RAYMOND R. FERRELL v. AMERICA'S DREAM HOMES, INC.

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-1151-08T1

RAYMOND R. FERRELL and

LISSA JEAN FERRELL,

Plaintiffs-Appellants,

v.

AMERICA'S DREAM HOMES, INC.,

a New Jersey Corporation,

PAUL R. DEBELLIS, and PAUL R.

DEBELLIS, JR.,

Defendants-Respondents,

and

AMERICA'S DREAM HOMES, INC.,

Defendant/Third-Party

Plaintiff,

v.

PAC CONTRACTING COMPANY,

Third-Party Defendant.

 

 

Argued March 15, 2010 - Decided

Before Judges Rodr guez, Yannotti and Chambers.

On appeal from the Superior Court of New Jersey, Law Division, Essex County, Docket No. L-792-04.

Jan Alan Brody argued the cause for appellants (Carella, Byrne, Bain, Gilfillan, Cecchi, Stewart & Olstein, attorneys; Mr. Brody and G. Glennon Troublefield, of counsel and on the brief).

Thomas P. Scrivo argued the cause for respondents (McElroy, Deutsch, Mulvaney & Carpenter, attorneys; Mr. Scrivo, of counsel; Michael C. Delaney, on the brief).

PER CURIAM

Plaintiffs Raymond R. Ferrell (Raymond) and Lissa Jean Ferrell (Lissa) appeal several summary judgment orders that dismissed their complaint against defendants Paul DeBellis (Paul), Paul DeBellis, Jr. (Junior), and America's Dream Homes, Inc. (ADH). We affirm.

These are the pertinent facts, viewed in the light most favorable to plaintiffs. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 523 (1995). Plaintiffs, who were looking for a new home, viewed property in the Highwood Park Estates development in West Orange. Highwood Park was "built into a mountain," meaning that many of the yards dropped off down the mountainside. Junior spent time walking the site with plaintiffs, who later asked if it would be possible for something to be done to "make their yard more usable." To accommodate plaintiff's request, Junior spoke to the head of ADH's construction division, who said that a retaining wall was necessary to enlarge the usable space.

Eventually, plaintiffs signed a contract to purchase the home for $495,595, including a $50,000 "lot premium." Junior explained that the premium "had nothing to do with the location or the square footage of the lot. It strictly had to do with building the retaining wall." Section 14.1 of the contract concerned the issue of merger, stating that the "deed of conveyances shall constitute [the] final and complete agreement between [ADH] and [plaintiffs], and all rights of the parties shall merge in [the] deed." Section 17.1 provided that ADH would not be liable for any damages plaintiffs might incur as a result of a delay in closing, which was estimated to occur on June 30, 2000. However, should issuance of the certificate of occupancy take longer than 180 days after the estimated closing date, plaintiffs could receive a full refund and void the contract. In accordance with Section 18.1, the contract and attached exhibits constituted the "entire and only agreement" between plaintiffs and ADH. Any change to the agreement had to be written, signed by both parties, dated, and subject to attorney review.

Defendants' attorney wrote a letter to plaintiffs' attorney, informing him that the $50,000 was "exclusively for the retaining wall "behind the proposed home and that plaintiffs could "consult with the site engineer and/or their architect to confirm the information on the retaining wall cost apportionment." ADH was required to ensure that properties in the development had no greater than a 2:1 slope, subject to approval by West Orange. Shortly thereafter, Junior sent a letter to plaintiffs, enclosing a site plan of their property, labeled "Exhibit A1," and confirming that ADH's "architectural department designed [the] home on the property to allow for the most usable land area." Raymond signed the letter and Exhibit A1, which showed the 2:1 slope commencing just beyond the end of the deck and patio and running to a line of trees and the retaining wall at the back of the property. On a later date, he signed a drawing labeled "Exhibit A," which depicted the site plan, a front elevation of the home, and floor plans. The site plan showed a hand-drawn chain link fence bordering the retaining wall. Junior wrote to plaintiffs confirming and approving Exhibits A and A1. He represented that their home would be constructed in accordance with the drawings, and that the "retaining wall [would] be constructed based on Exhibit A1 specifications."

