Opinion
DOCKET NO. A-0876-14T2
04-15-2016
PATRICIA FALCONITE, Plaintiff-Appellant/Cross-Respondent, v. ZELINDA DAROCI and ROBERT DAROCI, Defendants-Respondents, and WEICHERT REALTORS, Defendant-Respondent/Cross-Appellant, and ANTHONY PALUMBO and TROCHIANO AND PALUMBO, LLP, Defendants. ZELINDA DAROCI and ROBERT DAROCI, Third-Party Plaintiffs, v. JOHN FALCONITE, Third-Party Defendant.
Clark & DiStefano, P.C., attorneys for appellant/cross-respondent (Robert F. DiStefano, on the brief). McCuster, Anselmi, Rosen & Carvelli, P.C., attorneys for respondent/cross-appellant (Michael T. Millar, on the brief). Michael D. Fitzgerald, attorney for respondents Zelinda and Robert Daroci, join in the brief of respondent/cross-appellant.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Fisher and Rothstadt. On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-3539-07. Clark & DiStefano, P.C., attorneys for appellant/cross-respondent (Robert F. DiStefano, on the brief). McCuster, Anselmi, Rosen & Carvelli, P.C., attorneys for respondent/cross-appellant (Michael T. Millar, on the brief). Michael D. Fitzgerald, attorney for respondents Zelinda and Robert Daroci, join in the brief of respondent/cross-appellant. PER CURIAM
This action arises from a real estate transaction that was never consummated because of the buyer's claim that the seller failed to disclose a material defect in the property, namely, the presence of a sizeable drainage easement across the property. After protracted litigation, seller obtained summary judgment and buyer appeals, arguing, among other things, that the law of the case doctrine precluded summary judgment when an earlier summary judgment motion was denied, and, also, that there were material fact issues concerning the seller's representations about the condition of the property. We agree summary judgment was mistakenly entered — a determination that is also dispositive of the cross-appeal, which quarrels with the amount of fees awarded pursuant to Rule 4:58, the offer of judgment rule.
This civil action was commenced by the buyer, plaintiff Patricia Falconite, in General Equity nearly nine years ago. The chancery judge immediately restrained a release of the deposit and refused to bar seller, defendant Zelinda Daroci, from conveying the property to another. Soon thereafter, the matter was transferred to the Law Division, where the seller filed an answer, as well as a counterclaim against the buyer, and a third-party complaint against John Falconite.
In 2009, a Law Division judge allowed buyer to amend her complaint to include claims against Weichert Realtors and Anthony Palumbo, Esq., the buyer's former attorney. In 2010, another Law Division judge (the third judge) severed the legal malpractice claim against Palumbo from the other claims. Between 2010 and 2012, the parties filed dispositive motions. We need not recount the confusing state of affairs regarding those motions — some of which were denied, some of which were granted and most of which, by 2012, were vacated. It suffices to say that the third judge ultimately concluded that material factual disputes surrounded buyer's claim that seller breached the contract. On July 30, 2012, the third judge entered an order that denied buyer's claim of a right to trial by jury; by way of the same order, the third judge recused himself.
The record on appeal does not disclose what thereafter occurred with the claim against Palumbo.
We question but need not decide how a judge, who had determined to recuse himself, could at the same time dispose of a material issue in the case.
With the third judge's recusal, Weichert and seller moved again for summary judgment. On October 3, 2012, another judge (the fourth judge) rejected buyer's argument that the law of the case doctrine barred consideration of these motions and then granted both motions, finding no genuine material factual dispute stood in the way of the dismissal of buyer's complaint or in the entry of judgment on the counterclaims that concluded buyer breached the contract. By way of subsequent motions, the fourth judge awarded Weichert $10,000 in fees and costs.
