ABDM PROPERTIES, LLC VS. BOHDAN O. MEUSZ(L-0272-16, SOMERSET COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

This opinion shall not "constitute precedent or be binding upon any court."

Although it is posted on the internet, this opinion is binding only on the

parties in the case and its use in other cases is limited. R.1:36-3.

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-4556-15T4

ABDM PROPERTIES,

LIMITED LIABILITY

COMPANY,

Plaintiff-Appellant,

v.

BOHDAN O. MEUSZ, NANCY

A. BERLS-MEUSZ, ALAN

GEORGE FROSS, COLDWELL

BANKER REAL ESTATE

SERVICES LLC, d/b/a

COLDWELL BANKER RESIDENTIAL

BROKERAGE, COLDWELL BANKER

RESIDENTIAL REAL ESTATE LLC,

BRUCE ZIPF,1 CLARKE TOOLE and

CHARLOTTE SEARS,

Defendants-Respondents.

________________________________________________________________

Argued May 23, 2017 – Decided August 23, 2017

Before Judges Espinosa and Suter.

On appeal from Superior Court of New Jersey,

Law Division, Somerset County, Docket No. L-

0272-16.

Rajeh A. Saadeh argued the cause for

appellant.

1

Incorrectly impleaded as "Bruce Zipp."

Alan R. Levy argued the cause for

respondents Bohdan O. Meusz and Nancy A.

Berls-Meusz (Weiss & Weiss, LLC, attorneys;

Mr. Levy and Michael Weiss, of counsel and

on the brief).

Marisa R. De Feo argued the cause for

respondents Alan George Fross, Coldwell

Banker Real Estate Services, LLC, Coldwell

Banker Residential Real Estate, LLC, Bruce

Zipf, Clarke Toole and Charlotte Sears (Saul

Ewing LLP, attorneys; Ms. De Feo, Francis X.

Riley, III, and Caitlin P. Strauss, on the

brief).

PER CURIAM

Defendants filed motions to dismiss the complaint of

plaintiff ABDM Properties LLC pursuant to Rule 4:6-2(e). Plaintiff

appeals from orders granting both motions that dismissed its

complaint with prejudice. Following our plenary review of the

dismissal for failure to state a claim under Rule 4:6-2(e), Rezem

Family Assocs., LP v. Borough of Millstone, 423 N.J. Super. 103,

114 (App. Div.), certif. denied, 208 N.J. 368 (2011), we reverse

and remand.

I.

Defendants Bohdan Meusz and Nancy Berls-Meusz (Sellers) owned

residential property in Bridgewater that they listed for sale with

defendants Coldwell Banker Real Estate Services LLC (Coldwell

Banker) and Alan George Fross, the listing real estate agent.

After purchasing the property, plaintiff discovered certain

2 A-4556-15T4

defects and brought this suit against Sellers, Fross, and the

"Coldwell Banker Defendants": Coldwell Banker, Coldwell Banker

Residential Real Estate LLC (CBRRE), and three managing members

of CBRRE: Bruce Zipf, Clarke Toole, and Charlotte Sears (Managing

Members).

The complaint asserted claims of consumer fraud, common law

fraud and fraudulent concealment of a latent defect against all

defendants, based on the following allegations:

Fross and Coldwell Banker are licensed by the State of New

Jersey as a salesperson and real estate company, respectively.

Zipf, Toole and Sears are managing members of CBRRE.

Sellers executed a Seller's Disclosure Statement (SDS) and

represented the information they provided was accurate and

complete. They "did not disclose any defects in the real

property's foundation." Plaintiff reviewed the SDS and entered

into a contract, dated August 16, 2015, to purchase the property.

During the home inspection, plaintiff observed the "property's

crawlspace was physically and visually inaccessible because the

access point thereto was secured by a plywood panel that was

screwed shut." Fross refused access to the crawlspace and

"represented to [p]laintiff and the home inspector that there were

no inspection issues or defects beyond the plywood panel that

concealed the . . . crawlspace." Prior to the closing, plaintiff

3 A-4556-15T4

"returned to the . . . property to remove the plywood panel," but

"was unable to access the interior of the dwelling . . . because

[Fross] removed the lockbox and . . . keys to said dwelling."

