Strawn v. Canuso

• Court: New Jersey Supreme Court
• Writing for the Court: O'HERN
• Citation: Strawn v. Canuso, 140 N.J. 43, 657 A.2d 420 (N.J. 1995)
• Decision Date: 25 April 1995
• Parties: , 63 USLW 2700, 41 A.L.R.5th 859 Joanne STRAWN, Gerald L. Strawn, Tracey A. Strawn and Brandon M. Strawn, by their guardian ad litem Joanne Strawn, Russell C. Burton, and Brett C. Burton, by his guardian ad litem Russell C. Burton, Anthony Alvarez, Rita Alvarez, Lisa Alvarez, John M. Gaven, Sr., Annette M. Gaven, and John M. Gaven, Jr., Young D. Kim, Julia S. Kim and Patrick Kim and Roy Kim, by their guardian ad litem Young D. Kim, Albert Williams, Evelyn Williams and Stephen Williams, Plaintiffs-Respondents, and Marie C. Incollingo, Anthony F. Incollingo, Michelle M. Incollingo, Nancy Ann Incollingo, Frank Carnot, Raffaela Carnot, William Dennis, Jacqueline Dennis, Nicole M. Dennis and Farrah D. Dennis, by their guardian ad litem Jacqueline Dennis, Michael Powell, Dorothy Powell, Amy Powell and Molly Powell, by their guardian ad litem Dorothy Powell, Michael J. Vitarelli, Sr., Lois A. Vitarelli, and Jacqueline Vitarelli, Leslie Vitarelli, Michael Vitarelli, Jr. and Anthony Vitarelli, by their guardian ad litem Lois Vitarelli, Christopher Conti, Elayne Conti, Dana Marie Conti and Gina Christine Conti, by their guardian ad litem Elayne Conti, Eugene E. Jaron, Ann T. Jaron, Kathleen A. Jaron, Stephen M. Jaron, Paul M. Kramer, Patricia G. Kramer, Drew Kramer and Lauren Kramer, by their guardian ad litem Patricia G. Kramer, Sandy Oblena, Estrella Oblena, Nathaniel Oblena and Michael Oblena, by their guardian ad litem Sandy Oblena, William Helbling, Anthony Chapman, Catharine Chapman, David Chapman and Adriane Chapman, by their guardian ad litem Catharine Chapman, Jay Agnes, Jacqueline Agnes, Robert Lewis, Celine Lewis and Stephanie Lewis, by her guardian ad litem Robert Lewis, Trudy Becmer, Edmund Becmer, Debra Muraca, Frank Muraca, David Bard, Ruth Bard, Howard Friedman, Debra Friedman and Michelle Friedman, by her guardian ad litem Debra Friedman, Mariano A. Pinizzotto, Rosemary J. Pinizzotto, and Marie Rose Pinizzotto by her guardian ad litem Mariano A. Pinizzotto, C

