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Appellate division reverses trial judge’s order in Consumer Fraud Act claims.

April 1, 2011

In a Per Curiam decision, which was not approved for publication, the Superior Court of New Jersey Appellate Division recently reversed a trial court's order dismissing several Consumer Fraud Act (“CFA”) claims against the developer of a condominium development and the general contractor for allegedly having filed false affidavits of title in the course of selling several units. The CFA claims concerned defendants Paxton Construction (Jon Paxton, principal), the general contractor, and Cresse Development, LLC, the owner and developer of the condominium construction project. Cresse had sold units to three residential buyers and a commercial unit to Park Place Management in 2005. Prior to closing, Cresse conveyed to the buyers an affidavit of title signed by Paxton, representing among other things that “[n]o judgment or other lien … has been filed against [the property]” as well as attesting “that there were no pending lawsuits or judgments against it … [that] may be enforced against the property.” Despite these representations, Cresse had not paid a subcontractor, ABJ Sprinkler Co. (“ABJ”), for its work, and as a result, ABJ filed a construction lien against the property. Moreover, in his deposition, Paxton admitted that at the time the affidavits were signed, he knew that there was an ongoing dispute between Cresse and ABJ over the amount of money owed for the sprinkler work. The CFA prohibits both affirmative misrepresentations and knowing omissions that are made with the intent that others rely upon the misrepresentations or omissions. Under the CFA, acts of omission must be knowing and committed with intent to induce reliance. However, affirmative acts, including misrepresentation of material facts, do not require proof of intent to mislead. In this case, the Appellate Court did not hesitate in concluding that Paxton’s affidavits of title were in fact issued to induce the buyers to complete the purchases of the units. As a result, the owners had established a prima facie violation of the CFA and were entitled to default judgment on that claim. Consequently, because the buyers established a CFA violation, the Appellate Court reversed the order on appeal and remanded the matter to the trial court to address the issues of damages and counsel fees under the CFA.

Case Law Alert - 2nd Qtr 2011

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