PHOENIX v. U.S. HOMES CORPORATION

Filing 11

OPINION. Signed by Judge Joseph H. Rodriguez on 11/3/2014. (tf, )

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UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

Cydnee Phoenix,

:

Plaintiff,

:
:

v.
U.S. Home Corporation d/b/a Lennar
Homes,
Defendant.

Hon. Joseph H. Rodriguez
Civil Action No. 14-1615

:

OPINION

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This matter is before the Court on Defendant’s motion to dismiss pursuant to
Federal Rule of Civil Procedure 12(b)(6). For the reasons set forth below, the motion will
be granted (in part?).
I.

Background

The following facts are taken from Plaintiff’s complaint, and, as such, the Court
accepts them as true for the purposes of this motion. In September 2013, Plaintiff
Cyndee Phoenix (“Plaintiff or Phoenix”), along with her sister, mother, and a real estate
agent, visited a planned residential community known as Cedar Point, where Plaintiff
would eventually purchase property (“Property”). (Compl. ¶ 5, 9.) A sales agent and
representative of Defendant, Ray DeChristie (“DeChristie”), met Plaintiff and her family
at the Property. (Compl. ¶ 9.) Defendant—U.S. Home Corporation, d/b/a Lennar Homes
(“Lennar”)—is the builder, developer, and broker of the houses in Cedar Point,
including the Property. (Compl. ¶ 6.) During this visit, Plaintiff encountered Kevin
Elville Potter (“Potter”), who resides across the street from the Property. (Compl. ¶ 10.)
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Potter spoke with the sales representative about the lack of services by Defendant and
told Plaintiff and her family not to let Lennar do to you what they have done to us
(referring to himself and his family). (Compl. ¶ 11.)
After this encounter, Plaintiff asked DeChristie whether there was a problem with
Potter. (Compl. ¶ 12.) DeChristie informed them that there was “no problem,” implying
that Potter was no longer eligible for services because of the amount of time that had
passed since his home was purchased. (Compl. ¶ 13.) On September 21, 2013, Plaintiff
signed the Agreement of Sale, and on September 23, 2013, Defendant signed the
Agreement of Sale. (Compl. ¶ 14.) On October 30, 2013, Plaintiff purchased the Property
from Defendant and has resided there since November 7, 2013. (Compl. ¶ 4.) In
deciding to purchase the Property, Plaintiff relied on Defendant’s advertisements, which
spoke to the “wonderful lifestyle” of the community and stated that “Quality, Value and
Integrity are the hallmarks” of the community. (Compl. ¶ 7, 8.)
After purchasing the Property, Plaintiff learned that Potter was not receiving
services as a result of his “harassing, hostile, and volatile interactions” with Defendant’s
agents, employees, and/or workers. (Compl. ¶ 15.) This information was known by
Defendant and DeChristie before Plaintiff’s September visit. (Compl. ¶ 15.) Prior to
purchasing the property, Plaintiff was never informed of Potter’s harassing, hostile, and
volatile behavior. (Compl. ¶ 19.) If Plaintiff had known of Potter’s behavior, she would
not have purchased the Property. (Compl. ¶ 20.)
After purchasing the Property, Plaintiff became aware that Potter parked his
vehicles in front of her Property, blocking the driveway. (Compl. ¶ 21, 22, 23.) Upon
Plaintiff’s request, Potter agreed to move his cars when Plaintiff moved in. (Compl. ¶
22.) Unbeknownst to Plaintiff, on October 1, 2013, Defendant’s general counsel, Marcie
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R. Getelman, sent a letter to Potter’s wife telling her that her husband’s “frustration with
Lennar is misplaced and the harassing conduct needs to stop immediately.” (Compl. ¶
23.) The letter referenced Potter’s parking his vehicles in front of Plaintiff’s residence.
(Compl. ¶ 23.) However, neither Plaintiff nor any member of her family told Defendant
about Potter blocking her driveway, nor did they request a letter to be sent. (Compl. ¶
25.)
Upon moving onto the Property, Potter’s vehicles were still parked in front of the
Property, occasionally close to Plaintiff’s mailbox. (Compl. ¶ 27, 29.) Potter refused to
move them upon Plaintiff’s request, referencing the October 1, 2013 letter. (Compl. ¶
28.) The location of these vehicles has interfered with the United States Postal Service’s
ability to approach Plaintiff’s mailbox, resulting in the mail carrier not delivering mail
and requiring Plaintiff to physically pick up her mail from the post office. (Compl. ¶ 9.)
Potter’s behavior became hostile, belligerent, and increasingly harassing, such
that Plaintiff worried that Potter would become violent in the future. (Compl. ¶ 28, 29.)
Potter has made snide and racist comments about Plaintiff and her family; spit in the
direction of Plaintiff and her family; blasted his music loudly; taken pictures of
Plaintiff’s guests and stared them down in attempts to intimidate them; and called the
police on Plaintiff, among other means of harassment and intimidation. (Compl. ¶ 29.)
In response to his behavior, Plaintiff and her sister filed complaints for harassment
against Potter in Municipal Court on November 12, 2013. (Compl. ¶ 30.) Plaintiff also
hired a security guard in fear of retaliation for filing the harassment complaints. (Compl.
¶ 31.)
Plaintiff’s counsel informed Defendant’s general counsel of Potter’s harassing
conduct, asking Defendant to eliminate the problems caused by Potter. (Compl. ¶ 33.)
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Defendant has not taken any action to stop the harassment. (Compl. ¶ 34.) Potter’s
behavior has not stopped, and, as a result, Plaintiff claims to have been damaged.
(Compl. ¶ 35.) Plaintiff now brings claims for fraud, equitable fraud, negligence
misrepresentation and omission, violation of the New Jersey Consumer Fraud Act
(“CFA”), violation of the Planned Real Estate Development Full Disclosure Act
(“PREDFDA”), and negligent infliction of emotional distress.
II.