Page 43

140 N.J. 43

657 A.2d 420, 63 USLW 2700, 41 A.L.R.5th 859

Joanne STRAWN, Gerald L. Strawn, Tracey A. Strawn and Brandon M. Strawn, by their guardian ad litem Joanne Strawn Russell C. Burton, and Brett C. Burton, by his guardian ad litem Russell C. Burton, Anthony Alvarez, Rita Alvarez, Lisa Alvarez, John M. Gaven, Sr., Annette M. Gaven, and John M Gaven, Jr., Young D. Kim, Julia S. Kim and Patrick Kim and Roy Kim, by their guardian ad litem Young D. Kim, Albert Williams, Evelyn Williams and Stephen Williams, Plaintiffs-Respondents and Marie C. Incollingo, Anthony F. Incollingo, Michelle M Incollingo, Nancy Ann Incollingo, Frank Carnot, Raffaela Carnot, William Dennis, Jacqueline Dennis, Nicole M. Dennis and Farrah D. Dennis, by their guardian ad litem Jacqueline Dennis, Michael Powell, Dorothy Powell, Amy Powell and Molly Powell, by their guardian ad litem Dorothy Powell, Michael J. Vitarelli, Sr., Lois A. Vitarelli, and Jacqueline Vitarelli, Leslie Vitarelli, Michael Vitarelli, Jr. and Anthony Vitarelli, by their guardian ad litem Lois Vitarelli, Christopher Conti, Elayne Conti, Dana Marie Conti and Gina Christine Conti, by their guardian ad litem Elayne Conti, Eugene E. Jaron, Ann T. Jaron, Kathleen A. Jaron, Stephen M. Jaron, Paul M. Kramer, Patricia G. Kramer, Drew Kramer and Lauren Kramer, by their guardian ad litem Patricia G. Kramer, Sandy Oblena, Estrella Oblena, Nathaniel Oblena and Michael Oblena, by their guardian ad litem Sandy Oblena, William Helbling, Anthony Chapman, Catharine Chapman, David Chapman and Adriane Chapman, by their guardian ad litem Catharine Chapman, Jay Agnes, Jacqueline Agnes, Robert Lewis, Celine Lewis and Stephanie Lewis, by her guardian ad litem Robert Lewis, Trudy Becmer, Edmund Becmer, Debra Muraca, Frank Muraca, David Bard, Ruth Bard, Howard Friedman, Debra Friedman and Michelle Friedman, by her guardian ad litem Debra Friedman, Mariano A. Pinizzotto, Rosemary J. Pinizzotto, and Marie Rose Pinizzotto by her guardian ad litem Mariano A. Pinizzotto, Chester A. Riddick, Jr., Carmelita D. Riddick, Todd Riddick, and Allen Riddick, by his guardian ad litem, Carmelita D. Riddick, Martin V. Goldstein, Patricia M. Corson, Frederick E. Chink, Maria P. Chink, Mario Chink and Christina Chink, by their guardian ad litem, Frederick E. Chink, Richard J. Nelson and Mary Ann Nelson, on behalf of themselves and all others similarly situated, Plaintiffs, v. John B. CANUSO, Sr., John B. Canuso, Jr., Canetic Corporation, Canuso Management Corporation, and Fox & Lazo Inc., Defendants-Appellants, and Jocan, Inc., Weichert Realtors, John Doe (One) Through John Doe (Twenty), and Doe Corporation (One) Through Doe Corporation (Twenty), Defendants.

Supreme Court of New Jersey.

Argued Jan. 4, 1995.

Decided April 25, 1995.

Alan Greenberg, Marlton, for appellants John B. Canuso, Sr., John B. Canuso, Jr., Canetic Corp., Canuso Management Corp., (Rawle & Henderson, attorneys, Mr. Greenberg and Joanne Stipick, on the brief).

Theodore W. Geiser, Roseland, for appellant Fox & Lazo Inc. (Begley, McCloskey & Gaskill, attorneys, Gregory R. McCloskey, Moorestown, of counsel and on the brief).

Mark R. Rosen, Haddonfield, for respondents (Mesirov, Gelman, Jaffe, Cramer & Jamieson, Haddonfield and Williams & Cuker, Philadelphia, PA, attorneys, Mr. Rosen, Haddonfield and Mark R. Cuker, Cherry Hill, of counsel and on the brief).

Arthur M. Greenbaum, Woodbridge, submitted a brief on behalf of amicus curiae New Jersey Ass'n of Realtors (Greenbaum, Rowe, Smith, Ravin & Davis, attorneys, Mr. Greenbaum, of counsel, Mr. Greenbaum, Peter A. Buchsbaum, and Bruce D. Greenberg, on the brief).

Henry A. Hill, Princeton, submitted a brief on behalf of amicus curiae New Jersey Builders Ass'n (Hill Wallack, attorneys, Mr. Hill and Thomas F. Carroll, III, on the brief).

Alan H. Sklarsky, Haddonfield, submitted a brief on behalf of amicus curiae Ass'n of Trial Lawyers of America-New Jersey (Tomar, Simonoff, Adourian & O'Brien, attorneys, Mr. Sklarsky and Franklin P. Solomon, on the brief).

The opinion of the Court was delivered by

O'HERN, J.

Because this case arises from a motion for summary judgment, we must view the facts that may be inferred from the pleadings and discovery in the light most favorable to plaintiffs. In that light, the issue in this case is whether a builder-developer of new homes and the brokers marketing those homes have a duty to disclose to prospective buyers that the homes have been constructed near an abandoned hazardous-waste dump. The Appellate Division held that such a duty exists. We agree and affirm the judgment of the Appellate Division primarily for the reasons stated in its opinion.