Plaintiffs wrote back to Junior in part to "express [their] concern and expectations regarding the backyard of the property." They stated that July 28, 2000, was the "drop dead date" for closing on their new home because the sale of their old home was to close on the same date. Junior responded that, due to difficulties in obtaining cabinets, the estimated closing date would be August 21, 2000, and that that grading of the backyard would be completed "in accordance with Schedule A."

Plaintiffs objected to the August 21 closing date, claiming that Junior had verbally agreed to the July 28 date and never informed them of the delay until this letter. They stated that they "relied materially" on their agreement for a July 28 closing. Plaintiffs agreed to postpone the closing until no later than August 15, 2000, after which they would "hold [defendants] liable for any and all damages sustained." Plaintiffs also complained that defendants' "failure to follow-up with our requests to meet at the site to discuss the discrepancies between the retaining wall as agreed to in Exhibit A-1 and as currently and incompletely constructed." They stated that defendants' commitment to construct the wall as per Exhibit A was inadequate and insisted that they "agree[d] to purchase this property based upon the level yard size represented to us." Plaintiffs further stressed that they would "seek to enforce this agreement."

In response, Paul referred plaintiffs to Section 3.1 of their contract, which stated that the original closing date of June 30 was an estimate and which required plaintiffs "to accept the deed and pay consideration" on the date of completion. With respect to the retaining wall, Paul wrote:

[It] had to be designed by us and approved by the Town of West Orange. The wall that is currently built is exactly what was allowed by the City Engineering Department. Your concern should not be the size or shape of the wall but the fact that we are committed to giving you the exact yard area as specified in your Schedule "A".

Given plaintiffs' apparent dissatisfaction, Paul offered to "consider returning [their] deposit and voiding the contract, provided a decision is made immediately."

In subsequent letters, plaintiffs responded that August 15, 2000 was the "[t]ime is of the essence closing date." They requested a copy of the grading report and noted that they had no concern whatsoever regarding the size, shape or aesthetics of the retaining wall. Their concern was that "the wall be constructed as per our expectations diagramed in Exhibit 1." They asserted that "the wall as is does not conform." "Qualified experts" told them that the wall was unsafe. However, they stated in several letters that they wished to continue with the purchase.

Defendants' lawyer advised plaintiffs that "the wall that was built meets the Contract and Municipal requirements" and "[t]here will be no escrows and based on [plaintiffs] threats of litigation they will be required to execute a General Release to [defendants], which will except usual punch list items and items covered by the Home Owner's Warranty." Plaintiffs' counsel responded that plaintiffs had "solid information" that the wall was noncompliant and that they were overcharged for it. Plaintiffs refused to sign a release and insisted that closing occur within ten days. The exchange of letters continued.

In August 2000, defendants declared plaintiffs in breach of contract based on their failure to proceed to closing and their repeated attempts to add terms to the contract of sale. Three days later, however, defendants said that they would be willing to close as soon as possible, with no escrow, provided plaintiffs would sign a general release. Plaintiffs responded that, although they would not sign a general release, they would "waive the escrow requirement." The next day, plaintiffs announced that they were prepared to close "in accordance with the original terms of the Contract of Sale."

The certificate of occupancy was issued on August 28, 2000. The closing took place on August 29, 2000. Seven days later, plaintiffs conducted a walk-through of the property and created a punch list of items that needed to be corrected. None of the items involved either the rear retaining wall or the yard.

Plaintiffs filed this lawsuit more than three years later, alleging: breach of contract; breach of the implied covenant of good faith and fair dealing; equitable fraud; fraud; punitive damages; violation of the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1 to -20 (CFA); and negligence. They sought compensatory and punitive damages. Defendants answered. A period of discovery commenced.

