NOVELLI v. BRESLIN, 1:23-cv-02513

Background

Defendants William and Judith Breslin purchased a Margate, NJ house in 2019, spent ≈ $400,000 renovating without permits, and were aware those renovations likely triggered Margate’s “Fifty-Percent Rule.”
The Fifty-Percent Rule can require a substantially improved building to meet new-construction code and exposes owners to fines or potential demolition if unpermitted work equals/exceeds 50% of assessed value.
Defendants listed the property for sale, received buyer inspection reports showing extensive defects (stucco/moisture, structural, termites, missing gutters), and declined invasive stucco testing; an initial buyer terminated the contract.
When relisting, Defendants completed a seller’s disclosure stating they were unaware of any violations/defects; Plaintiffs Novelli relied on that disclosure and bought the house for $1,500,000 “as is.”
Plaintiffs later discovered the latent defects and the property’s unpermitted renovations that violated the Fifty-Percent Rule and sued for fraudulent inducement, rescission, breach, and related relief.
Procedurally, Plaintiffs moved for summary judgment; the Court granted summary judgment on liability for fraudulent inducement and rescission, denied Plaintiffs’ motion in limine as moot, denied Defendants’ cross-motion for summary judgment as procedurally defective (and on merits), and resolved several evidentiary motions.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Fraudulent inducement / rescission	Seller knowingly concealed material latent defects and Fifty-Percent Rule violation; Plaintiffs relied on false seller’s disclosure	Seller disputes constructive/actual knowledge or materiality of nondisclosures	Court: Granted for Plaintiffs — undisputed evidence shows Defendants knew of violation and nondisclosure; rescission appropriate (contract void ab initio)
Remedy / restitution	Plaintiffs seek rescission and return of purchase price (no unjust enrichment claim)	Defendants implied Plaintiffs seek additional restitution for improvements	Court: Ordered return of $1,500,000 purchase price; declined additional restitution for Plaintiffs’ improvements
Admissibility of Plaintiffs’ experts (Blue, Ronan)	Experts inspected property and their reports detail observed defects; reliance on third‑party inspection reports is permissible	Defendants challenge net opinion, hearsay reliance, and calculation of 50% rule	Court: Denied motions to exclude Blue and Ronan; experts qualified, relied on permissible data under Fed. R. Evid. 702/703
Admissibility of buyers’ inspection reports & FEMA 50% references	Reports show Defendants had notice of claimed defects; Fifty‑Percent Rule (local code) is relevant	Defendants argue hearsay / FEMA rule irrelevant and appraisal required to prove 50% violation	Court: Denied exclusion of inspection reports for notice; rejected exclusion of Fifty‑Percent Rule references (assessed value judicially noticed; appraisal not required)
Defendants’ cross-motion & procedural compliance	Defendants sought summary relief challenging Plaintiffs’ motion	Plaintiffs point to local-rule violations: late filing, no 56.1 statement, overlength brief, missing proposed order	Court: Denied Defendants’ cross-motion as untimely/procedurally defective (and rejected merits arguments)

Key Cases Cited

Santini v. Fuentes, 795 F.3d 410 (3d Cir. 2015) (summary judgment materiality/genuine dispute standard)
Anderson v. Liberty Lobby, 477 U.S. 242 (U.S. 1986) (standard for genuine issues at summary judgment)
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (U.S. 1986) (nonmoving party must show specific facts creating genuine issue)
In re Paoli R.R. Yard PCB Litig., 35 F.3d 717 (3d Cir. 1994) (Daubert/Expert admissibility and exclusion as extreme sanction)
UGI Sunbury LLC v. A Permanent Easement for 1.7575 Acres, 949 F.3d 825 (3d Cir. 2020) (expert testimony must "fit" the case and assist the factfinder)
Marcangelo v. Boardwalk Regency Corp., 847 F. Supp. 1222 (D.N.J. 1994) (rescission and restitution principles for contracts tainted by fraud)