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Patock Construction Co., Inc. v. GVK Enterprises

October 18, 2004


On appeal from Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-374-98.

Before Judges Petrella, Parker and Yannotti.

The opinion of the court was delivered by: Petrella, P.J.A.D.


Submitted September 20, 2004

Plaintiff Patock Construction Company (Patock) appeals from a dismissal of its construction lien, as well as awards of attorney's fees against it and in favor of defendant GVK Enterprises, LLC (GVK).

Patock was not paid for certain construction work it performed for GVK. Patock filed a claim for $85,985.16 based on a construction lien claim, breach of contract and quantum meruit.

After a bench trial, Patock was found to be entitled only to damages based on quantum meruit. However, the trial judge dismissed Patock's construction lien and breach of contract claims and awarded counsel fees to GVK. The net result was a judgment in favor of GVK for $6,535.26.

Patock argues on its appeal that: (1) the trial judge erred in ruling that no written agreement existed between the parties to support the filing of Patock's construction lien claim; (2) the evidence did not support the judge's finding that the construction lien was willfully overstated; (3) the judge erred in dismissing the second count of Patock's complaint alleging breach of an express contract and limiting Patock's remedy to recover on the theory of quantum meruit; (4) the award of attorney's fees to defendant pursuant to N.J.S.A. 2A:44A-15 was excessive; and (5) the award of additional attorney's fees under the offer of judgment rule was improper.

In the summer of 1997, George Klodin, the owner of GVK, approached Patock regarding a construction project on behalf of Colorest, a store also owned by Klodin that sells custom picture frames and radio controlled toys. Klodin wanted Patock to renovate an abandoned building purchased by Klodin in GVK's name so that Colorest could relocate into the renovated building and so that portions of the building could be leased to other tenants. Prior to the purchase of the property, Colorest was operating from leased premises.

While Klodin intended to pay for the entire renovation project with bank loans of $125,000 to $140,000, Patock and GVK did not fix a price for the anticipated work. Patock's president, Jay Patock, testified that there was no fixed price because GVK had only given them a preliminary construction plan. Jay Patock considered it a"time and material job" and that his company would be paid on completion of the project. No hourly rate was discussed and there was no written contract.

Klodin terminated Patock in November 1997, because he felt that Patock was not doing much work and was behind schedule. He hired Tri-Tech, another construction company, to finish the project. The project was soon completed and Colorest vacated its leased property on January 1, 1998. The only amount GVK paid to Patock was $5,800 in October 1997.

After its termination, Patock sent a letter to GVK requesting $85,985.16, after crediting the $5,800 received. Patock received no payment or response from GVK, causing it to file a construction lien claim on December 11, 1997 with the Monmouth County Clerk for $77,597.76, which purportedly represented the value of Patock's work. An amendment was filed on December 24, 1997, increasing the total owed to $85,985.16. In its lien document, Patock stated that"[t]he work, services, materials or equipment was provided pursuant to the terms of a written contract... dated 10/10/97...." One of the main issues at the ensuing trial was the value of Patock's work.

Patock's records, dated February 13, 1998, reflected that the total due was $87,761.54. However, different sections of the records stated different amounts owed. Labor costs were listed as $51,436.10 in the computer-generated portion, but was represented to be $68,814.44 in a handwritten notation. A Patock employee stated that the difference included workmen's compensation, insurance premiums, and equipment costs. Costs for material were $9,293.42. In the handwritten portion, Patock also applied a 15% markup that increased the bill to $93,561.54. After deducting $5,800, Patock calculated the amount outstanding as $87,761.54.

Another area referencing the value of Patock's work was contained in two documents entitled"Application and Certificate for Payment." Allegedly, to get the construction loan from the bank, Klodin was required to obtain requisitions from the contractors for estimates of the project. Different requisition forms were used to obtain different portions of the bank loan.

One application, submitted on September 23, 1997, showed the total contract amount to be $142,900. This included estimates for demolition, carpentry, electrical, and various other aspects of the construction detail. The cost of the carpentry work, Patock's responsibility, was estimated to be $20,000. Indeed, Jay Patock testified that Patock was responsible only for the carpentry work. All other work listed in the application was performed by other subcontractors. Even though Jay Patock personally signed the application, he claimed that Klodin prepared the estimate.

On October 28, 1997, a second"Application and Certificate for Payment" was submitted. This one reflected the scheduled cost of carpentry as $26,000. Again, Jay Patock claimed that the estimate was supplied by Klodin. Both of these applications came ...

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