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Don Corson Construction Co., Inc. v. Hrebek


June 5, 2007


On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, Docket No. MON-L-1725-01.

Per curiam.


Argued February 28, 2007

Before Judges Wefing, Parker and Yannotti.

Defendant Robert J. Hrebek appeals from a final judgment entered on December 16, 2005 after a jury awarded plaintiff $535,000 for breach of a construction contract. He also appeals from an order entered on February 6, 2006 denying his motion for a new trial or, alternatively, remittitur. We affirm.


The facts relevant to this appeal are summarized as follows. In the Fall of 1997, defendant purchased an eighteen-acre property in Wall Township. Defendant, an attorney who negotiates labor contracts for Monmouth County, entered into an oral agreement with plaintiff to construct defendant's "dream house" on the property. Plaintiff*fn1 is a general contractor whose main business is "pre-engineered steel buildings" and industrial and commercial buildings that he designs and constructs.

Plaintiff testified that he agreed to undertake the project and that he would bill defendant for his own manual labor at $60 an hour. Defendant wanted plaintiff to perform all necessary supervision for the project, which plaintiff agreed to do for "[twenty] percent . . . on top of [the total project]." Plaintiff testified that the twenty percent would be calculated on the costs of "all the labor, all the material, [and] all [of plaintiff's] operating equipment." Plaintiff understood that defendant "agreed on everything" and did not want a written contract because he was eager to start the project and thought their friendship made a written agreement unnecessary.

Defendant testified that he and plaintiff had an oral agreement and that neither of them offered or requested a written contract or cost estimate. The oral agreement included plaintiff's supervision of the project because the project would be built "through sub[-]contractors." Defendant understood that he would pay "a reasonable fee . . . on a hourly basis for [plaintiff's] work effort," in addition to paying for the sub-contractors and materials. Defendant did not recall the exact words that either of them used as to how plaintiff would be paid for supervision, but defendant insisted that the agreement did not include an additional twenty percent as a supervision or management fee. Defendant testified that he "expected to pay $60 an hour for Don Corson to oversee the building of my home."

Plaintiff's wife, Barbara Corson, handled the paperwork and banking for the project. She also coordinated with the sub-contractors when they could not reach her husband, but her time was not billed to defendant. Barbara testified that there was no payment schedule for the project because whenever plaintiff needed to make project-related payments, he asked defendant for the funds and defendant paid them. All the monies paid to plaintiff by defendant were placed in a special account from which plaintiff paid the suppliers, sub-contractors and the corporation.

Plaintiff did not ask for interim payments of the management fee, however. While he kept a record of the number of hours he and his employees spent in manual labor and billed for it, he did not record the time he spent on project management because he did those tasks continually, taking and making phone calls, coordinating sub-contractors and materials and overseeing the performance of all the work being done. Moreover, the architect's plans were incomplete, requiring plaintiff to provide many of the details and determine the materials to be used. Defendant testified that there was no discussion about billing for the project. He assumed that plaintiff was billing and getting paid for his own work, "because [he] didn't expect [plaintiff] to work for free."

On April 11, 2000, plaintiff submitted a three-page bill with handwritten details. The first two pages consisted of expenses already incurred, named the suppliers and sub-contractors and listed the exact amounts for each, totaling $1,456,775.12. One item stated: $375,000 for plaintiff, with no detailed description. The $375,000 item was money plaintiff paid to sub-contractors. The bill also listed farm equipment that defendant had purchased for plaintiff to use on the property, amounting to $65,967.01, bringing plaintiff's total expenditures to $1,522,742.13.

The third page of the April 11 bill listed dollar amounts, totaling $759,270 that plaintiff expected to incur in finishing the project. The expenses to date and the expected future expenses totaled $2,282,012.13. Plaintiff acknowledged that at the time of the April 11 bill, he would have been satisfied to receive that total amount at the completion of the project. After he reviewed the bill, defendant asked plaintiff about two of the items: $240,000 and $80,000 listed as "owed Don Corson." Plaintiff responded that those amounts reflected the management fee.

