Gennari v. Weichert Co. Realtors

• Decision Date: 15 April 1997
• Citation: 148 N.J. 582,691 A.2d 350
• Parties: Roxanne GENNARI, Plaintiff-Respondent and Cross-Appellant, v. WEICHERT CO. REALTORS, Individually and as Agent of Timberline Property Development, Inc., Defendant-Appellant and Cross-Respondent, and Timberline Property Development, Inc., a Corporation of the State of New Jersey and Allen Rumberg, Individually and as Principal, Agent or Employee of Timberline Property Development, Inc., and Weichert Realtors, and Van Noteharvey Associates and J.E.M. Heating and Cooling, Defendants, and Ellen Rumbert, Individually and as Principal, Agent or Employee of Timberline Property Development, Inc., Defendant-Appellant and Cross-Respondent. WEICHERT CO. REALTORS, Third Party-Plaintiff, v. J.E.M. HEATING AND COOLING, INC. and Rick Ings, Third Party-Defendants. (Four Cases). James NESTOR and Joan Nestor, Plaintiffs-Respondents and Cross-Appellants, v. WEICHERT CO. REALTORS, Individually and as Agent of Timberline Property Development, Inc., Defendant-Appellant and Cross-Respondent, and Timberline Property Development, Inc., a Corporation of the State of New Jersey and Allen Rumberg, Individually and as Principal, Agent or Employee of Timberline Property Development, Inc., and Weichert Realtors, and Van Noteharvey Associates and J.E.M. Heating and Cooling, Defendants, and Ellen Rumberg, Individually and as Principal, Agent or Employee of Timberline Property Development, Inc., Defendant-Appellant and Cross-Respondent. Rajan S. MATHEWS and Grace Mathews, Plaintiffs-Respondents and Cross-Appellants, v. WEICHERT CO. REALTORS, Individually and as Agent of Timberline Property Development, Inc., Defendant-Appellant and Cross-Respondent, and Timberline Property Development, Inc., a Corporation of the State of New Jersey and Allen Rumberg, Individually and as Principal, Agent or Employee of Timberline Property Development, Inc., and Weichert Realtors, and Van Noteharvey Associates and J.E.M. Heating and Cooling, Defendants, and Ellen Rumberg, Individually and as Principal, Agent or Employ
• Court: New Jersey Supreme Court

Page 582

148 N.J. 582

691 A.2d 350

Roxanne GENNARI, Plaintiff-Respondent and Cross-Appellant, v. WEICHERT CO. REALTORS, Individually and as Agent of

Timberline Property Development, Inc.,

Defendant-Appellant and Cross-Respondent,

and

Timberline Property Development, Inc., a Corporation of the

State of New Jersey and Allen Rumberg, Individually and as

Principal, Agent or Employee of Timberline Property

Development, Inc., and Weichert Realtors, and Van Noteharvey

Associates and J.E.M. Heating and Cooling, Defendants,

and

Ellen Rumbert, Individually and as Principal, Agent or

Employee of Timberline Property Development, Inc.,

Defendant-Appellant and Cross-Respondent.

WEICHERT CO. REALTORS, Third Party-Plaintiff, v. J.E.M. HEATING AND COOLING, INC. and Rick Ings, Third

Party-Defendants. (Four Cases).

James NESTOR and Joan Nestor, Plaintiffs-Respondents and Cross-Appellants, v. WEICHERT CO. REALTORS, Individually and as Agent of

Timberline Property Development, Inc.,

Defendant-Appellant and Cross-Respondent,

and

Timberline Property Development, Inc., a Corporation of the

State of New Jersey and Allen Rumberg, Individually and as

Principal, Agent or Employee of Timberline Property

Development, Inc., and Weichert Realtors, and Van Noteharvey

Associates and J.E.M. Heating and Cooling, Defendants,

and

Ellen Rumberg, Individually and as Principal, Agent or

Employee of Timberline Property Development, Inc.,

Defendant-Appellant and Cross-Respondent.

