LJUBISA MILOJKOVIC et al. v. ANNA MALY, et al.

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-3724-04T53724-04T5

LJUBISA MILOJKOVIC and

NADA MILOJKOVIC,

Plaintiffs-Appellants,

v.

ANNA MALY, BERNARD MALY,

VICTORIA MALY and

CHRISTINE MALY,

Defendants,

and

WEICHERT REALTORS,

Defendant/Third-Party

Plaintiff-Respondent,

and

LOUIS B. CHAPMAN,

PAUL SCHILLING & SON, and

BRIAN P. SCHILLING,

Third-Party Defendants.

 
_____________________________________________________________

Submitted March 8, 2006 - Decided August 7, 2006

Before Judges Wefing and Graves.

On appeal from Superior Court of New Jersey,

Law Division, Morris County, L-3377-02.

Piekarsky & Schettino, attorneys for appellants

(Scott B. Piekarsky, of counsel and on the

brief).

Laddey, Clark & Ryan, attorneys for respondent

(Thomas N. Ryan and Lawrence J. Supp, on the

brief).

PER CURIAM

Plaintiffs Ljubisa Milojkovic and Nada Milojkovic appeal from a judgment they obtained against defendant Weichert Realtors in the amount of $34,392.87, following a jury trial, and the order denying their motion for a new trial. Plaintiffs argue that their damage claims "were unfairly limited" by the trial court and that the jury verdict was "inconsistent and erroneous." Based on our review of the record and applicable law, we reverse and remand for a new trial.

Plaintiffs purchased an unimproved lot located at 300 Boonton Turnpike in Lincoln Park (the property) on November 1, 1999, from the Malys. Prior to the sale of their property, the Malys had hired Weichert Realtors (Weichert) to list it for sale. The multiple listing service (MLS) advertisement prepared by Frank Abate, a Weichert employee, contained the following statement: "Beautiful 2 family lot water already in street. Topographic survey avail[able] owner will provide curb cut & sewer stub. Engineering for custom 2 family home available. Ready to build now!!" The selling agent, Michael Starcev, who was a friend of the Milojkovics, was also employed by Weichert.

Plaintiffs testified that they were attracted to the property because, based on the information in the MLS advertisement, they understood that the property was "ready to go," and they only needed "architectural drawings and surveys" to put a building package together. After the parties negotiated a price of $112,500, they signed a contract dated June 25, 1999. The contract provided for the sale of a "2 family building lot," and paragraph 27 of the contract provided as follows: "Buyer responsible for all necessary approvals for construction of 2 family dwelling. Seller represents that property is suitable for 2 family purposes and will cooperate with purchaser on any applications needed." Based on this provision in the contract, plaintiffs believed that the property was a buildable two-family lot.

Prior to closing, Abate confirmed in a letter to Starcev, with a copy to plaintiffs' attorney, that the property was suited for two-family usage and he further advised: "The sellers were already approved for the building of a 2 family home in approx[imately] October of 1997." During the trial, however, Abate admitted that he "could have used a better choice of words" because he never saw any building permits for the property. Furthermore, the Malys admitted they never received approvals or permits to construct a two-family home on the property. The Malys also acknowledged that the "ready to build now" statement in the MLS advertisement, prepared by Abate, was incorrect because a prospective buyer would need to obtain "permits and approvals" prior to commencing construction.

Real estate broker Norman Kailo testified as an expert witness for plaintiffs in the area of real estate sales and broker practices. Kailo was familiar with the Lincoln Park real estate market through his experiences as a broker in the area. According to Kailo, Lincoln Park is known as a "flood area," because it has been flooded on many occasions. Kailo told the jury that "there are practically no vacant areas left in Lincoln Park," and he testified that the subject property is one of eight properties located in a subdivision where the builder who purchased the subdivision built on every other lot. Kailo also testified that the Lincoln Park engineering office maintained a copy of the New Jersey wetlands map, which identified all wetlands areas in the State and that the map was available for public inspection. According to Kailo, industry publications recommend that realtors inspect the wetlands maps when listing a property in a known flood plain or wetlands area. When Kailo went to the Lincoln Park municipal building and examined the wetlands map, it showed that the property purchased by plaintiffs contained wetlands.