Defendant testified that he was concerned about having already paid $1.5 million for the project and he questioned certain items on the bill and asked for further details about the amount paid to one sub-contractor and the $375,000 that plaintiff paid to sub-contractors. Defendant testified at his deposition that he was satisfied with plaintiff's explanation of the sub-contractor payment but claimed he never received information about the $375,000 item, despite repeated requests. At trial, defendant claimed that he continued to complain to plaintiff about the billing and the lack of detail, but never put his complaints in writing. He testified at trial that "[e]very time I gave [plaintiff] a check, I asked him for an explanation of the 375. And he wouldn't give it to me."

In November 2000, a certificate of occupancy was issued for the house. On December 14, 2000, plaintiff issued a final bill for the project totaling $2,834,933, including the management fee. By that time, defendant had already paid $2,157,000. In addition, defendant paid two items directly: $100,000 for kitchen cabinets and $80,000 for the architect's fees. According to plaintiff, defendant still owed $53,472 for suppliers and sub-contractors, $30,000 for miscellaneous expenses, and $417,369 "owed Don Corson Construction Co."

The $417,369 figure included $339,319 in management fees; $33,030 for equipment rental; and $30,720 as the unpaid portion for plaintiff's manual labor at the discounted rate. Plaintiff discounted his manual labor charge to $40 per hour, rather than the agreed-upon rate of $60 per hour, for 540 hours and further discounted his fee $30 per hour for another 304 hours. Plaintiff testified that he discounted his hourly rate because on a big project "there's just an awful lot of cleanup and there's a lot of little stuff that you have to do," and he did not feel right charging full price for such work. Plaintiff also discounted the management fee by reducing the base on which he calculated it. Rather than using the full price of the project, plaintiff based his fee on the cost of materials and sub-contractors, $1,696,597.30. Twenty percent of that figure amounted to $339,319.

Defendant claimed that the December bill was the first time he learned of the management fee. He testified that he understood "construction management" to mean that plaintiff "was there every day watching that job, watching the sub-contractors. Making sure the work was done properly. He was a working supervisor, if you will," and that this was included in the $60 per hour rate.

Plaintiff testified that he averaged approximately five hours per day of labor and seven hours of construction management. Nevertheless, defendant claimed that the information provided by plaintiff was "not sufficient" to identify which hours plaintiff spent performing a management function.

On January 9, 2001, defendant wrote to plaintiff directing him to "stop all work on this property and do nothing further." The letter stated in part:

I am staggered by how far out of line and exorbitant your demand is, and I am disheartened that someone whom I regard as a friend would present such a demand.

I firmly believe that to date you have been paid more than sufficiently and that in fact I have paid more than I should because of overbilling. I have certainly paid enough to expect you to take care of any subs you may yet owe.

Because I want to maintain our friendship if at all possible, I would be happy to discuss this with you. Please feel free to call me at your convenience.

Plaintiff testified that the January 9 letter was his first indication that defendant objected to the December 14, 2000 bill. After receiving the letter, plaintiff attempted to reach defendant to discuss the matter -- as the letter suggested -- but defendant did not respond. Defendant's failure to respond prompted plaintiff to withdraw the discounted fee and to recalculate it "based upon the handshake deal back in September of 1998," rather than on the reduced base. The recalculation resulted in a management fee of $492,540.24. Plaintiff did not withdraw the discounts for his manual labor, however. Defendant still owed $25,478.90 for sub-contractors and $78,050 for labor.

John Cohen, a licensed professional engineer, testified as plaintiff's expert on the value and quality of construction, the construction process and the reasonableness of the costs. He concluded that the dollar value of the project as constructed was in excess of $2.9 million. He determined the reasonableness of the actual costs by comparing the actual costs to a prospective estimate as it would have been calculated before the project started. Cohen retained Brian Hanifin, a cost consultant, to prepare the prospective cost estimate. Hanifin used the same information relied upon by Cohen, in addition to published data on nationwide averages for construction costs and proprietary cost data, to prepare the prospective cost estimate. Cohen testified that, although he was qualified to prepare cost estimates, he is "by no means an expert at that," and relied on a cost estimator (Hanifin) who was familiar with costs "for locality, for time, [and] for market forces."