Standard

A complaint should be dismissed pursuant to Rule 12(b)(6) if the alleged facts,
taken as true, fail to state a claim. Fed. R. Civ. P. 12(b)(6). When deciding a motion to
dismiss pursuant to Rule 12(b)(6), ordinarily only the allegations in the complaint,
matters of public record, orders, and exhibits attached to the complaint, are taken into
consideration. 1 See Chester County Intermediate Unit v. Pa. Blue Shield, 896 F.2d 808,
812 (3d Cir. 1990). It is not necessary for the plaintiff to plead evidence. Bogosian v.
Gulf Oil Corp., 561 F.2d 434, 446 (3d Cir. 1977). The question before the Court is not
whether the plaintiff will ultimately prevail. Watson v. Abington Twp., 478 F.3d 144,
150 (2007). Instead, the Court simply asks whether the plaintiff has articulated “enough
facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly,
550 U.S. 544, 570 (2007).

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a district court may not consider matters extraneous to the pleadings, a document integral to
or explicitly relied upon in the complaint may be considered without converting the motion to dismiss
into one for summary judgment.” U.S. Express Lines, Ltd. v. Higgins, 281 F.3d 383, 388 (3d Cir. 2002)
(internal quotation marks and citations omitted) (emphasis deleted).

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“A claim has facial plausibility 2 when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009) (citing Twombly, 550
U.S. at 556). “When there are well-pleaded factual allegations, a court should assume
their veracity and then determine whether they plausibly give rise to an entitlement to
relief.” Iqbal, 556 U.S. at 680.
The Court need not accept “‘unsupported conclusions and unwarranted
inferences,’” Baraka v. McGreevey, 481 F.3d 187, 195 (3d Cir. 2007) (citation omitted),
however, and “[l]egal conclusions made in the guise of factual allegations . . . are given
no presumption of truthfulness.” Wyeth v. Ranbaxy Labs., Ltd., 448 F. Supp. 2d 607,
609 (D.N.J. 2006) (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)); see also Kanter
v. Barella, 489 F.3d 170, 177 (3d Cir. 2007) (quoting Evancho v. Fisher, 423 F.3d 347,
351 (3d Cir. 2005) (“[A] court need not credit either ‘bald assertions’ or ‘legal
conclusions’ in a complaint when deciding a motion to dismiss.”)). Accord Iqbal, 556
U.S. at 679 (finding that pleadings that are no more than conclusions are not entitled to
the assumption of truth).
Further, although “detailed factual allegations” are not necessary, “a plaintiff’s
obligation to provide the ‘grounds’ of his ‘entitlement to relief’ requires more than labels
and conclusions, and a formulaic recitation of a cause of action’s elements will not do.”
Twombly, 550 U.S. at 555 (internal citations omitted). See also Iqbal, 556 U.S. at 678

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plausibility standard requires more than a mere possibility that unlawful conduct has occurred.
“When a complaint pleads facts that are ‘merely consistent with’ a defendant’s liability, it ‘stops short of
the line between possibility and plausibility of ‘entitlement to relief.’” Id.

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(“Threadbare recitals of the elements of a cause of action, supported by mere conclusory
statements, do not suffice.”).
Thus, a motion to dismiss should be granted unless the plaintiff’s factual
allegations are “enough to raise a right to relief above the speculative level on the
assumption that all of the complaint’s allegations are true (even if doubtful in fact).”
Twombly, 550 U.S. at 556 (internal citations omitted). “[W]here the well-pleaded facts
do not permit the court to infer more than the mere possibility of misconduct, the
complaint has alleged-but it has not ‘shown’-‘that the pleader is entitled to relief.’”
Iqbal, 556 U.S. at 679 (quoting Fed. R. Civ. P. 8(a)(2)).
Further, Rule 9(b) states that “[i]n alleging fraud or mistake, a party must state
with particularity the circumstances constituting fraud or mistake. Malice, intent,
knowledge, and other conditions of a person’s mind may be alleged generally.” Fed. R.
Civ. P. 9(b).
III.

