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Duall Bldg. Restoration, Inc. v. 1143 East Jersey Ave.

Decided: January 27, 1995.

DUALL BUILDING RESTORATION, INC., PLAINTIFF-RESPONDENT-SECOND CROSS-APPELLANT,
v.
1143 EAST JERSEY AVENUE ASSOCIATES, INC., DEFENDANT-RESPONDENT-FIRST CROSS-APPELLANT, AND MONSEY PRODUCTS, INC., DEFENDANT-APPELLANT-CROSS-RESPONDENT.



On appeal from the Superior Court of New Jersey, Law Division, Camden County.

Before Judges Petrella, Havey and Brochin.

Brochin

The opinion of the court was delivered by BROCHIN, J.A.D.

Defendant 1143 East Jersey Avenue Associates, Inc. owned a ten-story building. The front of the building was faced with marble. The other three sides of the building were made of brick and, before the occurrence of the events which are the subject of this law suit, were covered with a reddish-brown asphalt coating, approximately one-half inch or more in thickness that was peeling badly.

Plaintiff Duall Building Restoration, Inc. was in the business of restoring, cleaning, pointing, caulking and waterproofing masonry. On August 10, 1988, Duall entered into a contract with 1143 East Jersey to do "grouting and caulking of limestone joints . . . painting of brickwork [and] roofing repairs to the designated balconies" on 1143 East Jersey's building. Duall agreed that if it took more than 40 days to substantially complete its work, it would pay 1143 East Jersey liquidated damages of $150 a day. The contract specified that Duall would use "Modac," a waterproofing paint produced by defendant Monsey Products, Inc., to cover the three brick sides of the building. The contract also stated, "All masonry painting shall carry a five year guarantee against peeling or flaking." The contract Price for the specified work was $110,000. Later, by a separate document, the parties agreed to certain items of "extra work" or "change orders" totalling an additional $17,465.

After Duall had finished painting the building, but with some other work still undone, it stopped work, claiming that 1143 East Jersey had failed to make a progress payment due to it under the contract. Duall commenced suit against 1143 East Jersey for $34,465. 1143 East Jersey denied liability.

At about the same time as Duall commenced its suit, the Modac paint which Duall had applied to three sides of the building began peeling disastrously. One of the principals of 1143 East Jersey described the peeling as follows:

The entire building is peeling. It's . . . going wild. I mean . . . the surface is a whole bunch of spaghetti. Maybe noodles, I should say. It's curlicues of surface coming off all over the place.

1143 East Jersey counterclaimed against Duall for the defective application of Modac to its building. Duall impleaded Monsey Products, Inc., the manufacturer of Modac, as a third-party defendant. Duall demanded common-law indemnification from Monsey for any liability incurred by Duall as the result of any defect of Modac. 1143 East Jersey also asserted a direct claim against Monsey, asserting that Modac was defective and that Monsey had therefore breached its express and implied warranties that Modac was merchantable and fit for its intended purpose. 1143 East Jersey also alleged that Monsey had negligently given erroneous advice to Duall about the application of Modac, had negligently failed to supervise Duall's application of Modac, and had negligently failed to warn 1143 East Jersey that the paint was being improperly applied.

The case was tried to a jury which returned its verdict by answering twelve special interrogatories. By its answers to these interrogatories the jury found that 1143 East Jersey had breached its contract by failing to pay Duall; that the breach was material and therefore relieved Duall from any further contractual obligation under the contract; and that when Duall stopped work on the contract, "what remained to be done to complete the contract [was] what 1143 contends, which included replacements as required in the repair of the balconies and any other work which [1143] claimed had to be done or redone." The jury also determined that Duall had substantially completed its work within 40 working days and therefore was not liable to 1143 East Jersey for liquidated delay damages. The jury awarded Duall $17,465 against 1143 East Jersey for completed work which had not been paid for.

On 1143 East Jersey's counterclaim against Duall, the jury found that Duall had "failed to provide a painting job in conformity with the written guarantee provision contained in the contract." For breach of that guarantee, the jury determined that Duall was liable to pay 1143 East Jersey $185,000.

However, with respect to Duall's claim against Monsey for indemnification, the jury was asked only whether there was an "oral agreement between Monsey and Duall that Monsey would stand behind Duall with a five-year guarantee for labor and materials on all jobs on which Modac paint was used and [that] Monsey was given an opportunity and did approve the surface preparation in advance of the work." The jury's answer was, "no."

