MATTHEW FREEMAN AND LISA FREEMAN v. DEBORAH SANDLAUFER

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-2687-03T52687-03T5

MATTHEW FREEMAN AND LISA

FREEMAN,

Plaintiffs-Respondents/

Cross-Appellants,

v.

DEBORAH SANDLAUFER,

Defendant-Appellant/

Cross-Respondent.

_____________________________________

 

Argued September 14, 2005 - Decided

Before Judges Wefing, Wecker and Graves.

On appeal from the Superior Court of New

Jersey, Law Division, Essex County,

L-3502-03.

David Kiefer argued the cause for appellant/

cross-respondent (Sills, Cummis, Esptein &

Gross, attorneys; Mark E. Duckstein and

Patrick C. McGuinness, on the brief).

Jed S. Freeman argued the cause for respondent/

cross-appellant (Wolf, Block, Brach, Eichler,

attorneys; Mr. Freeman, on the brief).

PER CURIAM

Plaintiffs Matthew Freeman and Lisa Freeman entered into a contract to purchase residential property from defendant, Deborah Sandlaufer. Based upon a home inspection provided for in their contract, and the failure of negotiations with respect to repair of "structural defects" evidenced by the report, plaintiffs cancelled the contract and sought return of their $36,000 deposit. Defendant refused, and plaintiffs' suit resulted in summary judgment in their favor, ordering return of their deposit. Plaintiffs' motion for counsel fees, however, was denied. Defendant appeals the summary judgment, and plaintiffs cross-appeal the order denying their fee application. We now affirm as to both.

The contract between the parties was dated March 13, 2003, and provided a three-day attorney review period. Plaintiffs' attorney rejected the contract on March 14, but proposed modifications, including a provision that the time for plaintiff to order inspections would run from the end of the attorney review period. Defendant's attorney did not respond until March 21, accepting the modifications. Thus the attorney review period ended March 21.

Section 5 of the "Contract for the Sale of Real Estate," entitled "Home Inspection," reads as follows:

The Buyer may, at the Buyer's expense, have the property inspected by an engineer, builder or home inspector to determine the presence of any structural defects or environmental contaminants and to determine that all electrical, plumbing, heating, sewer/septic, well, and central air conditioning (if applicable) systems are in working order and need no major replacements or repairs. If the Buyer chooses to have the inspection, the inspection must be completed and the Seller notified of the results within ten calendar days of the date of this Contract; otherwise the Buyer waives his rights under this paragraph. If any structural defects or environmental contaminants are found, or if all the aforementioned systems are not in working order or are in need of major replacements or repairs, Seller will be given ten calendar days after receipt of the report to notify the Buyer whether or not the Seller agrees at his own expense to correct the structural defect, remove the contaminants, put the aforementioned systems in working order and make all needed major replacements or repairs, or the Buyer may cancel this Contract. The Buyer, however, at his option, may waive the results of the inspection in writing, and this Contract shall become binding.

[Emphasis added.]

Plaintiffs' attorney wrote to defendant's attorney on March 25, enclosing the written inspection report. The thirty-two-page report provided by plaintiffs' home inspector detailed his findings and included the following handwritten, "additional comments" relevant to this appeal:

4. Exterior masonite stucco panel rotted by service entry.

5. Rot noted by garage door column.

6. Active roof leak into garage.

7. No ice and water shield present.

The report also noted "mold in [garage] ceiling from above", as well as mold on the master closet ceiling, "paint peeling on kitchen ceiling due to moisture," and the lack of gutters on the house.

Plaintiffs' attorney's March 25 letter enclosing the report, reads as follows:

The Buyer requests that the Seller address the items of concern as outlines [sic] on the enclosed list. My clients are willing to accept a credit for repair of the roof in lieu of repairs, and also request that the damage to the ceiling be further evaluated so that repairs are correctly undertaken.

[Emphasis added.]

