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Briggs v. Luisi

2006 WL 1476929 (N.J. Super. App. Div. 2006), Unpublished; May 22, 2006: (Unpublished)

CONSUMER FRAUD —Under the Consumer Fraud Act, the standard for omission is almost the standard for common law fraud in that there must be an intent to deceive and an intent that others rely on the deception.

The purchaser of a home sued its home inspector, among others, because of a number of later discovered defects in the home. The most prominent defect was the improper installation of an Exterior Insulated Finishing System (EIFS). One of the allegations made by the home purchaser against the inspection company was that of fraud under the Consumer Fraud Act. The standards for consumer fraud are statutory. “Under the statute, an offense arises from an affirmative act, a knowing omission, or a violation of an administrative regulation. ... It is agreed that the act does not establish a broad business ethic designed to outlaw unconscionable practices. ... The law is also quite clear that there are differences between affirmative statements and omissions. ... [A]ffirmative representations even if not intended to be false which are in fact false do violate the act if they are made to induce the buyer to make a purchase.”

There is a different standard that applies to omissions. The Act states “that a concealment or omission must be knowing and done with the intent that others rely on such concealment of omission. Thus, the standard for omission is almost the standard for common law fraud in that there must be an intent to deceive and an intent that others rely on the deception.”

In this case, the homeowner did not point to any specific statement or knowing concealment. The inspection company “was quite clear in its report that it had not done an EIFS analysis and that it had not done a full roofing inspection. Thus, while it may have been negligent in not getting up on a ladder to inspect the roof, or not undertaking the EIFS inspection itself, it clearly committed no fraud. It neither made a false statement about its inspection in its report, nor concealed what it did not do.” According to the Court, “[a]t best [there was] a breach of contract or negligence shown.”
The homeowner also tried to show that there was a deceptively fraudulent relationship between the home inspector and real estate brokers to the extent that the home inspection company saw its job as to make the “deal happen.” The Court rejected those allegations on a factual basis. It was cognizant of earlier case law where a particular inspection service was found to be a “stalking horse” for a real estate broker that it, in fact, had indemnified the inspector from liability in the case of a faulty inspection. In the earlier case, the inspection that was done “bespoke fraud.” Here, however, the inspection company marked many items “as being in need of repair or requiring comment.” In fact, its report made “frequent and explicit statements as to what was not done with respect to the roof or the EIFS.” Consequently, the Court refused to characterize this particular inspection company’s report as the “pablum” that had been criticized in the earlier decision that found another home inspection company merely a “stalking horse.”

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