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Saums v. Estate of Foster

A-5595-09T1 and A-5916-09T1 (N.J. Super. App. Div. 2011) (Unpublished)

CONSUMER FRAUD ACT — A complaint cannot be amended at trial to raise a Consumer Fraud Act claim unless the evidence related to the claim, beyond that contained in the pleadings, is introduced at the trial without objection.

Parents purchased an old, disheveled home as a residence for their unemployed son. The son later began to date a home improvement contractor. The municipality notified the son that the home was scheduled to be condemned because of its state of disrepair. The son and the contractor discussed the situation with the father and offered to restore the home with the intention of ultimately purchasing the property from the father. They negotiated a sale price and the father prepared a written contract. The contractor did not sign it because of her concern about the son’s condition, which had deteriorated. Nevertheless, the contractor gave the father two deposit checks.

The contractor alleged that although she did not enter into a formal contract to purchase the property, she and the father had entered into a contract under which the father agreed to keep the property off the market, not to evict his son, and to hold the price, all provided the contractor paid the father to cover his mortgage payments. The contractor subsequently made payments to the father, and he kept the property off the market. The contractor then solicited a proposal for renovation of the home. The renovation company began work on the home shortly thereafter.

The renovation company testified that its workers removed a portion of a partition wall in a second floor apartment to create a larger, single bedroom; finished the floors, kitchen, and bathroom; and painted the unit. While working on the first floor apartment, the workers were forced to leave the job incomplete because the son had been engaging in erratic behavior and had been removing asbestos. The contractor testified that she paid for the work performed in the home.

The father’s wife suffered a stroke, and title was conveyed from the father and his wife to the father alone. The father then died, and his son moved in with his mother. The son rented the upstairs apartment to a stranger and kept the rent money. The son then died. The father’s will was probated, and his daughter was named executrix. The daughter testified that she tried to rent the upstairs apartment, but could not do so because it wasn’t structurally safe.

The contractor sought recovery of what she paid for the renovation of property. She also sought to recover the cash she had paid to the father toward the purchase of the property and a sum in lieu of the rent payments that she made to the father. The estate denied the allegations and filed a counterclaim for damage to the property and lost rent, as well as for treble damages, attorneys’ fees, and costs based on an alleged violation of the Consumer Fraud Act (CFA).

At trial, the estate presented expert testimony that the home needed repair to restore it to a habitable state. The expert remarked that removal of a load-bearing wall had caused the ceiling in the second floor bedroom to sag and bow. He opined that damage to the downstairs bathroom had resulted from the improper installation of gutters, and this caused water to seep into, and rot, the outer wall.

The daughter entered into an agreement listing the property for sale at a price below its appraised value. She subsequently chose not to list the property when the first listing expired, believing that a buyer would not be able to obtain a mortgage due because the home would not pass inspection. The contractor did not communicate any desire to purchase the home.

The lower court concluded that the contractor was not entitled to recovery on her claim for the costs she incurred in renovating the house or for the monies she paid pursuant to the option agreement. The lower court noted that the contractor did not have a contractual right to such monies, and relief was not warranted on the basis of quantum meruit or quasi-contract. The lower court found that the contractor never had an expectation that she would be paid for the renovations; that there was no evidence that the renovations had increased the value of the property; and that the contractor had caused the inappropriate removal of a load-bearing wall in the upstairs apartment. The lower court further found that the evidence did not support an award of damages to the estate on its claim for damage to the premises; that the cause of damage was disputed; and that any alleged damage would have been offset by the value of any renovations completed by the contractor. Further, the lower court denied the CFA claim because it was not pled; denied the estate’s claim for lost rent because the son had rendered the room unfit; and noted a legitimate issue as to whether the second floor was habitable.

On appeal, the Appellate Division agreed with the lower court that the contractor did not present sufficient evidence to warrant an award of damages under the doctrines of quasi-contract or unjust enrichment. The lower court was presented with sufficient credible evidence to establish that the renovations did not increase the value of the property, and that the contractor herself caused damage to the property’s load-bearing wall. Thus, the Court left that determination undisturbed.

In the appeal, the estate argued that the lower court erred by refusing to permit it to amend its complaint at trial in order to raise a CFA claim. The Court noted that New Jersey’s Court Rules allow a claim to be amended at trial only when evidence related to issues beyond the pleading is introduced at trial without objection. Here, the contractor never consented to an amendment and, because she was not afforded the opportunity for discovery on any CFA claims, she would have been prejudiced by their introduction.

Additionally, the Court agreed that the estate had not presented sufficient evidence to support its claims for damage to the property or for lost rent because there was conflicting testimony about who or what caused the damage to the property. The expert had conceded that there were various possible causes for water infiltration. Similarly, the estate’s claim for lost rent was ineffective because the son, not the contractor, had rendered the first floor unfit for rental and because his erratic and dangerous conduct led to the cessation of the work. Further, the daughter admitted to living in the second floor apartment, leading to a question as to whether the apartment could or could not be rented.

In affirming the lower court’s decision, the Court noted that the lower court’s findings were all supported by adequate, substantial, and credible evidence in the record.

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