(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for
the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please
note that, in the interests of brevity, portions of any opinion may not have been summarized).
Argued December 2, 1996 -- Decided April 15, 1997
Pollock, J., writing for a unanimous Court.
The primary issue in this appeal is whether Weichert Co. Realtors (Weichert), as the sales agent of
a residential real estate developer, is liable under the Consumer Fraud Act (the Act), for affirmative
misrepresentations to purchasers of new homes from the developer.
Roxanne Gennari, James and Joan Nestor, Rajan and Grace Mathews, and Raymond and Janet
LaChapelle (collectively, purchasers) purchased homes in a Lawrence Township development 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. It is
alleged that Weichert made misrepresentations about Allen's qualifications as a builder and the quality of
his workmanship.
Ellen Rumberg was a sales associate in Weichert's East Brunswick office and was the Weichert
sales representative at Squire's Runne. She was also married to the builder of the Squire's Runne
development, Allen Rumberg. As a Weichert agent, Ellen had been the listing broker for Allen's initial
building effort, a four-lot development in Holmdel, New Jersey. That development foreshadowed the
problems that arose 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, Weichert was intimately involved with Allen Rumberg in the sale of houses to
the purchasers. Weichert maintained a trailer and signs at the development, several Weichert agents joined
Ellen Rumberg at the site, and Weichert's East Brunswick manager approved marketing strategy and
advertisements for the development. In addition, it was through Weichert that the purchasers learned about
Allen. Weichert's representations led the purchasers to believe that Weichert agents were familiar with
Allen and the quality of his workmanship. In the sale of the houses, Ellen Rumberg and other Weichert
representatives informed the purchasers that Allen was an experienced builder who had built hundreds of
quality homes throughout New Jersey. Unfortunately, that was not true: Allen had always worked under the
supervision of others, primarily his brother-in-law, and his workmanship was poor.
The purchasers were induced to close on homes that were poorly built. Experts hired by the
purchasers discovered serious problems with insulation, infiltration of cold air into the home, water damage
and water leakage, poor quality lumber, inappropriate framing and support beams and the use of certain
substandard materials.
The purchasers sued Weichert, Timberline, the Rumbergs, and others, alleging, among other things,
a violation of the Consumer Fraud Act, common-law consumer fraud and negligence. At the conclusion of
a consolidated, liability-only trial, the Law Division found Weichert liable as the sole proximate cause of the
purchasers' losses. The court observed that Ellen Rumberg, her manager, and other Weichert agents knew
of the problems at Holmdel yet represented that Allen Rumberg built quality homes. According to the
court, the houses at Squire's Runne were defective, Weichert was responsible for the acts of its agents, and
Weichert was accountable under the Act. .
The Appellate Division affirmed the decision of the trial court, agreeing that Weichert made material misrepresentations that were relied on by the purchasers and were the proximate cause of the damages sustained by the purchasers for the structural, functional and appearance defects in their homes at
Squire's Runne. The Appellate Division also imposed liability Allen and Ellen Rumberg under the Act and
for common law fraud, and found that the Rumbergs were subject to punitive damages.
The Supreme Court granted motions for leave to appeal by Weichert, Ellen Rumberg and the
purchasers.
HELD: Weichert Co. Realtors, as the sales agent of a residential real estate developer, is liable
under the Consumer Fraud Act for affirmative misrepresentations to purchasers of new
homes from the developer.
1. Under the Act, one who makes an affirmative misrepresentation is liable even in the absence of
knowledge of the falsity of the misrepresentation, negligence or the intent to deceive. Although there is
proposed legislation that would amend the Act, this case must be decided under the Act's present form,
which does not require proof of knowledge that the statement made by Weichert was false. (pp. 29-32)
2. Weichert made affirmative misrepresentations about the builder's experience and qualifications, as well
as the quality of his homes. Weichert's misrepresentations about the builder and the houses were material,
false, and made to induce the purchasers to buy at Squire's Runne. Weichert's liability arises from the Act
and, therefore, does not require proof of reliance. Weichert is liable for misrepresentations whether any
person has in fact been misled, deceived or damaged thereby. (pp. 32-34)
3. The Rumbergs and Weichert are both proximate causes of the purchasers' damages and, as such, are
jointly liable in damages. Joint liability requires a consideration of the apportionment of damages between
the parties. Under the Act, injured parties may recover three times their ascertainable damages (treble
damages). In addition, the Comparative Negligence Act enables the trier of fact to determine the extent, in
the form of a percentage, of each party's negligence or fault. The Comparative Negligence Act extends
beyond negligence to other kinds of fault. (pp. 34-35)
4. The Appellate Division held that Weichert was entitled to indemnification from Allen because of his joint
liability. Thus, the purchasers could recover the excess portion of damages under the Act entirely from