Kailo testified that every realtor has a duty to "investigate" any property that he or she lists for sale to determine if there is any negative information that should be disclosed to potential purchasers. Kailo inspected the property and observed that the "rear area and both side areas sloped directly into the middle of . . . the lot." Kailo testified that the sloping he observed on the property would raise the issue of whether the property had adequate drainage; the river across the street from the property would raise the issue of whether the property was subject to flooding; and that both Abate and Starcev, who were Weichert agents, deviated from accepted real estate standards of practice when they marketed the property as "ready to build now!!" because that was not true. In addition, Kailo testified that both Abate and Starcev had a responsibility to disclose information that could be detrimental to the potential development of the property, and they failed to do so.

Plaintiffs closed title on November 1, 1999, and within a few days, they submitted a building permit application to the Lincoln Park Building Department. Plaintiffs were advised that they needed to have a "wetlands delineation test" performed before any improvements could be made to the property.

Plaintiff hired Michael Firth of Environmental Liability Management (ELM) to perform the wetlands delineation test. Firth determined that the property contained wetlands, and advised plaintiffs that certain permits were needed from the New Jersey Department of Environmental Protection (DEP) in order to build on the property. Firth completed and submitted an "Application for Minor Stream Encroachment Permit and Statewide General Permit Number 6" to the DEP. In a letter dated February 8, 2001, Firth advised plaintiffs' attorney as follows:

NJDEP stated that the likelihood of receiving approval for the proposed regulated activities under an individual permit [is] small and that mitigation for any filled wetland areas would be required as part of the individual permit approval, if the approval were granted.

As a result, the potential for development of the above-referenced property is very limited, if not precluded.

But Mrs. Milojkovic testified that Firth eventually concluded that it would be "totally impossible" to obtain the necessary permits from the DEP, and that she was "wasting [her] money" pursuing the permits. Based on this information, plaintiffs abandoned their efforts to obtain a building permit, and they attempted to sell the property. Plaintiffs were unable to sell the property, and when plaintiffs failed to submit mortgage and property tax payments, the Borough foreclosed on the property.

The jury was provided with a jury verdict sheet, which contained twenty-one questions. The relevant questions pertaining to Weichert were answered as follows:

7. Did Weichert Realtors make any fraudulent misrepresentation or engage in any deceit in this transaction?

Yes ______No Vote: 6 to 0

8. If so, were these fraudulent misrepresentations a proximate cause of plaintiff's damages?

Yes ______No Vote: 6 to 0

9. Did Weichert Realtors commit Consumer Fraud as defined by the New Jersey Consumer Fraud Act?

Yes ______No Vote: 6 to 0

10. If so, was Weichert Realtors' consumer fraud a proximate cause of plaintiff's damages?

Yes ______No Vote: 6 to 0

11. Is Weichert entitled to the statutory exemption for [sic] liability for treble damages and attorney's fees under the Consumer Fraud Act as described by the Court?

Yes ______No Vote: 5 to 1

The "statutory exemption," referenced in question eleven refers to the statutory exemption from treble damages and attorney's fees for realtors, N.J.S.A. 56:8-19.1, which applies only if the real estate broker, broker-salesperson or salesperson demonstrates that he or she: "a. Had no actual knowledge of the false, misleading or deceptive character of the information; and b. Made a reasonable and diligent inquiry to ascertain whether the information is of a false, misleading or deceptive character."

Plaintiffs argue that the jury rendered inconsistent verdicts because it found that Weichert was guilty of common law fraud or deceit by clear and convincing evidence (in response to questions seven and eight on the jury verdict sheet), yet it also determined (in response to question 11) that Weichert had no actual knowledge of the false, misleading or deceptive character of the information provided to plaintiffs. As noted by plaintiffs, the jury instructions included the following:

Now, . . . common law fraud and deceit also is alleged in this case. The Milojkovics seek to recover damages which they . . . allegedly sustained as a result of a misrepresentation made to them by the Malys and Weichert.