Rajan S. MATHEWS and Grace Mathews, Plaintiffs-Respondents and Cross-Appellants, v. WEICHERT CO. REALTORS, Individually and as Agent of

Timberline Property Development, Inc.,

Defendant-Appellant and Cross-Respondent,

and

Timberline Property Development, Inc., a Corporation of the

State of New Jersey and Allen Rumberg, Individually and as

Principal, Agent or Employee of Timberline Property

Development, Inc., and Weichert Realtors, and Van Noteharvey

Associates and J.E.M. Heating and Cooling, Defendants,

and

Ellen Rumberg, Individually and as Principal, Agent or

Employee of Timberline Property Development, Inc.,

Defendant-Appellant and Cross-Respondent,

and

Raymond LACHAPELLE and Janet LaChapelle, Plaintiffs-Respondents and Cross-Appellants, v. WEICHERT CO. REALTORS, Individually and as Agent of

Timberline Property Development, Inc.,

Defendant-Appellant and Cross-Respondent,

and

Timberline Property Development, Inc., a Corporation of the

State of New Jersey and Allen Rumberg, Individually and as

Principal, Agent or Employee of Timberline Property

Development, Inc., and Weichert Realtors, and Van Noteharvey

Associates and J.E.M. Heating and Cooling, Defendants,

and

Ellen Rumberg, Individually and as Principal, Agent or

Employee of Timberline Property Development, Inc.,

Defendant-Appellant and Cross-Respondent.

Supreme Court of New Jersey.

Argued Dec. 2, 1996.

Decided April 15, 1997.

Martin Newmark, Morristown, for appellant and cross-respondent Weichert Co. Realtors (Broderick, Newmark & Grather, attorneys; Mr. Newmark and Alan J. Baldwin, on the briefs).

Frances J. Panzini-Romeo, West Orange, for appellant and cross-respondent Ellen Rumberg (O'Donnell, Kennedy, Vespole, Piechta & Trifiolis, attorneys).

George Dougherty, Lawrenceville, for respondents and cross-appellants (Katz & Dougherty, attorneys).

Arthur M. Greenbaum, Woodbridge, submitted a brief on behalf of amicus curiae New Jersey Association of Realtors (Greenbaum, Rowe, Smith, Ravin & Davis, attorneys; Mr. Greenbaum and Bruce D. Greenberg, on the brief).

Cindy K. Miller, Senior Deputy Attorney General, submitted a brief on behalf of amicus curiae Attorney General of New Jersey (Peter G. Verniero, Attorney General, attorney; Jeffrey C. Burstein, Deputy Attorney General, of counsel).

The opinion of the Court was delivered by

POLLOCK, J.

The primary issue is whether defendant, Weichert Co. Realtors ("Weichert"), as the sales agent of a residential real estate developer is liable under the Consumer Fraud Act, N.J.S.A. 56:8-1 to -20 (the "Act"), for affirmative misrepresentations to purchasers of new homes from the developer. After a trial on liability only, the Law Division found Weichert liable as the sole proximate cause of the purchaser's losses. In affirming the imposition of liability on Weichert, the Appellate Division also imposed liability on the builder, Allen Rumberg, and his wife, Ellen, under the Act and for common-law fraud. Finally, the court held that the Rumbergs were subject to punitive damages. We granted motions for leave to appeal by Weichert, Ellen, and the purchasers. We modify and affirm the judgment of the Appellate Division.

I.

Plaintiffs Roxanne Gennari, James and Joan Nestor, Rajan and Grace Mathews, and Raymond and Janet LaChapelle are purchasers of homes in a thirty-five house development in Lawrence Township known as Squire's Runne. Timberline Property Development ("Timberline"), a corporation owned by Allen and Ellen Rumberg, built the houses, which suffered from substantial defects. Timberline is now bankrupt. Underlying this case are Weichert's misrepresentations about Allen's qualifications as a builder and the construction of the defective homes. This appeal arises from the trial of a consolidated action involving claims asserted by the purchasers against Weichert, Timberline, the Rumbergs and others.

