Court Opinion

ID: 3133039
Source: CourtListenerOpinion
Date Created: 2015-10-20 20:01:00.723178+00
Date Added: 2024-06-11T09:33:13.316252
License: Public Domain

NOT PRECEDENTIAL

                       UNITED STATES COURT OF APPEALS
                            FOR THE THIRD CIRCUIT
                               ________________

                                      No. 14-4463
                                   ________________

                                  CYDNEE PHOENIX,

                                                      Appellant

                                             v.

                             U.S. HOMES CORPORATION,
                                    doing business as
                                   LENNAR HOMES
                                   ________________

                      Appeal from the United States District Court
                               for the District of New Jersey
                                 (D. C. No.1-14-cv-01615)
                     District Judge: Honorable Joseph H. Rodriguez
                                    ________________

                       Submitted under Third Circuit LAR 34.1(a)
                                   on July 10, 2015

               Before: FUENTES, NYGAARD and ROTH, Circuit Judges

                            (Opinion filed: October 20, 2015)

                                   ________________

                                       OPINION*
                                   ________________

ROTH, Circuit Judge

*
 This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not
constitute binding precedent.
       Cydnee Phoenix appeals the District Court’s dismissal of her complaint alleging

fraudulent misrepresentation, nondisclosure, and violation of state consumer protection

statutes arising from the purchase of a home across the street from an unruly neighbor.

We will affirm, largely for the reasons stated by the District Court.

                                              I.

       In September 2013, Phoenix visited Cedar Point to view a property built and

developed by Lennar Homes. As Lennar’s sales agent, Ray DeChristie, was showing her

the property, a resident from across the street, Kevin Potter, approached them and told

Phoenix “not to let Lennar do to you what they have done to us.” Phoenix asked

DeChristie “whether there was a problem with Potter.” DeChristie “responded that there

was no problem” and “implied that Mr. Potter was no longer eligible for [warranty repair]

services as a result of the time that had passed since his house was purchased.” Phoenix

later learned that “Potter was no longer receiving services as a result of [his] harassing,

hostile and volatile interactions with [Lennar’s] agents, employees and/or workers.”

       On September 21, 2013, Phoenix signed the Agreement of Sale for the property.

On October 1, 2013, before Phoenix closed on the house and without her knowledge,

Lennar sent a letter to Potter’s wife demanding that Potter not park his cars in front of

Phoenix’s property and driveway. The letter also demanded that Potter “cease and desist

from taking any further actions which may interfere with Lennar conducting its business

or may be considered an invasion of the privacy of any New Home Owner.” Phoenix

alleged that the letter caused Potter to retaliate against her by engaging in a pattern of

harassing conduct. On November 12, 2013, due to Potter’s volatile behavior, Phoenix

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and her sister filed criminal complaints for harassment against Potter. Phoenix also hired

a security guard.

       On December 23, 2013, Phoenix brought this suit, alleging that Lennar

fraudulently concealed and misrepresented Potter’s harassing, hostile, and volatile

behavior. Phoenix asserted claims for fraud, equitable fraud, negligent misrepresentation

and omission, violation of the New Jersey Consumer Fraud Act, violation of the Planned

Real Estate Development Full Disclosure Act, and negligent infliction of emotional

distress. According to Phoenix, once Lennar elected to speak, via DeChristie, about

Potter, Lennar had a legal duty to speak the truth. Phoenix also alleged emotional

distress and claimed that her home suffered a diminution in value because she would

have to disclose Potter’s behavior to any potential future buyers.

                                              II.1

       To establish a common law fraud claim based on an affirmative misrepresentation,

Phoenix must show “a material misrepresentation by the defendant of a presently existing

fact or past fact; knowledge or belief by the defendant of its falsity; an intent that the

plaintiff rely on the statement; reasonable reliance by the plaintiff; and resulting damages

to the plaintiff.”2 The elements of equitable fraud are similar, except “knowledge of the

1
  The District Court had subject matter jurisdiction pursuant to 28 U.S.C. § 1332. We
have jurisdiction pursuant to 28 U.S.C. § 1291. We exercise plenary review over a
district court’s grant of a motion to dismiss for failure to state a claim under Federal Rule
of Civil Procedure 12(b)(6). See Reilly v. Ceridian Corp., 664 F.3d 38, 41 (3d Cir. 2011).
We review the denial of a motion for leave to amend the complaint for abuse of
discretion. See Hudson United Bank v. LiTenda Mortg. Corp., 142 F.3d 151, 160 (3d Cir.
1998).
2
  Liberty Mut. Ins. Co. v. Land, 892 A.2d 1240, 1247 (N.J. 2006).
                                               3
falsity and an intention to obtain an undue advantage therefrom,” is not required.3 To

establish a New Jersey Consumer Fraud Act claim, Phoenix must show a

“misrepresentation . . . in connection with the sale or advertisement of . . . real estate, . . .