One who represents as true that which is false with the intent to deceive -- now we're talking common law -- with the intent to deceive the person to whom the representation is made is liable to that person if that person believing the representation to be true acts or refrains from acting in justifiable reliance upon this false statement and suffers damages as a result.

The burden of proof is on the Milojkovics to establish by clear and convincing evidence that each of the following . . . elements of this claim [have] been established: first, that the Malys and Weichert made the false representation of fact to the Milojkovics; second, that the Malys or Weichert knew or believed it to be false; third, the Malys or Weichert intended to deceive the Milojkovics; fourth, the Milojkovics believed and justifiably relied on the statement and were induced by it, by their actions or inactions; and, finally, fifth, that as a result of the Milojkovics' reliance upon the statement, they sustained loss or damage.

Although Weichert argues that the verdicts are not necessarily inconsistent, it acknowledges that "question #7 is flawed" because "it does not convey that its focus is common law fraud." According to Weichert, "[q]uestion #7 could be understood by a juror as referring to either common law fraud or consumer fraud."

The verdict of a jury should not be set aside unless, having given due regard to the opportunity of the jury to pass upon the credibility of the witnesses, it clearly appears that there was a miscarriage of justice under the law. Dolson v. Anastasia, 55 N.J. 2, 6-7 (1969); Baxter v. Fairmont Food Co., 74 N.J. 588, 599 (1977); Law v. Newark Bd. of Educ., 175 N.J. Super. 26, 37 (App. Div. 1980); see also R. 2:10-1. Our Supreme Court has characterized "the standard for authorizing a new trial as one that requires a determination that the jury's verdict is contrary to the weight of the evidence or clearly the product of mistake, passion, prejudice or partiality." Crawn v. Campo, 136 N.J. 494, 512 (1994) (internal quotation marks omitted). "The scope of the new trial depends on the nature of the injustice. Where trial error affecting liability occurs, the new trial will encompass all issues." Fertile v. St. Michael's Med. Ctr., 169 N.J. 481, 490-91 (2001). Where the amount of damages is the sole source of the court's conclusion that a denial of justice has taken place, other remedies, including additur, are available. Id. at 491.

As plaintiffs correctly note, a defendant's knowledge or belief of the falsity of its material misrepresentation is an element of fraudulent misrepresentation under the common law. Gennari v. Weichert Co. Realtors, 148 N.J. 582, 610 (1997). On the other hand, a defendant may only benefit from the realtor's exemption from treble damages and attorney's fees if it establishes that it did not have knowledge of the "false misleading or deceptive character of the information" it conveyed to plaintiff. N.J.S.A. 56:8-19.1. The jury's answers to questions seven and eleven are therefore clearly inconsistent. Because the verdict was likely the product of jury mistake or confusion, it cannot stand. JMB Enters. v. Atl. Employers Ins. Co., 228 N.J. Super. 610, 616 (App. Div. 1988).

Since the matter must be retried, we will briefly address plaintiffs' claim that the trial court unfairly limited their damages. At a pretrial N.J.R.E. 104 hearing held on December 8, 2004, the trial court ruled that a judgment obtained against plaintiffs by ELM for unpaid environmental consulting services in the amount of $8,774.65 was inadmissible because plaintiffs failed to demonstrate that the services rendered were both reasonable and necessary. In our view, this ruling was contrary to N.J.R.E. 803(c)(26). There was no need for a representative from ELM to testify at trial, and there was no need for expert testimony as a condition for admissibility. The probative value of the judgment "is sufficiently high to warrant its admissibility in evidence . . . ." Yelder v. Zuvich, 245 N.J. Super. 331, 336 (Law Div. 1990) (internal quotation marks omitted). We are also satisfied that a jury should determine to what extent, if at all, plaintiffs are entitled to recover the commitment fee they paid on November 1, 1999, when they purchased the property.

 
Reversed and remanded for further proceedings consistent with this opinion.

(continued)

(continued)

11

A-3724-04T5

August 7, 2006