Weichert, and Weichert would then have to seek indemnification from the builder. Because Allen is
judgment proof, however, the effect of that holding is to require Weichert pay all damages. A reading of
both the Act and the Comparative Negligence Act leads to the conclusion that the parties causing an injury
should be liable in proportion to their relative fault. Accordingly, at a trial on damages, if Weichert is more
than sixty percent at fault, the purchasers may recover from Weichert all of the treble damages. If Weichert
is less than sixty percent at fault, it would be liable only for the percentage of the treble damages that
comport with its percentage of fault. (pp. 35-36)
5. Ellen Rumberg is also liable under the Act. She was integral to the acquisition of the Lawrence
Township property and to the marketing and sales of the homes at Squire's Runne. In addition, both
Rumbergs are liable for common law fraud. Allen and Ellen knew that Allen's experience and qualifications
were not as they represented. They induced the purchasers to rely on their false representations that Allen
had many years of experience, finished construction on schedule and was a craftsman. The purchasers relied
on those misrepresentations to their detriment. Because both are liable for common law fraud, they are also
subject to punitive damages. Because of the concern for the duplication of damages, however, the trial
court's finding that Weichert is not liable for common law fraud is left undisturbed. Moreover, the trial
court did not err in dismissing the negligence claim against Weichert. Furthermore, absent a clear
expression of legislative intent changing the common-law rule, the Court will not read the Act to encompass
non-economic losses. (pp. 36-42)
As MODIFIED, the judgment of the Appellate Division is AFFIRMED.
CHIEF JUSTICE PORITZ and JUSTICES HANDLER, O'HERN, GARIBALDI, STEIN and
COLEMAN join in JUSTICE POLLOCK's opinion.
SUPREME COURT OF NEW JERSEY
A-75/76/
87 September Term 1996
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 NOTE-HARVEY 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
WEICHERT CO. REALTORS,
Third Party-Plaintiff,
v.
J.E.M. HEATING AND COOLING, INC.
and RICK INGS,
Third Party-Defendants.
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 NOTE-HARVEY 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
WEICHERT CO. REALTORS,
Third Party-Plaintiff,
v.
J.E.M. HEATING AND COOLING INC.,
and RICK INGS,
Third Party-Defendants.
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 NOTE-HARVEY 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
WEICHERT CO. REALTORS,
Third Party-Plaintiff,
v.
J.E.M. HEATING AND COOLING INC.,
and RICK INGS,
Third Party-Defendants.
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 NOTE-HARVEY 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
WEICHERT CO. REALTORS,
Third Party-Plaintiff,
v.
J.E.M. HEATING AND COOLING INC.,
and RICK INGS,
Third Party-Defendants.
Argued December 2, 1996 -- Decided April 15, 1997
On appeal from the Superior Court, Appellate
Division, whose opinion is reported at 288
N.J. Super. 504 (1996).
Martin Newmark argued the cause 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 argued the cause for
appellant and cross-respondent Ellen Rumberg
(O'Donnell, Kennedy, Vespole, Piechta &
Trifiolis, attorneys).
George Dougherty argued the cause for
respondents and cross-appellants (Katz &
Dougherty, attorneys).
Arthur M. Greenbaum 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.
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 ad
vertising, 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 Gennari was not looking
for a new home, she was impressed with
Healey's description of both the builder and
the development because Healey was someone
whose opinion Gennari respected. She and
Healey were business partners, and had
purchased a lot in a Windsor Township
development on which they intended to have a
house built and then to sell it.
Healey told Gennari that Squire's Runne
was to be constructed by a North Jersey
builder who had built hundreds of homes and
was a person of detail and craftsmanship. If
they acted quickly, they could get in at pre-construction prices. In Healey's opinion,
this represented a wonderful investment.
Gennari was interested and excited not only
because of her friend's opinion but because
she knew Weichert was a large and reputable
firm and was behind the development. At the
site, Gennari first met Ellen Rumberg. She
confirmed that her husband had built hundreds
of homes, demanded excellent quality, and
that he built homes in Mendham. She said he
has five engineering degrees and that he was
"timely."
Prior to Gennari's May 14, 1986 contract
signing, Healey invited her to attend a
meeting at Weichert's Princeton office with
the builder. At that meeting, Rumberg
claimed he had a father and son team who
would be working on this project and who had
been working with him for years, and that he
was so particular only one man in the whole
State could do Rumberg's stucco work. He
produced a portfolio with a number of photos
of homes. Healey told Gennari that Rumberg
built the homes. She reiterated that Rumberg
had built hundreds of homes and had recently
finished a development in Mendham.
After the meeting, Gennari asked Healey
to go to look at the homes that Rumberg had
built in Mendham. Healey did, and reported
back that the homes were more beautiful than
the photographs; the development was
gorgeous, the detail exquisite, and the
craftsmanship excellent. Gennari expressed
concern about the closing date to Healey and
the Rumbergs. She asked to close in January,
1987. Ellen Rumberg asserted that her
husband always closed on time. Gennari,
therefore, signed her contract on May 14,
1986.
