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Cook v. McPherson

A-6343-04T1 (N.J. Super. App. Div. 2007) (Unpublished)

CONSUMER FRAUD ACT; CONTRACTORS — A home builder who, by mistake, includes the wrong floor area or allows inclusion of the wrong floor area for a new home to be included in the listing service’s database may be found liable for breach of contract, but so long as the disparity is not unconscionable, even though substantial, the home builder will not be liable for treble damages under the Consumer Fraud Act.

Homeowners contracted with a builder for a newly constructed residence. They relied upon the builder’s listing on the Multiple Listing Service (MLS). It described the house as having an area of 5,600 square feet. The homeowner only intended to purchase a home measuring between 5,500 and 5,600 square feet. The owners never saw the house fully constructed prior to closing, nor did they see the architectural plans. The owners, after moving in, noticed some deficiencies with the dwelling. When they acquired the architectural plans they discovered that the house had an area only of 4,782 square feet, and sued the builder seeking treble damages under the New Jersey Consumer Fraud Act (CFA). At trial, the owners introduced the builder’s deposition testimony, in which he testified that he had provided his real estate agent all information contained in the MLS listing and that he believed that 5,600 square feet was an accurate measurement. The builder testified at trial that he had no idea how the 5,600 square foot estimate specifically came to be included in the MLS listing, though he admitted that he had initialed the sale contract which referenced the MLS listing. After the case had been called for trial, the lower court ruled, on the owners’ motion, that the entire controversy doctrine would not bar a future action against the owners’ own broker. A jury verdict awarded damages for defective construction, and for selling a home smaller than stated in the contract. However, the jury found that the owners had failed to prove that the builder violated the CFA by misrepresenting the square footage of the house. The owners appealed the award as insufficient, chiefly contending that the jury was improperly charged on the New Jersey Consumer Fraud Act, and that the lower court failed to charge that the builder would be liable under the CFA for misrepresentations by his agents, including the real estate agent who was involved in this particular sale.

The Appellate Division asked itself: if the jury had found that the realtor had been the source of the mistaken 5,600 square foot estimate in the MLS listing, should the lower court have charged that the builder could be liable to the owners under the CFA? While the Appellate Court agreed with this legal premise, it refused to set aside the verdict on this basis because of the procedural manner in which the charge issue unfolded. The Court found that it would have been preferable for the lower court to have charged the jury on agency principles, but did not find the failure to do so as having amounted to plain error because the owners’ counsel did not press the issue before the charge was finalized, and there existed no direct proof for the jury to consider how the 5,600 figure had been calculated. The Court also found that the disparity between the footage in the MLS listing and the actual size on the architectural plans were substantial, but not unconscionable. In fact the jury found the builder personally responsible for the discrepancy and held that the contract had been breached on that ground. Under the circumstances, the Court found no need for a retrial, as the owners had been compensated for the error, albeit notwithstanding that the owners were not awarded damages under the CFA.

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