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Brodsky v. W.B. Associates, Inc.

A-0576-06T2 (N.J. Super. App. Div. 2008) (Unpublished)

DEVELOPERS; CONTRACTS; OFF-SITE CONDITIONS; TORTIOUS INTERFERENCE — A contract-buyer’s pointing out in a settlement conference that its developer had a prior criminal conviction and threatening to go public with that information does not constitute defamation or wrongful interference because statements made during a settlement conference are protected and threats of litigation do not rise to the level of outrageous behavior beyond the bounds of decency.

A buyer entered into a contract with a builder for the construction of a house and later found out that the property was located in a development that bordered a state prison facility. The buyer sued the builder, claiming fraud, negligence, and breach of warranty. It alleged that the builder concealed the fact that the development bordered a prison by advertising the development as bordering a dairy farm. The lower court dismissed the suit, finding there was no evidence to support the claims, but a jury found the buyer liable on the builder’s counterclaims of tortious interference and of intentional and negligent infliction of emotional distress. It awarded the builder $450,000. The lower court however reduced the amount by roughly $100,000 after including an additional award of attorneys’ fees to the builder.

The Appellate Division disagreed with the lower court. It held that the homeowner’s pointing out a prior criminal conviction on the part of the builder and threatening to go public was not tortious interference. According to the Court, since these were said during a settlement conference as part of the litigation process, the buyer was protected from claims of defamation or wrongful interference. The Court also disagreed with the lower court’s finding that the buyer’s threat of litigation against the builder constituted infliction of emotional distress because it did not rise to a level at outrageous behavior beyond the bounds of decency and because the litigation process itself was considered a civilized means of settling a dispute, even if sometimes overused by potential litigants.

Consequently, the Appellate Division reversed the lower court’s judgment in favor of the builder. The lower court’s denial of the buyer’s motion of a verdict notwithstanding the verdict was also reversed. At the same time, the lower court’s judgment dismissal of the buyer’s claims was affirmed on the basis that the builder was not statutorily required to disclose the presence of the prison or of any other offsite conditions to the buyer.

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