Healey testified that the only things she told Gennari about the development were that they could purchase early at a reduced price and that it was going to be located on a beautiful piece of property. She denied
ever describing Rumberg as the best builder
from North Jersey and denied that she ever
told Gennari that Rumberg had built hundreds
of homes. She also denied going to Mendham
after the meeting with Gennari and Rumberg
and reporting back to Gennari as to what she
had seen. Healey and her husband, though,
had driven to Mendham before Gennari's
meeting with Rumberg. They spoke to a
resident in the development who was happy
with the builder and his home.
Gennari made color and option selections
with Ellen Rumberg. The process was finished
by early fall, but nothing was happening on
the site despite the January 2, 1987 closing
date. Ellen Rumberg told her not to worry,
and blamed the delay on the township which
did not give final subdivision approval until
the end of October. Rumberg received the
building permit for the Gennari lot on
November 17, 1986.
Gennari was not able to inspect her home
while it was being constructed. There was no
road to the homesite and no easy way for her
to get there. Rumberg told her that one of
his rules was that purchasers were not
welcome to go to the homes. She would have
to have his specific permission to visit the
property during construction. Rumberg posted
a security guard to prevent access to the
homes. On one occasion, Gennari slipped by
the guard, got into the house, and complained
about some deficiencies. Rumberg became
angry, ordered her to stay away from the home
and indicated he would fire the guard.
Gennari noticed two obvious problems with the
house. The back stairs were constructed so
that they jutted into one of the bays of the
two-car garage, effectively rendering it a
one-car garage and the brick being put on the
front of her home was the wrong color. The
staircase was removed when Rumberg maintained
that there was no other way to construct it.
Rumberg also corrected the mistake with the
brick.
The Gennari closing was delayed until January, 1988. The only walk-through of the house permitted occurred on the day of the closing. Gennari noticed many problems. She
observed drainage problems and a large hump
on the front lawn. She had seen these months
earlier and was assured by Ellen Rumberg,
that they were just grading problems. There
were gaps and buckling in the siding; bent
wood in the trim; the roofing was discolored
and not what she had chosen; and there were
cracks in the foundation. The garage and
basement floors were badly cracked, the
basement walls had several large cracks, a
kitchen wall was bowed, and the hardwood
floors had gaps throughout. The most serious
problem was with the heating system.
Upstairs was extremely hot, while downstairs
the heat was inadequate. She was told that
the heat problem was simply a matter of
adjustment. Someone allegedly had brushed up
against the thermostat which caused the
excessive heat upstairs. She was told that
the mound on the front yard was there because
the township ordered that type of grading and
there was nothing they could do about it.
She later found out that the mound was
associated with the aerobic wastewater
disposal system that was required in place of
a normal septic system.
Despite the problems, Gennari went to
closing because the people who bought her old
home wanted her to leave, and Rumberg
threatened to sue her if she did not close on
time. Furthermore, she feared loss of the
nearly $100,000 she had already deposited.
She was assured by the Weichert
representatives at the sales trailer that
everything would be taken care of.
Once she moved in, however, the heating system was not working properly and the septic system overflowed onto the front lawn, backed up into the basement, and caused a terrible smell in the bathrooms. Twice she had ankle deep water in the basement from septic system overflow. The installer of the system explained that normally there is an overflow alarm on the system, but it had not been hooked up. Further, although she was told the system would have a 1500-gallon capacity, it was downsized to hold only 500 gallons. This was inadequate as six people were living in the house, using about eight hundred gallons of water a day. The system
repeatedly overflowed even to the time of
trial. As to the heating system, the
ductwork had fallen into the basement several
times because it was not secured properly.
Although it was a two-zone system, the system
was not constructed so that the zones were
entirely separate and both systems were
feeding off only one return.
Gennari also complained that the windows
were inferior and leaked air and water. She
had chosen Andersen Windows, but had been
given the Ideal brand instead. Her hardwood
floors were still a problem at the time of
trial. Each time Rumberg sent people over to
fix them, they made the situation worse.
They were still buckling and not level, had
large gaps and were poorly finished. The
exterior of the property was never properly
graded causing pooling of water which flooded
her basement and her front walkway.
Grace and Rajan Mathews, other
disgruntled buyers, found Squire's Runne
through a builder-friend who suggested that
they get in touch with Ruth Skonieczny, a
Weichert agent. Grace was familiar with
Weichert as one of the biggest real estate
companies in New Jersey. She associated the
Weichert name with very good quality homes.
She met with Skonieczny, who gave her a
brochure and promotional material. Grace was
impressed with the fact that these were going
to be custom built homes with flexibility in
design, that nationally known brand name
materials were being offered in the houses
and that such a large realtor with name
recognition was making the offering.
