ANTHONY RAMUNDO, et al. v. MARY ANN CARTER, et al.
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
DOCKET NO. A-4268-05T34268-05T3
ANTHONY and LIOUDMILA RAMUNDO,
MARY ANN CARTER,
ABLE HOME INSPECTION, CHUCK LAING,
PRO-TECH TERMITE & PEST CONTROL,
and HALL REAL ESTATE AGENCY,
Submitted November 14, 2006 - Decided December 15, 2006
Before Judges Coburn and Gilroy.
On appeal from the Superior Court of New Jersey,
Law Division, Ocean County, L-1483-04.
McIntyre & Kirshenbaum, attorneys for appellants
(Francis D. McIntyre, on the brief).
Howard Butensky, attorney for respondent.
Plaintiffs purchased a house from defendant Mary Ann Carter and thereafter filed this action for common law fraud and consumer fraud based on the allegation that Carter deliberately concealed material and latent defects that were not reasonably observable to them. Carter prevailed on summary judgment. Plaintiffs settled with the other defendants and now appeal, arguing that the judge based his decision on findings of fact unsupported by the record.
After carefully considering the record and briefs, we are satisfied that plaintiffs' arguments are without sufficient merit to warrant discussion in a written opinion, R. 2:11-3(e)(1)(E), and we affirm substantially for the reasons expressed by Judge Peterson in his thorough and carefully reasoned oral opinion of January 20, 2006. Nevertheless, we add the following comments.
Carter was engaged part-time in the business of buying houses in poor condition, rehabilitating them, and then selling them. She purchased the subject house in 2000 for $35,000, receiving at the time a written disclosure statement from the seller indicating that there was "water in crawl space," and "damage to the property caused by termites, dryrot, or pests." P149a The statement also said that "general pest treatment [was] done in May 2000." Ibid. After the purchase, Carter retained a professional engineer to have him "[d]etermime if the existing building is structurally sound and if not, determine what methods are necessary to correct the same." P153a The report delivered to Carter included the following observations, recommendations, and conclusion:
The house is a one story frame dwelling approximately 34' x 36', irregular shaped, with a 10' x 12' addition. Some of the original siding has been removed and the rim joist and some of the plates are dry rotted. The 10' x 12' addition is constructed on a slab. The crawl access is through the garage. The crawl space is wet and has standing water in it. As per the United States Department of Agriculture Soil Conservation Soil Survey of Ocean County, N.J., sheet #5, the soil is a Lakehurst Type "A" soil, 0-12" is sand, 12"-46" is sand, fine sand and loamy sand, and 46"-60" is sand, gravelly sand and sandy loam with no particles over 3". Seasonal high water is between 1.5 and 3.5' below the surface. The permeability of the soil is between 6 and 20". The building has been neglected and is in need of repair. The windows should be replaced. There is evidence of dry rot on the window sills and various areas around the doors. The interior has some punch holes in the walls. Leaks in the bathroom has [sic] caused dry rotting in that area. The bedroom on the west side has an unfinished ceiling, where the rafters are exposed. The rafters are 2" x 4's. An inspection of the foundation indicates no signs of settlement or structural failure in the footing or the foundation.
. . . .
1. Place a sump pump in the crawl space.
2. Direct the leaders from the roof, the minimum is 6'-0" from the building.
3. Construct swale in front of the building, to the west and south.
4. Replace rotted rim joist and plates with wolmanized lumber.
5. Replace rotted sheathing at the bottom with womanized plywood to 2' above the plate.
6. Replace all rotted floor joists.
7. Replace rotted flooring.
8. Construct ceiling joist in west bedroom.
9. Place A/C D/C smoke detectors in all bedrooms, hall and garage.
10. Add 6 new foundation vents in the crawl space.
11. The contractor shall notify the Architect, Engineer and Building Inspector of any unusual conditions uncovered during renovations so a re- design may be made if necessary.
The existing footing, foundation and first floor will be structurally sound provided the above recommendations are followed.
A few days later, Carter contracted with Rick Mooney Custom Home Improvement to have the work recommended in the engineer's report done for $69,975. Although Mooney was also Carter's boyfriend, the record contains nothing to indicate that Carter expected anything less than full and satisfactory performance of the work. After the work was done, Carter obtained a certificate of occupancy from the municipality and rented the house to tenants who remained until shortly before the closing with plaintiffs. Carter testified that the tenants never complained about the condition of the house, and no contrary evidence was offered on this point.
