SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
A-3149-93T1
DA-LU TUNG,
Plaintiff-Appellant,
v.
BRIANT PARK HOMES, INC.,
Defendant,
and
RALPH J. POCARO,
Defendant-Respondent/
Cross-Appellant/Cross-
Respondent,
v.
HUGO M. PFALTZ and PFALTZ &
WOLLER, P.A.,
Third Party Defendants/
Cross-Respondents/Cross-
Appellants.
_______________________________________________
Submitted: December 19, 1995 - Decided:
February 6, 1996
Before Judges Pressler, Wefing and A.A.
Rodríguez.
On appeal from the Superior Court of New
Jersey, Law Division, Union County.
Raymond K. Hsu, attorney for appellant.
Greenbaum, Rowe, Smith, Ravin & Davis,
attorneys for respondent/cross-appellant
Pocaro (Dennis A. Estis, of counsel and on the
brief; Stephanie Kay Austin, on the brief).
Tompkins, McGuire & Wachenfeld, attorneys for
cross-respondents/cross-appellants Hugo M.
Pfaltz & Woller, P.A. (Christopher J. Carey,
of counsel and on the reply brief; Angelo R.
Giacchi, on the brief).
The opinion of the court was delivered by
RODRÍGUEZ, A.A., J.A.D.
In this case we consider whether a developer who fails to
deliver a current public offering statement (POS) on the contract
date, as required by the New Jersey Planned Real Estate Development
Full Disclosure Act, N.J.S.A. 45:22A-21 to -56 (the Act), is liable
to the purchaser for double damages and costs if there is no causal
connection between such failure and the losses sustained by the
purchaser for breach of the contract. We hold that under those
circumstances a developer is not liable for double damages or
costs. The judgments under review are affirmed.
Da-Lu Tung signed a contract to purchase a condominium unit
from Ralph J. Pocaro for $290,000. Pocaro reserved the right to
assign the contract to Briant Park Homes, Inc. (Briant Park) and
agreed to refund to Tung the excess of his purchase price over that
for which other specified, unsold units would eventually be sold.
At the time the first contract was executed, a current POS was not
delivered to Tung as required by N.J.S.A. 45:22A-26a(2). The
contract was contingent upon delivery of the POS within forty-five
days after execution. If the POS was not delivered within that
period, Tung would be entitled to a refund of the deposit with
accrued interest.
Tung's mortgage lender objected to the refund clause. Tung
signed a second purchase contract with Briant Park. By then a
current POS had been delivered to Tung. The second contract did
not contain a refund clause. However, at Tung's request Briant
Park sent him a letter in which it assumed the responsibility for
refunding the excess of the purchase price, using the same language
as in the first contract. After the transaction closed, Tung
learned that a similar unit had been sold for $200,000. He
demanded a $90,000 refund from Pocaro and Briant Park. The demand
was refused.
Tung sued Pocaro and Briant Park for breach of the refund
provisions and Pocaro for violating N.J.S.A. 45:22A-26a(2) by
failing to deliver a current POS upon execution of the first
contract. Pursuant to N.J.S.A. 45:22A-37a, Tung demanded double
damages and attorney fees against Pocaro. In a separate action,
Pocaro and Briant Park sued Tung's real estate lawyer, Hugo Pfaltz
and the firm of Pfaltz and Woller, P.A., (collectively Pfaltz) for
contribution, contributory negligence and indemnification. The two
actions were consolidated. Pfaltz moved for dismissal of the
complaint. The motion was denied.
Pocaro and Tung moved for summary judgment. The judge granted
Tung summary judgment for $90,000 against Briant Park for breach of
the refund clause, but denied damages under the Act. The judge
granted Pocaro's motion for summary judgment dismissing claims
against him under the Act. The judge reasoned that there was a
novation of the first contract which relieved Pocaro from any
further responsibility and that there was no violation of the Act.
All claims against Pfaltz were dismissed.
On appeal, Tung contends that: (1) the judge should have
found that Pocaro violated the Act by executing the first contract
prior to the approval of the POS, thus becoming liable for double
damages under N.J.S.A. 45:22A-37a; (2) there is a genuine issue of
fact as to whether Tung consented to make Briant Park solely
responsible for the refund; (3) Pocaro is liable under the first
contract because the parties did not intend a novation; and (4) the
judge should have pierced the corporate veil and held Pocaro
individually liable for the refund.
In considering Tung's contention that Pocaro was liable for
double damages because he violated the Act we are required to
"effectuate the legislative intent in light of the language used
and the objects sought to be achieved." State v. Maguire,
84 N.J. 508, 514 (1980). N.J.S.A. 45:22A-26 provides in pertinent part,
a. Unless otherwise exempted:
(2) No developer may dispose of any lot,
parcel, unit, or interest in a planned real
estate development, unless he: delivers to
the purchaser a current public offering
statement, on or before the contract date of
such disposition.