Within the first two weeks of May 1986, the Mathews met with Skonieczny at the site and first asked who the builder was. They were told that Rumberg had built hundreds of homes, and that she herself had worked with him very closely at a development in Holmdel, along with Rumberg's wife, Ellen. She claimed Rumberg was an excellent builder with great credentials and was known for quality workmanship, performed by crews who had worked with, and for him, in the past. She asserted that Rumberg was devoted to detail and actively supervised the building of the
homes. The Mathews were presented with a
portfolio of impressive homes which Rumberg
had built.
They discussed the completion of the
home, as the Mathews were expecting their
first child in the early part of September.
They specifically asked Skonieczny what her
experience had been with Rumberg as to timely
closings. She represented that Rumberg
needed three to four months to complete a
home and was very good about meeting
deadlines and was always within two weeks of
the scheduled closing date.
The Mathews met with Rumberg himself
before signing the contract. He said he had
built hundreds of homes and had
qualifications, experience and expertise
necessary and he took care in building homes,
using quality craftsmen and crews brought
with him from other developments. He
maintained that he spent much time
supervising his projects and introduced them
to his supervisor. When the Mathews raised
the timing issue, Rumberg confirmed that
closing would be three to four months from
the time they signed the contract.
They signed the contract on June 17,
1986, with a closing date of December 30,
1986, or four months from the issuance of a
mortgage commitment, for the base price of
$360,000. The Mathews did no checking on
their own to verify the representations made
about Rumberg's experience or qualifications.
Skonieczny showed them newspaper articles
about the development to support her claims.
The articles also referred to the builder's
commitment to quality, use of top-grade
construction materials and quality workmen,
and his framing of homes in douglas fir.
In August, though, when they had noticed nothing had been done on their lot, they checked with Skonieczny who said Rumberg had run into problems with the township and that the building process would take an additional month and a half. They listed their home for sale with Weichert through Skonieczny. She sold their house with a closing date in February, 1987. She assured the Mathews,
however, that they would be in the Squire's
Runne home in early February. That date came
and went as did several others in early 1987.
As with Gennari, Rumberg promised month by
month a closing date, and each month the date
got pushed back. The buyers of their home
were cooperative, however, and agreed to the
extension until April, when they gave the
Mathews a deadline to the end of May. At the
end of May, the Squire's Runne home was still
not ready. The Mathews first moved in with
friends and rented a townhouse in Princeton
Junction on a monthly basis. They finally
closed on September 26, 1987.
Up to the date of closing, the Mathews
were not allowed to visit their homesite, as
Rumberg said they could not go in without his
permission. Rumberg posted a guard and the
Mathews never tried to get by him to see
their home. Their first inspection was on
the date of the closing and resulted in a
four-page list of items which the Mathews
found incomplete or not done properly.
Rumberg, though, said the repairs could all
be completed within thirty days and the
Mathews went through with the closing.
After living in the house for four or
five days, upon finishing a load of wash,
they saw foam all over the front yard.
Rumberg responded they were using the wrong
detergent. Over the next several days, the
windows started collapsing. Fog was
appearing between the panes and the windows
began leaking air as the weather got colder.
They thought these were Hurd windows, which
had a high quality reputation, but Rumberg
told them that they got Ideal windows
instead. At first, the leakage was only from
air, but after a very heavy rain, three of
the windows were also leaking water under the
sills.
As time went on, the Mathews noticed other serious problems. Their bathroom pipes went through the garage area. They froze because there was no insulation even though they had paid for an upgraded insulation package. There was a severe water problem in the basement. The basement walls were wet and water came in from beneath a concrete
slab which was part of the entry way into the
house. The walls in the entry way and around
the stairway were bowed and misaligned, and
there was a slope in the entry foyer floor.
Doors were misaligned and could not be
secured because the bolt did not meet the
hole on the doorframe. The hardwood floors
also had defects. The septic system
continued to overflow even though they
changed detergents and it made a gurgling
noise that could be heard throughout the
front of the house, as a silencer had not
been installed. There was also a problem
with the timing of the pumps. Four pumps
failed within a year and a half, some of
which occurred when the system's one year
warranty expired and for which the Mathews
had to pay.
Furthermore, the heat distribution was
uneven and the bedroom over the garage was
extremely cold, as was the adjoining
bathroom. Only once, after the Mathews
repeatedly complained to Rumberg, did Rumberg
send someone over to look at the heating
system. That person looked at the ductwork
and never came back. A portion of their roof
bowed, but Rumberg claimed it was a result of
normal settling.