The "enclosed list" was contained in a separate letter from plaintiffs to defendant, expressing "serious concerns about the property that need to be corrected." The letter described "serious water damage due to an incorrectly installed roof and lack of gutters that has affected numerous areas to the home," and went on to list twelve specific "concerns." Those relevant to the issue of structural damage are:

1. Though the roof was installed in 2000 according to the listing, there was no ice/water shielding placed at the entire perimeter of the roof. In addition, there are no gutters on the home, therefore water has gotten under the shingles and penetrated the home. Also, it is in doubt whether the valleys of the roof have flashing that was properly installed because these are points where water is entering the house. We observe an active leak (garage ceiling) and previous water damage (bedrooms, closet interiors) or moisture (attic and kitchen ceiling). Present and former leaks have caused damage to drywall on [sic] that needs to be replaced.

2. The lack of gutters has caused the masonite stucco panel siding on the left exterior side of the house to rot or buckle forward and require full replacement.

Defendant's attorney responded with respect to some of the expressed concerns by letter dated March 26; but the only response with respect to the roof was "My client will repair the roof water leak around the chimney flashing, same to be accomplished this week." In that letter, he also described the real estate listing indicating "that the roof was replaced in 2000," as "incorrect" and claimed that his "client advised the realtor that the roof had been replaced in 1994 due to old water damage in the bedrooms." There was no response to plaintiffs' request that "damage to the ceiling be further evaluated."

In support of their summary judgment motion, plaintiffs filed the certification of Paul M. Arthur, the licensed home inspector who completed their home inspection and written report. His certification included the following elaborations of that report:

6. Pursuant to my [visual] inspection of the property, I observed that the roof of the house had no ice/water shields and no gutters. There was an active water leak in the ceiling of the garage and a puddle had formed on the garage floor from the leak. In addition, there was rot in the exterior masonite panels. This indicated to me that water or moisture had also leaked behind the panels causing severe damage.

7. Based on my experience, my [visual] inspection suggested that there was structural damage to the house. The only way to determine the extent of the structural damage would be to tear down the ceiling in the garage and the exterior masonite panels. Unfortunately, this is not the type of inspection that is permitted for a home inspection.

8. The Freemans were present during the inspection and I explained to them my findings and the fact that it would be impossible to determine the extent of the structural damage without ripping everything apart.

9. I have subsequently learned that when the Freemans raised the issue of the leak in the garage and the exterior masonite panels, the Seller only agreed to repair the flashing around the chimney. This repair would not address the existing problems and certainly would not address the structural damage from pre-existing water leaks, especially by the electric meter on the side of the house.

10. To reiterate, during my inspection of 28 Colony Drive East, West Orange, I discovered certain problems that could indicate structural damage to me but I was not able to rip apart everything to fully determine the extent of the damage.

Although the contract provision respecting "structural defects" is undefined, either by language or dollar amount, we are satisfied that items 1 and 2 on plaintiffs' above-quoted list of concerns are supported by the home inspection report and fall within the "structural defects" provision of the contract. The nature of the visible damage, and the home inspector's subsequently expressed opinion that the extent of structural damage could not be fully determined without destructive inspection, support plaintiffs' right to invoke the cancellation provision of the contract. Without defendant's undertaking to make satisfactory repairs, which would have required invasive inspection to allow a clearer determination of the extent of the damage, plaintiffs were entitled to cancel the contract and to have the full amount of the deposit returned.

We agree, in addition, with the trial judge's rejection of plaintiffs' reliance on the offer of judgment rule, R. 4:58, as the basis for an award of a counsel fee. Plaintiffs did not comply with the court rule for effectively serving and filing an offer of judgment, and there is no other basis for a fee award. See R. 4:42-9.

 
Affirmed.

The fact that the plaintiffs were willing to negotiate a price reduction in lieu of their right to cancel is not evidential on the question of their right to cancel.

The record reflects that defendant entered into another contract for sale of the property on June 10, 2003, at a contract price of $385,5000. Of course, if plaintiffs did not have the right to cancel the contract, defendant would be entitled to her actual damages, Kuhn v. Spacial Design, Inc., 245 N.J. Super. 378, 384-86 (App. Div. 1991), and not the deposit per se.

(continued)

(continued)

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A-2687-03T5

September 29, 2005