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Consult Urban Renewal Dev. Corp. v. T.R. Arnold & Assoc.

April 19, 2007

RE: CONSULT URBAN RENEWAL DEV. CORP.
v.
T.R. ARNOLD & ASSOC., INC.



The opinion of the court was delivered by: William J. Martini Judge

MARTIN LUTHER KING JR. FEDERAL BLDG. & U.S. COURTHOUSE 50 WALNUT STREET, P.O. BOX 419 NEWARK, NJ 07101-0419 (973) 645-6340

LETTER OPINION

Dear Litigants:

This matter comes before the Court on Defendant's motion for summary judgment pursuant to Fed. R. Civ. P. R. 56. Oral arguments were held on April 5, 2007. For the reasons set forth below, Defendant's motion is DENIED at this time.

I. BACKGROUND

Plaintiff Consult Urban Renewal Development Corporation was the construction manager for a housing complex for low-income seniors in New Jersey (the "Project"). (Cocoziello Decl. 1.) In connection with the Project, Plaintiff entered into a contract with DeLuxe Building Systems ("DeLuxe") in 1998, whereby DeLuxe agreed to manufacture, deliver, and install modular prefabricated buildings for the Project (the "Project Contract"). (Id.) In New Jersey, modular building units manufactured outside of the state, but erected within the state, are subject to certain regulations including inspection and labeling by an approved third-party inspecting agency. See generally N.J.A.C § 5.23-4A-10. As DeLuxe is a Pennsylvania corporation with its manufacturing plant located in Pennsylvania, the Project Contract specified that DeLuxe would maintain a relationship with an independent third-party inspecting agency in accordance with applicable law. (Cocoziello Decl. Ex. A.)

To fulfill its inspection obligations under the Project Contract, DeLuxe engaged Defendant T.R. Arnold & Associates, an Indiana corporation, to perform inspection services pursuant to a pre-existing contract. (Def.'s Br. 3-4; Tanger Certification 1-2; Pl.'s Br. 3-4.) In 1980, Defendant had contracted with DeLuxe to be retained as a third-party inspecting agency so that DeLuxe could fulfill statutory and regulatory requirements for the sale and distribution of modular building units (the "Inspection Contract"). (Def.'s Br. 3; Wapner Decl. Ex. A.) Pursuant to this retention agreement, Defendant performed various review services for DeLuxe over the years, including the inspection and labeling of the Project units. (Def.'s Br. 3; Cocoziello Decl. Ex.B.)

After delivery of the prefabricated modular units to the Project site, Plaintiff informed DeLuxe that the units were not acceptable, because they did not conform to Plaintiff's specifications and had suffered water damage. (Def.'s Br. 3-4.) DeLuxe refused to replace or repair the units. (Id.) Plaintiff and DeLuxe took their dispute to an arbitration panel. (Id.) The panel awarded both Plaintiff and DeLuxe damages, but determined that there was no prevailing party within the meaning of the Project Contract. (Cocoziello Decl. Ex. D.) On February 22, 2006, Plaintiff filed this suit against Defendant in New Jersey state court. (Compl. 7.) Defendant timely removed the case based upon diversity jurisdiction, and Defendant's motion for summary judgment is now before the Court.

II. DISCUSSION

The complaint states two claims against Defendant: (1) breach of contract under a third-party beneficiary theory, and (2) negligence. (Compl. 7-8.) In its summary judgment motion, Defendant argues that: (1) Plaintiff is not an intended third-party beneficiary; (2) even if the Court determines that Plaintiff is an intended third-party beneficiary, the Inspection Contract's indemnity clause bars this action; and (3) Plaintiff's negligence claim is barred, because Plaintiff failed to file an Affidavit of Merit as required under New Jersey law. (Def.'s Br. 1-2; Def.'s Reply Br. 2.) These arguments are addressed below.

A. Summary Judgment Standard

Summary judgment eliminates unfounded claims without resorting to a costly and lengthy trial. Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986). However, a court should grant summary judgment only "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). The burden of showing that no genuine issue of material fact exists rests initially on the moving party. Celotex, 477 U.S. at 323. A litigant may discharge this burden by exposing "the absence of evidence to support the nonmoving party's case." Id. at 325. In evaluating a summary judgment motion, a court must view all evidence in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); Goodman v. Mead Johnson & Co., 534 F.2d 566, 573 (3d Cir. 1976).

Once the moving party has made a properly supported motion for summary judgment, the burden shifts to the nonmoving party to "set forth specific facts showing that there is a genuine issue for trial." Fed. R. Civ. P. 56(e); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). The substantive law determines which facts are material. Id. at 248. "Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Id. No issue for trial exists unless the nonmoving ...


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