Sellers and Fross "refused to grant [p]laintiff access to the . . .

property after" the inspection and prior to the closing date.

After purchasing the property, plaintiff removed the plywood

blocking the crawlspace, which revealed "several defects with

the . . . property's foundation that weaken the structural

integrity of the dwelling thereon and may cause its structural

failure," including "rotted and severely water damaged floor

joists, joists with wood destroying insect damage, a lack of any

footing for the inner walls of the foundation, and an organized

and widespread and improper use of cinder blocks to support the

joist system."

Defendants filed a motion in lieu of an answer to dismiss the

complaint pursuant to Rule 4:6-2(e). At oral argument on the

motion, counsel for Sellers acknowledged that all facts alleged

in the complaint were deemed to be true. Counsel for the rest of

the defendants similarly limited her arguments to the sufficiency

of the allegations.

II.

On a motion to dismiss pursuant to Rule 4:6-2(e), courts must

"search[] the complaint in depth and with liberality to ascertain

4 A-4556-15T4

whether the fundament of a cause of action may be gleaned even

from an obscure statement of claim." Printing Mart-Morristown v.

Sharp Elecs. Corp., 116 N.J. 739, 746 (1989) (citation omitted).

All facts alleged in the complaint must be accepted as true, ibid.,

and plaintiffs are afforded "every reasonable inference of fact."

Major v. Maguire, 224 N.J. 1, 26 (2016) (quoting Printing Mart,

supra, 116 N.J. at 746). "[I]f necessary," the plaintiff is given

an "opportunity . . . to amend." Ibid. (quoting Printing Mart,

supra, 116 N.J. at 746); see Hoffman v. Hampshire Labs, Inc., 405

N.J. Super. 105, 116 (2009) (noting dismissal under Rule 4:6-2(e)

is ordinarily without prejudice to allow the plaintiff to amend

the complaint).

In examining the legal sufficiency of the pleading, we are

"limited to . . . the facts alleged on the face of the complaint."

Printing Mart, supra, 116 N.J. at 746. This means we may consider

the "allegations in the complaint, exhibits attached to the

complaint, matters of public record, and documents that form the

basis of a claim" when evaluating a motion to dismiss. Banco

Popular N. Am. v. Gandi, 184 N.J. 161, 183 (2005) (quoting Lum v.

Bank of Am., 361 F.3d 217, 222 n.3 (3d Cir.), cert. denied., 543

U.S. 918, 125 S. Ct. 271, 160 L. Ed. 2d 203 (2004)).

If a court deciding a Rule 4:6-2(e) motion is presented with

and does not exclude "matters outside the pleading," the motion

5 A-4556-15T4

must "be treated as one for summary judgment and disposed of as

provided by [Rule] 4:46, and all parties shall be given reasonable

opportunity to present all material pertinent to such a motion."

R. 4:6-2. However, "a court may consider documents specifically

referenced in the complaint 'without converting the motion into

one for summary judgment.'" Myska v. N.J. Mfrs. Ins. Co., 440

N.J. Super. 458, 482 (App. Div. 2015) (quoting E. Dickerson & Son,

Inc. v. Ernst & Young, LLP, 361 N.J. Super. 362, 365 n.1 (App.

Div. 2003), aff'd, 179 N.J. 500 (2004)), certif. dismissed as

improvidently granted, 224 N.J. 523 (2016).

III.

In this case, the only documents referenced in the complaint

were the SDS and the contract entered into by the parties on August

16, 2015. Those documents were submitted in support of defendants'

motions. However, defendants also supported their motions with a

certification from Fross and documents not referenced in the

complaint: the property's listing report and a letter between

counsel following attorney review that modified the sales contract

(Modified Sales Contract Letter).

We summarize relevant parts of the documents submitted in

support of the motion:

The property's listing report stated it was for sale "AS IS"

and "No repairs will be done by the owners. Buyers will be

6 A-4556-15T4

responsible for all [Certificates of Occupancy]."