Discussion

Counts I, II, III and VI of Plaintiff’s Complaint allege claims of fraud, equitable
fraud, Plaintiff now brings claims for fraud, equitable fraud, negligence
misrepresentation and omission, and negligent infliction of emotional distress
respectively. These claims will be referred to as the common law claims. Counts IV and
V allege violations of the New Jersey Consumer Fraud Act and the Planned Real Estate
Development Full Disclosure Act, respectively. The Court will address the issues in
turn.
Plaintiff’s characterization of Potter’s actions paints an unpleasant and
unenviable experience. While Plaintiff may seek redress against Potter, the Complaint
here, for the reasons that follow, fails to state a claim upon which relief can be granted
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as to Lennar. New Jersey does not recognize a duty to disclose an undesirable neighbor.
The standard of review governing fraud claims, pursuant to Fed. R. Civ. P. 9(b), requires
the pleading of particularized circumstances constituting fraud. Here, such particularity
is lacking, specifically as to Defendant’s knowledge of Potter’s behavior toward other
neighbors. In addition, to the extent that Defendant’s agent made certain statements to
Plaintiff following an encounter with Potter, the Court finds that those statements do
not constitute material misrepresentation of fact. While the Court sympathizes with
Plaintiff’s grievances as to Potter, the Complaint fails to state a claim upon which relief
can be granted as to Defendant Lennar.
A. Common Law Claims
Plaintiff’s fraud claims fail as a matter of law because Defendants did not owe a
duty to Plaintiff to disclose Potter’s behavior. In New Jersey, "any tort of negligence
requires the plaintiff to prove that the putative tortfeasor breached a duty of care . . . ."
S. Broward Hosp. Dist. v. MedQuist, Inc., 516 F. Supp. 2d 370, 395 (D.N.J. 2007)
(quoting Highlands Ins. Co. v. Hobbs Group, LLC, 373 F.3d 347, 351 (3d Cir. 2004)).
Therefore, in order for the fraud claims to succeed, Defendant must have a duty to
disclose Potter’s behavior to Plaintiff.
Under New Jersey law, home sellers only have a duty to disclose “off-site physical
conditions known to [them] and unknown and not readily observable by the buyer if the
existence of those conditions is of sufficient materiality to affect the habitability, use, or
enjoyment of the property and, therefore, render the property substantially less
desirable or valuable to the objectively reasonable buyer.” Strawn v. Canuso, 140 N.J.
43, 65 (1995). Potter’s behavior is not an off-site physical condition, but a social
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condition that Lennar had no duty to disclose. See, Levine v. Kramer Group, 354 N.J.
Super. 397, 405 (App. Div. 2002) (where the court found that there was no duty to
disclose the existence of a disgruntled neighbor).
In this regard, Plaintiff’s reliance on two California state court decisions is
unavailing. First, the cases are not binding on this Court. More importantly, California
has a statute that requires a broker to disclose the “[n]eighborhood noise problems or
other nuisances” including “difficult neighbors.” See Alexander v. McKnight, 7 Cal. App.