Plaintiffs hired John S. Stern, an architect, to review their property for defects. Stern found that "[c]ontrary to the documented construction details, changes in relationship and deviation in grading radically limit and reduce the actual usable size of the backyard." Specifically, Stern found that the placement of the chain link fence and trees at the top of the slope reduced the backyard size by half. He also determined that the slope of the yard was "twice as steep or 1:1." This "severely limits the use of the rear yard even if the chain link fence is relocated." Finally, he opined that the retaining wall deviated from construction standards and needed to be replaced.

Plaintiffs also retained Henry R. Naughton, P.E., to examine the backyard and retaining wall. Naughton concluded that: (1) "[t]he as-built chain link fence was not as depicted on Exhibit A1"; (2) the ground slope was 1.6:1, which "exceeded the maximum allowable slope" of 2:1; (3) the height of the retaining wall exceeded seven feet in places; and (4) the wall was improperly constructed because, among other things, it did not appear to include filter fabric and showed evidence of "soil and stone migration." Naughton provided an estimate for adjusting the slope and replacing the rear retaining wall to a height of six feet as required by West Orange regulations. The total cost for a new boulder wall was $211,300.

Naughton provided plaintiffs with a revised estimate "for replacing approximately 60 linear feet of the existing boulder wall with an Allan Block type coherent gravity retaining wall, approximately 13.5 feet in height." The estimate provided for backfill "behind this wall so that essentially, a level rear yard surface, approximately 60 feet in width and 32.5 feet in depth, will exist behind the house to the wall." There would be "a slope of no greater than 1:2." The total estimated cost would be $235,300.

ADH retained George E. Derrick, P.E., of Engineering and Environmental Services, Inc., to review plaintiffs' property. He concluded that "the existing rear retaining wall is structurally sound within a reasonable degree of engineering certainty." This conclusion was supported by the fact that "the wall ha[d] been in place for approximately [seven] years without visual indication of movement or loss of soil slope." However, in his deposition, Derrick admitted that he did not observe filter fabric in the areas of the wall he examined, thereby indicating it was likely not installed. As for the slope, he noted that it varied from 1.78:1 to 2:1, a "minimal" difference from the design on Exhibit A1. He concluded that the increased slope did not degrade the wall and could be easily remedied if desired.

Defendants moved for summary judgment on all claims. Plaintiffs cross-moved for summary judgment on the breach of contract and CFA counts. Judge Sebastian P. Lombardi partially granted defendants' motion, dismissing with prejudice the implied covenant and punitive damages claims against ADH. The order dismissed all counts against Paul and Junior, except for the fraud count. Plaintiffs moved for reconsideration. Judge Lombardi denied the motion in a December 16, 2006 oral opinion and signed a January 2, 2007 order.

Approximately six months later, defendants moved for summary judgment on the three fraud claims. Judge Alfonse J. Cifelli concluded:

With reference to the alleged mis-representations as to cost and the municipal requirements, from my review of the record I find it to be completely devoid of any proof or any competent evidential materials to prove an unlawful act on behalf of the defendants. Specifically, the plaintiffs have failed to provide this Court with any competent evidential materials to show that the alleged misrepresentations, even assuming they were made, again, as the Court must for purposes of this motion, were, in fact, false.

. . . [W]ith reference to the alleged misrepresentations as to slope and location of trees, I also make the same finding, i.e., lack of proof to show that the subject misrepresentations constituted an unlawful act as specified for in the [CFA].

In addition, . . . I also find that [p]laintiff[s'] actions in deciding to proceed with the contract subsequent to their becoming aware of the alleged disparities constitutes a waiver . . . .

Thus, Judge Cifelli granted the motion and issued an oral opinion dated May 31, 2007.

ADH moved for partial summary judgment to dismiss the remaining breach of contract claim. Judge Cifelli granted the motion in a April 3, 2008 order. Plaintiffs moved for leave to appeal, which we denied. No. M-5190-07 (App. Div. June 02, 2008).