Based on "court documents," Cohen took the total facility cost of $2,098,500.08 for the house alone and the total square footage of the main residence, 12,362, and calculated an actual "total facility cost" of approximately $170 per square foot. Cohen explained that a house at "middle market values" would have been worth approximately $125 per square foot, while a luxury home with the special features of this one, which included "special masonry, the huge [roof] overhangs, the extensi[ve] plumbing and heating systems," could be valued at "[$]200 [per square foot] or higher."

Cohen noted that Hanifin's prospective cost estimate for the house, including the barn and other items such as the farm equipment, was $2,922,332.33. Cohen deducted those items and calculated Hanifin's projected cost estimate for the house alone at $170 per square foot -- the same as the actual cost. In Cohen's opinion, that figure confirmed that plaintiff's construction of the house for $170 per square foot was "more than reasonable" for "a luxury home" with all of its special features. Cohen indicated that he was struck by "the quality of the workmanship" and "the lack of notable problems" on "a job of this complexity." He also noted "the uniqueness of the construction," including special materials like the oversized bricks and stones that were fitted with practically gapless precision. He attributed the quality of the work to plaintiff's supervision of the sub-contractors and proper coordination and sequencing of their work.

In this appeal, defendant argues:



A. Hanifan's Opinion Is Not a Fact Reasonably Relied Upon

B. Cohen Laid No Foundation For Hanifan's Opinion

C. Cohen's Testimony Was Not Based Upon Facts

D. Cohen's Testimony was Double Hearsay

E. Cohen's Testimony Was Not Relevant To Plaintiff's Contract Claim

F. Cohen's Testimony was Not Relevant to The Quantum Meruit Claim

G. Cohen's Opinion Was A Net Opinion

H. Cohen's Testimony Did Nothing But Inflame The Jury









A. The Judge Erred By Molding The Verdict POINT SIX



In his first argument, defendant contends that the trial court erred in admitting Cohen's testimony. He argues that Cohen simply adopted Hanifin's conclusions without performing an independent analysis of the data that Hanifin used, and that Cohen did not lay a foundation for Hanifin's opinion. Defendant further argues that Cohen's testimony was double hearsay, because Hanifin's conclusions were themselves hearsay since they incorporated published and proprietary data. Moreover, defendant claims that Cohen rendered a net opinion because he merely transmitted Hanifin's conclusion that defendant received a home valued at $2.9 million. Defendant further claims that Cohen's testimony was not relevant to the contract or quantum meruit claims and that his testimony merely inflamed the jury. We find no merit in these arguments.

The trial court conducted a hearing pursuant to N.J.R.E. 104 during which Cohen testified with respect to his professional credentials and experience in performing a construction quality review of a similar $3 million project. He detailed the documents he reviewed and his inspection of the property. He recommended retaining Hanifin to prepare a prospective cost estimate for the project like those usually done before construction in order to estimate the final cost. And, he testified with respect to the methodology he employed in using Hanifin's "numbers" to reach his conclusion on the reasonableness of the construction costs.

At the conclusion of the Rule 104 hearing, the trial court denied defendant's motion to exclude Cohen's testimony and found it relevant to both the contract and quantum meruit claims. The court further found that Hanifin's work was the kind of information upon which experts in Cohen's field reasonably relied. Moreover, Hanifin had been subject to deposition and fully cross-examined on his methodology.

At the close of plaintiff's case, defendant moved to strike Cohen's testimony as irrelevant to the contract claim, and sought to strike Cohen's testimony with respect to the quantum meruit claim on the ground that it was a net opinion. The court declined to revisit its decision to admit Cohen's testimony and rejected defendant's arguments.

Trial courts are "granted broad discretion in determining both the relevance of the evidence to be presented and whether its probative value is substantially outweighed by its prejudicial nature." Green v. N.J. Mfrs. Ins. Co., 160 N.J. 480, 492 (1999). Their determinations "should not be overturned on appeal 'unless it can be shown that the trial court palpably abused its discretion, that is, that its finding was so wide off the mark that a manifest denial of justice resulted.'" Ibid. (quoting State v. Carter, 91 N.J. 86, 106 (1982)).

