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Nuzzo v. Horvath

A-5323-08T1 (N.J. Super. App. Div. 2011) (Unpublished)

DAMS — Once a landowner is approached by the Department of Environmental Protection with respect to maintaining and inspecting a dam on the landowner’s property, it will have already incurred measurable damages therefore can sustain begin a suit against parties who might be liable to the landowner with respect to the claims.

The Department of Environmental Protection (DEP) notified a landowner that because a dam was partially located on its property, it was responsible for maintaining or removing it. The landowner argued that it was not until the DEP contacted it, that it had any knowledge the dam was on its property or that it had any responsibility for the dam. The landowner sued the brokers, attorneys, surveyors, and title insurers who had provided services in connection with its purchase of the property, and sued an adjoining property owner on whose property the dam also partially sat, seeking, inter alia, indemnification for the costs of compliance with DEP’s directives.

The landowner also contended that when it asked the real estate broker about the dam, it was told that the dam was not on the property. Furthermore, the survey did not show the dam. A title commitment and the policy were also issued. The title commitment and title insurance policy both took exception to coverage for conditions and restrictions that the title insurer only described by reference to three deed books, where similarly worded conditions and restrictions were set forth. However the landowner’s attorneys never told the landowner of any liability with respect to the dam. After the DEP notified the landowner about the dam, the landowner requested a second survey from the surveyor. This time, it showed the dam. The DEP requested that the landowner submit an inspection plan. The landowner then hired experts to determine the cost for removing or maintaining the dam.

The brokers, attorneys, surveyor, and title insurers all denied the allegations and filed cross-claims against the others for contribution. The landowner also sought to recover a share of the expense of the dam from its neighbor on a theory of unjust enrichment. The neighbor denied liability and counterclaimed for a declaratory judgment to quiet title by resolving the questions of ownership and responsibility for the dam based on the deeds. The neighbor also sought damages for the landowner’s alleged trespass and encroachment.

The lower court dismissed the case on the grounds that the complaint and counterclaim were not ripe for adjudication. It held that because the DEP had not yet ordered the landowner to do anything, its damages were uncertain. On appeal, the Appellate Division vacated the order because regardless of the outcome of any future challenge to the DEP’s authority to compel either immediate repairs or a long-term solution, the landowner had already incurred measurable damages. It had paid for experts to respond to the DEP’s request to submit a plan and expert proposals. The DEP also directed that the landowner make immediate repairs recommended by its experts. In essence, its claims did not depend upon the dam’s future.

It reversed the dismissal of the neighbor’s counterclaim alleging trespass, encroachment, and a request for a declaratory judgment establishing the parties’ respective obligations for the dam under their deeds because uncertainty as to the extent of the obligations the DEP might impose was immaterial to the landowner’s request for relief.

Summary judgment in favor of the surveyor was affirmed because the claim was extinguished by N.J.S.A. 2A:14-1.3, a statute of repose. Under that statute, no action can be taken against a surveyor more than ten years after the performance of furnishing of the survey.

On the other hand, the Court reversed the judgment in favor of the broker because there was a material question of fact as to whether the landowner had been told by the broker that the dam was not on its property. Summary judgment in favor of the title insurers on the negligence and contract claims was affirmed because a title company’s liability is limited to the policy. A title insurance company is not liable in tort for negligence in searching records unless the title insurer assumed a duty beyond issuing a contract of insurance. Here, the insurers assumed no duty beyond issuing the policy. Further, the policy contained an exception for the conditions and restrictions set forth in the deeds and those revealed a requirement to maintain the dam. Even an exception incorporating a limitation on the insured’s use of the property by reference to a deed book and page number is adequate to give notice of that limitation. It is the duty of the insured or the insured’s attorney to perform due diligence as to the exceptions. For that reason, the Court also affirmed the denial of the attorneys’ motion for summary judgment because a fact-finder could reasonably conclude that the attorneys’ failure to conduct further inquiry into the obligations in the Deed Books breached a standard of care owed to the landowners.

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