Construction Litigation Law Blog

On March 11, 2008, in the matter of Camelot Condominium Association, Inc v. Dryvit Systems, Inc., pending before the Superior Court of New jersey, Docket No. BER-L-012457-04, a jury entered a verdict in favor of the Plaintiff and against Dryvit Systems, Inc ("Dryvit") for violations of the New Jersey Consumer Fraud Act. Dryvit Systems is the largest manufacturer of Exterior Insulation and Finish Systems for residential and commercial construction in the United States.

With settlements the Plaintiff obtained before and during trial from other defendants, the total irecovery for the Plaintiff following the jury verdict was $5,046,000.

The case involved a joint repair project done in 1998 on what was then a 16 year old high rise building clad with roughly 300 panels coated with Dryvit's EIFS. The jury returned a verdict that charged Dryvit with knowledge that the Dryvit EIFS finish coating on the buildng's exterior panels softened when exposed to substantial water penetration. That softening caused cohesive failures at critical caulk joints, which resulted in openings for water to penetrate inside the building and cause catastrophic damage to the framing and sheathing on the building.

The jury found that Dryvit made knowing omissions and affirmative misrepresentations of material fact in connection with the repair of the Exterior Insulation and Finish System (EIFS) on the building located in Hackensack, New Jersey. This is the first time in New Jersey that an EIFS manufacturer has been subjected to a jury verdict for violations of the New Jersey Consumer Fraud Act. There will be no appeal.

John Randy Sawyer and Donald B. Brenner Shareholders of Stark & Stark’s Construction Litigation group represented the Plaintiff in the case.

After a bench trial, a judge in New Haven, Connecticut ruled that the seller of a house that had obvious, visible mold damage - black mold stains in the utility room and water stained and rotted wood inside - had intentionally concealed the existence of this problem, and was liable to the buyers for the cost to prevent further water intrusion, the cost to repair the damage caused by past water intrusion, and $25,000 for emotional distress. The case is Camerone v. Phillips, 2007 WL 241258, (Conn. Super. Jan. 17, 2007), The award of emotional distress damages was later vacated. Camarone v. Philips, WL 2081330 (Conn. Super. April 17, 2007).

The plaintiffs purchased a home in North Haven, Connecticut from the sellers in 2003. Upon moving in, they immediately noticed severe water seepage in the lower level of the house, and brought suit against the sellers for failing to disclose the problems. Sellers argued that the buyers had hired a home inspector, and relied upon his inspection, and proceeded to closing, despite the fact that the inspection noted several potential trouble spots. The court specifically found that the seller was not truthful, and based its findings largely on discrepancies between the MLS description and the seller’s testimony. For example, the MLS listing described the home as “mint condition” and “like new”. New walls, new carpeting and new paint were highlighted. At trial, however, the seller testified that the items were not all new, in fact some of the items had been installed in 1999. The seller testified that he never saw anything that indicated that the home was subject to water seepage. The court stated in its opinion that it did not believe him.

The court specifically found that the seller could not have been unaware of the serious water problems and resulting mold throughout the house. Carpet which had been installed just before the sale was soaking wet when lifted. There was black mold in the utility closet, obscured by boxes and storage items. Wood support beams were visibly stained and rotted through, in areas where sheet rock was missing from the walls, so the seller could not have missed it. The evidence appears to have been overwhelming that the house was in terrible condition.. The court did not discuss the contents of the home inspector’s report. It appears that the defendant’s deception and untruthfulness was hugely significant and overcame any argument that the home inspector should have noted these deficiencies. The judge specifically found that the seller/defendant’s conduct was “outrageous” and “intentional” and that his actions exceeded “all bounds usually tolerated by decent society.”

The buyer was awarded compensatory damages of $96,282 to compensate for the cost of waterproofing the house, repairing the damage and remediating the mold problem. The court initially awarded $25,000 in damages for emotional distress, but vacated that order four months later when it was pointed out that the Plaintiff had not introduced any evidence of her emotional distress. The court found that it was “unduly swayed” by the photographic evidence, and by the Plaintiffs emotional state when she testified.

Your home inspector probably advised you that it's good sense to prevent possible water damage by turning off the water to your second home when you're not in residence. But if you neglect to do so and your defective toilet floods the condominium unit downstairs, New Jersey courts may not hold you liable for the damage to your neighbor's home. In an unpublished decision, the Appellate Division declined to find that residents of multiple dwelling units had a legal duty to turn off the water when they were going to be away for more than a day. Coyne v. Price, A-3291-05T5 (App. Div. September 14, 2006).

Mr. and Mrs. Coyne lived downstairs from Mr. and Mrs. Price in a condominium "down the shore." While the Prices were at their primary home, their condo's toilet failed, flooding the Coyne's home. Although the Prices had typically turned off the water to their washing machine, they had never considered the possibility that other leakage might occur and had never turned off the water to the unit as a whole, although a turn-off valve was located in the ceiling of their unit.

Although the Coyne's insurance paid for most of the damage, they brought suit in small claims court, seeking to recover the $1000 deductible that they were forced to pay. After the trial judge ruled in the Coyne's favor, finding that the Prices should have foreseen the possibility of leakage, the Prices appealed the judgment.

Defining negligence as "conduct that creates an undue risk of harm to others," the Appellate Division found that foreseeability alone did not give rise to a legal duty but must be evaluated along with reasonableness, public policy, fairness and common sense. Because the Prices had no reason to believe that their toilet would leak in their absence, held the court, the Prices' failure to turn off the water to their unit was reasonable. Accordingly, the court declined to create a new legal duty.