MICHELE ANNARELLA v. JOSEPH PUGLIESE

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

MICHELE ANNARELLA,

Plaintiff-Appellant,

v.

JOSEPH PUGLIESE, individually and as agent of Weichert Realtors, and WEICHERT REALTORS,

Defendants-Respondents,

and

LANNING ENGINEERING CO. and DONALD MILLER, individually and d/b/a DONALD MILLER SEPTIC SERVICES, INC.,

Defendants,

v.

LANNING ENGINEERING, INC.,

Defendant/Third-Party Plaintiff,

v.

DOROTHY DONLIN, individually

and BETTER HOMES REALTY,

Third-Party Defendants.

__________________________________

September 18, 2014

Submitted September 9, 2014 Decided

Before Judges Yannotti, Fasciale and Hoffman.

On appeal from Superior Court of New Jersey, Law Division, Mercer County, Docket No. L-1151-09.

Stone Mandia, L.L.C., attorneys for appellant (Richard B. Stone, Richard Allan Wiener, and Jason Michael Ross, on the brief).

Pagan Affiliates, L.L.C., attorneys for respondent Joseph Pugliese (Ed Pagan, Jr., on the brief).

Law Offices of Peter N. Laub, Jr. & Associates, L.L.C., attorneys for respondent Weichert Realtors (Peter N. Laub, Jr. and M. Teresa Garcia, on the brief).

PER CURIAM

In this case involving the purchase of real property ("the property"), plaintiff appeals from orders granting summary judgment to Joseph Pugliese ("Pugliese") and Weichert Realtors ("Weichert") (collectively referred to as "defendants"). We affirm in part, reverse in part, and remand for further proceedings.

In April 2001, Pugliese acquired the property, which is partially located within areas designated by the New Jersey Department of Environmental Protection (NJDEP) as wetlands. A prior owner recorded a conservation easement in 1997. Pugliese constructed a single-family home and septic system on the property. Thereafter, Pugliese listed the property for sale through Weichert, which employed Pugliese as a real estate agent.

Plaintiff walked around the property prior to purchasing it, which her fiancé videotaped. She arranged for home, pest, and septic inspections, as well as soil testing, which initially revealed the presence of lead. Plaintiff's inspectors conducted a second round of testing, and Pugliese separately arranged for soil testing. The results of the testing disclosed no lead problem. Plaintiff purchased the property in July 2004.

Plaintiff alleges that in winter 2004 to 2005, she noticed that some of the vegetation on the property was dying. In spring 2005, she found concrete and asphalt debris while digging a garden. In August 2007, a NJDEP inspector observed tainted fill material in the soil including asphalt, concrete, and stone.

In February 2008, the NJDEP issued a notice of violation to Pugliese for dumping fill within a freshwater wetland transition area. In April 2008, years after he sold the property, Pugliese filed a restrictive easement listing himself as the grantor and the NJDEP as the grantee, purportedly pursuant to NJDEP's instructions.

In May 2009, plaintiff filed a complaint seeking damages alleging breach of contract (First Count); fraudulent concealment of defects (Second Count); common law fraud (Third Count); fraud by filing the restrictive deed (Fourth and Fifth Counts); negligence (Eighth Count);1 breach of the covenant of good faith and fair dealing (Ninth Count); and violations of the Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -195 (Tenth Count). Plaintiff believed that Pugliese used tainted fill material and failed to tell her. She also claimed that Pugliese falsely held himself out as the owner of the property by filing the easement.

Weichert filed a motion for summary judgment, which the judge granted on December 18, 2012. The judge determined that plaintiff's expert was unqualified because she had no license, training, or experience as a real estate broker, and that the expert utterly failed to cite any governing standards of care for brokers. The judge found that there were no genuine issues of material fact regarding plaintiff's CFA claim, concluding that

there's no evidence that Weichert concealed anything, that it knew of any of the conditions complained about in the complaint. Plaintiff admits [that she was] able to perform all the tests she . . . wanted to [do] so there doesn't seem to be any issue of . . . material fact for a jury because there has to be some evidence to support plaintiff's allegations and plaintiff basically . . . would be asking the jury . . . to infer . . . that somehow Weichert knew about [debris on the property] as opposed to Pugliese who was the owner of the property.