On 1143 East Jersey's claim against Monsey, the jury found that Monsey was negligent in "advising that Modac be applied on this surface from which all of the existing coating had not been removed." But the jury also found that that negligence was not a proximate cause of the paint peeling off the building. The jury also answered "no" to the compound question, "Do you find that a breach of express warranty existed as to the effectiveness of Modac as expressly set forth in Monsey's brochure and that 1143 [East Jersey] gave notice thereof to Monsey within a reasonable period of time after discovering same." However, the jury answered "yes" to the question, "Was there a breach of the implied warranty of fitness and use [sic] of this paint as being one that could be used on any existing coating without exception or reservation of any sort?" The jury awarded 1143 East Jersey $185,000 against Monsey "in order for it to obtain a paint job on this building free from peeling for a five year period."

Judgment was entered on the record in accordance with the jury verdict in favor of Duall and against 1143 East Jersey for $17,465; and in favor of 1143 East Jersey and against both Duall and Monsey for $185,000. Following the argument of post-trial motions, the motion Judge, who had also presided over the trial, reserved decision on Duall's claim for indemnification from Monsey. The formal judgment entered thereafter includes "judgment . . . in favor of . . . Duall and against . . . Monsey on [Duall's] counterclaim for common law indemnification." If the Judge who entered the final judgment provided a statement of his reasons for ruling that Duall was entitled to indemnification, it was not included in the record that has been furnished to us.

Monsey has appealed and Duall and 1183 East Jersey have cross-appealed. We first consider Monsey's appeal.

-1-

Since the jury found that Monsey's negligence was not a proximate cause of the peeling paint, the $185,000 judgment in favor of 1143 East Jersey and against Monsey can only be based on its affirmative answer to interrogatory 10. That interrogatory asked whether "there was a breach of the implied warranty of fitness and use [sic] of this paint [Modac] as being one that could be used on any existing coating without exception or reservation of any sort." Monsey interprets the jury's answer as a finding that it breached its warranty of merchantability with respect to Modac, i.e., the implied warranty codified by N.J.S.A. 12A:2-314(1) and -314(2)(c). By virtue of these sections, every contract for the sale of goods entered into by "a merchant with respect to goods of that kind" includes an implied warranty that the goods "are fit for the ordinary purposes for which such goods are used."*fn1 See Herbstman v. Eastman Kodak Co., 68 N.J. 1, 8, 342 A.2d 181 (1975). On the assumption that the jury's answer to interrogatory 10 was a finding that it had breached its implied warranty of merchantability, Monsey argues that 1143 East Jersey's judgment against it must be reversed because there is no evidence in the record that Modac is not fit for the ordinary purposes for which it is used.

We agree that the record would not support a finding that Modac is not fit for waterproofing masonry walls, the ordinary purpose for which it is used.*fn2 However, 1143 East Jersey responds that the jury's answer to interrogatory 10 was a determination that Monsey had breached its implied warranty that Modac was fit for the specific purpose of waterproofing brick walls from which not all of the underlying asphalt coating had been removed. The implied warranty on which 1143 East Jersey relies is codified in N.J.S.A. 12A:2-315:

Where the seller at the time of contracting has reason to know any particular purpose for which the goods are required and that the buyer is relying on the seller's skill or judgment to select or furnish suitable goods, there is unless excluded or modified under the next section an implied warranty that the goods shall be fit for such purpose.

The evidence is more than ample to sustain a finding that Monsey breached an implied warranty of fitness for a particular purpose. The jury could readily have found that before Duall signed the contract specifying Modac as the paint to be applied to the asphalt-covered brick walls, it solicited and received Monsey's assurances, conveyed by a sales manager for Monsey's exclusive distributor in the area, that even if Modac was applied on top of asphalt, it would adhere satisfactorily to the underlying bricks, provided only that the loose asphalt had first been removed. Expert testimony was presented that these assurances were mistaken and that the Modac peeled because it was not compatible with the asphalt which had been left adhering to the walls.

Monsey argues in response that even if 1143 East Jersey's claim for breach of an implied warranty of fitness for a particular purpose pursuant to N.J.S.A. 12A:2-315 were meritorious in other respects, lack of privity would bar recovery. The Supreme Court spoke to that issue in Spring Motors Distributors, ...


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