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Quality Guaranteed Roofing, Inc. v. Hoffmann-La Roche

June 25, 1997

QUALITY GUARANTEED ROOFING, INC. PLAINTIFF-RESPONDENT,
v.
HOFFMANN-LA ROCHE, INC., DEFENDANT-APPELLANT.



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

Approved for Publication June 25, 1997.

Before Judges Michels, Muir, Jr., and Kleiner. The opinion of the court was delivered by Michels, P.j.a.d.

The opinion of the court was delivered by: Michels

The opinion of the court was delivered by

MICHELS, P.J.A.D.

Defendant Hoffmann-La Roche, Inc. (Hoffmann-La Roche) appeals from a judgment of the Law Division that awarded plaintiff Quality Guaranteed Roofing, Inc. (Quality Roofing) $162,366.48 due under a contract for goods and services rendered in connection with the installation of a watertight roof and that dismissed Hoffmann-La Roche's counterclaim for damages for breach of contract and warranty, negligence, and misrepresentation.

Briefly, Hoffmann-La Roche entered into a number of separate contracts with Quality Roofing for the installation of foam roofs upon a number of buildings located at Hoffmann-La Roche's Nutley, New Jersey facility. After the installation of several roofs, the parties contracted for additional foam roofing work to be performed on Building 71. Upon or near completion of the installation of Building 71's roof, Hoffmann-La Roche suspended all remaining work and/or payments allegedly because it had discovered quality deficiencies with Quality Roofing's workmanship. Because of Quality Roofing's alleged poor performance, Hoffmann-La Roche refused to let Quality Roofing bid on the repair work and did not demand that Quality Roofing perform any repairs. Thereafter, Quality Roofing instituted this action against Hoffmann-La Roche to recover the balance due under the contract pertaining to Building 71. Hoffmann-La Roche counterclaimed.

At the Conclusion of a bench trial, the trial court awarded Quality Roofing damages of $162,366.48 and dismissed Hoffmann-La Roche's counterclaim. The trial court held that the Uniform Commercial Code (UCC) governed the contracts involved in this matter. In reaching this Conclusion, the trial court explained "that the dominating factor in the transaction between the plaintiff and the defendant was the sale of materials which were identifiable and moveable at the time of contracting." The trial court also found that Hoffmann-La Roche had accepted the roofs of the buildings which had been completed by Quality Roofing and had paid for these roofs in full. The trial court held:

Now the absolute undisputed testimony by all of the witnesses who testified in this case, both for the plaintiff and the defendant, was to the effect that when the plaintiff was barred from the premises, no notice of any kind was given to the plaintiff of the alleged defects, nor was the plaintiff given any opportunity whatsoever to cure any such defects.

Therefore, according to the UCC and the statute which I've just read [, N.J.S.A. 12A:2-607], the defendant is barred from any remedy against the plaintiff for all of the roofs that were accepted.

Hoffmann-La Roche appealed.

Hoffmann-La Roche seeks a reversal of the judgment and a remand for a new trial, contending that the contracts were service contracts with any sale of goods being incidental thereto and that, therefore, its contractual relationship with Quality Roofing was not governed by the UCC. We agree and reverse.

The Uniform Commercial Code-Sales (UCC-Sales), N.J.S.A. 12A:2-101 to -725, applies to "transactions in goods." N.J.S.A. 12A:2-102. The UCC-Sales does not, however, apply to service contracts. Neither party disputes that the contracts in question were "transactions" and concerned "goods." Additionally, neither party disputes that the contracts in question also concerned service or labor. Thus, the contracts are mixed goods and services contracts. See Newmark v. Gimbel's Inc., 54 N.J. 585, 593 (1969). The question, of course, is whether the UCC-Sales applies to these mixed contracts.

Whether the UCC-Sales governs a mixed contract "depends upon how the contract may be accurately characterized - as one for the sale of goods . . . plus incidental services, or as one for . . . services with the [service provider] furnishing materials as well as labor." Meyer v. Henderson Constr. Co., 147 N.J. Super. 77, 79 (Law Div. 1977). See also Custom Communications Eng'g, Inc. v. E.F. Johnson Co., 269 N.J. Super. 531, 537 (App. Div. 1993). "The legal analysis most frequently employed when courts are faced with such mixed contracts is that Article 2 of the UCC is applicable 'if the sales aspect predominates and is inapplicable if the service aspect predominates.'" Custom Communications Eng'g, Inc. v. E.F. Johnson Co., (supra) , 269 ...


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