Further, ADH moved for summary judgment to dismiss the remaining negligence claim. Plaintiffs cross-moved to vacate the April 3, 2008 order and reinstate the breach of contract claim against ADH. On August 1, 2008, Judge Cifelli issued an oral opinion granting ADH's motion, dismissing the negligence claim with prejudice, and denying plaintiffs' cross-motion.

Plaintiffs appeal, contending that the judges erred by dismissing their complaint. We affirm.

The summary judgment standard is set by Rule 4:46-2 and Brill, supra, 142 N.J. at 536-41. The judge must determine "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 dispute in favor of the non-moving party." Id. at 540. All favorable inferences are given the non-moving party. Id. at 536. If the evidence "is so one-sided that one party must prevail as a matter of law," the judge should grant the motion for summary judgment. Id. at 540. However, "[a] trial court's interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference." Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995). We use the same summary judgment standard that is used by trial courts. Jolley v. Marquess, 393 N.J. Super. 255, 267 (App. Div. 2007). Applying this standard here, we are satisfied that Judges Lombardi and Cifelli were correct in granting summary judgment.

Fraud And Equitable Fraud

As for the fraud and equitable fraud claims, plaintiffs argue that the judge was required to accept as true their claims that Junior misrepresented facts regarding the cost and construction of the wall and that the judge made improper findings with respect to Junior's knowledge and intent. They also argue that sufficient evidence was proffered to go before a jury because they certified that they relied on the alleged misrepresentations in deciding to enter into the contract. Plaintiffs based their fraud allegations on four alleged misrepresentations: (1) the retaining wall was required by West Orange; (2) the $50,000 cost for the wall was without markup or profit; (3) the slope of the backyard would be 2:1; and (4) the backyard would be larger because the trees and fence were to be located at the base of the slope.

In order to prove legal fraud, a plaintiff must demonstrate "a material representation of a presently existing or past fact, made with knowledge of its falsity and with the intention that the other party rely thereon, resulting in reliance by that party to his detriment." Jewish Ctr. of Sussex County v. Whale, 86 N.J. 619, 624 (1981). In contrast, recovery for equitable fraud requires only that the plaintiff "prove his or her reasonable reliance on a material misrepresentation of fact." Daibo v. Kirsch, 316 N.J. Super. 580, 588 (App. Div. 1998).

The judge found that plaintiffs waived their fraud claims with respect to the cost of the wall. Waiver "involves the intentional relinquishment of a known right, and thus it must be shown that the party charged with the waiver knew of his or her legal rights and deliberately intended to relinquish them." Shebar v. Sanyo Bus. Sys. Corp., 111 N.J. 276, 291 (1988). The party's intention to relinquish the right is derived from evidence of "a clear, unequivocal and decisive act" on which such an intention can be based. Country Chevrolet, Inc. v. N. Brunswick Plan. Bd., 190 N.J. Super. 376, 380 (App. Div. 1983). Waiver "cannot be predicated on consent given under a mistake of fact." W. Jersey Title and Guar. Co. v. Indus. Trust Co., 27 N.J. 144, 153 (1958).

Here, the evidence showed that plaintiffs learned of the price increase prior to executing the contract. They had ample opportunity during the attorney review period to ascertain whether the increase was reasonable. Plaintiffs presented no competent evidence suggesting defendants misrepresented the cost of the wall. Thus, as the court concluded, because plaintiffs executed the contract of sale after learning of the price increase, they waived their fraud claims with respect to that issue.

Moreover, there is an insufficiency of evidence to sustain the fraud claims. The slope, location of the trees and fence, and size of the backyard were all detailed in the contract to purchase. Plaintiffs were aware of all of the alleged disparities between defendants' alleged misrepresentations and the as-built conditions "for some time prior to closing." They repeatedly complained that the wall and yard did not meet their expectations. Yet, as the judge pointed out, "notwithstanding the disparities, [plaintiffs] elected to take title." This amounts to a waiver and negates the element of reliance.

