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W. A WRIGHT, INC. v. KDI SYLVAN POOLS

August 9, 1983

W. A. WRIGHT, INC., a Corporation of the State of New Jersey, and A.C. EXCAVATING, INC., formerly known as WRIGHTWAY EXCAVATION CO., INC., a Corporation of the State of New Jersey, Plaintiffs,
v.
KDI SYLVAN POOLS, INC., a Delaware corporation, Defendant



The opinion of the court was delivered by: COHEN

 In this breach of contract action, the jury returned a verdict in favor of plaintiffs, W.A. Wright, Inc. (Wright) and A.C. Excavating, Inc. (A.C. Excavating), and against defendant KDI Sylvan Pools, Inc. (KDI). In response to Special Interrogatories prepared by the Court with the consent of counsel, the jury determined that KDI wrongfully terminated its two separate contracts with Wright and A.C. Excavating without good cause. Wright was awarded compensatory damages in the amount of $86,768.00, and punitive damages in the amount of $7,500.00; A.C. Excavating was awarded compensatory damages in the amount of $28,396.00, and punitive damages in the amount of $7,500.00.

 Upon return of the jury's verdict, but prior to this Court's entry of judgment, oral application was made on behalf of both plaintiffs for an assessment of prejudgment interest against defendant on the awards of compensatory damages. Plaintiffs seek interest from November 30, 1980, the end of the 1980 season, to the present, on the ground that they have been wrongfully deprived of monies due them during that period. This oral motion, taken under advisement by the Court pursuant to Fed. R. Civ. P. 7(b)(1), is now, inter alia, the subject of this Opinion.

 Also presently before the Court is a motion by defendant for a new trial *fn1" pursuant to Fed. R. Civ. P. 59. Specifically, KDI alleges that (1) consideration by the jury of the issue of punitive damages resulted in a miscarriage of justice, because it was not supported by the evidence and was contrary to the laws of the State of New Jersey; (2) the award of damages constituted error because the verdict was against the weight of the evidence and was the result of an improper charge to the jury on the issue of punitive damages; and (3) plaintiffs' amendment to their complaint, filed upon leave of this Court after the close of their case and during the presentation of defendant's case, unfairly surprised KDI and prejudiced its ability to defend the action, because the sole witness who could have rebutted the allegations contained therein was unavailable.

 For the reasons set forth below, we shall grant plaintiffs' motion for prejudgment interest, and deny defendant's motion for a new trial.

 At all times pertinent hereto, plaintiffs were engaged primarily in the construction of swimming pools. The principals in both companies were William A. Wright and his wife, Patricia. On or about February 14, 1980, each plaintiff entered into a separate agreement with defendant KDI which together form the basis of their complaint.

 In the contractor agreement between plaintiff Wright and defendant KDI, the latter agreed to recommend Wright for all decks or terrace work on pools sold out of defendant's Cherry Hill, New Jersey office during the 1980 season. In the subcontractor agreement, simultaneously entered into between plaintiff A.C. Excavating and KDI, the former was to perform all excavation work on Sylvan pools sold out of the Cherry Hill office during the same period. The parties estimated that there would be "between 85 and 100 digs." Plaintiffs' Exhibit 1. KDI terminated both contracts on May 16, 1980, prior to the expiration of the 1980 season. Plaintiffs thereafter filed the instant action, *fn2" seeking both compensatory and punitive damages.

 The amended third count alleged that defendant intentionally sought to injure plaintiffs in the conduct of their business, by entering into the contracts at issue with full knowledge that those agreements violated a consent decree of the Court of Common Pleas of Montgomery County, Pennsylvania. The decree was issued pursuant to an action brought by Anthony Industries, Inc. (Anthony), a competitor of KDI, against KDI and several of its employees, seeking to restrain them from engaging in unfair business practices. See Anthony Industries, Inc. v. KDI Sylvan Pools, Inc., et al., No. 79-23298 (Pa. C.P. Montgomery County, filed January 21, 1980); see also Plaintiffs' Exhibit 45. The decree provided that for a specified period of time, neither Anthony nor KDI would solicit for employment anyone currently employed by the other. It also prohibited either party from unlawfully interfering with the other's business relationships with its contractors or subcontractors, during the same period. See Plaintiffs' Exhibit 45. In the instant case, plaintiffs alleged that KDI knew it was prohibited from entering into the contracts at issue, because plaintiffs were, at that time, under contract to do similar work for Anthony.

 Defendant opposed plaintiffs' Rule 15 motion on two grounds. First, KDI claimed, the motion was untimely and prejudicial because the allegations contained in the proposed third count were not raised in the final pretrial order, and leave to amend was being sought long after plaintiffs' case had been completed. Therefore, defendant maintained, it was being unfairly surprised by new allegations to which it was unable to prepare an adequate defense. Second, defendant argued, plaintiffs' claims for punitive damages should be stricken because, under New Jersey law, punitive damages are not recoverable in a breach of contract action.

 Oral argument by counsel for both parties was heard, and plaintiffs were granted leave to amend their complaint. An opinion was placed on the record, in which we considered and rejected both of defendant's arguments in opposition to plaintiffs' motion.

 As to defendant's claim of untimeliness and unfair surprise, we ruled that Fed. R. Civ. P.15(a) provides this Court with broad discretionary authority to permit a party to amend its pleading, even after the close of its case at trial. We further held that the defendant here was in no way prejudiced by the amendment at issue, because it was fully aware of the circumstances which formed the basis thereof.

 As to the punitive damages issue, we determined that damages are generally not recoverable in this state in contract actions unless the facts of the case fit within the scope of a recognized exception to this general rule. Sandler v. Lawn-a-Mat Chemical & Equipment Corp., 141 N.J. Super. 437, 451, 358 A.2d 805, 813 (App. Div.), certif. denied, 71 N.J. 503, 366 A.2d 658 (1976); see also Mayer v. Development Corp. of America, 541 F. Supp. 828, 861-62 (D. N.J. 1981). However, we further found that New Jersey courts also permit an award of punitive damages where there exists such an aggravated set of circumstances that punitive damages are appropriate notwithstanding the contract form of the action, even though it may be beyond the scope of the recognized exceptions. Id. Finally, we determined that under the facts of this case, ...


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