In June 1986, Joan and James Nestor saw
an advertisement for Squire's Runne. Because
of its location and because it was offered by
Weichert Realtors, it immediately interested
them. Joan went to the site alone, meeting
first with Ellen Rumberg who introduced
herself as a sales representative of
Weichert. She informed Joan that she was the
builder's wife and would be involved in the
building process. She stated that her
husband had an engineering degree, had over
ten years of building experience, had built
over a hundred homes and had used a crew that
had been with him for years. He was a man
who paid extreme attention to detail. Ellen
stated that Weichert supported her husband
one hundred percent.
On June 10, 1986, the Nestors and the Rumbergs met at the site. Nestor noticed a large sign advertising Squire's Runne with a logo and only Weichert's name on it. The
brochure Mrs. Nestor was given had only
Weichert's name on it. Rumberg talked about
the wonderful Hurd windows he used in the
development and Ellen brought out other
samples of materials Rumberg used in these
homes, including Revere siding. Rumberg told
them that he was a quality builder, had built
over one hundred homes, had more than ten
years of experience as a builder, used an
experienced crew of workmen who had been with
him for years, and that he hired the finest
workers. He told them he had four degrees,
but was most proud of his engineering degree.
Ellen added that her husband's customers
loved him and some of them still called the
office about him. . . . The Nestors recalled
how the Rumbergs kept repeating that Allen
used experienced workers and good quality
materials.
On June 14, 1986, the Nestors went to an
address in Mendham given to them by Ellen
Rumberg, as a home her husband had built.
The homeowner told them that she had been in
the house only two weeks and was its second
owner, so she did not know the builder. She
gave them a tour of the house which the
Nestors found to be absolutely beautiful.
They were convinced that a top builder built
that home. The only problem they saw were
some gaps in the hardwood flooring.
They immediately scheduled another appointment with the Rumbergs to talk about building their home and on June 19, 1986, they chose a lot. They were initially interested in lot number three but Rumberg persuaded them to choose lot twenty-four instead because it had "perked" beautifully. Rumberg asserted that he had never built a home that had a water problem, but he had some concerns in that regard with lot three. They took lot twenty-four because Rumberg claimed they would never have a water problem there. Ellen said the closing would be January 15, 1987, as her husband built homes in four months. She also stated that the January date was firm. At that meeting, Joan Nestor mentioned the unsightly gaps in the hardwood floor that she had seen in the Mendham house. Allen Rumberg told her that it occurred because those people had chosen a
lower grade of wood and he would not allow
that to happen at Squire's Runne.
They signed the contract of sale on July
15, 1986, with a closing date of January 15,
1987. The Nestors were given a choice
between Andersen and Hurd windows and
initially indicated a preference for
Andersen. However, Allen Rumberg gave a
lengthy presentation using a Hurd window
sample. The Nestors then chose Hurd windows,
and Ellen Rumberg checked the space next to
Hurd windows on the selection sheet. Rumberg
asserted that Douglas fir was the premier
lumber in construction and that it would be
used in their house.
By October 1986 nothing was happening at
the site and so the Nestors stopped at the
trailer and met Ruth Skonieczny. She
introduced herself as a Weichert sales agent.
They asked what was going on. She told them
that they had to trust the builder, and that
Lawrence Township was delaying Rumberg. The
January closing date, however, passed without
explanation. Rumberg assured them in late
January that they would be in their house by
March. In March, the framing on the house
was only half done, but in May, the Nestors
received a notice that another installment
payment was due because the roof and windows
were in place. They attempted to visit the
site on several occasions but a guard was
posted who said no one was allowed on the
site. They were able to view the home only
from a distance, and nothing appeared
unsatisfactory from their distant vantage
point.
In July 1987, Joan Nestor went to the
site to meet with the mason about a
fireplace. She found the siding color was
yellow. They had, however, chosen a tan
which they had coordinated with the roof and
shutters. At that point though, at least
seventy-five percent of the siding was on.
The Nestors themselves were in a time bind
because there was a contract of sale on their
own home, and, therefore, they decided to
keep the wrong color siding.
The Nestors needed to close in September
because they had a mid-October closing date
on their old house. Their written request to
Rumberg received no response. In early
October, James Nestor met with Rumberg and
told him that they had to close by October
19, or he would be forced to rent with a
minimum three-month lease which would
postpone the closing for three months. On
October 7, the Nestors were allowed a walk
through of the home, accompanied by their
privately retained home inspector, in
preparation for an October 10, 1987 closing.
There were dozens of workers in the house.
The inspector pointed out there was no
heat flowing in the rooms over the garage and
water was pooling on the western side of the
house. Other less serious problems involved
fixtures which had not yet been installed and
items which were not completely assembled.
There was so much disorder in the house that
they could not make a thorough inspection.
Rumberg told the Nestors that the heating
difficulty was a balancing problem and
nothing to worry about. Similarly, he stated
the water pooling on the western side of the
house was a simple regrading problem. Nestor
accepted those explanations.
