Failure to Reveal Material Facts is Actionable Under the Consumer Fraud Act

Omissions of material fact are actionable under the New Jersey Consumer Fraud Act. See Cox v. Sears, 138 N.J. 2, 18 (1994). The New Jersey Supreme Court has held that when an alleged consumer fraud consists of an omission of material fact, the plaintiff must show that the defendant acted with knowledge, and intent is an essential element. The seminal New Jersey decision pertaining to nondisclosure is Weintraub v. Krobatsch, 64 N.J. 445 (1974). The Supreme Court held that deliberate concealment of a latent defective condition material to the transaction constitutes sufficient grounds to justify rescission of a contract to purchase realty. See Correa v. Maggiore 196 N.J. Super. 273 (1984) Since rendition of that opinion, this principle has been expanded to permit recovery of monetary damages and has been applied in a broad variety of circumstances. See, e.g., Jewish Center of Sussex Cty. v. Whale, 86 N.J. 619 (1981); Carlsen v. Masters, Mates & Pilots Pension Plan, 80 N.J. 334 (1979); Environmental Protection Dep’t. v. Ventron Corp., 182 N.J. Super. 210 (App. Div. 1981), modified 94 N.J. 473, 468 A.2d 150 (1983); Neveroski v. Blair, 141 N.J. Super. 365, 358 A. 2d 473 (App. Div. 1976); Berman v. Gurwicz, 178 N.J. Super. 611 (Ch. Div. 1981); Tobin v. Paparone Const. Co., 137 N.J. Super. 518 (L. Div 1975)
In Strawn v. Canuso, 140 N.J. 43, 65 (1995), the New Jersey Supreme Court held that a residential builder, developer and broker were liable to homebuyer’s for non-disclosure of off-site physical conditions known to the defendants, which were unknown to the buyer. The silence of the defendants created a mistaken impression by the purchasers. In Strawn, the defendants used sales promotion brochures, newspaper advertisements and fact sheets to sell the homes. The materials portrayed the homes in a peaceful, bucolic setting with an abundance of fresh air and clean lakes. Although the promotional materials mentioned how far the properties were from local malls, country clubs and train stations, neither the promotional material nor any of the sales’ representatives referred to a landfill which was located near the development. Id. at 61. The New Jersey Supreme Court upheld the Appellate Division’s finding that the defendants’ conduct violated the New Jersey Consumer Fraud Act.
In Tobin v. Papparone Construction Co., 137 N.J. Super 517 (Law Div. 1995), the Appellate Division held that silence as to the character of the surrounding neighborhood operated to induce the purchasers to buy and the silence as to a material fact was fraudulent. In Berman v. Gerwitz, 189 N.J. Super 89 (Ch. Div. 1981), the Court held that the sellers committed an act of fraud by not disclosing that the complex recreational facilities were separate from their purchase of their condominium. The suppression and withholding of truth is equivalent to a falsehood. The defendants have a duty to recognize material facts and make proper disclosures. Strawn, supra, at 62. (Emphasis added).