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Di Maria Construction, Inc. v. Interarch

SUPREME COURT OF NEW JERSEY


May 21, 2002

DI MARIA CONSTRUCTION, INC., PLAINTIFF-RESPONDENT,
v.
INTERARCH, SHIRLEY HILL AND RAYMOND A. KLUMB, DEFENDANTS-APPELLANTS.

On certification to the Superior Court, Appellate Division.

SYLLABUS BY THE COURT

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized). Di Maria Construction v. Interarch (A-21-01)

(NOTE: The Court wrote no full opinion in this case. Rather, the Court's affirmance of the judgment of the Appellate Division is based substantially on the reasons expressed in the per curiam opinion below.)

The primary issue in this appeal is whether plaintiff was barred from recovering lost profits in its Law Division action because arbitrators had arguably included such relief in a prior award.

The dispute in this matter began as a breach of contract claim by plaintiff, Di Maria Construction, Inc., against Commerce Bank after the latter terminated Di Maria's contract, claiming, in part, that Di Maria had failed to substantially complete phase one of the contractual project by the required date. Di Maria sought arbitration, primarily arguing that it completed the work within the required time, inclusive of the extensions resulting from fifty-six change orders. The arbitrators awarded Di Maria $205,270 for specified phases of the construction project and $49,650 for "damages suffered by [Di Maria] related to all other contractual topics." That award was confirmed in the Superior Court and on appeal.

Following arbitration, Di Maria sued defendants, Interarch, Shirley Hill, and Raymond A. Klumb (collectively "Interarch"), architects and agents for Commerce Bank, seeking compensation for tortious interference with a business relationship and interference with its prospective economic advantage. More specifically, Di Maria claimed that Interarch interfered by publishing a false certification stating that Di Maria had failed to complete phase one by the completion date. Interarch argued that Di Maria was barred from recovering lost profits because the arbitrators had included such relief in their prior award; that Interarch, as agent for Commerce bank, was a party to the contractual relationship and therefore could not be liable for tortious interference with that relationship; and, that there was insufficient evidence for the jury to conclude that Interarch acted with malice. The jury found in Di Maria's favor, awarding both compensatory and punitive damages. Interarch appealed

The Appellate Division held that (1) Interarch's actions fell outside of its scope of employment and therefore outside of its party-relationship with Commerce Bank; (2) Di Maria's arbitration award did not include damages for future lost profits and Di Maria was therefore free to pursue that element of damages against Interarch; and (3) the jury reasonably concluded that Interarch acted with malice, intentionally and without justification, when it published the false certification. For these and other reasons, the Appellate Division affirmed the judgment below. HELD: The judgment of the Appellate Division is AFFIRMED substantially for the reasons expressed in that court's opinion. There was no overlap between the arbitration award and the judgment, and Di Maria is entitled to both.

1. The Court urges arbitrators to describe with greater specificity the claims that they intend to cover or include in their awards, as this would reduce the likelihood of unnecessary litigation. (P. 3)

CHIEF JUSTICE PORITZ and JUSTICES COLEMAN, LONG, VERNIERO, LaVECCHIA, and ZAZZALI join in this opinion. JUSTICE STEIN did not participate.

The opinion of the court was delivered by: Per Curiam.

Argued February 13, 2002

This case arises out of a construction contract between Commerce Bank, N.A. (Commerce) and Di Maria Construction, Inc. (DiMaria). DiMaria claimed that Commerce had breached the contract. A panel of arbitrators from the American Arbitration Association (AAA) found in DiMaria's favor. Accordingly, the arbitrators ordered Commerce to pay DiMaria an amount relating to specified phases of the construction project, and to pay a separate amount more generally reflecting "damages suffered by [DiMaria] related to all other contractual topics." That award was confirmed in the Law Division and affirmed on appeal. Commerce Bank v. DiMaria Constr., Inc., 300 N.J. Super. 9, 13, 21 (App. Div.), certif. denied, 151 N.J. 73 (1997), cert. denied, 522 U.S. 1116, 118 S. Ct. 1053, 140 L. Ed. 2d 116 (1998).

Following the arbitrators' award, DiMaria filed this action against Interarch, Shirley Hill, and Raymond A. Klumb (defendants) in the Law Division, alleging tortious interference with the prior construction contract and interference with its prospective economic advantage. At the time of the contract, defendants acted as agents of Commerce. The jury found in DiMaria's favor, awarding both compensatory and punitive damages.

We granted defendants' petition for certification, 170 N.J. 86 (2001), to review, among other things, their contention that DiMaria was barred from recovering lost profits in its Law Division action because the arbitrators had included such relief in their prior award. The Appellate Division rejected that contention, concluding that "there was no overlap between the arbitration award and the judgment, and DiMaria is entitled to both." Di Maria Constr., Inc. v. Interarch, ___ N.J. Super. ___, ___ (2001). The panel resolved all other issues raised by defendants.

We affirm the judgment of the Appellate Division substantially for the reasons expressed in that court's thorough and persuasive opinion. We add only the following.

If DiMaria's prior arbitration award had described more fully the "other contractual topics" on which it founded relief, the present dispute might have been avoided. We thus urge arbitrators to describe with greater specificity the claims that they intend to cover or include in their awards. Such specificity would reduce the likelihood of unnecessary litigation and, in our view, would not trespass on the internal rules of the AAA. See, e.g., American Arbitration Association, Construction Industry Dispute Resolution Procedures, R-45 (revised and in effect on July 1, 2001), available at http://www.adr.org/ (last visited Apr. 10, 2002) ("The arbitrator shall provide a concise, written breakdown of the award.")

The judgment of the Appellate Division is affirmed.

CHIEF JUSTICE PORITZ and JUSTICES COLEMAN, LONG, VERNIERO, LaVECCHIA and ZAZZALI join in this opinion. JUSTICE STEIN did not participate.

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© 2002 VersusLaw Inc.



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