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Felumero v. AHB Development Corporation

A-5386-08T2 (N.J. Super. App. Div. 2010) (Unpublished)

CONSUMER FRAUD — Where the original builder of a home makes no statements or representations to the eventual owner of the home and none were passed down from the original buyer to the eventual owner, there is not necessary causation to sustain a Consumer Fraud Act claim by the eventual owner against the developer.

A developer sought approval from a municipal planning board for a minor subdivision that would result in the creation of two residential lots. If approved, a house on the lot would not comply with the municipality’s side yard setback requirements. Thus, the developer had to remove a portion of the dwelling to eliminate the need for any further variances, but never did so. A survey of the property was attached to the recorded subdivision deed. It showed that the portion of the dwelling had to be removed to satisfy a sideyard setback. When the lot was conveyed, the new owner obtained a certificate of occupancy from the municipality despite the portion not having been removed. The property was sold again and that deed referenced the prior transfers and contained the survey. The new buyer admitted that she never met the developer nor received any communication from the developer, and that her closing file contained the survey.

The municipality refused to issue a certificate of occupancy because the portion had not yet been removed. According to the new buyer, it would cost $35,000 to remove the portion and repair the resulting damage. So, she sued the original owner and the developer under theories of fraud. Both filed motions for summary judgment to dismiss the complaint, each of which was granted by the lower court.

The buyer appealed the dismissal of her New Jersey Consumer Fraud Act (CFA) claim, but the Appellate Division affirmed the lower court’s decision, holding that neither the developer nor the original owner had made any representations of an existing fact directly to the new buyer. The Court found that to recover under the CFA, a party must suffer an ascertainable loss as a result of the use or employment by another person of an unlawful method, act or practice. In this case, there was no chain of representations from the developer or from original owner to the new buyer, and so the necessary causation to sustain a CFA claim was absent.

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