Weichert is a real estate broker with offices throughout the United States. Ellen Rumberg was a sales associate in Weichert's East Brunswick office and the Weichert sales representative at Squire's Runne. Weichert maintained a trailer and signs at the development. Joining Ellen Rumberg at the site was Weichert agent Ruth Skonieczny, now deceased. Another Weichert agent, Nancy Healey, also was active in selling homes at Squire's Runne. In Weichert's East Brunswick office, the manager, Thomas Glick, approved marketing strategy and advertisements for the development.

In a liability trial that extended for thirty-four days over eight months, the Law Division heard testimony about Weichert's representations to purchasers and the defects in the homes. Perhaps because the trial was so protracted, the Law Division did not make detailed factual findings on all issues. The Appellate Division, however, filled in many missing details. To avoid unnecessary duplication, we draw on the factual findings of both courts.

The most direct link between Weichert, Allen Rumberg, and Timberline is Ellen Rumberg, Allen's wife and a Weichert agent. Ellen's dual role on behalf of the builder and the realtor is at the crux of this case. As a Weichert agent, Ellen had been the listing broker for Allen's initial building effort, a four-lot development in Holmdel, New Jersey. With Ellen's help, Allen and Thomas Glick negotiated the listing agreement for the Holmdel property. At Holmdel, as at Squire's Runne, Weichert paid for all advertising, brochures, newspaper advertising, and communications with other brokers. Foreshadowing the problems at Squire's Runne, the Holmdel houses suffered from numerous defects: shoddy workmanship, inadequate heating systems, roof problems, uninsulated pipes, improper foundation waterproofing, uneven floors, inadequate air conditioning systems, and delayed completion.

At Squire's Runne, Allen again negotiated with Glick for a listing agreement concerning the advertising and marketing of the houses. Weichert agreed to provide a sales trailer at the site and to pay for advertising, telephone costs, and a sales brochure. Robert Albrecht, a Weichert regional vice-president, and Paul Christman, a senior vice-president, approved the arrangement for Weichert. The trial court concluded:

Here, high Weichert management made a determination to spend considerable funds that would boldly display its name in the signage at the construction site, in advertising, in brochures, and in the presence of its sales agents. Weichert was proclaiming the excellence of the project.

In brief, Weichert was intimately involved with Allen Rumberg in the sale of houses to the purchasers at Squire's Runne. Weichert, however, did not verify the information provided by Allen. Nor did Weichert establish a procedure to confirm its agent's representations to prospective purchasers. Weichert, moreover, was the means through which the purchasers learned about Allen. Weichert's representations led the purchasers to believe that Weichert agents were familiar with Allen and his workmanship.

The Law Division characterized the trust that the purchasers placed in Weichert's representations by referring to the purchasers' "belief[s] through the activities of Weichert that their homes would be of high quality.... In essence, they were led to believe that Rumberg was an exacting and demanding builder of real substance. They were misled."

The Law Division also found:

Plaintiffs purchased at Squire's Runne because of the focused and highly specific misrepresentations made by Weichert agents, and in part, by the equally misleading literature as to the quality of construction. Weichert is the reason plaintiffs signed on with Allen Rumberg.

In the sale of the houses, Ellen Rumberg, Ruth Skonieczny, and Nancy Healey represented that Allen was an experienced builder who had built hundreds of quality homes throughout New Jersey. The facts were to the contrary. Generally speaking, he had always worked under the supervision of others, primarily his brother-in-law, Philip Kayne. His workmanship, moreover, was disastrous.

In meticulous detail, the Appellate Division expanded on the Law Division's more general fact-findings concerning defective construction and Weichert's role in the sale of the houses:

Roxanne Gennari was the first of the four plaintiffs to contract for a new home in Squire's Runne. Gennari, a full-time real estate agent, was active in Mercer County since 1980. In April 1986, Nancy Healey, Gennari's neighbor and a Weichert agent, told her about a new development Weichert was marketing. Although...