Gennari v. Weichert Co. Realtors

Citation288 N.J.Super. 504,672 A.2d 1190
PartiesRoxanne GENNARI, Plaintiff-Respondent-Cross Appellant, v. WEICHERT CO. REALTORS, individually and as agent of Timberline Property Development, Inc., Defendant-Appellant-Cross Respondent, and Timberline Property Development, Inc., a corporation of the State of New Jersey and Allen Rumberg and Ellen Rumberg, individually and as principals, agents or employees of Timberline Property Development, Inc., and Weichert Realtors, and Van Note-Harvey Associates and J.E.M. Heating and Cooling, Defendants, and WEICHERT CO. REALTORS, Defendant-Third Party-Plaintiff, v. J.E.M. HEATING AND COOLING, INC. and Rick Ings, Third Party-Defendants. James NESTOR and Joan Nestor, Plaintiffs-Respondents-Cross Appellants, v. WEICHERT CO. REALTORS, individually and as agent of Timberline Property Development, Inc., Defendant-Appellant-Cross Respondent, and Timberline Property Development, Inc., a corporation of the State of New Jersey and Allen Rumberg and Ellen Rumberg, individually and as principals, agents or employees of Timberline Property Development, Inc., and Weichert Realtors, and Van Note-Harvey Associates and J.E.M. Heating and Cooling, Defendants, and WEICHERT CO. REALTORS, Defendant-Third Party-Plaintiff, v. J.E.M. HEATING AND COOLING, INC., and Rick Ings, Third Party-Defendants. Rajan S. MATHEWS and Grace Mathews, Plaintiffs-Respondents-Cross Appellants, v. WEICHERT CO. REALTORS, individually and as agent of Timberline Property Development, Inc., Defendant-Appellant-Cross Respondent, and Timberline Property Development, Inc., a corporation of the State of New Jersey and Allen Rumberg and Ellen Rumberg, individually and as principals, agents or employees of Timberline Property Development, Inc., and Weichert Realtors, and Van Note-Harvey Associates and J.E.M. Heating and Cooling, Defendants, and WEICHERT CO. REALTORS, Defendant-Third Party-Plaintiff, v. J.E.M. HEATING AND COOLING, INC., and Rick Ings, Third Party-Defendants. Raymond LaCHAPELLE and Janet LaChapelle, Plaintiffs-Res
Decision Date15 March 1996
CourtNew Jersey Superior Court – Appellate Division

Martin Newmark, Morristown, argued the cause, for appellant (Broderick, Newmark & Grather, attorneys; Alan J. Baldwin and Mr. Newmark, on the brief).

George T. Dougherty, Lawrenceville, argued the cause, for respondents (Katz & Dougherty, attorneys; Mr. Dougherty, on the brief).

Leon B. Piechta, West Orange, argued the cause, for defendant Ellen Rumberg, O'Donnell, Kennedy, Vespole, Piechta & Trifiolis (Mr. Piechta, of counsel; Francis J. Panzini-Tomeo, on the brief).

Greenbaum, Rowe, Smith, Raven & Davis, Woodbridge, for amicus curiae, New Jersey Association of Realtors (Arthur M. Greenbaum, of counsel; Bruce Greenberg on the brief).

Before Judges SHEBELL, STERN and NEWMAN.

The opinion of the court was delivered by

SHEBELL, P.J.A.D.

Defendant, Weichert Company Realtors (Weichert), appeals, on leave granted by this court, from an interlocutory order, entered after a bench trial on liability only, finding Weichert liable under the Consumer Fraud Act, N.J.S.A. 56:8-2, as the sole proximate cause of plaintiffs' damages resulting from defective construction of homes purchased by the plaintiffs at a development in Lawrence Township, Mercer County, called Squire's Runne. The plaintiffs in these four consolidated actions were all purchasers in a development marketed by Weichert and built by defendant Allen Rumberg and defendant, Timberline Property Development (Timberline), a corporation owned by the builder and his wife, defendant, Ellen Rumberg. Ellen Rumberg was also employed by Weichert as its sales representative on the site.

Plaintiffs cross-appeal from the dismissal of their common law fraud and the Consumer Fraud Act claims against Allen Rumberg and Ellen Rumberg, and common law fraud claims against Weichert. They also appeal the dismissal of their consequential damages claims based on emotional distress.