In section 8 of the SDS, covering "STRUCTURAL ITEMS," Sellers

disclosed they were aware of the following past or present

structural issues: (1) "movement, shifting, deterioration, or

other problems with walls or foundations"; (2) "cracks or flaws

in the walls or foundation"; and (3) "water leakage or mold in the

house." They also disclosed there were "repairs or other attempts

to control the cause or effect of" these problems. Where the form

asked for more detail, they wrote, "some cracks in wall from winter

shifting – need spackle" and "mold in window remediated by 911

restoration June 2010."

Paragraph 36 of the sales contract provided:

[Plaintiff] is purchasing the property/home as

is. No inspections will be conducted and the

[plaintiff] is responsible for [the

Certificate of Occupancy]. [Plaintiff] will

do any and all repairs. . . . There are no

other contingencies for the purchase of the

property.

The Modified Sales Contract Letter included the following:

Notwithstanding the foregoing, [plaintiff]

represents that he and/or it completed all

inspections as desired by [plaintiff] during

attorney review [and] as such, no further

inspections are required.

In his certification, Fross stated he was "an independent

contractor associated with Coldwell Banker" and "not an employee

of" either Coldwell Banker or CBRRE, and "do[es] not personally

7 A-4556-15T4

know, and ha[s] never spoken with" any of the Managing Members

"regarding any matter, including the [p]roperty."

Following oral argument, the trial court entered two orders

granting defendants' motion and dismissing plaintiff's complaint

with prejudice under Rule 4:6-2(e), finding

[T]he property was explicitly sold as is

without any warranties as to its conditions.

And, moreover, despite initially waiving

an inspection, [plaintiff] did complete an

inspection, at least in part, and represented

to all parties that the inspection was

conducted and sufficient for [its] purposes.

[(Emphasis added).]

IV.

The underlined portion of the trial court's statement relied

on the property's listing report and the Modified Sales Contract

Letter, documents that were not referenced in the complaint.

Therefore, defendants' motions were subject to the standard

governing summary judgment motions. R. 4:6-2; see, e.g., R.K. v.

D.L., 434 N.J. Super. 113, 121 (App. Div. 2014) ("[B]ecause the

court decided defendant's Rule 4:6-2(e) motion after it considered

factual allegations made by the parties in certifications outside

the pleadings, it was required to apply the standard governing

summary judgment motions in Rule 4:46-2(c)." (citing Roa v. Roa,

200 N.J. 555, 562 (2010))).

8 A-4556-15T4

Although the materials relied upon by the trial court required

the application of Rule 4:46-2 to the motion, it is not evident

from the trial court's decision that the summary judgment standard

was applied, particularly as to the principle that the evidence

is to be viewed in the light most favorable to the non-moving

party. Rather, the trial court appeared to conclude that the

allegations in the complaint failed as a matter of law based on

statements in documents not referenced in the complaint.

"When used in connection with the sale of real property, 'as

is' generally means the purchaser is acquiring real property in

its present state or condition." K. Woodmere Assocs., L.P. v.

Menk Corp., 316 N.J. Super. 306, 316 (App. Div. 1998). "The term

implies real property is taken with whatever faults it may possess,

and that the grantor is released of any obligation to reimburse

purchaser for losses or damages resulting from the condition of

the property conveyed." Id. at 317. A related legal principle

is the doctrine of "caveat emptor," or "buyer beware," which

"dictates that in the absence of express agreement, a seller is

not liable to the buyer or others for the condition of the land

existing at the time of transfer." T & E Indus. v. Safety Light

Corp., 123 N.J. 371, 387 (1991).

However, courts have consistently declined to apply the

caveat emptor doctrine where there has been concealment or

9 A-4556-15T4

nondisclosure of a latent defect. See, e.g., id. at 400 ("[W]e

would not countenance a doctrine of 'buyer beware' in the context

of fraudulent concealment of infestation of property . . . .");

N.J. Dep't of Envtl. Prot. v. Ventron Corp., 182 N.J. Super. 210,

227-28 (App. Div. 1981) (holding "caveat emptor should not apply"

where there has been "nondisclosure . . . of latent, not patent,

defects" by a seller), modified on other grounds, 94 N.J. 473

(1983).

