Petrillo v. Bachenberg

655 A.2d 1354 (1995)

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Nature of the Case

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Facts

Rohrer Construction (Rohrer) owned a tract of undeveloped land. Rohrer hired Heritage Consulting Engineers (Heritage) to perform percolation tests. Union Township requires two successful percolation tests. Heritage provided Rohrer and D, Rohrer's attorney, with copies of two reports: the first report revealed that of twenty-two tests, only one had been successful; the second report revealed that out of eight tests, only one had been successful. Rohrer listed the property with a real estate broker, Bachenberg & Bachenberg, Inc. Bachenberg, Jr. (Bachenberg) asked D for information concerning that listing. D sent Bachenberg a two-page document consisting of one page from each of the two Heritage reports. Read together, these two pages described a single series of seven tests, two of which were successful. The 'composite report,' did not explain that the property had only passed two of thirty percolation tests. This composite report became part of Bachenberg's sales packet. Rohrer was in financial distress and Bachenberg and a partner, Matthews, were able to purchase the property at a sheriff's sale. P ought to purchase the property. D was hired to represent Bachenberg in that sale. D did not inform P or her attorney of the complete Heritage reports. P was given time to conduct independent percolation tests as well as the ability to rescind the contract if those tests were unsatisfactory. Based on D's report, P's contractor recommended soil tests and preliminary steps to develop the property. The six soil tests failed, and the contractor ceased work on the site plan. P notified Bachenberg that the contract was void. Bachenberg contracted with Heritage to design a satisfactory septic system. It was approved by the Hunterdon County Board of Health. P refused to accept the design. P sued Bachenberg, Matthews, and D for return of her $16,000 down payment and the costs of her engineering fees. P alleged, in part, negligent misrepresentation by D in that his failure to provide the complete Heritage reports violated a duty he owed to her and that the breach of that duty caused her to incur engineering expenses she would not have incurred had she been apprised of all the facts. The trial judge dismissed the claim against D. The Appellate Division reversed, finding that an attorney for a seller has a duty not to provide misleading information to potential buyers who the attorney knows, or should know, will rely on that information. D appealed.