whether or not any person has in fact been misled, deceived or damaged thereby . . ..”4

“The misrepresentation has to be one which is material to the transaction and which is a

statement of fact, found to be false, made to induce the buyer to make the purchase.”5

       Phoenix’s fraud, CFA, and PREDFDA6 claims based on Lennar’s affirmative

misrepresentations fail because she did not establish that Lennar’s agent, DeChristie,

made a statement of fact that is false.7 DeChristie’s comment that there was no problem

with Potter left Phoenix with the impression that she should not be concerned about

Potter. But the comment was not a fact. At best, it was an idle comment conveying

DeChristie’s opinion about Potter and the degree of risk Potter posed.8 Likewise,

Lennar’s advertisements about the “wonderful lifestyle” and integrity of Cedar Point are

3
  Jewish Cntr. of Sussex Cnty. v. Whale, 432 A.2d 521, 524 (N.J. 1981).
4
  N.J.S.A. § 56:8-2.
5
  Gennari v. Weichert Co. Realtors, 691 A.2d 350, 366 (N.J. 1997) (quotation marks
omitted).
6
  Under PREDFDA, “[a]ny developer disposing of real property subject to this act, . . .
who in disposing of such property makes an untrue statement of material fact or omits a
material fact . . . from any public offering statement, . . . shall be liable to the
purchaser . . ..” N.J.S.A. § 45:22A-37(a).
7
  We need not resolve the question of whether Phoenix sufficiently pled a fraud claim
under Rule 9(b) because she failed to state a plausible claim for relief under the more
lenient standard of Rule 8. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
8
  See Gennari, 691 A.2d at 366 (differentiating material misrepresentations from “idle
comments or mere puffery”).
                                                4
not actionable because they were “puffery,” not actionable misrepresentations of fact.9

To the extent the comment about Potter’s ineligibility for services was a fact, we agree

with the District Court that it was not material.

       Phoenix’s nondisclosure claims fail because Lennar had no duty to disclose off-

site social conditions, such as the personality traits of a neighbor. While Lennar had a

duty to disclose off-site conditions that are material to the transaction,10 it had no “duty to

investigate or disclose transient social conditions in the community that arguably affect

the value of the property.”11 Moreover, the duty to disclose extended to “off-site physical

conditions known to [the seller] and unknown and not readily observable by the buyer.” 12

Here, as the District Court noted, DeChristie did not know that Potter was going to be

hostile to his neighbors. Potter’s behavior was also readily observable to Phoenix when

she was visiting the property.

9
  See Rodio v. Smith, 587 A.2d 621, 624 (N.J. 1991) (the slogan “You’re in good hands
with Allstate” was “nothing more than puffery” and was thus not “a deception, false
promise, misrepresentation, or any other unlawful practice within the ambit of the
Consumer Fraud Act”).
10
   See Tobin v. Paparone Constr. Co., 349 A.2d 574, 578 (N.J. Super. Ct. 1975) (finding
a developer liable for failure to disclose to a purchaser that an adjoining lot owner
intended to construct a tennis court with a ten-foot high fence within one foot of the
common boundary line).
11
   Strawn v. Canuso, 657 A.2d 420, 431 (N.J. 1995), superseded on other grounds by,
N.J.S.A. § 46:3C-10.
12
   Id. (emphasis added).
                                               5
       Because Lennar did not owe Phoenix a duty of care to disclose information

regarding Potter’s conduct, Phoenix cannot state a claim for negligent misrepresentation

and omission or negligent infliction of emotional distress.13

                                            III.

       For the foregoing reasons, we will affirm the District Court’s judgment.14

13
   See Monaco v. Hartz Mountain Corp., 840 A.2d 822, 833 (N.J. 2004) (“whether a
person owes a duty of reasonable care toward another turns on whether the imposition of
such a duty satisfies an abiding sense of basic fairness under all of the circumstances in
light of considerations of public policy” (citation omitted)); Decker v. Princeton Packet,
Inc., 561 A.2d 1122, 1128 (N.J. 1989) (whether the defendant has a duty of care to the
plaintiff depends on whether it was foreseeable that “the tortious conduct will cause
genuine and substantial emotional distress or mental harm to average persons”). To the
extent Phoenix’s emotional distress claim is based on Lennar’s October 1 letter to Potter,
we do not believe that Lennar’s conduct in sending the letter was negligent.
14
   We also conclude that the District Court did not abuse its discretion in denying
Phoenix’s motion to amend her complaint.
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