Courts have also refused to enforce "as is" or "no warranties"

clauses to defeat concealment of latent defects claims. In

Weintraub v. Krobatsch, 64 N.J. 445, 447, 455 (1974), the Supreme

Court held sellers could be liable for not disclosing a cockroach

infestation, even though the sales contract stated "that the

purchasers had inspected the property and were fully satisfied

with its physical condition, that no representations had been made

and that no responsibility was assumed by the seller as to the

present or future condition of the premises." Similarly, in the

context of the sale of a horse, we held that "as is" and "no

warranties" clauses in a contract "were not intended to insulate

[sellers] against their misrepresentations or their concealment

of information they were required to disclose." Richie & Pat

Bonvie Stables, Inc. v. Irving, 350 N.J. Super. 579, 588 (App.

Div. 2002). "One who engages in deliberate concealment may not

10 A-4556-15T4

urge that his victim should have been more circumspect or astute."

Correa v. Maggiore, 196 N.J. Super. 273, 281 (App. Div. 1984).

This exception to caveat emptor "rests upon modern concepts

of justice and fair dealing which recognize that purposeful

concealment can be as destructive as an affirmative false

statement." Ibid. Under this principle, "a seller of real estate

or a broker representing the seller would be liable for

nondisclosure of on-site defective conditions if those conditions

were known to them and unknown and not readily observable by the

buyer." Strawn v. Canuso, 140 N.J. 43, 59 (1995) (citing

Weintraub, supra, 64 N.J. at 454-55); see also Johnson Mach. Co.

v. Manville Sales Corp., 248 N.J. Super. 285, 306 (App. Div. 1991)

(observing New Jersey common law "imposes a duty on a seller of

real property to affirmatively disclose to the buyer a latent

defective condition material to the transaction").

Here, the complaint alleges structural defects were hidden

behind the secured plywood panel; Sellers concealed the defects;

Fross made a misrepresentation in stating there were no inspection

issues behind the plywood and denied plaintiff access to inspect.

These allegations adequately pled a concealment of latent defects

claim. We therefore conclude the trial judge erred in dismissing

the complaint with prejudice on this basis.

11 A-4556-15T4

V.

We next address the claims against CBRRE and the Managing

Members. The complaint alleges defendants Zipf, Toole and Sears

were each "a managing member of" CBRRE and CBRRE, an LLC, "was the

member of" Coldwell Banker, which is also an LLC.

It is "fundamental . . . that a corporation is a separate

entity from its shareholders, and that a primary reason for

incorporation is the insulation of shareholders from the

liabilities of the corporate enterprise." Richard A. Pulaski

Constr. Co. v. Air Frame Hangars, Inc., 195 N.J. 457, 472 (2008)

(quoting N.J. Dept. of Envtl. Prot. v. Ventron Corp., 94 N.J. 473,

500 (1983)). Thus, "[e]xcept in cases of fraud, injustice, or the

like, courts will not pierce a corporate veil." Ibid. (alteration

in original) (quoting Ventron, supra, 94 N.J. at 500).

The corporate veil can be pierced upon "a finding that the

parent so dominated the subsidiary that it had no separate

existence but was merely a conduit for the parent." Ventron,

supra, 94 N.J. at 501. "Even in the presence of corporate

dominance, liability generally is imposed only when the parent has

abused the privilege of incorporation by using the subsidiary to

perpetrate a fraud or injustice, or otherwise to circumvent the

law." Ibid.

The complaint does not allege CBRRE or Managing Members in

12 A-4556-15T4

any way "abused the privilege of incorporation by using" Coldwell

Banker "to perpetrate a fraud or injustice, or otherwise to

circumvent the law." Ibid. Nor did it allege Coldwell Banker

"was either a fraud or a sham, or that it had failed to observe

the requisite corporate formalities." Pulaski, supra, 195 N.J.

at 473. Simply put, plaintiff never pled the necessary factual

allegations in its complaint to support piercing-the-corporate-

veil liability against CBRRE or Managing Members.