Consumer Fraud Act

Plaintiffs argue that the judge erred by dismissing their CFA claim. They contend that defendants, as developers, are subject to the CFA and that defendants' false assurances with respect to the slope, backyard space, cost of the wall were affirmative representations that "lured" them into purchasing the house. We are not persuaded by this argument.

N.J.S.A. 56:8-2 provides:

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, in connection with the sale or advertisement of any merchandise or real estate, or with the subsequent performance of such person as aforesaid, whether or not any person has in fact been misled, deceived or damaged thereby, is declared to be an unlawful practice . . . .

The CFA prohibits affirmative actions, as well as acts of omission. Vagias v. Woodmont Props., L.L.C., 384 N.J. Super. 129, 133 (App. Div. 2006). Prohibited affirmative actions include deception, unconscionable commercial practice, fraud, false promise or pretense, and misrepresentation. Chattin v. Cape May Greene, Inc., 243 N.J. Super. 590, 598 (App. Div. 1990), aff'd, 124 N.J. 520 (1991). Acts of omission, on the other hand, include suppression, concealment, or omission of a material fact. Ibid. Unlike acts of omission, violations of the CFA through an affirmative action "do not require proof of intent to mislead." Vagias, supra, 384 N.J. Super. at 133-34.

In order to bring a claim under the CFA, "a plaintiff must allege each of three elements: (1) unlawful conduct by the defendants; (2) an ascertainable loss on the part of the plaintiff; and (3) a causal relationship between the defendants' unlawful conduct and the plaintiff's ascertainable loss." N.J. Citizen Action v. Schering-Plough Corp., 367 N.J. Super. 8, 12-13 (App. Div.), certif. denied, 178 N.J. 249 (2003). According to the Supreme Court:

Usually, consumer fraud involves a pattern of repetitive conduct, not separate incidents. Minor disagreements between consumer and business owner over quality of customer service, timing of service, or increased price is not consumer fraud. To constitute consumer fraud . . . the business practice in question must be "misleading" and stand outside the norm of reasonable business practice in that it will victimize the average consumer, and thus most clearly

and directly involve a matter of legitimate public concern.

[Turf Lawnmower Repair, Inc. v. Bergen Record Corp., 139 N.J. 392, 416 (1995), cert. denied, 516 U.S. 1066, 116 S. Ct. 752, 133 L. Ed. 2d 700 (1996).]

Even where the deception or fraud is "committed in good faith," the CFA applies. Gennari v. Weichert Co. Realtors, 148 N.J. 582, 604 (1997). In other words, "[a]n intent to deceive is not a prerequisite to the imposition of liability." Id. at 605. Thus, where real estate is concerned, "[n]ot just 'any erroneous statement' will constitute a misrepresentation prohibited by [the CFA]. The misrepresentation has to be one which is material to the transaction and which is a statement of fact, found to be false, made to induce the buyer to make the purchase." Id. at 605 (first alteration in original) (citation omitted).

The CFA applies to professional sellers of real estate, as well as "real estate brokers, agents and salespersons representing professional sellers of real estate," but it does not apply to "non-professional sellers of real estate." Byrne v. Weichert Realtors, 290 N.J. Super. 126, 134 (App. Div.), certif. denied, 147 N.J. 259 (1996). Defendants, as professional sellers of real estate, are subject to the CFA.

Here, as with plaintiffs' fraud claims, the only evidence submitted that the yard was not constructed as represented on Exhibit A1 was Stern's report stating that the slope was too steep and the yard was too small because of the improper location of the trees and fence. However, there is no indication that defendants' representations were false at the time they were made. Nor do plaintiffs dispute that the wall was necessary. Thus, plaintiffs failed to present competent evidence indicating an actionable affirmative act of misrepresentation occurred. Chattin, supra, 243 N.J. Super. at 598. Moreover, plaintiffs were offered the opportunity to walk away, but opted to continue with the purchase of their home despite deciding the property was not constructed in accordance with their expectations. They did not include the slope, wall, fence or trees on the punch list of items to be remedied. Thus, even if plaintiffs had valid claims under the CFA, they waived them at closing.

