court does not suggest that in every instance in which a builder gives credits for upgrades or other features added to a new home the amount actually paid by purchasers reflects the true market value of the property." Maude v. Twp. of Jackson, supra, slip op. at 11. He warned that the record was missing key documents such as the buyers' mortgage application and an appraisal, which would be "critical to the outcome of a tax appeal" in the future. Id. at 12-13. Nor does the opinion indicate whether the Maudes' receipt of the credit was contingent upon their agreement to close by a specified date or to use an affiliated mortgage lender or title company.
Plaintiffs additionally argue that the trial court's ruling is erroneous because they received financing and friends and family credits which, under the trial court's reasoning, also should have been included in the consideration on the deed. Those credits, however, were properly excluded from consideration. The financing credit specifically provided that it should be applied to closing costs. The purchase price listed on the deed did not include closing costs. Additionally, the friends and family credit was given in March 2006 when plaintiffs first entered into the contract of sale, and did not list any consideration that plaintiffs had to provide in order to receive the benefit. Therefore, without consideration for the credit, it was properly excluded from the purchase price stated on the deed.
Plaintiffs argue in Point II that summary judgment should not have been granted because defendant violated the CFA by including upgrades as consideration and skewing and tainting comparable sales by its practice, thereby making it impossible to appeal to the taxing authority. We disagree.
To state a claim under the CFA, a plaintiff must allege unlawful conduct, an ascertainable loss, and a causal relationship between the defendant's unlawful conduct and the plaintiff's ascertainable loss. Int'l Union of Operating Eng'rs Local No. 68 Welfare Fund v. Merck & Co., 192 N.J. 372, 389 (2007).
The CFA defines unlawful conduct as:
The act, use or employment by any person of any unconscionable commercial practice, deception, fraud, false pretense, false promise, misrepresentation, or the knowing, concealment, suppression, or omission of any material fact with intent that others rely upon such concealment, suppression or omission, in connection with the sale or advertisement of any merchandise or real estate. [N.J.S.A. 56:8-2.]
Courts have also divided the unlawful conduct of CFA claims into three broad categories: affirmative acts, knowing omissions, and regulatory violations. Int'l Union, supra, 192 N.J. at 389 (citing Cox v. Sears Roebuck & Co., 138 N.J. 2, 17 (1994)).
As previously discussed, Judge Millard properly concluded that defendant's conduct did not violate the Recording Act and thus was not an unlawful practice under the CFA. He also properly concluded that plaintiffs failed to demonstrate an ascertainable loss under the CFA.
The CFA provides, in pertinent part:
Any person who suffers any ascertainable loss of moneys or property, real or personal, as a result of the use or employment by another person of any method, act, or practice declared unlawful under this act . . . may bring an action or assert a counterclaim therefor in any court of competent jurisdiction. In any action under this section the court shall, in addition to any other appropriate legal or equitable relief, award threefold the damages sustained by any person in interest. [N.J.S.A. 56:8-19 (emphasis added).]
"When a plaintiff fails to produce evidence from which a finder of fact could find or infer that a plaintiff suffered a quantifiable or otherwise measurable loss as a result of the alleged CFA unlawful practice, summary judgment should be entered in favor of defendant[.]" Thiedemann v. Mercedes-Benz USA, LLC, 183 N.J. 234, 238 (2005).
Here, plaintiffs did not demonstrate an actual loss because they received what they expected under the agreements with defendant. The parties all agreed on the purchase price of the home, the amount of credits, the cost of upgrades, and the price to list on the deed. Moreover, there does not appear to be a causal relationship between defendant's alleged unconscionable activity and plaintiff's purported loss. As Judge Millard found, "Defendant has no control over the actions or calculations of the Jackson Township tax assessor." Finally, regardless of whether plaintiffs have alleged an ascertainable loss, without the first element of the CFA, unlawful conduct, plaintiffs cannot state a claim and summary judgment was properly granted for defendant on the first count of the complaint.
Plaintiffs also cannot sustain their common law fraud claim that defendant made material misrepresentations regarding the consideration recited in the deeds as a matter of fact or law. Accordingly, the second and third counts of the complaint was properly dismissed on summary judgment.