As a result, all of plaintiff's claims against CBRRE and

Managing Members are dismissed without prejudice.

VI.

Plaintiff's consumer fraud claims are governed by the

Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -206, which requires

proof of three elements: "1) unlawful conduct by defendant; 2) an

ascertainable loss by plaintiff; and 3) a causal relationship

between the unlawful conduct and the ascertainable loss."

D'Agostino v. Maldonado, 216 N.J. 168, 184 (2013) (quoting Bosland

v. Warnock Dodge, Inc., 197 N.J. 543, 557 (2009)).

Unlawful conduct under the CFA includes

[t]he act, use or employment by any person of

any unconscionable commercial practice,

deception, fraud, false pretense, false

promise, misrepresentation, or the knowing,

concealment, suppression, or omission of any

material fact with intent that others rely

upon such concealment, suppression or

13 A-4556-15T4

omission, in connection with the sale or

advertisement of . . . real estate.

[N.J.S.A. 56:8-2.]

"An offense arises under the [CFA] from an affirmative act,

an omission, or a violation of an administrative regulation."

Gennari v. Weichert Co. Realtors, 148 N.J. 582, 605 (1997). An

affirmative misrepresentation must be "material to the transaction

and . . . a statement of fact, found to be false, made to induce

the buyer to make the purchase." Id. at 607.

A.

The CFA does not apply to "the non-professional, casual seller

of real estate." Zaman v. Felton, 219 N.J. 199, 223 (2014). In

fact, the Supreme Court "has never applied the CFA against a non-

professional, who does not advertise real estate services to the

public, based upon his or her purchase of residential real estate

for personal use or as an investment." Ibid. The allegations

are, therefore, insufficient to support a CFA claim against Sellers

as a matter of law, and that claim against them is dismissed

without prejudice.

B.

We next consider the CFA claim against the remaining

defendants, Fross and Coldwell Banker. They argue the trial

court's consideration and reliance upon documents not referenced

14 A-4556-15T4

in the complaint did not convert their motions into summary

judgment motions; a dismissal with prejudice was proper on the

documentary evidence that was submitted; and, in any event, the

pleadings failed to state a claim upon which relief can be granted.

The fatal deficiency they allege in the CFA count is that it

"fails to specifically identify any alleged misrepresentation by

the Coldwell Banker Defendants," a description that omits Fross.2

Coldwell Banker does not argue the complaint suffers from a similar

deficiency as to Fross and, significantly, alleges no deficiency

either in pleading or evidence regarding the ascertainable loss

and causal relationship elements of a CFA claim. Those arguments

are, therefore, deemed waived in this appeal. See Gormley v.

Wood-El, 218 N.J. 72, 95 n. 8 (2014); Drinker Biddle & Reath LLP

v. N.J. Dept. of Law & Pub. Safety, 421 N.J. Super. 489, 496 n.5

(App. Div. 2011) (claims not addressed in merits brief deemed

abandoned); Pressler & Verniero, Current N.J. Court Rules, comment

3 on R. 2:6-2 (2017).

Unlike an individual seller, Fross is not immune from a CFA

claim. See Mango v. Pierce-Coombs, 370 N.J. Super. 239, 254 (App.

Div. 2004) (noting "a broker may be liable under the CFA").

The complaint alleges Fross "represented to [p]laintiff and

2

Defendants identify the "Coldwell Banker Defendants" as

Coldwell Banker, CBRRE and the Managing Members.

15 A-4556-15T4

the home inspector that there were no inspection issues or defects

beyond the plywood panel that concealed the . . . property's

crawlspace." As noted, the complaint also alleges this statement

was false. Because this was certainly a statement of fact material

to the transaction, the complaint adequately pled this element of

the CFA claim.