Pugliese moved for summary judgment. On May 1, 2013, the judge granted the motion and dismissed plaintiff's claims against Pugliese. The judge concluded that plaintiff failed to demonstrate damages related to the alleged filing of a restrictive deed, and she rejected any suggestion that Pugliese misrepresented or concealed the existence of improper fill. The judge stated that

[it] is undisputed [] that plaintiff was able to do testing prior to purchasing the property. . . .

. . . .

[T]he video tape [of the property] supports that this was not concealed, that this was either obvious to the naked eye, or at the very least, would be obvious to anyone who was having testing done, which was done.

On appeal, plaintiff argues primarily that the judge erred by (1) granting summary judgment to defendants because there were genuine issues of material fact; (2) finding that plaintiff's expert was unqualified to testify; and (3) in otherwise evaluating plaintiff's proofs.

We review de novo a trial court's decision granting or denying summary judgment. Town of Kearny v. Brandt, 214 N.J. 76, 91 (2013). Summary judgment must be granted when "'there is no genuine issue as to any material fact challenged and . . . the moving party is entitled to a judgment or order as a matter of law.'" Ibid. (quoting R. 4:46-2(c)). The court must "consider 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).

Applying this standard, we affirm the grant of summary judgment to Pugliese on Counts Four and Five (regarding the restrictive deed) and the grant of summary judgment to Weichert on Counts One and Eight, and as to Weichert's direct liability on Counts Two, Three, and Ten. We do so substantially for the reasons expressed by the judge in her well-reasoned oral opinions. We conclude, however, that the judge erred by granting summary judgment dismissing plaintiff's remaining claims against Pugliese and Weichert.

I.

Giving plaintiff the benefit of all reasonable inferences, there exist genuine issues of material fact precluding summary judgment on plaintiff's claims of fraudulent concealment, fraud, the CFA, and breach of contract and the covenant of good faith and fair dealing against Pugliese.

"[T]he elements necessary to prove fraudulent concealment on the part of a seller in a real estate action are: the deliberate concealment or nondisclosure by the seller of a material fact or defect not readily observable to the purchaser, with the buyer relying upon the seller to his detriment." State, Dep't of Envtl. Prot. v. Ventron Corp., 94 N.J. 473, 503 (1983). Even where a party conducts an independent investigation, there may still be reliance on a defendant's representation. Byrne v. Weichert Realtors, 290 N.J. Super. 126, 137-39 (App. Div.), certif. denied, 147 N.J. 259 (1996). In contrast, "[a] false representation made to a person who knows it to be false is not in legal estimation a fraud." Golden v. Nw. Mut. Life Ins. Co., 229 N.J. Super. 405, 415 (App. Div. 1988).

The parties dispute whether Pugliese knowingly concealed the use of contaminated fill on the property. Plaintiff's neighbor, who sold the property to Pugliese, certified that Pugliese was the only person who brought fill onto the property while Pugliese built the house and septic system. Pugliese maintains that he used clean fill.

In dismissing the claims against Pugliese, the judge relied upon the fact that plaintiff had the property inspected, but the results of the inspections do not necessarily foreclose plaintiff's reliance on Pugliese's failure to disclose the presence of the tainted fill on the property. Plaintiff's inspectors were searching primarily for the presence of lead, pests, and similar problems, not for violations related to the type of fill used on the property.

Looking at the evidence in the light most favorable to plaintiff, the tainted fill was also not readily observable to plaintiff when she purchased the property. Plaintiff observed the improper fill material for the first time when she began digging the soil to plant a garden. Plaintiff's contention that the fill was not readily observable before she purchased the property is further buttressed by the parties' dispute about what the video of plaintiff walking the property shows.

Regarding common law fraud, "[a] misrepresentation amounting to actual legal fraud consists of 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 Cnty. v. Whale, 86 N.J. 619, 624-25 (1981). Reliance must be reasonable. Gennari v. Weichert Co. Realtors, 148 N.J. 582, 610 (1997). The parties dispute whether Pugliese knowingly misrepresented that he used clean fill, that plaintiff reasonably relied on his statement, and that she did so to her detriment. Affording plaintiff all reasonable inferences, as we must do at this stage, plaintiff had no reason to believe that Pugliese made any misrepresentations regarding the fill.