4th 973, 976 (Cal. Ct. App. 1998); see also Shapiro v. Sutherland, 64 Cal. App. 4th 1534,
1545 (Cal. Ct. App. 1992). There is no such statute in New Jersey requiring a similar
disclosure and, pursuant to Strawn, there is no obligation to disclose the presence of a
disgruntled neighbor to a prospective buyer. Strawn, 140 N.J. at 64.
Moreover, the Complaint fails to set forth sufficient facts that demonstrate that
Defendant assumed a duty to disclose Potter’s behavior upon being asked by Plaintiff
whether Potter was a problem and then volunteering a response. “Although a party may
keep absolute[ly] silen[t] and violate no rule of law or equity, … if he volunteers to speak
and to convey information which may influence the conduct of the other party, he is
bound to discover the whole truth. A partial statement then becomes a fraudulent
concealment, and even amounts to a false and fraudulent misrepresentation.” Berman v.
Gurwicz, 189 N.J. Super. 89, 93 (Ch. Div. 1981) (quoting Pomeroy, Equity
Jurisprudence (5th ed.), § 901a (1941)).
Here, the Complaint fails to allege sufficient facts to plausibly conclude that
Defendant was aware of additional information requiring disclosure. First, there is
nothing in the Complaint that suggests that Plaintiff had a specific need that Defendant
fraudulently assuaged. While it is axiomatic that prospective homebuyers wish for
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“good” neighbors, Potter’s behavior was on full view to Plaintiff and there are no facts
plead indicating that Defendant was aware that Potter was “harassing, volatile, or
hostile” with his neighbors. Compl. ¶15. At most, Defendant’s October 1, 2013 letter to
Potter demonstrates Defendant’s awareness of Potter’s unneighborly conduct of parking
his vehicle in front of Plaintiff’s future home; the Complaint fails to plead with
particularity the details of the “hostile, volatile, and harassing” actions Potter took
against Defendant’s personnel and/or the other neighbors. Iqbal, 556 U.S. at 680; Fed.
R. Civ. P. 9 (b). The act of parking in front of Plaintiff’s future home, which according to
the letter was taken for the purpose of frustrating Defendant’s sales effort, does not
demonstrate that Defendant was aware, or could even surmise, that Potter’s frustrations
would be directed toward Plaintiff in the manner that has occurred. In addition, the
letter was sent after Plaintiff’s September visit to the property where Plaintiff had the
opportunity to observe Potter’s parking.
Second, Defendant’s statement, even if it falls short of complete propriety, is not
a misrepresentation of a material fact. Alexander v. CIGNA Corp., 991 F. Supp. 427, 435
(D.N.J. 1998) (“Similarly, statements that can be categorized as “puffery” or “vague and
ill-defined opinions” are not assurances of fact and thus do not constitute
misrepresentations.”) (citing Diaz v. Johnson Matthey, Inc., 869 F. Supp. 1155, 1165
(D.N.J. 1994) (citations omitted). To establish her claims of fraud, Plaintiff must
demonstrate that the Defendants knowingly withheld material facts to induce Plaintiff
to purchase the property. See Gennari v. Weichert Co. Realtors, 148 N.J. 582, 610
(1997); Strawn, 140 N.J. at 60.