Coldwell Banker argues the "alleged misconduct of the other

[d]efendants" cannot "sustain the claims against the Coldwell

Banker Defendants." We disagree.

The complaint alleges Fross "was employed by" Coldwell

Banker. This allegation provides a basis for the application of

the doctrine of respondeat superior, rendering Coldwell Banker

liable for Fross's misrepresentation "if, at the time of the

occurrence, [he] was acting within the scope of his . . .

employment." Carter v. Reynolds, 175 N.J. 402, 408-09 (2003).3

The pleading is therefore adequate to support a CFA claim

against Coldwell Banker.

VII.

Common law fraud consists of five elements: "(1) a material

3

Fross certified he was "an independent contractor associated

with Coldwell Banker." If that is the case, Coldwell Banker can

be held liable for Fross's fraud if it "direct[ed] or

participate[d] in" it. Baldasarre v. Butler, 132 N.J. 278, 291

(1993).

16 A-4556-15T4

misrepresentation of a presently existing or past fact; (2)

knowledge or belief by the defendant of its falsity; (3) an

intention that the other person rely on it; (4) reasonable reliance

thereon by the other person; and (5) resulting damages." Allstate

N.J. Ins. Co. v. Lajara, 222 N.J. 129, 147 (2015) (quoting Banco

Popular, supra, 184 N.J. at 172-73). Put differently, "legal

fraud consists of a material representation of a presently existing

or past fact, made with knowledge of its falsity and with the

intention that the other party rely thereon, resulting in reliance

by that party to his detriment." Jewish Ctr. of Sussex Cty. v.

Whale, 86 N.J. 619, 624 (1981).

Defendants have targeted the fourth element of the fraud

claim, "reasonable reliance," as inadequately pled. "Without

reasonable reliance on a material misrepresentation, an action in

fraud must fail." Triffin v. Automatic Data Processing, Inc., 394

N.J. Super. 237, 249 (App. Div. 2007).

Sellers argue plaintiff made two factual allegations to

support its fraud claim against them: (1) Sellers failed to

disclose problems with the property's foundation on the SDS; and

(2) Sellers refused to give plaintiff access to the crawlspace

during the home inspection. At oral argument before the trial

court, Sellers' counsel explicitly stated that, for the purpose

of the motion, they were "not disputing the facts as alleged in

17 A-4556-15T4

the complaint." They argued the allegations were insufficient to

allege "justifiable reliance." On appeal, however, Sellers argue

"these allegations are either disproven by documentary evidence

or contradicted by plaintiff's own allegations."

The remaining defendants argue the complaint fails to allege

"a single fact upon which to base a common law fraud claim against"

Coldwell Banker and also argue the claim was properly dismissed

against Fross. They contend "[p]laintiff cannot plausibly

establish that it relied upon Fross' alleged misrepresentation

regarding the lack of any defects in the foundation in light of

the [SDS] which does disclose defects therein." (Emphasis in

original).

Defendants' arguments conflate the adequacy of the pleading

tested by a Rule 4:6-2(e) motion, with the weighing of evidence

undertaken in an analysis under Rule 4:46-2(c).

To survive a Rule 4:6-2(e) motion, the plaintiff only had to

allege facts which, if proven, would sustain a judgment in its

favor. In contrast, "[t]o defeat a motion for summary judgment,

the opponent must "'come forward with evidence" that creates a

genuine issue of material fact.'" Cortez v. Gindhart, 435 N.J.

Super. 589, 605 (App. Div. 2014) (citation omitted), certif.

denied, 220 N.J. 269 (2015).

Although the summary judgment standard should have been

18 A-4556-15T4

applied here, the arguments were made based on the adequacy of the

pleadings. At least for the purpose of their motions, no defendant

disputed the factual allegations made in the complaint. We decline

to hold plaintiff to a Rule 4:46-2(c) standard when defendants did

not challenge the adequacy of its proofs measured against that

standard.