The Nestors went back to the site and
walked through the house by themselves on
October 9. Several problems had been
corrected but, for the first time, they were
able to see the floors and were shocked
because they were discolored and stained.
They told Rumberg that they were not going to
close with the floors in that condition.
Rumberg assured them that he would take care
of the floors and agreed to house the Nestor
family in the Hyatt Hotel while the floors
were redone after closing. Under those
conditions the Nestors closed on October 10.
The Nestors moved into the house on October 21, 1987. The basement on the west side of the house was wet. There was a long list of other problems which required workmen to come to the house, but repairs progressed at a slow pace. The Nestors felt cold winds from gaps in the drywall, the heating was uneven and, like the rooms over the garage,
the main bath and the master bath were
particularly cold. The family room, which
had a cathedral ceiling, was also much cooler
than the kitchen which was next to it,
causing drafts. Workmen spent two hours on
one occasion working on the system, but after
they left, the Nestors noticed no
improvement. Further, there was no
insulation in the rooms abutting the garage.
Rumberg sent workers to install insulation,
but they installed it backwards. The second-floor bedroom was heated only when the first
floor heater was on in the two-zone system,
and only the rooms at the very center of the
house got reasonable heat.
In January 1988, James Nestor again saw
a pool of water sitting against the western
side of his house. He went into the basement
and saw water pouring through the basement
windows onto the floor. He called and
Rumberg and his superintendent came to the
house within minutes. The two of them ran
back and forth from basement window to
basement window with Rumberg shouting:
"[W]hat are we going to do, what are we going
to do." Nestor also showed them cracks in
some of the basement girders, but both told
him it was nothing to worry about. Nestor
also showed them several lolly columns that
were not supporting girders, but was told
they would just put shims there. However, no
one ever came to do the work. Nestor took
the men upstairs and showed them the windows.
The corners did not meet the frame and air
was leaking in. Rumberg told him that the
windows were Ideal windows. Nestor
protested, saying that they had selected Hurd
windows but Rumberg maintained that they had
not. A representative from the window
distributor came to look at the windows. He
maintained that the gaps were normal. To
correct the problem, the representative stuck
black weather stripping into the gaps
claiming that was all that could be done.
The Nestors were told they were going to have a standard septic system. Instead an aerobic wastewater treatment system was installed which subsequently overflowed onto their front lawn. The Nestors had to be careful about the volume of water that passed
through the system, as well as the soaps and
paper they used.
The LaChapelles were attracted to
Squire's Runne by Weichert's ads. Janet
LaChapelle had worked full time as a real
estate agent in Princeton Junction between
1974 and 1975, but was inactive in the real
estate business at the time she saw the
development. She had known of the Weichert
name, though, for many years. It was an
established company and she knew if Weichert
had a listing, you could rely on the
information on the listing sheet. On July
13, 1987, she and her husband went to the
site and spoke to Ellen Rumberg who said her
husband was the builder, and that he had
built homes in Mendham, Holmdel and
Livingston. In response to Janet's question,
Ellen said that her husband had been in
business over ten years and had built
hundreds of homes. He had a crew and a
"super" who had been with him for years. He
paid more than the normal rate to his super,
as well as a $1000-$1500 per home bonus to
get construction done on time.
Before the LaChapelles signed a
contract, Janet took a ride to Holmdel to see
the homes that Rumberg built there. She went
to the same model home that she was
interested in, but no one was home. She
spoke with a landscaper who indicated that he
had heard the homeowners were unhappy about a
banister, but he really did not know what the
situation was. The LaChapelles then went to
Mendham and talked to a homeowner who was
outside of the house. He was the second
owner of the home and had no idea who the
builder was. They went to another house and
found a homeowner who showed them around the
house. She loved the house but did not
recognize the name Rumberg. She said the
name of the person she had worked with was
Phil. The next day, the LaChapelles told
Ellen about the conversation and asked who
Phil was. Ellen said that Phil was the
superintendent on that job and was Allen's
brother-in-law.
The LaChapelles signed their contract on July 19, 1986, and had a closing date of
March 1, 1987. Although the Rumbergs
attempted to persuade Janet that Hurd windows
were better than Andersen, she chose
Andersen. The LaChapelles also could only
watch their home being built from a distance.
They were told they could not go near the
home. In the spring, Allen Rumberg told the
LaChapelles that their home would be ready
"soon." In response, they put their house on
the market in May and sold it within four to
six weeks. Janet then told the Rumbergs she
had a buyer and needed a closing date. Allen
said their new home would be ready in August.
She then agreed to a closing date of October
14, 1987 for her house. In October, the
Squire's Runne home looked as if it was
ready, but the LaChapelles could not get in.
They and their three children were forced to
move into a two-bedroom, one-bath condo.
Rumberg promised them that they would be in
by Thanksgiving and then promised closing by
Christmas. Because they would have lost
their mortgage if they did not close by
December 30, 1987, they closed that day.