For reasons that escape us, yet another judge (the fifth judge) entered the picture. The fifth judge entered judgment in favor of Weichert and against the buyer in the amount of $33,098.93. That order was certified as final, R. 4:42-2, a circumstance that compelled buyer to file a notice of appeal despite the fact that not all issues had been resolved; Weichert likewise instituted a cross-appeal. On September 19, 2013, we granted buyer's motion to vacate the certified partial judgment and dismissed the appeal and cross-appeal without prejudice.
A year later, the fifth judge entered judgment in favor of seller and against buyer for $27,500. Buyer filed a notice of appeal, and Weichert filed a notice of cross-appeal.
In her appeal, buyer reprises her argument that the fourth judge's summary judgment was precluded by the third judge's denial of the same or similar motion. She also argues, over the course of five separate but similar points, that material factual disputes permeated the transaction and, lastly, that the judgment entered in favor of Weichert must be vacated as it is derivative of the summary judgment, entered in favor of the seller, that can no longer stand. Weichert cross-appeals, arguing that the fifth judge erred in reducing the counsel fee award sought on the basis of Rule 4:58, the offer of judgment rule. We find insufficient merit in the buyer's argument regarding the law of the case doctrine to warrant further discussion. R. 2:11-3(e)(1)(E). And, because we agree that the summary judgment entered by the fourth judge must be reversed, the award of fees in Weichert's favor on its derivative claim to offer of judgment fees must be vacated. With that, we turn to the merits and whether seller was entitled to summary judgment.
The law of the case doctrine simply has no application to an order denying summary judgment because such an order "decides nothing and merely reserves issues for future disposition." See Gonzalez v. Ideal Tile Imp. Co., Inc., 371 N.J. Super. 349, 356 (App. Div. 2004), aff'd, 184 N.J. 415 (2005), cert. denied, 546 U.S. 1092, 126 S. Ct. 1042, 163 L. Ed. 2d 857 (2006); A&P Sheet Metal Co., Inc. v. Edward Hansen, Inc., 140 N.J. Super. 566, 573 (Law Div. 1976). Moreover, such an order is interlocutory and may be revisited at any time, in the interests of justice, prior to entry of final judgment. R 4:42-2; Lombardi v. Masso, 207 N.J. 517, 534 (2011).
Whether Weichert is entitled to damages or fees must abide the results of the trial for which we remand. --------
The case concerns buyer's contract to purchase residential property in Middletown from seller. There is no dispute that the property is burdened by Middletown's 120-foot-by-20-foot drainage easement. As the fourth judge observed in her written opinion granting summary judgment, the easement is unimproved and not visible to the eye.
The record reveals that the seller and her husband purchased the property in 1992. A survey created at the time of that transaction revealed the existence of the easement. In 1996, a deed which placed title solely in the hands of Zelinda Daroci, whom we have been referring to as the seller, was recorded.
In 2007, seller listed the property with Weichert; the listing did not disclose the existence of Middletown's drainage easement. In fact, Weichert filed a certification in support of its dispositive motion denying knowledge of the easement. As part of the listing with Weichert, seller executed a disclosure statement which acknowledged her "obligation to disclose any known material defects in the [p]roperty even if not addressed in this printed form." Among the many representations contained in this disclosure statement, seller asserted she was unaware of "any encroachments, utility easements, boundary line disputes, or drainage or other easements affecting the property."
In addition, the disclosure statement contains seller's representation that she was in possession of a survey of the property. A survey obtained by seller and her husband when they purchased the property in 1992 clearly identifies the drainage easement.
The parties executed a contract for sale on January 29, 2007. One of the preprinted paragraphs, upon which the seller now greatly relies, states: "Conveyance is to be made subject to easements, restrictions of records, zoning ordinances, if any, which [s]eller represents have not been violated and do not render title unmarketable" (emphasis added). By way of the attorney-review process, however, buyer's attorney sought and obtained seller's agreement to amend the contract to include the following provision:
Seller represents that to the best of [s]eller's knowledge, information and belief there are no governmental or quasi-governmental variance or other use/bulk restrictions relating to the property, and that there are no agreements, written or oral, other than current zoning ordinances which affect any portion of the premises.