Plaintiffs, Roxanne Gennari, James and Joan Nestor, Rajan and Grace Mathews, and Raymond and Janet LaChapelle, filed separate verified complaints against Timberline and the Rumbergs. The complaints alleged common law fraud and consumer fraud and sought compensatory and punitive damages. Thereafter, plaintiffs filed amended complaints naming Weichert as an additional defendant. Weichert filed its answers, generally denying the allegations, and asserting by way of defenses, no breach of duty owed to plaintiffs, estoppel by deed, waiver, and the statute of frauds. Weichert also crossclaimed for contribution and indemnification and filed a third-party complaint against J.E.M. Heating and Cooling, Inc. (J.E.M.), and Rick Ings for indemnification and contribution. Plaintiffs Gennari, Nestor and Mathews subsequently filed second amended complaints naming Ings and J.E.M. as direct defendants.

The cases were consolidated, and commencing June 1, 1993, a bifurcated trial as to liability covered 34 days, over a period of 8 months. An oral decision was rendered on May 13, 1994, finding defendant, Weichert Realty, liable under the Consumer Fraud Act, N.J.S.A. 56:8-2, as the sole proximate cause of defective conditions relating to the structural, functional, and appearance aspects of the plaintiffs' homes. An order embodying the judge's decision was entered on May 26, 1994.

Squire's Runne is a thirty-five house development. Allen Rumberg began his experience in the construction of wood frame housing with his employment in 1979, by his brother-in-law, Philip Kayne, a developer and builder of commercial and residential property since 1963. Kayne is the brother of Ellen Rumberg. Ten years earlier Rumberg had graduated from Indiana Technical Institute with a degree in mechanical engineering. During the years after he graduated, Rumberg worked in engineering, and around 1976 he started working part-time with Kayne. In 1979, he started working full-time with Kayne's construction company.

Rumberg's first building project while working full-time with Kayne was a twenty-six house development in Parsippany. He was a supervisor. After Parsippany, Rumberg worked with Kayne in Florham Park, a project of ten to thirteen lots, again in a supervisory capacity. Rumberg, however, maintained that he was a "co-builder" with Kayne in that development.

In 1981, Kayne and Rumberg came to a "verbal" understanding that Rumberg would share in the profits in some of the developments. About that time, Kayne purchased sixteen to eighteen lots in Livingston. Although Rumberg characterized himself, again, as "co-builder," Kayne described Rumberg's duties as supervisory, but said Rumberg was allowed to take on responsibility in dealing with people and in answering questions.

Before the Livingston project was completed, Kayne entered into a joint venture, consisting of thirty-five homes in Mendham, with a law firm and bank. Rumberg was promised 10% of the profits as an overseer of the construction. However, Rumberg and Kayne had a falling out before the development in Mendham was completed and they parted ways. At the point that Rumberg left that project, ten to thirteen homes had proceeded to closing.

Nevertheless, Kayne agreed to form the Habonim Corporation with Rumberg. Rumberg was president and owned 40% of the company. In late 1984 or early 1985, Rumberg and Kayne found four lots in an existing subdivision in Holmdel. The company purchased the lots and called it Hidden Manor. Rumberg selected Weichert to market the homes because Weichert was willing to pay for all of the project's advertising, preparation of brochures, inserts into newspapers, and communication with other realtors. Ellen Rumberg, who had worked for Weichert as a salesperson for about a year, helped in the negotiations between Thomas Glick, manager of Weichert's East Brunswick office, and her husband. She became the listing agent for that development. Rumberg maintained that he performed the building services on the Holmdel development and that no one supervised his work at that site. Kayne, however, asserted that nothing Rumberg did at Mendham Livingston, Florham Park or Holmdel was ever accomplished without Kayne's supervision.

Three of the four purchasers at the Hidden Manor development at Holmdel were not satisfied with Rumberg's work. According to one, he contracted with Rumberg on July 6, 1985. The closing was scheduled for December 15, 1985, the date Rumberg chose. However, the foundation was not even started until late October or early November. By mid-December, the house was 80% framed but had no roof. Construction progressed very slowly after that with a variety of problems. The absence of a roof and windows allowed rain and snow to permeate the subflooring in the house making it soft and weak. Nevertheless, oak hardwood flooring was put on top, again before windows and a roof were installed, allowing it to get wet, shrink, discolor and stain. The closing on the property eventually occurred in July, 1986. At that time there were many items unresolved and the purchaser's attorney insisted that $27,500 be put in escrow in order to assure that the problems were resolved. It took two years to do so.

A second Holmdel house went to contract on October 9, 1985, with closing scheduled for March 15, 1986. It did not close until September 1986 and the purchaser experienced problems. The oak hardwood flooring was installed...

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