Breach Of Contract

Plaintiffs argue that the judge erred by dismissing their breach of contract claims on summary judgment. They contend that the question of the existence of the alleged oral agreements with respect to the backyard posed issues of fact sufficient to survive summary judgment and that certifications of such agreements were not parol evidence. Moreover, plaintiffs argue that their claims did not merge into the deed at closing because the oral agreements constituted collateral covenants that should have been excepted from merging.

Plaintiffs argue that the judge erred by finding that they presented no evidence of the existence of the alleged oral agreements. Although, because it is often reliant on credibility determinations, the existence of an oral agreement is a question of fact not ordinarily suitable for summary judgment, McBarron v. Kipling Woods, L.L.C., 365 N.J. Super. 114, 117 (App. Div. 2004), we conclude that plaintiffs' argument is without merit.

In support of their assertion that an oral agreement existed with respect to the yard, plaintiffs relied on Raymond's unsubstantiated certification that defendants assured them that a 2:1 slope meant that "the backyard would be flat, walkable land from the back of the house to the retaining wall." However, prior to that certification, plaintiffs repeatedly stated simply that they were promised a 2:1 slope. Although they insisted that they thought the slope would be "fairly level," they admitted that they knew there would be "a potential decline." Moreover, Lissa admitted in her deposition that, she was aware that Exhibit A1 was inconsistent with her request to have a level yard.

In his certification, Raymond also claimed for the first time that ADH had orally agreed to a "maximum amount of usable backyard space" and to closing "without an extinguishment of [plaintiffs'] claims by virtue of the deed." None of these alleged agreements were placed in writing.

The judge properly concluded that Raymond's assertions constituted parol evidence and were inadmissible in light of the clear and unambiguous terms of the contract of sale. The parol evidence rule prevents admission of oral promises that alter the terms of "an integrated written agreement." Seidenberg v. Summit Bank, 348 N.J. Super. 243, 256 (App. Div. 2002). Raymond's certification that defendants agreed to level the yard is contrary to plaintiffs' own statements, as well as the unambiguous contract documents.

Further, plaintiffs' assertion that ADH orally promised that their claims would not be extinguished at closing directly contradicts the terms of the contract, which states in Section 14.1 that the "deed of conveyances shall constitute [the] final and complete agreement between [ADH] and [plaintiffs], and all rights of the parties shall merge in [the] deed." Moreover, Section 18.1 of the contract requires all amendments to be written, signed by both parties, and subject to attorney review.

Thus, Raymond's self-serving, unsubstantiated allegations were insufficient to create a genuine issue of material fact with respect to the existence of the oral agreements, especially in light of the fact that plaintiffs first mention the alleged agreements approximately four years after filing their complaint. See Lepis v. Lepis, 83 N.J. 139, 159 (1980) (conclusory allegations of parties should be disregarded when deciding whether material fact is in dispute). Thus, the court correctly excluded Raymond's certification as inadmissible parol evidence.

Furthermore, even if the agreements existed, they merged with the deed in accordance with Section 14.1 of the contract. "[I]n real estate transactions, all warranties and representations made in connection with a sale, unless specifically reserved to hold over after the passage of title, are merged into the deed." Andreychak v. Lent, 257 N.J. Super. 69, 72 (App. Div. 1992).

Here, Section 14.1 of the contract provided that all rights would merge at acceptance unless specifically reserved.

Breach Of Implied Covenant Of Good Faith And Fair Dealing

Plaintiffs contend that the judge erred by dismissing their claims for breach of the implied covenant of good faith and fair dealing. They argue that the record established a prima facie case for breach of the implied covenant because defendants misrepresented: (1) when they learned of the need for the retaining wall; (2) the cost of the wall; (3) that the backyard would be level; and (4) that the trees and fence would be located at the retaining wall. However, plaintiffs' argument below focused solely on their contention that defendants deliberately delayed the closing. Because these issues were never before the lower court, we need not address them here. See Neider v. Royal Indem. Ins. Co., 62 N.J. 229, 234 (1973) ("[We] decline to consider questions or issues not properly presented to the trial court when an opportunity for such a presentation is available.").

