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D’Angelantonio v. Granato

A-3795-00T5 (N.J. Super. App. Div. 2002) (Unpublished)

CONSUMER FRAUD; BROKERS— Unlike a claim for common law fraud or negligent misrepresentation, it is not necessary for a property buyer to actually rely on a real estate agent’s misrepresentation for there to be a violation of the Consumer Fraud Act.

A buyer sued its seller, the real estate agent, and the broker for common law fraud and misrepresentation. It also alleged that the real estate agent and broker violated the New Jersey Consumer Fraud Act. According to the buyer, its seller falsely represented that a property could be subdivided into a certain number of residential lots and also that there were no problems with the appliances or systems. The buyer claimed the real estate agent and broker misrepresented the condition of the property and its suitability to be subdivided into a certain number of residential lots. The seller, agent, and broker moved for summary judgment and the lower court granted their motion. The Appellate Division affirmed the dismissal of the claims for common law fraud and negligent misrepresentation, but reversed the dismissal of the consumer fraud case against the agent and broker. In order to prove common law fraud one needs to show that: (1) there was a material misrepresentation of a present or past fact; (2) that the person making the representing knew or believed it to be false; (3) that the person making the statement intended for the recipient to rely on it; (4) that it was reasonable to rely on the representation; and (5) that there were damages. In order to prove negligent misrepresentation, one needs to show that an incorrect statement was negligently made but reasonably relied on. The Court found that, as to the condition of the property, the buyer conducted a home inspection but chose to go forward with the sale without addressing the problems discovered. Consequently, because the buyer did not rely on the truth of the seller’s representation as to the property’s condition, he could not claim fraud or negligent misrepresentation. The Court also rejected the buyer’s claim of fraud and negligent misrepresentation with respect to the buyer’s claim that the property could be subdivided into a certain number of lots. It noted that the buyer contacted the municipality prior to completing the purchase and was told it wasn’t possible to determine the number of possible subdivisions. The buyer also knew that he needed to apply for subdivision approval. Therefore, he could not justifiably rely on the seller’s representation because he knew there was no application or approval. On the other hand, under the Consumer Fraud Act, a person may be held liable for a misrepresentation whether or not a person may have been misled or damaged by it. The lower court focused on the fact that the buyer did not rely on the agent’s representation. The Appellate Division noted that the proper inquiry is not whether the seller relied on a misrepresentation, but if a reasonable jury could determine that the agent knew that it was impossible to subdivide the property into the number of lots stated in the real estate listing and that the agent permitted the presentation of the false statement as a fact in order to induce a buyer to purchase the property. Unlike a claim for common law fraud or negligent misrepresentation, it is not necessary for the buyer to actually rely on the misrepresentation for a real estate agent to be guilty of a Consumer Fraud Act violation. The Court noted that if the agent can be liable for a Consumer Fraud Act violation, the broker can also be held liable for the agent’s misrepresentations if he put the agent in such a position that a reasonably prudent person would assume that the agent had the authority to make the representation.


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