Expert testimony is authorized under N.J.R.E. 702. The facts or data on which experts base their opinions do not have to be admissible themselves if they are "of a type reasonably relied upon by experts in the particular field" when forming opinions. N.J.R.E. 703. An expert must rely on some evidence or other data, however, and if the expert merely offers a bare conclusion with no foundation, it will be deemed inadmissible as a net opinion. Buckelew v. Grossbard, 87 N.J. 512, 524 (1981); Rosenberg v. Tavorath, 352 N.J. Super. 385, 401 (App. Div. 2002). We recognize that "a trial court's decision regarding the admissibility of evidence is fact sensitive" and we limit our review "to whether there has been an abuse of discretion." State v. Fortin, 178 N.J. 540, 591 (2004).

When a party proffers expert testimony based on underlying information or data of a particular kind, the court must conduct an inquiry pursuant to N.J.R.E. 104(a) and make a finding as to whether the information or data satisfy the N.J.R.E. 703 standard of being reasonably relied upon by experts in the witness's field. State v. Martini, 131 N.J. 176, 278 (1993); Ryan v. KDI Sylvan Pools, Inc., 121 N.J. 276, 287-89 (1990). "If such reliance be found, then it is presumed to be reasonable," Ryan, supra, 121 N.J. at 289, rendering the testimony admissible.

We have carefully reviewed the record and we are satisfied that the trial court did not abuse its discretion in admitting Cohen's testimony. Cohen did not simply adopt Hanifin's conclusions; rather, he performed additional analyses of Hanifin's cost estimate before concluding that it provided collateral support for his determination of the reasonableness of the actual costs. See Krohn v. N.J. Full Ins. Underwriters Ass'n, 316 N.J. Super. 477, 485-86 (App. Div. 1998), certif. denied, 158 N.J. 74 (1999) (holding that an expert may testify about opinions of non-testifying experts, which actually formed a basis for the testifying expert's opinion). The court was well within its discretion to find Cohen's testimony was not a "conduit" for Hanifin's opinions -- which were subject to cross-examination at Hanifin's deposition. Ibid.


Defendant next argues that the trial court erred in allowing the jury to consider plaintiff's claim for a management fee under quantum meruit. He maintains that while both sides agreed that a contract existed, they disagreed on whether plaintiff would be paid a management fee and there was no evidence of an industry practice to pay such a fee or how it might be calculated. Industry practice was not the issue, however; the agreement between the parties was.

The trial court rejected defendant's motion to dismiss the quantum meruit claim on the ground that Cohen's testimony was inadmissible or legally insufficient to support it. At the close of plaintiff's case, defendant moved for a directed verdict on the quantum meruit claim on the ground that the claim required the absence of a contract. The court denied the motion, stating that there was sufficient evidence for the jury to consider one of three alternatives: (1) an oral contract with a provision for the fee; (2) an oral contract with a provision for the fee without strictly defining how to calculate it; or (2) performance by plaintiff of supervisory work that defendant accepted in the absence of an oral contract and for which plaintiff deserved compensation.

Motions for judgment, whether made pursuant to R. 4:37-2(b) at the close of the plaintiff's case, R. 4:40-1 at the close of evidence, or R. 4:40-2(b) after the verdict, are "governed by the same evidential standard: '[I]f, accepting as true all the evidence which supports the position of the party defending against the motion and according him the benefit of all inferences which can reasonably and legitimately be deduced therefrom, reasonable minds could differ, the motion must be denied.'" Verdicchio v. Ricca, 179 N.J. 1, 30 (2004) (quoting Estate of Roach v. TRW, Inc., 164 N.J. 598, 612 (2000)).

"[A] plaintiff who has attempted to prove both breach of contract and unjust enrichment need not choose which one will go to the jury, as long as there is sufficient evidence as to both." Caputo v. Nice-Pak Prods., Inc., 300 N.J. Super. 498, 504 (App. Div.), certif. denied, 151 N.J. 463 (1997). "It is only recovery under inconsistent theories that is not permitted," and the jury must be instructed to "decide which of the two was proved." Ibid. (emphasis added); accord County of Essex v. First Union Nat'l Bank, 373 N.J. Super. 543, 556 (App. Div. 2004), aff'd as mod., 186 N.J. 46 (2006).