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Here, DeChristie’s comments are nothing more than an “ill-defined opinion.” In
this regard, Defendant’s reliance on Perri v. Prestigious Homes, Inc., 2012 WL 95564
(N.J. Super. A.D. Jan. 13, 2012) is instructive. In Perri, a realtor told a buyer that
“flooding was not something to worry about” in regards to a home located in a flood
zone. In determining that the realtor was not liable under the CFA and common law
fraud, the Appellate Division concluded that the plaintiff could not establish that the
realtor made a statement of fact that was false. Rather, the Appellate Division concluded
that the statement did not “describe a direct assertion of fact; at best, it indicates an idle
comment [the realtor] made conveying her opinion about the seriousness of the
problem posed by flooding.” at *5 (citing Gennari, 148 N.J. at 607 (differentiating
material misrepresentations from “idle comments or mere puffery”). Plaintiff asked
DeChristie his opinion of Potter’s behavior, which she personally observed, and his
response is not a material fact. Perri, 2012 WL 95564 at *4. Likewise, DeChristie’s
comment as to the reasons Potter was no longer eligible for services is not a material
fact.
Finally, the Sales Agreement disclaims any reliance on statements outside of the
contract and Plaintiff cannot now claim fraud. Alexander, 991 F. Supp. at 436; see also
Pathfinder Mgmt., Inc. v. Mayne Pharma, 2008 WL 3192563 (D.N.J. Aug. 5, 2008)
(“Since the Purchase Agreement explicitly states that Plaintiff is aware that no
representations are being made to them outside those contained within the Purchase
Agreement and specified schedules and instruments, the representations made by
[Defendant] in the January 2003 presentation cannot be justifiably relied upon by
Plaintiff.”).