Negligence

Plaintiffs contend that the judge erred by dismissing on summary judgment their negligence claim. They argue that the court should have found that ADH, as an experienced builder, owed an independent duty to plaintiffs that arose not solely from the contract, but also from the fact that it performed services not specifically covered in the contract.

New Jersey law provides that a tort remedy does not arise from a contractual relationship unless the allegedly breaching party owes an independent duty of care. Saltiel v. GSI Consultants, Inc., 170 N.J. 297, 316 (2002). Where there is "no personal injury or consequential property damage arising from a traumatic event. . . . the loss is of a nature more normally associated with a contract action" particularly where "the relationship between the parties is governed by a lengthy and comprehensive contractual arrangement." New Mea Constr. Corp. v. Harper, 203 N.J. Super. 486, 494 (App. Div. 1985). Moreover, in Aronsohn v. Mandara, 98 N.J. 92, 98 (1984), the Court implied that tort liability cannot be imposed against a contractor where the plaintiffs are only seeking to obtain the benefit of the bargain from the underlying contract.

Plaintiffs allege that defendants were negligent in not constructing the property in conformance with the exhibits, by improperly sloping the yard, and improperly constructing the retaining walls. All of these allegations arise from the contract documents, indicating that plaintiffs were merely seeking to enhance the benefit of their bargain. Moreover, plaintiffs provided no evidence suggesting that defendants owed an independent duty as to the retaining walls and the yard. Alternatively, as defendants point out, even if they owed an independent tort duty, the economic loss rule would prohibit plaintiffs' recovery. Alloway v. Gen. Marine Indus., L.P., 149 N.J. 620, 632 (1997), ("When the harm suffered is to the product itself, unaccompanied by personal injury or property damage, principles of contract, rather than of tort law, [are] better suited to resolve the purchaser's claim."); Dean v. Barett Homes, Inc., 406 N.J. Super. 453, 472 (App. Div. 2009) (holding that economic loss rule prohibited a homeowner's negligence claim against a builder where the alleged negligence only caused property damage). Because any alleged damages suffered were, as shown by the evidence viewed in the light most favorable to plaintiffs, to the property only, their negligence claim is barred by the economic loss rule.

Punitive Damages

Plaintiffs argue that the judge erred by dismissing their punitive damages claim on summary judgment. Plaintiffs maintain that the manner in which they were "lured" into purchasing the property, combined with Junior's misrepresentations "and the fact that the home was not built in accordance with [their]

expectations," are sufficient for a jury to find that defendants' conduct was egregious enough to warrant an award of punitive damages.

The judge, on reconsideration, recalled that plaintiffs failed to oppose dismissal of this claim. Moreover, the judge concluded: "[A]fter three years if you don't have a solid theory for punitive damages I think it's appropriate for the Court to say that there's not sufficient [evidence] for the jury . . . to find that the standard has been met."

Punitive damages may be awarded in particularly egregious cases where intentional wrongdoing, such as wanton and willful disregard for the rights of others, occurs. Nappe v. Anschelewitz, Barr, Ansell & Bonella, 97 N.J. 37, 49-50 (1984). In accordance with the Punitive Damages Act, N.J.S.A. 2A:15-5.9 to 5.17, punitive damages are intended to punish the wrongdoer and deter future wrongs by that person. Tarr v. Bob Ciasulli's Mack Auto Mall, Inc., 194 N.J. 212, 216 (2008).

Even viewed in the light most favorable to plaintiffs, we conclude that they have failed to articulate facts that could constitute malice or willful misconduct on the part of defendants. Even on reconsideration, plaintiffs were unable to present any evidence of malice. Thus, plaintiffs failed to state a claim of defendants' alleged misconduct that would rise to a level where an award of punitive damages could be justified.

 
Affirmed.

(continued)

(continued)

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A-1151-08T1

 

August 4, 2010