Another section, N.J.S.A. 45:22A-37a, provides for "double damages suffered, and court costs expended, including reasonable attorney's fees" to be paid by a developer who violates N.J.S.A. 45:22A-26. The purpose of the Act is to insure honesty, public understanding and trust in the sale of complex interests. N.J.S.A. 45:22A-22; Abrahamsen v. Laurel Gardens Ltd., 276 N.J. Super. 199, 214 (Law Div. 1993). It is a consumer-oriented statute remedial in
nature. Enfield v. FWL, Inc.,
256 N.J. Super. 502, 511 (Ch. Div.
1991), aff'd,
256 N.J. Super. 466 (App. Div.), certif. denied,
130 N.J. 9 (1992). Although Enfield suggests that an aggrieved
purchaser seeking double damages must prove that losses were
occasioned by the violation of the statute, Id. at 508, 523-24,
there is no reported case that holds so precisely.
From the statutory language and the legislative purpose we
discern an intent that the phrases "damages suffered" and "court
costs expended", as used in N.J.S.A. 45:22A-37, mean damages and
costs to the purchaser resulting from a violation of the Act and
not a breach of the developer's contractual obligations. This
construction is in accord with the Supreme Court's holding in a
case involving another consumer protection statute. In Meshinsky
v. Nichols Yacht Sales, Inc.,
110 N.J. 464 (1988), triple damages
under the Consumer Fraud Act (N.J.S.A. 56:8-1 to 8-20) were denied
because there was no proof that the plaintiff's damages arose from
the type of conduct that the relevant statutory scheme prohibited.
We are mindful that as remedial legislation, the Act must be
interpreted expansively rather than narrowly, and liberally
construed in favor of protecting consumers. Cox v. Sears Roebuck
& Co.,
138 N.J. 2, 15 (1994). However, the purposes of the Act do
not include a special protection against ordinary breaches of
contractual obligations. Here, Tung does not explain how the
violation itself harmed him. He does not discuss the content of
the POS, much less identify a statement within it that Pocaro
misrepresented or omitted. There is nothing in the record that can
be construed as suggesting that Tung suffered a harm by virtue of
the failure to deliver a current POS. Tung has not cited any
discrepancy between Pocaro's representations to him and the content
of the POS. Tung's $90,000 loss flows solely from Briant Park's
breach of the refund clause. That loss would have occurred even if
a current POS had been delivered when the first contract was
executed.
The judge found that Pocaro did not violate the statute. Tung
asserts that Pocaro did. We do not have to resolve that dispute
because Tung did not suffer a loss as a result of the non-delivery
of the POS. Tung is not entitled to damages, much less double
damages pursuant to N.J.S.A. 45:22A-37a.
Tung's next contentions are that there were genuine issues of
disputed fact regarding his consent to release Pocaro from the
obligation created by the refund clause and the parties' intention
that the second contract be a novation of the first. We are not
persuaded by this argument. In Brill v. Guardian Life Ins. Co. of
America,
142 N.J. 520 (1995), the Supreme Court held that the
standard for determining a motion for summary judgment is similar
to a motion for involuntary dismissal under R. 4:37-2(b). Id. at
535. In fact, the only distinction is that summary judgment
motions are generally decided on a pretrial record, rather than on
evidence presented during a trial. Id. at 536.
The evidence is uncontroverted that Tung accepted the refund
side letter given by Briant Park, did not object to designating
Briant Park as the seller in the second contract, and did not
request that Pocaro be held liable also under the separate refund
letter. A contracting party is bound by the apparent intention he
or she outwardly manifests to the other party. It is immaterial
that he or she has a different, secret intention from that
outwardly manifested. Hagrish v. Olson,
254 N.J. Super. 133, 138
(App. Div. 1992). Indeed, in interpreting the intention of the
parties to a contract it is "the intent expressed or apparent in
the writing that controls." Friedman v. Tappan Development Corp.,
22 N.J. 523, 531 (1956).
Applying the Brill standard, considering the competent
evidentiary materials, and allowing Tung all of the favorable
inferences, the evidence is one-sided that Tung agreed to a
novation of the first contract with Pocaro by entering into a
contract with Briant Park. Therefore, Tung's argument that summary
judgment should have been denied fails.
Tung's final contention is that Briant Park's corporate veil
be pierced to hold Pocaro liable. In New Jersey, the power of the
courts to pierce corporate veils is well-established and will be
invoked to prevent an independent corporation from being used to
defeat the ends of justice, to perpetrate a fraud, to accomplish a
crime, or otherwise to evade the law. State, Dept. of Environ.
Protect. v. Ventron Corp.,
94 N.J. 473, 500 (1983). However, the
party seeking an exception to the fundamental principle that a
corporation is a separate entity from its principal bears the
burden of proving that the court should disregard the corporate
entity. Touch of Class Leasing v. Mercedes-Benz Credit of Canada,
Inc.,
248 N.J. Super. 426, 441 (App. Div.), certif. denied,
126 N.J. 390 (1991). Here, the issue of piercing the corporate veil
was never presented to the judge. The issue does not go to
jurisdiction nor affects the public interest. Nieder v. Royal
Indemnity Ins. Co.,
62 N.J. 229, 234 (1973). We decline to
consider it.
Pocaro cross-appeals contending that delivery of a current POS
is a statutory requirement and its violation does not constitute
tortious conduct, and that the claim for contribution against
Pfaltz should not have been dismissed. Pfaltz cross-appeals from
the initial denial of its motion to dismiss the complaint of Pocaro
and Briant Park. Our decision renders moot Pocaro's and Pfaltz's
cross-appeals.
The summary judgments appealed from are affirmed.