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Accordingly, Defendant had no duty to Plaintiff to disclose information regarding
Potter’s conduct. Therefore, Plaintiff’s fraud claim must be dismissed. Additionally, the
equitable fraud, negligent misrepresentation and omission, and negligent infliction of
emotional distress claims are also dismissed because Defendant did not owe a duty to
Plaintiff.
B. Violation of the New Jersey Consumer Fraud Act
Plaintiff’s claim under the New Jersey Consumer Fraud Act is dismissed. “[T]o
state a claim under the CFA, a plaintiff must allege each of three elements: (1) unlawful
conduct by the defendants; (2) an ascertainable loss on the part of the plaintiff; and (3) a
causal relationship between the defendants' unlawful conduct and the plaintiff's
ascertainable loss.” N.J. Citizen Action v. Schering-Plough Corp., 367 N.J. Super. 8, 1213 (App. Div. 2003).
There are two bases for Plaintiff’s CFA claim. First, Plaintiff alleges a violation
stemming from the misrepresentation and omission of facts concerning Potter’s
conduct. Second, Plaintiff alleges false representations in written advertisements
provided by Defendant. Both claims fail as a matter of law and are insufficient to
maintain a CFA action.
Plaintiff’s CFA claim based upon Defendant’s alleged failure to speak the whole
truth when the sales representative volunteered that Potter’s conduct was of no moment
is dismissed as there are no facts in the Complaint that sufficiently allege that Defendant
was aware of any further information regarding Potter’s conduct that warranted
disclosure. In addition, pursuant to the Rule 9(b) standard governing fraud claims, the
plaintiff must also allege “substantial aggravating circumstances.” Naporano Iron &
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Metal Co. v. Am. Crane Corp., 79 F. Supp. 2d 494, 507 (D.N.J. 1999) (citing Suber v.
Chrysler Corp., 104 F.3d 578, 587 (3d Cir. 1997)). Plaintiff has not satisfied either of
these burdens.
As to the claim of fraudulent misrepresentation, the statement that Potter was
“no problem” does not constitute a misrepresentation as it is not a statement of material
fact. Under the CFA, “[t]he 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.” Gennari, 148 N.J. at 607 (citing Gennari v. Weichert Co.
Realtors, 288 N.J. Super. 504, 535 (App. Div. 1996)). Not all erroneous statements
constitute a sufficient misrepresentation to bring a claim under the CFA. Id. The
statement that Potter was “no problem” is not a statement of fact; instead, it is an idle
comment which is insufficient to constitute a misrepresentation. See Gennari, 148 N.J.
at 607.
As for the written advertisements claiming a “wonderful lifestyle” and speaking to
the “Quality, Value and Integrity” of the neighborhood, these statements alone do not
justify a claim under the CFA. “Whether a practice itself is unfair [for purposes of the
New Jersey Consumer Fraud Act] is a classic jury question. However, where the claim is
based on written statements, the court must make the legal determination of whether a
practice can be said to be unfair in light of the written statements.” Slack v. Suburban
Propane Partners, L.P., 2010 WL 3810870, at *5 (D.N.J. Sept. 21, 2010) (quoting
Hassler v. Sovereign Bank, 374 Fed. Appx. 341, 344 (3d Cir. 2010)). Therefore, the
question of whether this claim is actionable is a matter of law.
“Mere puffery does not constitute consumer fraud.” Bubbles N’ Bows, LLC v. Fey
Publ’g. Co., 2207 WL 240698, at *9 (D.N.J. Aug. 20, 2007) (citing Turf Lawnmower
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Repair, Inc. v. Bergen Record Corp., 139 N.J. 392, 416 (1995)). Further, “vague and illdefined opinions” cannot be construed as a misrepresentation. Bubbles N’ Bows, 2207
WL 240698, at *9. Specifically, vague statements about “integrity” are mere puffery and
cannot be construed as promises. Id. In deciding whether a statement is puffery or
something more, courts have looked to whether the statements would “victimize the
average consumer.” Turf Lawnmower Repair, 139 N.J. at 416. The allegedly fraudulent
statements provided by Defendant would not victimize the average consumer. Rather,
phrases like a “wonderful lifestyle” are statements of opinion, not fact. Therefore,
Plaintiff’s CFA claim must be dismissed.
C. Violation of the Planned Real Estate Development Full Disclosure Act
The PREDFDA states that any developer who “makes an untrue statement of
material fact or omits a material fact… or who makes a misleading statement… shall be
liable to the purchaser.” N.J.S.A. 45:22A-37 (1978). As previously stated, the Complaint
does not allege facts sufficient to determine that Defendant possessed knowledge of
Potter’s conduct prior to Plaintiff’s purchase of the Property to satisfy a Rule 12(b)(6)
motion. The Court need not accept “‘unsupported conclusions and unwarranted
inferences,’” Baraka, 481 F.3d at 195. Without more, the Complaint simply concludes
that Potter engaged in “harassing, hostile, and volatile conduct” with Defendant’s
employees and other neighbors; such bare statements are insufficient under Rule
12(b)(6). Iqbal, 556 U.S. at 679. Accordingly, the PREDFDA claim must be dismissed.
IV.

Conclusion

For the reasons stated above, Defendant’s Motion to Dismiss is granted on the
entirety of the Complaint.
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An appropriate order shall issue.

Dated: November 3, 2014

s/ Joseph H. Rodriguez
Hon. Joseph H. Rodriguez,
UNITED STATES DISTRICT JUDGE

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