On the day of closing, the house was
littered and a man was sweeping things up.
He kept telling them to get out of the house.
They were disgusted and talked about whether
they would go through with the closing.
However, if they did not, they would have
lost their mortgage commitment as well as the
$100,000 in deposit money they had already
given Rumberg.
They moved in the following day. When
they walked into the house after the closing,
it was cold. They found this odd since the
day before they noticed how hot it was. They
called the superintendent to take care of it.
Someone had turned the emergency switches off
because there was a short in the thermostat
and the heat would not turn off by itself.
During the night they heard a loud bang from
the basement. They went downstairs and saw
that a heating system duct had fallen to the
floor. After the ductwork was repaired, they
found they had very little heat on the second
floor and that there were "dummy" registers.
Almost immediately, there were also problems with the windows. They were drafty
and permanently fogged between the double
panes. They discovered that they did not
have the insulation they paid for. The
LaChapelles had a problem with their siding
as well. There were no window and edge
finishing pieces, and consequently, hornets,
bees and other insects built nests between
the siding and the wood frame. The hardwood
floors also had defects requiring that, in
February 1988, they move out of the house
while the floors were redone.
The plaintiffs hired a number of experts
to inspect their homes. Mark MaGrann,
president of an energy and building
consulting firm, did a thermographic survey
of the Nestor, Gennari and Mathews residences
to determine the energy efficiency and
insulation quality of their homes. In all
three homes he found that the insulation was
poorly done; on a scale of one to ten, he
rated the insulation work as, at most, a two
or three. There was so much outside air
infiltration that the interior walls and
ceilings were cold in the winter. He stated
some infiltration is normal and will show up
in some spots on exterior walls, but flaws in
these homes were so extensive that cold air
was penetrating between the gaps in the
floors and cooling ceilings as well as
interior partitions and soffits. There were
places along the walls where there was no
insulation.
An expert was also hired by plaintiffs, Nestor, Gennari and Mathews, to inspect their HVAC systems. The two-zone systems in these homes were designed so that both furnaces were connected to a common return, seriously diminishing their efficiency. Their expert had never seen a two-zone system intentionally designed so that the cold air returns were combined. The duct work was undersized, so that some rooms had no air flow at all and other rooms receiving only minimal airflow. The ductwork was not properly supported. The standards require that the lateral ductwork be supported every five to seven feet, depending upon the size of the ductwork, whereas in these homes the ducts would go fifteen to twenty feet without any supports. This caused them to droop, and
over time, to fall apart. In some areas,
ducts were not even connected to the trunk
lines. Two bathrooms had no warm air because
the ductwork ran through an unheated garage
without insulation.
A licensed professional structural
engineer then inspected the plaintiffs' three
homes. He found the construction
demonstrated a lack of skill on the part of
the tradesmen carrying out the framing. The
inaccuracy of the cutting, the failure to
check floor levels as they went along, the
missing or misplaced piers, all showed a lack
of attention to the blueprints or an
inability to read them. This, he opined, was
a case of second or third-class workmanship
exacerbated by the use of poor quality
materials. Green lumber and lumber of lower
species was substituted for that called for
by the architect in the drawings and no
evidence of any grade stamp indicating kiln-dried lumber was found as called for.
The framer used support beams smaller in
size and fewer in number than those called
for in the blueprints. Failure to use
sufficient supporting beams in the trusses
and in the main supporting beam caused undue
stress on the attic rafters which, under full
snow loads, would become overloaded and would
sag. In the Mathews home, a support post
that was supposed to go from the roof framing
of the family room to the basement was
missing, causing the family room roof to sag.
The floors in these homes were uneven because
support beams were missing. A support beam
which was to be reenforced with steel was
omitted in all of these homes. Sloping
floors were caused by the failure of the
framer to provide double supports as called
for. In the Gennari house, the failure to
double every third joist resulted in
furniture visibly leaning at an angle and
caused the ceiling in the living room to sag.
In the Nestor home, the framer set the main girder more than an inch too low relative to the exterior walls resulting in a noticeable slope in the floors. Any attempt to raise the girder to its proper level would cause cracking throughout the house and would
affect the duct work and plumbing. In the
Gennari house, a masonry pier supporting a
main girder was too short. To make up the
difference, mortar was placed between the
girder and the pier with no moisture shield
to separate the two. Moisture wicking out of
the masonry eventually will cause the wood to
rot.
A licensed architect and expert in wood
frame construction inspected all four
plaintiffs' homes and also found the framing
to be poor. He further observed that there
was no asphalt coating on the foundation
walls below grade, allowing moisture to seep
in through the block walls in the basement.
Richard Ings was the framer in the
development. He was used by Rumberg in
Holmdel in 1986. He had two crews at
Squire's Runne but was not personally there
in 1986 and 1987 because he was remodeling
the Rumbergs' home in Spotswood and he let
his lead carpenter supervise the framing job.