The CFA "provides relief to consumers from 'fraudulent practices in the market place.'" Lee v. Carter-Reed Co., 203 N.J. 496, 521 (2010) (quoting Furst v. Einstein Moomjy, Inc., 182 N.J. 1, 11 (2004)). To prevail on a CFA claim, a consumer must establish (1) that the defendant engaged in an unlawful practice; (2) that the consumer suffered an "ascertainable loss"; and (3) "'a causal relationship between the unlawful conduct and the ascertainable loss.'" Ibid. (quoting Bosland v. Warnock Dodge, Inc., 197 N.J. 543, 557 (2009)). An unlawful practice is:

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, or with the subsequent performance of such person as aforesaid, whether or not any person has in fact been misled, deceived or damaged thereby . . . .

[N.J.S.A. 56:8-2.]

Here, there are genuine issues of material fact because the parties dispute whether Pugliese committed an unlawful practice by making a knowing misrepresentation of the type of fill that he used on the property, and they dispute whether that alleged misrepresentation caused an ascertainable loss.

Regarding the breach of contract claim, "'every contract in New Jersey contains an implied covenant of good faith and fair dealing[, t]hat is, 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 v. N.J. Mfrs. Ins. Co., 206 N.J. 562, 577 (2011) (alterations in original) (quoting Kalogeras v. 239 Broad Ave., L.L.C., 202 N.J. 349, 366 (2010)). "[A] plaintiff may get relief [under this implied covenant] if it relies to its detriment on a defendant's intentional misleading assertions." Brunswick Hills Racquet Club, Inc. v. Route 18 Shopping Ctr. Assocs., 182 N.J. 210, 226 (2005). Because there are genuine issues of material fact as to whether Pugliese intentionally misrepresented the type of fill used and whether plaintiff reasonably relied on this purported misrepresentation, summary judgment on this count was awarded prematurely.

Finally, we conclude that it was error to enter summary judgment dismissing plaintiff's respondeat superior claim against Weichert. There exist genuine issues of material fact as to Pugliese's liability and whether he was acting as Weichert's agent when he listed his property for sale. Under the doctrine of respondeat superior, "'[i]f the principal is the master of an agent who is [the master's] servant, the fault of the agent, if acting within the scope of his employment, will be imputed to the principal . . . .'" Levin v. Lynn, 310 N.J. Super. 177, 185 (App. Div. 1998) (quoting JMB Enters. v. Atl. Emp'rs Ins., Co., 228 N.J. Super. 610, 617 (App. Div. 1988)). "'[C]ontrol by the master over the servant is the essence of the master-servant relationship on which the doctrine of respondeat superioris based.'" Wright v. State, 169 N.J. 422, 436 (2001) (quoting N.J. Prop.-Liab. Ins. Guar. Ass'n v. State, 195 N.J. Super. 4, 8 (App. Div.), certif. denied, 99 N.J. 188 (1984)).

Factors to consider in determining whether control exists include:

(a) the extent of control which, by the agreement, the master may exercise over the details of the work;

(b) whether or not the one employed is engaged in a distinct occupation or business;

(c) the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision;

(d) the skill required in the particular occupation;

(e) whether the employer or the workman supplies the instrumentalities, tools, and the place of work for the person doing the work;

(f) the length of time for which the person is employed;

(g) the method of payment, whether by the time or by the job;

(h) whether or not the work is a part of the regular business of the employer;

(i) whether or not the parties believe they are creating the relation of master and servant; and

(j) whether the principal is or is not in business.

[Carter v. Reynolds, 175 N.J. 402, 409-10 (2003) (quoting Restatement (Second) of Agency 220 (1958)).]

The parties dispute whether Weichert and Pugliese had a master-servant relationship. Pugliese testified that he worked for Weichert from 2001 until 2006 or 2007; Weichert provided training and a mentor; Weichert provided instrumentalities of work and a place for work, such as a desk, office materials, lawn signs, and computers; while working for Weichert, Pugliese was not permitted to work for any other real estate agencies; and brokers at Weichert had a managerial role over Pugliese. Weichert maintains that it did not control Pugliese's work. Plaintiff, however, must first establish Pugliese's liability, before pursuing her claim that Weichert is vicariously liable based on the doctrine of respondeat superior.

After a thorough review of the record and consideration of the controlling legal principles, we conclude that plaintiff's remaining arguments are without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).

Affirmed in part, reversed in part, and remanded for further proceedings in conformity with this opinion. We do not retain jurisdiction.

1 Plaintiff asserted this claim only against Weichert.