The complaint alleges Sellers "did not disclose any defects

in the . . . property's foundation in the [SDS]" and Fross refused

access to the crawlspace area during the home inspection and

affirmatively represented there were no inspection issues or

defects behind the plywood panel. Although the SDS disclosed

"movement, shifting, deterioration, or other problems with walls

or foundations" and "cracks or flaws in the walls or foundation,"

the detail Sellers provided regarding these issues was "some cracks

in wall from winter shifting – need spackle." This disclosure

cannot fairly be characterized as being so unequivocal as to

preclude any justifiable reliance upon the representation that

there were no inspection issues or defects behind the plywood

panel as a matter of law.

Similarly, if it is proven that Sellers and Fross knowingly

and intentionally concealed the extent of the property's

foundational problems, plaintiff's pursuit of an independent

investigation thereafter does not impede its right to sue them for

19 A-4556-15T4

fraud. See Byrne v. Weichert Realtors, 290 N.J. Super. 126, 137

(App. Div.), certif. denied, 147 N.J. 259 (1996).

Viewing the complaint with the liberality to which it is

entitled, the complaint pled with specificity all five elements

of a common law fraudulent misrepresentation claim against

Sellers, Fross and Coldwell Banker. The dismissal of these claims

is therefore reversed.

VIII.

In Weintraub, supra, 64 N.J. at 455, the Supreme Court

articulated a cause of action based on "deliberate concealment or

nondisclosure of [a] latent [defect] not observable by the

purchasers on their inspection." The elements of this claim are:

"the deliberate concealment or nondisclosure by the seller of a

material fact or defect not readily observable to the purchaser,

with the buyer relying upon the seller to his detriment." Ventron,

supra, 94 N.J. at 503.

Citing the arguments made regarding the other claims, Sellers

argue this claim must be dismissed because plaintiff is unable to

prove it relied upon a deliberate concealment to its detriment.

Fross and Coldwell Banker argue there are no allegations against

them in this count and further, they are unaware of a cognizable

claim for purposeful concealment under the facts alleged. Neither

challenge to the sufficiency of the allegations in the complaint

20 A-4556-15T4

has merit.

The complaint clearly alleges non-minor, material defects:

"rotted and severely water damaged floor joists, joists with wood

destroying insect damage, a lack of any footing for the inner

walls of the foundation, and an organized and widespread and

improper use of cinder blocks to support the joist system." The

defects were not observable to plaintiff because they were behind

a "plywood panel that was screwed shut" and "prevented visual and

physical access to the . . . property's crawlspace." The

complaint also sufficiently alleged detrimental reliance, stating

"[p]laintiff relied on the representations" made by Sellers and

Fross in purchasing the property which had "several defects with

[its] foundation that weaken the structural integrity of the

dwelling thereon and may cause structural failure."

As for the concealment element, the complaint alleges Sellers

and Fross "purposefully concealed [the] latent defective

conditions from [p]laintiff." With respect to Fross, the complaint

alleges he "refused to provide access to the . . . property's

crawlspace," "refused to grant [p]laintiff access to the real

property" between the inspection and the closing, and "represented

to [p]laintiff . . . that there were no inspection issues or

defects beyond the plywood panel." Certainly, this allegation of

physical and verbal conduct sufficiently alleges concealment.

21 A-4556-15T4

With respect to Sellers, the complaint alleges they concealed

the defects by "not disclos[ing] any defects in the . . .

property's foundation in the [SDS]." As we have noted, although

the SDS disclosed some issues with "past or present movement,

shifting, deterioration, or other problems with walls or

foundation," the explanation given on request minimized rather

than disclosed the extent of the issues as alleged in the

complaint. See Ventron, supra, 182 N.J. Super. at 227-28 (finding

that "notice of hazardous chemicals within and adhering as residue

to the industrial buildings did not put the [buyers] on notice of

surface and subsurface contaminants").

These allegations were sufficient to allege a cognizable

claim based on the deliberate concealment of a latent defect that

was not observable on inspection. Therefore, we reverse the

dismissal of count three of the complaint as to Sellers, Fross and

Coldwell Banker.

Reversed and remanded. We do not retain jurisdiction.

22 A-4556-15T4