I

The facts of the case are set forth in the reported opinion of the Appellate Division. Strawn v. Canuso, 271 N.J.Super. 88, 95-100, 638 A.2d 141 (1994). The case concerns the claims of more than 150 families seeking damages because the new homes that they bought in Voorhees Township, New Jersey, were constructed near a hazardous-waste dump site, known as the Buzby Landfill. The complaint named as defendants John B. Canuso, Sr., and John B. Canuso, Jr., and their companies: Canetic Corporation and Canuso Management Corporation. Fox & Lazo Inc. (Fox & Lazo), the brokerage firm that was the selling agent for the development, was also named as a codefendant.

Plaintiffs base their claims on common-law principles of fraud and negligent misrepresentation, and the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1 to -66. The twenty-six plaintiff-families filed a class-action lawsuit on behalf of all of the purchasers of the homes in the development sold by defendants. Those families purchased their homes between 1984 and 1987.

The Buzby Landfill consists of two tracts of property, a nineteen-acre portion owned by RCA and a contiguous thirty-seven-acre parcel now owned by Voorhees Township. Those two tracts were the site of a landfill from 1966 to 1978. Although the Buzby Landfill was not licensed to receive liquid-industrial or chemical wastes, large amounts of hazardous materials and chemicals were dumped there. The landfill was also plagued by fires.

Toxic wastes dumped in the Buzby Landfill began to escape because it had no liner or cap. Tests done by the New Jersey Department of Environmental Protection and Energy (DEPE) revealed that leachate was seeping from the landfill into a downstream lake. The DEPE estimated that half of the landfill material was submerged in ground water, thereby contaminating the ground water with hazardous substances. Additional tests indicated the presence of hazardous waste in ground water, in marsh sediments taken from the landfill, and in lakes southeast of the landfill.

RCA installed a system at the landfill to vent excessive levels of methane gas at the site. DEPE's site manager discovered gas leaks in that venting system. Those leaks released contaminants, including benzene and other volatile organic compounds. In 1986, methane gases, which naturally accumulate in landfills, emanated from the dump site. Reports of the federal Environmental Protection Agency (EPA) confirm that residents' complaints about odors and associated physical symptoms are consistent with expected reactions to exposure to gases from the landfill. EPA recommended that the site be considered for a Superfund cleanup.

Plaintiffs allege that the developers knew of the Buzby Landfill before they considered the site for residential development. Plaintiffs contend that although defendants were specifically aware of the existence and hazards of the landfill, they did not disclose those facts to plaintiffs when they bought their homes. A 1980 EPA report warned: "The proposed housing development on land adjacent to the site has all the potential of developing into a future Love Canal if construction is permitted." A copy of the EPA report was in the Canuso defendants' files. Those defendants also met with a DEPE employee to discuss the prospects of building homes near the landfill. (Later reports of regulatory agencies tempered those earlier reports, one of which described any risk as "indeterminate." We also note that such reports may contain hearsay and, therefore, may be inadmissible at trial.)

In addition, one of Fox & Lazo's marketing directors urged his firm and the individual Canuso defendants to disclose the existence of the Buzby Landfill to home buyers. Each refused that request and instead followed a policy of nondisclosure. That policy continued even after early purchasers complained about odors. Defendants' representatives were instructed never to disclose the existence of the Buzby Landfill, even when asked about such conditions. Later, some prospective home buyers, having independently learned about the Buzby Landfill, refused to convert their initial non-binding deposits into enforceable agreements of sale.

John Canuso, Jr., who personally supervised the sales force, instructed his sales manager to ascertain what information DEPE was providing to people who asked about the landfill. The sales manager spoke with a DEPE representative, who again warned defendants of the problems of building a large development near the landfill. The sales manager repeated in a memorandum the warnings given to her by the DEPE employee and placed the memorandum with related papers in a "hazardous waste" file that the Canuso defendants maintained. John Canuso, Jr., discussed this memorandum with his father, John Canuso, Sr., who refused to disclose to home buyers the proximity of the landfill.

Plaintiffs sought class certification of their action on behalf of more than 150 families who bought those homes in Voorhees Township. The trial court ruled that plaintiffs had failed to establish the predominance of common issues sufficient to warrant certification.

We note that the trial court undertook an exhaustive and painstaking review of the issues, arguments, and precedent presented by the parties....