After he completed the Rumbergs' house, he
returned to Squire's Runne but could not
recall which house he began working on. He
claimed to have examined his supervisor's
work, done in his absence, and found it to be
satisfactory. Ings wanted to do all the
framing in Douglas fir but Rumberg refused,
as he wanted to use less expensive hem fir.
Ings had never before used hem fir on a
framing job. He acknowledged that it was he
who suggested that certain aspects of the
framing deviate from the architectural plans.
It was his opinion the homes did not need
four-ply beams; and two-by-eights would do
just as well as two-by-tens.
Rumberg acknowledged that although he intended to provide the plaintiffs with quality construction, he was unable to do so because of personal problems and because he relied on contractors, as well as a super, who did not do their jobs correctly. Rumberg left many responsibilities to his super, whose previous experience was as a mason, not as a superintendent of construction. Rumberg admitted that his superintendent was so incompetent that he was forced to fire him in the summer of 1987. However, he had been
aware of his super's mistakes six to eight
months earlier.
Thomas Glick was manager of the East
Brunswick Weichert office and dealt directly
with Rumberg on both the Holmdel and Squire's
Runne development. Richard Albrecht was
Weichert's regional vice president. They
testified that it was company policy to
accept the representations of a builder with
respect to his credentials and experience,
and no one was responsible for verifying
information received from a builder.
Further, there was no monitoring of what
sales representatives were telling customers.
Glick had dealings with Rumberg from Holmdel
and knew that his involvement in other
developments was only in conjunction with
other builders. He also knew that his
experience was less than the ten years
represented in the article Weichert ran to
advertise the development.
The Law Division concluded that the houses at Squire's Runne
were defective and that Weichert was "responsible for the acts of
its agents and [was] accountable under the Consumer Fraud Act."
In so concluding, the court observed that Ellen Rumberg, Tom
Glick, and Ruth Skonieczny knew of the problems at Holmdel. Yet,
all three, as well as Nancy Healey, represented that Allen
Rumberg built quality homes and was known for his commitment to
craftsmanship. In effect, Weichert's agents misled the
purchasers to believe that "Rumberg was an exacting and demanding
builder of substance." Thus, the Law Division concluded that:
Weichert engaged in the making of material
misrepresentations that were relied upon by
the several plaintiffs and that these
misrepresentations are the proximate cause of
damages sustained by plaintiffs for the
structural, functional and appearance defects
in their homes at Squire's Runne.
The Appellate Division carefully explained the Law
Division's finding that Weichert had made affirmative
misrepresentations to the purchasers:
The record supports a finding that
misrepresentations to that effect were made
to plaintiff Gennari by Nancy Healy [sic], a
Weichert agent, who told her that Rumberg was
one of the best builders in New Jersey and
that he had built hundreds of homes, and was
noted for detail and craftsmanship. Healy
[sic] described to Gennari, Rumberg's quality
control and spoke of his excellent
craftsmanship.
Similarly, the Mathews dealt with
Weichert agent Ruth Skonieczny who told them
that Rumberg had built hundreds of homes,
that she had worked with him personally and
knew that he was dedicated to quality
workmanship, was very experienced, paid a
premium for quality craftsmanship and brought
the same workers with him from job to job.
She described Rumberg as the builder of the
development in Mendham.
The Nestors learned of Squire's Runne
through newspaper advertisements and a
brochure published by Weichert which had only
Weichert's name connected with this project.
This was followed by a meeting with both
Rumbergs, during which Ellen Rumberg, a
Weichert representative, asserted that
Weichert supported her husband one hundred
percent, that his customers loved him and
still called him.
The LaChapelles also learned of the
project from newspaper advertisements of
Weichert listings. They purchased after
meeting with Ellen Rumberg who promoted her
husband's high quality of workmanship, that
he had been in business for over ten years,
and his having built over a hundred homes in
developments in Holmdel, Mendham and
Livingston.
Weichert agents' affirmative statements
of fact as to Rumberg's reputation,
experience, and qualifications were untrue.
Testimony from both Rumberg and Rumberg's
brother-in-law, Philip Kayne, entirely
refuted these representations, as the judge
explicitly found in his opinion. The judge
found that Rumberg was not even an adequate
builder. His work was acceptable when
supervised and controlled by a real builder
such as his brother-in-law, but when on his
own, he demonstrated a gross lack of ability
evidenced first by the difficulties in the
Holmdel project, followed by greater
difficulties in the Squire's Runne
development.
The record amply demonstrates that although Rumberg had been employed by Kayne since 1978, he had little responsibility for construction until 1981, with the commencement of the development known as Barnside at Mendham. At that time, he was an overseer, supervised by Kayne, the actual builder. At Holmdel, a small project by a corp