After attorney review was completed, buyer obtained a survey that revealed the existence of the drainage easement. Buyer asserted that this was a material defect and a legitimate reason for rescinding the contract. Seller disagreed and, when negotiations over the consequence of the easement's discovery broke down, this suit was commenced.
Ultimately, the matter boils down to, as goes the famous Watergate question, what seller knew and when she knew it. There is nothing in the contract or the surrounding documents that would shelter seller from the consequences of her failure to disclose the easement if she was aware of its existence when listing the property and contracting with buyer. The general statement in the printed contract form — that the conveyance was subject to easements — cannot shield seller from liability if she misrepresented what she knew about the easement. Buyer was entitled to understand the significance of this standard contractual provision in light of seller's representation that she was unaware of any easements. And what is seller saying by falling back on this provision — that she was aware of an easement and consciously sought buyer's agreement to take title subject to an easement? How does that square with seller's claim that she was unaware of the easement? The "subject to easements" provision could not have been viewed as significant until the existence of the easement was actually revealed; buyer was entitled to view that preprinted provision as mere boilerplate in light of the lack of information about the existence of an easement. The fourth judge's citation to the oft-quoted rubric that courts will not rewrite contracts bears no significance if the buyer had no reason to negotiate for a better term; she was given no reason to believe there were any easements. Moreover, the judge's reliance on this one provision failed to adequately consider a competing provision — sought and obtained by buyer in the attorney-review period and quoted above — that contained seller's representation that there were "no governmental . . . restrictions relating to the property"; certainly the drainage easement was a governmental restriction. Ultimately, to the extent summary judgment seems to have been based on an assumption that the buyer should be stuck with the risk of loss because she failed to more carefully craft the contract to deal with the possibility that seller may have misrepresented the condition of the property, we say only that we are long past the days of caveat emptor. McDonald v. Mianecki, 79 N.J. 275, 299 (1979); see also Strawn v. Canuso, 140 N.J. 43, 55-56 (1995).
The question is whether seller committed equitable fraud. To be sure, seller did not represent there were no easements; she only represented that "to her knowledge" there were no easements. But buyer has presented evidence to call into question the legitimacy of seller's conclusory assertion. For example, seller acknowledged in the disclosure statement that she was in possession of a survey, and the only survey in the record that she might have possessed identifies the easement. In addition, seller received a five percent discount on her property taxes due to the existence of the easement. These facts alone present a triable fact as to whether seller's statement that she knew of no easements was false. Weintraub v. Krobatsch, 64 N.J. 445, 455 (1974).
In short, it is not enough for seller to assert in support of her dispositive motion that she was unaware of the easement. Buyer had no access to what seller knew and was incapable of presenting direct contradictory evidence of seller's assertion. The fourth judge, therefore, erred when she departed from the principle that, when a movant's knowledge or state of mind is critical, summary judgment is ordinarily precluded. See, e.g., Wilson v. Amerada Hess Corp., 168 N.J. 236, 253-54 (2001); Judson v. Peoples Bank & Tr. Co., 17 N.J. 67, 76 (1954); McBarron v. Kipling Woods, 365 N.J. Super. 114, 117 (App. Div. 2004). Moreover, as mentioned, the record contained evidence that suggested seller may very well have been aware of the easement, i.e., her possession of a survey that revealed its existence and the tax break she received because the property was subject to the easement. Because a trier of fact could find from these circumstances and from an assessment of seller's credibility that there is no truth in her assertion that she was unaware of the easement, summary judgment was not available.
Consequently, we reverse the order granting summary judgment in favor of the seller, as well as the orders entered in Weichert's favor, since they depend on the results of the dispute between buyer and seller, which, as we have held, does not lend itself to summary disposition. We remand for trial; in light of the time that has already been expended to get to this point, we trust the bench trial will be scheduled, conducted and decided expeditiously. We do not retain jurisdiction. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION