Title: Ellen Nobrega et als. v. Edison Glen Associates, et als.
Citation: N/A
Docket Number: a-130-99
State: new-jersey
Issuer: new-jersey Supreme Court
Date: May 22, 2001

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized). STEIN, J., writing for a unanimous Court. The issue in this appeal is whether the New Jersey Real Estate Residential Off-Site Conditions Disclosure Act (Disclosure Act or Act) authorizes lawsuits against Edison Glen, condominium developers and sellers, under the Consumer Fraud Act for knowingly failing to disclose to the plaintiffs, purchasers of the condominium units, the existence of toxic waste sites in close proximity to the condominium development, and whether the provisions of the Disclosure Act that exonerate sellers from liability for non-disclosure of off-site conditions prior to that Act's effective date may be applied retroactively in this case. Eileen Nobrega, president of the Edison Glen Condominium Association, is one of the purchasers of sixty residential units in the Edison Glen complex acquired between February 1987 and September 1991. The complex is located on Route 1 in Edison Township, which hosts at least three Superfund sites included on the U.S. Environmental Protections Agency's (EPA) National Priorities List (NPR). Two of those sites are located within two miles of the Edison Glen complex. The first site was placed on the Superfund list in 1982, prior to the construction of the Edison Glen complex, as a result of the EPA's determination that storage containers containing hazardous waste had deteriorated, permitting the discharge of lethal toxins into the soil and groundwater. The second was placed on the Superfund list in 1990, after the EPA determined that arsenic and other hazardous substances had leached into the soil and groundwater after being illegally dumped on certain property. Edison Glen began developing and selling units in the complex in 1987. Nobrega and the other purchasers of the units alleged that Edison Glen knew or should have known of the nearby Superfund sites and of the hazardous conditions, but failed to disclose that information to them before they purchased the condominiums. After learning, through an appraiser's report, that the market value of their units had declined substantially as a result of the proximity of the Superfund sites to the complex, Nobrega and the other owners filed suit in May 1997, alleging common law claims of negligence, fraud and misrepresentation, breach of contract, breach of warranty, and violation of the Consumer Fraud Act. Edison Glen moved to dismiss the complaint on the ground that each of the claims were barred by the Disclosure Act. Although that Act was passed after the subject properties had been conveyed, Edison Glen argued that the Disclosure Act applied retroactively to bar the homeowners' claims. The Law Division granted Edison Glen's motions with respect to the common law claims, but ruled initially that the Consumer Fraud Act claims survived the Disclosure Act. However, the trial court reversed itself on Edison Glen's motion for reconsideration, concluding that Section 10 of the Disclosure Act precluded the homeowner's Consumer Fraud Act claims. The Appellate Division reversed, holding that the Disclosure Act did not bar Consumer Fraud Act claims for intentional failure to disclose off-site conditions affecting the value of properties. The Appellate Division did not address the retroactivity issue. The Supreme Court granted Edison Glen's petition for certification. HELD: The New Residential Real Estate Off-Site Conditions Disclosure Act prospectively precludes the homeowner plaintiffs from suing sellers and developers of real estate under the Consumer Fraud Act for failure to disclose off-site conditions, provided that the sellers and developers satisfy their disclosure obligations under Sections 8 and 9 of the Act; the Act may not be applied retroactively to those homeowners who would not have had a remedy under The Planned Real Estate Development Full Disclosure Act. 1. In Strawn v. Canuso, the Consumer Fraud Act was held to require the seller of property to disclose off-site conditions affecting the value of the subject property, which conditions were known to the seller, but not evident to the buyer. Following the Court's holding requiring such disclosure, the Legislature enacted the Disclosure Act, which requires persons who own, lease or maintain potentially dangerous off-site conditions to provide the municipal clerk of each municipality in which the conditions exist a list of those conditions and their location, and to update the list annually. The Act further requires the seller of the property to provide the prospective purchaser with a notice of the of the availability of the lists of off-site conditions in the municipal clerk's office and of the buyer's right to cancel the contract within five days after its execution. (pp. 7-10) 2. Although the Disclosure Act provides that a seller has discharged his or her disclosure responsibilities by furnishing notice of the availability of the lists, Section 10(d) specifically provides that the Act shall not be interpreted to affect the disclosure requirements for off-site conditions contained in The Planned Real Estate Development Full Disclosure Act and the Air Safety Zoning Act of 1983, or in any other statutory provision. That the Act was intended to bar non-statutory claims is clear. (pp. 10-13) 3. Because Sections 2, 10(a), 10(b), and 10(d) of the Disclosure Act contradict, one must look beyond the plain meaning of those sections and look to the legislative intent. (pp. 13-14) 4. The legislative history of the Disclosure Act makes clear that its intent was to reverse the effect of Strawn as the case relates to residential real estate contracts for new construction entered into prior to its effective date, and any ambiguities in the Act must be interpreted in a manner that effectuates that purpose. Thus, the Disclosure Act prospectively precludes plaintiffs from suing sellers and developers of real estate under the Consumer Fraud Act for failure to disclose off-site conditions, provided that the sellers and developers satisfy their disclosure obligations under Section 8 and 9 of the Act. (pp. 15-16) 5. The any other statutory provision exception contained in Section 10(d) of the Disclosure Act includes only statutes that impose specific off-site disclosure obligations for sellers of real estate, either on the face of the statute or by way of administrative regulation. Prohibitions expressed with the generality of the Consumer Fraud Act do not fall within the any other statutory provision exception in Section 10 (d). (pp. 16-18) 6. The plain language of Section 10(c) of the Disclosure Act evidences a clear legislative intent that the Act apply retroactively to all cases in which the real estate contracts have been entered into prior to the Act's effective date. (pp. 18- 21) 7. The Disclosure Act would not be applied retroactively if retroactive application would be unconstitutional, which in the past has been defined as interfering with vested rights, or if retroactive application, even if constitutional, would constitute manifest injustice. (pp. 21-22) 8. Consistent with contemporary United States Supreme Court legislative retroactivity decisions, the Court is disinclined to pursue a vested rights analysis in determining whether Section 10(c) of the Disclosure Act violates plaintiff's rights under the Due Process Clause. Rather, in place of that inquiry, a rational basis scrutiny will be applied. Thus, if Section 10(c) is supported by a legitimate legislative purpose furthered by rational means, it will withstand a due process challenge. (pp. 22-32) 9. Because a clear manifest injustice would result by the retroactive application of the Disclosure Act in this case, the much closer constitutional question need not be resolved. (pp. 32-34) 10. The basic principle of Strawn -- that purchasers of real estate are entitled to know about material off-site conditions -- was both deducible from prior precedent and reaffirmed by the Legislature in the Disclosure Act itself. Thus, there was sufficient reliance on pre-existing law in this case to implicate the manifest injustice analysis. (pp. 34-38) 11. Because of the limited record before the Court, the matter is remanded to the trial court for a determination of which, if any, of the homeowners could have pursued a PREDFDA claim within the limitations period set forth in that law. Those plaintiffs who could have filed a PREDFDA claim would not suffer manifest injustice by the retroactive application of the Disclosure Act. However, those plaintiffs who were barred from filing a PREDFDA claim at the time they first became aware of the diminution of their property values may maintain their common law and Consumer Fraud Act causes of action notwithstanding the retroactivity provision of the Disclosure Act, as those plaintiffs otherwise would be deprived of a remedy for violation of a right that the Disclosure Act itself affirms. (pp. 38-41) Judgment of the Appellate Division is MODIFIED and the matter is REMANDED to the Law Division for further proceedings consistent with this opinion. CHIEF JUSTICE PORITZ and JUSTICES COLEMAN, LaVECCHIA, and ZAZZALI join in JUSTICE STEIN's opinion. JUSTICES LONG and VERNIERO did not participate. EILEEN NOBREGA, FRANK AND ANNA SCALISE, SALVATORE APUZZIO, JR., DORIS AND KWONG AU, SAMUEL BASKINGER, BONNIE BERTUCCI, BRUCE AND RACHEL BINKOWITZ, WILLIAM BLUESTONE, YVONNE BRIX, PATRICIA BUSH, ROLAND AND BETTY CHANG, JIM AND CHUEN CHU, ALICJA CIOBANU AND PAUL SZOTT, CORNELL AND FRAN COCO, DAN AND CONNIE COLON, ROSE MARY CORRALES, ALAN AND BARBARA COSCARELLI, SCOTT AND CHRISTY DAVIS, ELAINE DeLORENZO, DIANE DIGIULIO, ARLENE AND BARRY FINK, STEVEN AND KATHLEEN FUSCHETTI, ELIZABETH GOMEZ, WORSELEY AND ULA GREENIDGE, HARRY GRIEFER, MICHAEL AND TERESA HAMMALAK, ANDRE AND MERITTA HERSCOVICI, MARILYN AND GEORGE HIGGINS, LINDA IONTA, STEPHEN E. AND AMY S. KANE, ARLENE KAPLAN, IRWIN, BARRY AND MURIEL KESHNER, CAROLYN B. KILPONEN, BILL AND TERRY KONCAR, FRANK KOWALEWSKI, ALBERT AND JEAN KUCHINSKAS, THERESA LEONARDIS, JOHN AND PHYLLIS MAFFUCCI, JOSEPH AND CELIA MANDEL, NATHAN AND MOLLY MARKO, ESTHER MULLALY, TERESA O'HARA, LEONARD OLEN, VICTORIA MONTANINO ORTIZ, OSCAR AND LOIS PANNELLA, AUDREY PRESS, SUSAN PUHAN, DONNA RANDO, YVES ROC, SCOTT ROSMARIN, KENNETH G. SABLE, MARK AND MIRTA SMOLAR, ZAIDA AND ANGEL SOTOLONGO, KATHRYN STANCO, STEWART THOMPSON, VINCENT AND CAROLYN VARCA, ANDREW AND CAROLYN VITTORIA, LARRY AND ARLEEN WEISENSTEIN, DANA ZAIFERT and EDWARD ZIMMERMAN, v. EDISON GLEN ASSOCIATES, a New Jersey Partnership, ARIE HALPERN, DAVID HALPERN, FRED HALPERN, JACK HALPERN, MURRAY HALPERN, SAM HALPERN, JOSEF PARADIS, HENRY STEIN, ESTATE OF HARRY WILF, JOSEPH WILF, ERIC ROSENBAUM and PAUL VISSER, Defendants-Appellants, and JOHN DOES A-S, Defendants. Argued January 16, 2001 -- Decided May 22, 2001 On certification to the Superior Court, Appellate Division, whose opinion is reported at 327 N.J. Super. 414 (2000). Frederick B. Polak argued the cause for appellants (Post, Polak, Goodsell &amp; MacNeill, attorneys; Mr. Polak, Robert A. Goodsell and Christopher O. Eriksen, of counsel and on the briefs). Dennis A. Estis argued the cause for respondents (Greenbaum, Rowe, Smith, Ravin, Davis &amp; Himmel, attorneys; Mr. Estis and Jessica R. Mayer, on the briefs). Paul H. Schneider argued the cause for amicus curiae, New Jersey Builders Association (Giordano, Halleran &amp; Ciesla, attorneys; Michael J. Gross, of counsel). The opinion of the Court was delivered by NO. A-130 EILEEN NOBREGA, et al., Plaintiffs-Respondents, v. EDISON GLEN ASSOCIATES, a New Jersey Partnership, et al., Defendants-Appellants. DECIDED May 22, 2001 Chief Justice Poritz