A plaintiff "seeking recovery on a theory of quantum meruit must establish that the services were performed with an expectation that the beneficiary would pay for them, and under circumstances that should have put the beneficiary on notice that the plaintiff expected to be paid." Weichert Co. Realtors v. Ryan, 128 N.J. 427, 439 (1992). "Thus, a [plaintiff] who makes a sufficient showing can recover fees for services rendered even absent express or implied agreement concerning the amount of the fee." Ibid. The plaintiff has the burden of establishing "the reasonable value of the services" for which he is seeking recovery. Starkey, Kelly, Blaney & White v. Estate of Nicolaysen, 172 N.J. 60, 68 (2002).

Here, the court correctly decided that the quantum meruit claim should proceed to the jury. There was adequate evidence to allow the jury to find that plaintiff expected to be paid, that defendant should have realized that plaintiff was performing substantial supervisory work because defendant was present on the site daily, and that twenty percent of the actual cost was a reasonable measure of the supervisory work.


Defendant claims that the trial court erred in admitting into evidence plaintiff's answer to interrogatory five which detailed plaintiff's demand for damages. Defendant argues that R. 4:17-8(a) provides that "interrogatories shall not be marked into evidence without good cause," and plaintiff offered no good cause for admission of the answer to interrogatory five. Defendant's objection is based upon the fact that the interrogatory answer "was typewritten and neatly outlined plaintiff's alleged damages determined long after litigation commenced" while the April 11 and December 14, 2000 bills were handwritten. Defendant maintains that the typewritten interrogatory answer "should not have been allowed into evidence and its submission added to the confusion over [the] damages" resulting "in [a] miscarriage of justice."

Defendant raised this issue in his motion for a new trial. The court rejected defendant's argument "that the jurors looked upon the exhibit as a contract document" because the jury knew that there were no documents that even arguably represented a written contract. The court found further that plaintiff had authenticated the exhibit as an accurate statement of his claim, that the exhibit's contents were "clearly relevant," and the exhibit was nothing more than an efficient and less-distracting substitute for the notes and the "diagram board" on which plaintiff would otherwise have needed to write all of the same information.

"Answers to interrogatories may be used to the same extent as . . . the deposition of a party," but the interrogatories themselves "shall not be marked into evidence without good cause." R. 4:17-8(a). Here, plaintiff did not demonstrate "good cause" and the interrogatory answer should not have been admitted into evidence. Defendant, however, has not demonstrated any prejudice resulting from the document being considered by the jury that would give rise to reversible error. We, therefore, conclude that the error was harmless.


Defendant contends that the trial court erred in failing to dismiss the breach of contract claim on the ground that plaintiff failed to make a "prima facie showing of the damages which flowed from the breach." He argues that plaintiff failed to demonstrate how damages were calculated to reach the amount of the jury award -- which did not correspond to any of the specific figures advanced by plaintiff.

Defendant raised this issue again in his motion for a new trial. In denying the motion, the trial court noted that the jury charge on contract formation included an instruction under which the jury "could find the contract to be as plaintiff has described or as defendant has described or an amalgam of the two versions." The court explained that the jury was free to accept plaintiff's testimony that he dedicated himself to the project by foregoing all other opportunities, and that the jury could regard his testimony as lending credence to the existence of an agreement to pay a management fee. The jury's findings were consistent with the court's impression that the jury found plaintiff more credible than defendant on that issue.

The jury's findings on damages must be given deference and "a trial [court] should not interfere with the quantum of damages assessed by a jury unless it is so disproportionate to the injury and resulting disability shown as to shock his conscience and to convince [the court] that to sustain the award would be manifestly unjust." Baxter v. Fairmont Food Co., 74 N.J. 588, 596 (1977). We apply the same standard. Id. at 596-99.

Any jury award that is supported by credible evidence must be affirmed, including the award on a contract claim unless it "exceeds an undisputed amount" such as "the maximum amount of profit which [the] plaintiff might recover under any of the theories presented." Bd. of Educ. v. Hoek, 38 N.J. 213, 228-29 (1962) (emphasis added). Here, the amount was sharply disputed and the verdict did not exceed the maximum amount of profit plaintiff could have recovered.

We have carefully considered the record and we are satisfied that there is sufficient credible evidence in the record to support the jury's award of damages.


Defendant claims that the trial court erred in charging the jury such that it allowed the jury to calculate damages under the combined theories of contract and quantum meruit. He argues that the jury's request for further instructions on contract damages and its subsequent verdict in an amount different from any figure advanced by plaintiff demonstrated the jury's improper calculation of the contract damages.

