## Facts

- Two sisters inherited a 40.55-acre tract in Warren Township, New Jersey, and their father’s will required sale of the property with proceeds split between them.
- The sisters had a longstanding attorney-client relationship with William B. Butler, who had represented them and the estate in multiple matters.
- The sisters received unsolicited offers from various potential buyers at prices generally below a later offer conveyed by Butler.
- Butler presented an offer from Paul M. DiFrancesco, Jr. to buy the tract at $110,000 per lot with a deposit and a right to assign, and he undertook to represent both the buyer and the sellers.
- Butler obtained signed conflict-of-interest letters from both sides; the sellers did not consult independent counsel.
- The contract made the purchase contingent on obtaining subdivision approval within a set period, with possible extension if the buyer was proceeding expeditiously.
- While Butler represented both sides, DiFrancesco entered a resale contract with another company at a substantially higher price of $200,000 per lot.
- Butler did not disclose the resale contract to the sellers while they consulted him about whether to grant extensions as approval deadlines approached.
- The sellers granted an extension, later suspected a resale arrangement, and Butler declined to disclose details and told them to contact the buyer directly.
- After learning of the resale contract, the sellers sued for rescission and damages based on breach of fiduciary duty and legal and equitable fraud; the buyer counterclaimed for tortious interference and obtained a large judgment and conveyance/easement order in the trial court.

## Issues

1. Whether an attorney’s dual representation of buyer and seller in a complex real estate transaction created an impermissible conflict of interest affecting the attorney’s duties to the sellers.
2. Whether the attorney’s nondisclosure of a material resale contract constituted legal and equitable fraud, and whether that fraud could be imputed to the buyer under agency principles.
3. Whether the sellers’ execution of conflict-of-interest letters barred or limited their fraud and fiduciary-duty claims.
4. Whether the buyer established a tortious-interference claim against the sellers and was entitled to damages and equitable relief compelling conveyance and an easement.
5. What remedies were available to the sellers, including compensatory and punitive damages.

## Decision

- The Appellate Division reversed the trial court’s dismissal of the sellers’ claims and the judgment on the buyer’s counterclaim.
- The court held Butler’s dual representation in the transaction created a disqualifying conflict, and his nondisclosure of the resale contract and related material facts constituted legal and equitable fraud.
- The court ruled the conflict letters did not constitute fully informed consent that excused nondisclosure of material developments or eliminated fiduciary obligations.
- The court imputed the attorney’s fraud to the buyer as principal because the acts occurred within the scope of the attorney’s agency in furtherance of the transaction.
- The court ordered entry of judgment for sellers for compensatory damages and remanded for a hearing on punitive damages.
- The court rejected the buyer’s tortious-interference counterclaim and reversed the order requiring conveyance of the property and an emergency access easement.

## Legal Principles

- A lawyer representing both buyer and seller in a complex real estate transaction must satisfy duties of undivided loyalty and full disclosure to each client; “neutrality” is inconsistent with fiduciary obligations when interests materially diverge.
- Silence can constitute actionable misrepresentation when a fiduciary has a duty to disclose material facts; nondisclosure of a known, significant resale agreement may support legal and equitable fraud.
- Conflict waivers require informed consent; general conflict letters do not authorize withholding later-arising, transaction-specific material information.
- Under agency law, a principal may be vicariously liable for an agent’s fraud committed within the scope of the agency and in the course of the transaction, including fraud committed by the principal’s attorney.
- A tortious-interference claim requires intentional, wrongful interference without justification; a counterclaim fails absent proof of the required wrongful intent and conduct.

## Conclusion

The court held that an attorney’s conflicted dual representation and nondisclosure of a materially higher resale contract constituted fraud that supported damages for the sellers and could be imputed to the buyer, while the buyer’s tortious-interference counterclaim and related conveyance/easement relief were unwarranted.


Baldasarre v. Butler, 604 A.2d 112 (N.J. Super. Ct. App. Div. 1992)