In February 2003, plaintiffs signed a contract to purchase the house for $145,000 in "as is" condition, subject to their right to have the customary inspections made. Before closing, and after the inspections, plaintiffs demanded through their attorney that Carter repair rot at the crawl space entrance. Carter refused, and plaintiffs chose to proceed with the closing. A few months later a bathtub fell through the floor surface, revealing widespread deterioration of the foundation, including substantial deterioration of the wood framing elements of the foundation structure. This was evident in a crawlspace that plaintiffs' inspectors failed to enter because piled up furniture blocked the access thereto.
On June 30, 2004, plaintiffs' new property inspector found the "interior rooms visually sag," the main supporting beam under the house was "extensively termite damaged and rotted," and that there was extensive "deterioration of the floor joists." He also found "visibly wet conditions, hanging insulation (due to condensation), staining and moldy odor present at the crawl space entrance . . . indicate that long term flooding of the crawlspace is present, even without entering the crawlspace area" (emphasis added). He concluded that:
[T]here were enough visible indicators present that even without entering any area that was inaccessible or posed a hazard that a conclusion should have been drawn and expressed verbally to the clients [plaintiffs] and in the inspection report, that extensive damage existed to the lower structure and poor conditions were present in the crawl space that were consistent with that of rot, mold, and insect infestation. Pa231
Carter testified that she never looked in the crawlspace, had no knowledge of the problems discovered after the sale to plaintiffs, and relied on Mooney to do the required repairs to render the house habitable. Plaintiff Lioudmila Ramundo testified that "it was impossible [for Carter] not to know." Pa63 Her husband testified that he did not become aware of major problems with the house until the floor gave way under the tub.
Although Carter made no representations to plaintiffs, or anyone representing them, silence can be fraudulent when a fact material to a transaction is not disclosed. Weintraub v. Krobatsch, 64 N.J. 445, 455-56 (1974). But that principle only applies when there is "deliberate concealment or nondisclosure of [a] latent [defect] not observable by the purchasers on their inspection . . . ." Id. at 455. Although a jury could certainly find that Mooney was aware of the conditions at issue, there is no evidence that he ever informed Carter that he had failed to properly repair the house or that she had observed the conditions at issue after Mooney completed his work on the house.
Plaintiffs argue that the judge erred in relying on the "as-is" aspect of the contract, but the judge did so only with respect to the contract claim, not with respect to the fraud claims. Next, plaintiffs argue that the judge improperly relied on a finding that Carter had said that plaintiffs could void the contract after receiving the letter from Carter's lawyer, indicating that Carter refused to perform any repairs on the house. Plaintiffs say the record does not support that finding. Assuming that to be so, it is clear that the judge did not rely on that fact as in any way determinative; rather, he found informative Carter's refusal to do any repairs. Next, plaintiffs argue that the judge improperly relied on the certificate of occupancy issued by the municipality in connection with the sale. But the judge noted that as simply being some evidence, not determinative evidence, that Carter had not intentionally withheld material facts. Next, plaintiffs refer to a problem with the foundation vents, but fail to show how that is evidence of Carter withholding a material fact. Next, plaintiffs argue that the judge erred in failing to recognize as a jury issue whether Carter read and understood the disclosure statement she received when she purchased the property. But that is immaterial given the uncontested testimony that Carter hired an engineer to inspect the house and then hired Mooney to perform all the required repairs. Finally, plaintiffs argue that the judge failed to recognize that the dry rot at issue was only visible if one inspected the interior access crawlspace. But the record does not support that assertion. What the judge found was that the dry rot at the crawlspace entrance indicated, or should have indicated, to plaintiffs and their home inspection expert, that the crawlspace itself might be implicated. He also found as a fact that there was no evidence that Carter was aware of either condition.
Giving plaintiffs the benefit of all reasonable inferences from the evidence viewed in the light most favorable to them, as the judge did and as is required on summary judgment, Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 523 (1995), there is no basis for disturbing the judgment on the common law fraud claim. Nor is there any basis for disturbing the judgment on the consumer fraud claim. When, as here, the claim is based on an omission, or failure to disclose material facts, there must be proof that the defendant acted with knowledge and intent. Cox v. Sears Roebuck & Co., 138 N.J. 2, 18 (1994).
Also known as "Ludmila" and "Ludmilla".
December 15, 2006