The court instructed the jury that a contract required a meeting of the minds, offer and acceptance, consideration and certainty. The court charged the jury on the necessary elements that must be found in order to determine that the parties had entered a contract. The damages instruction was provided with the verdict form. The court explained that if the jury found defendant liable for breach of an oral contract, it was to determine "[w]hat sum of money is due, if any, that represents the natural and probable consequence of the breach of contract." The court added that "[y]ou don't have to put on [the verdict form] how you got there. You just tell us what's due, if any[thing]." The jury was instructed that if it found defendant liable under quantum meruit, it would have to determine "what sum of money is due, if any, that would constitute the balance due against the reasonable value of [the] services rendered by the plaintiff to the defendant," meaning the portion of the project's reasonable value, if any, that was left unpaid.

After the charge was completed, defendant objected that the jury might use plaintiff's evidence of the reasonable value of the project as proof of damages under the contract claim. The court called the jury back to repeat the instructions on damages under each theory of liability and added that the jury was to give the terms "natural and probable" and "reasonable" their ordinary meanings.

The jury later requested a re-charge on the elements of a contract, which the court provided. The jury also asked, "What are the natural and probable consequences of breach of contract? Please illustrate/define/exemplify." The court responded as follows:

A plaintiff who is awarded a verdict for breach of contract is entitled to compensatory damages for such losses as may fairly be considered to have arisen naturally from the defendant's breach of contract. Alternatively, plaintiff may be entitled to such damages as may reasonably be supposed to have been contemplated by both parties at the time they made the contract as the probable result of the breach of such contract.

Compensatory damages for breach of contract are designed under the law to place the injured party in as good a monetary position as he would have enjoyed if the contract had been performed as promised.

The jury then decided that defendant had breached an oral contract, for which it awarded damages in the amount of $535,000.

In reviewing a jury charge, we must read it as a whole. State v. Marshall, 123 N.J. 1, 135-36 (1991), cert. denied, 507 U.S. 929, 113 S.Ct. 1306, 122 L.Ed. 2d 694 (1993). "[S]sections of a jury charge cannot be read in isolation." Mohr v. B.F. Goodrich Rubber Co., 147 N.J. Super. 279, 283 (App. Div.), certif. denied, 74 N.J. 281 (1977). The standard is whether the trial court gave "a comprehensible explanation of the questions that the jury must determine," covering all "fundamental matters" at issue. State v. Green, 86 N.J. 281, 287-89 (1981). If the charge as a whole meets that standard, the verdict must be affirmed. State v. Ramseur, 106 N.J. 123, 280 (1987).

We have reviewed the jury charge in its entirety and we are satisfied that it allowed the jury to find an oral contract that included an agreement for defendant to pay a management fee even if the amount was not specified -- as long as the acceptance did not present different terms from the offer, and as long as the agreement on the fee was sufficiently certain for defendant to know that he had an obligation to pay it and for both sides to determine later whether he had done so. The damage award was consistent with the jury instruction and merits the general presumption that juries understand and follow the instructions given. See State v. Loftin, 146 N.J. 295, 390 (1996); State v. Manley, 54 N.J. 259, 271 (1969).


Finally, defendant claims that the trial court erred in "molding the verdict." Defendant points to the court's observation that the damage award "may" have incorporated prejudgment interest if the jury had calculated the award on the basis of the $417,369 that plaintiff requested in the December 14, 2000 bill, rather than the $596,069.14 that plaintiff asserted at trial. Defendant maintains that the court in effect molded the verdict by construing it to contain an element of pre-judgment interest in order to justify the jury's award that did not correspond to any specific figure advanced by plaintiff.

As we have discussed previously, the damage award on a contract claim did not have to match any specific figure advanced by plaintiff. There is sufficient credible evidence in the record to support the verdict and we need not speculate on what the jury included in its calculations. We see no miscarriage of justice in the jury's award or the trial court's denial of defendant's motion for remittitur or, alternatively, a new trial.

Defendant's remaining arguments regarding Cohen's testimony lack sufficient merit to warrant further discussion in this opinion. R. 2:11-3(e)(1)(E).


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