To prevail on a common law fraud claim, a plaintiff must prove the following elements: "(1) a material misrepresentation of a presently existing or past fact; (2) knowledge or belief by the defendant of its falsity; (3) an intention that the other person rely on it; (4) reasonable reliance thereon by the other person; and (5) resulting damages." Gennari v. Weichert Co. Realtors, 148 N.J. 582, 610 (1997).
Similarly, negligent misrepresentation consists of "'[a]n incorrect statement, negligently made and justifiably relied on, [and] may be the basis for recovery of damages for economic loss sustained as a consequence of that reliance.'" McClellan v. Feit, 376 N.J. Super. 305, 317 (App. Div. 2005) (alterations in original) (quoting H. Rosenblum, Inc., v. Adler, 93 N.J. 324, 334 (1983)). Negligent misrepresentation is closely related to legal and equitable fraud. McClellan, supra, 376 N.J. Super. at 317.
The transaction was transparent in all respects from start to finish. Judge Millard properly found defendant "provided full disclosure of all facts in this matter[,]" the representations made regarding the purchase price were not false, and plaintiffs used the same purchase price to obtain mortgage financing. Plaintiffs agreed to the purchase price in the addendum to the purchase agreement in advance of the closing and all terms of the arrangements. Furthermore, they understood the value of the upgrades on the property. In exchange for a credit on those upgrades, they followed the terms of the agreement by using defendant's affiliate companies and proceeding with the closing by October 31, 2006. Plaintiffs cannot now complain.
To recover on a claim of common law negligence, a plaintiff must prove four elements: (1) a duty of care, (2) a breach of that duty, (3) proximate causation, and (4) damages. Weinberg v. Dinger, 106 N.J. 469, 484 (1987). "[A] defendant owes a duty of care to take reasonable measures to avoid the risk of causing economic damages, aside from physical injury, to . . . an identifiable class with respect to whom defendant knows or has reason to know are likely to suffer such damages from its conduct." People Express Airlines, Inc. v. Consol. Rail Corp., 100 N.J. 246, 263 (1985).
Defendant provided no false information to plaintiffs. Just as they cannot sustain a cause of action for negligent misrepresentation, they cannot sustain a claim of common law negligence as alleged in count four of their complaint. The parties negotiated and agreed that the deed would reflect the purchase price as $428,453.75, which was reflected on the closing statement and on which defendant's realty transfer taX was calculated. Defendant has no control over the tax assessor and his or her calculation of the tax assessment of the properties in Jackson. As discussed by Judge Millard and previously in this opinion, to the extent plaintiffs believe the deed does not accurately reflect the fair market value of their property, their recourse, like the Maudes, is to timely file a tax appeal and present appropriate proofs to the county board and Tax Court.
For similar reason, plaintiffs' fifth count alleging breach of the implied covenant of good faith and fair dealing must fall. "'[E]very contract in New Jersey contains an implied covenant of good faith and fair dealing[.]'" Wood v. N.J. Mfrs. Ins. Co., 206 N.J. 562, 577 (2011) (quoting Kalogeras v. 239 Broad Ave., L.L.C., 202 N.J. 349, 366 (2010)); Sons of Thunder, Inc. v. Borden, Inc., 148 N.J. 396, 420 (1997). This obligation requires that "'neither party shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract[.]'" Wood, supra, 206 N.J. at 577 (quoting Kalogeras, supra, 202 N.J. at 366); Sons of Thunder, Inc., supra, 148 N.J. at 420. The purchase price clearly recited in the contract, deed and closing statement was that undisputedly agreed upon by the parties.
Judge Millard also properly dismissed count six alleging a violation of the Retirement Community Full Disclosure Act. A developer of a retirement community who "makes an untrue statement of a material fact" or "omits a material fact" may be held liable to the purchaser if the purchaser relied on the statement or omission. N.J.S.A. 45:22A-16(a). Similarly, under the Planned Real Estate Development Full Disclosure Act, N.J.S.A. 45:22A-37, a developer who makes untrue statements of material fact or omits a material fact may be liable to the purchase for double damages suffered.
Here, defendant did not make any untrue statements, let alone a material misrepresentation or an omission. Defendant offered plaintiffs credits and plaintiffs satisfied the requirements and obtained the credits. Defendant did not artificially inflate or manipulate the market value of the property. The parties agreed on the purchase price to be stated in the deed in advance and defendant prepared and recorded the deed in accordance with the agreement.