Soucie v. Toll Brothers, Inc.

A-5973-96T1 (N.J. Super. App. Div. 1998) (Unpublished)
  • Opinion Date: April 23, 1998

DEVELOPERS; RELEASES; SCOPE—Even though a home buyer gave the developer a general release, such a release will not bar a subsequent action unless it was intended to release the developer from future claims.

A land developer was sued by a buyer seeking recission of their contract and for compensatory and punitive damages. The buyer claimed he purchased a parcel of land and a house to be constructed on it, based on assurances that: (1) the property would be of a certain size; (2) the two lots to the east would be developed as one large lot; and (3) the slope of the property would remain as it appeared prior to construction. Once the buyer moved in, he discovered numerous construction defects. After much discussion, he signed a general release which he contends was limited to the construction defects. Within two years, the two lots to the east were sold and developed separately, and the slope of his property was excavated and replaced with a retaining wall which destroyed his sprinkler and drainage systems. The trial judge granted summary judgment in favor of the developer after finding that the release contained broad language making it a general release of any future claims. The judge stated that the property owner could have simply crossed out the general language and signed a more limited release if that was truly his intent. The judge also concluded that even if the release did not bar future claims, the developer was entitled to summary judgment because the homeowner did not present sufficient proof to support his claims.

Citing the New Jersey Supreme Court, the Appellate Division stated that the parties’ intent is relevant in ascertaining the scope of a release, and that claims arising after a release is executed are generally not covered by that release unless expressly stated. Since the parties’ intent was unclear and the release did not explicitly encompass future claims, summary judgment should not have been granted. The Appellate Division agreed that there was no genuine issue of material fact with respect to development of the neighboring lots but that there was one as to whether the developer had a duty to inform the homeowner about the possible construction of the retaining wall. If the developer had a duty to inform, the homeowner may have been fraudulently induced into buying the property based on the developer’s intentional or negligent misrepresentation. The Court concluded that summary judgment should also have been withheld as to damages that may have been incurred as a result of the damage to the property or from a reduction in the value of the property as a result of the retaining wall.