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B&H Securities, Inc. v. CKC Condominium Association


February 27, 2008


On appeal from the Superior Court of New Jersey, Law Division, Special Civil Part, Essex County, Docket No. DC-12152-06.

Per curiam.


Submitted January 22, 2008

Before Judges Parrillo and Graves.

Defendant, CKC Condominium Association, Inc. (Association), appeals from a Special Civil Part final judgment in favor of plaintiff, B&H Securities, Inc., in the amount of $8,078.10. We affirm.

This is a contract action. Defendant is an association for a garden-style condominium complex consisting of 107 units. Plaintiff is a New Jersey corporation which provides security systems, monitoring, repairs and other related services to commercial and residential customers. Sometime in July 2004, defendant's representative, Robert Lyon, president of the association, contacted Charles Hamburger, plaintiff's senior project engineer, to inquire about completing installation of a fire alarm system on premises at 765 Vose Avenue, Orange, that was only partially installed by a former contractor. After a visual inspection of that portion of the building made available to him, and speaking with defendant's representative about the previous work done in the remainder of the structure, Hamburger drafted a proposal on a "time and material" basis, as distinguished from a sum certain or fixed cost one. The proposal estimated five days to complete the work, based on Hamburger's observations and information provided by defendant's representative. Thus, the proposal specifically stated: "As 75% of the building is already piped and partially wired with most of the devices installed." The proposal concludes with the following: "Any alterations or deviation from the above specifications involving extra costs will be executed only upon written order, and will become an extra charge over and above the estimate."

Once work commenced on the premises, Hamburger soon discovered that the wiring performed by the former contractor was only partially completed, that the portion of the work actually done violated "C codes" and "NFPA codes," and that the wiring was the wrong size. Consequently, Hamburger advised Lyon directly that the work necessary to complete the project would exceed the estimated five-day time frame originally proposed. According to Hamburger, at the same time, he suggested to Lyon, as per the parties' contract, that a change order should be executed, to which Lyon responded: "I haven't got time for that, I'm under pressure." As a result, Lyon gave Hamburger permission to proceed with the expanded work schedule: "do what [you have] to do to get it done." Based on Lyon's oral direction, plaintiff completed work on the premises without a change order.

Two invoices were submitted to defendant for the completed work. Invoice number 19653, dated September 29, 2004, was for the sum of $14,565.00 for services and labor on the project. Invoice number 19957, dated November 5, 2004, was for the sum of $1,013.10 for additional materials that were not on site. Defendant only partially paid the invoices. The outstanding balance due amounted to $8,078.10.

Plaintiff sued defendant for the balance due. Following a one-day bench trial, the judge entered judgment in favor of plaintiff in the amount of $8,078.10, plus taxed costs. In doing so, the judge credited the testimony of Hamburger over that of Lyon, finding the former "believable" and by contrast, the latter less so. As to the merits, the court concluded:

And as a result of that, the issue that's been raised here as a change order, there was never a need for a change order in here, because there was never a need for any changes. This contract speaks for itself. The terms are clear. There was no date certain of completion. There was no time certain of completion. And there was actually no amount of money that was defined here as to what it would cost for the job.

Now, as a result of that the Court finds, number one, that there was a binding agreement with respect to the contract for the reasons I've set forth on the record. The issue before the Court is whether or not there was a breach of that contract. And I think it's clear, and the Court finds, number one, by a preponderance of the evidence, that there is a legal binding contract. And number two, there was a breach of the contract.

I find without doubt, and there's nobody that disagrees with that, that the work to be performed by B&H through Mr. Hamburger was the completion of the job at the condominium to allow them to pass inspection by the Orange Fire Department, or Fire Inspectors. That was done. No question about that. That was the offer that was made, . . . that's what was accepted, and that was completed. There's no question about the fact that what the defense asked for, they received.

Mr. Hamburger indicated that once he determined that the job was going to be . . . in excess of what was originally contemplated here, he told Mr. Lyon about that. Mr. Lyon, in turn -- and he also told Mr. Lyon, according to Mr. Hamburger's testimony, that we needed a change order. According to Mr. Hamburger, Mr. Lyon replied, "I don't care. I'm under a lot of pressure, do what you got to do -- do what you have to do," I'm sorry. That was the testimony of Mr. -- Mr. Hamburger.

And as a result of that, Mr. Hamburger proceeded . . . to complete the job. As a result of that, many, many man hours or man days were expended. I think he said it was ten man days plus 11-and-a-half hours were expended by B&H. There was a limited amount of additional material that was secured to the tune of about $11,000, all of which was billed to -- to the condominium association, and all of which was accepted, certainly at the time that the -- the job was completed. It was only after the job was completed --and I think this is undisputed -- it was only after the job was completed that Mr. Lyon, according to his testimony protested that it cost too much and was twice what he anticipated.

Furthermore, the court rejected, as a matter of law, defendant's claim that plaintiff's purported violation of the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1 to -167, and the Home Improvement Practices Regulations, N.J.A.C. 13:45A-16.1 to -16.2, requiring contract modifications be in writing, render the contract unenforceable. On this score, the court reasoned:

As [counsel for plaintiff] points out, which I accept, [defendant] can't get the benefit of [its] bargain at this point in time, getting what they [it] for originally, not pay . . . [its] financial responsibility to B&H, and the same time asked for this Court to enter sanctions against B&H and Mr. Hamburger for perceived violation of the Consumer Fraud Act or the Home Practices Regulations. In fact, the actions by . . . Mr. Lyon, which I accept on behalf of the condominium association, does rise to the level of equitable estoppel, and I believe [defendant is] barred from doing that.

As a result of that, the Court finds by a preponderance of the evidence there was a contract, there was a breach of a contract, there [were] no operable or operative violations of the Consumer Fraud Act or the Home Practices Act for the reasons I've expressed on the record. And I find liability on the part of -- of the condominium association in the amount of [$8,078.10].

On appeal, defendant raises the following issues:


A. Prior To Trial The Court Found That The Subject Transaction Involving Fire Alarm Repairs To This Residential Condominium Complex Was Covered By The Home Improvement Practices

B. Plaintiff Violated The Home Improvement Practice Regulations and the Consumer Fraud Act

C. Plaintiff Charged Defendant For Additional Parts Without A Writing As Required by N.J.A.C. 13:45.A-16.2(a)12ii

D. Plaintiff Agreed To Charge Five Man Days of Labor And Billed For Approximately Eleven Days of Labor In Violation of Home Improvement Practice Regulations and the Consumer Fraud Act

E. The Doctrine of Equitable Estoppel Does Not Apply To This Case

We have considered each of these issues in light of the record, the applicable law, and the arguments of counsel, and we are satisfied that none of them is of sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(A), (E). We, therefore, affirm substantially for the reasons stated by Judge Ryan in his oral decision of May 9, 2007. We add only the following comments.

Even if a written change order was contemplated by the "time and material" contract under review, or required under applicable law, nevertheless we are satisfied that defendant is equitably estopped from asserting this defense under the particular facts and circumstances of this case, as found by the trial judge.

Equitable estoppel is "the effect of the voluntary conduct of a party whereby he is absolutely precluded, both at law and in equity, from asserting rights which might perhaps have otherwise existed . . . as against another person, who has in good faith relied upon such conduct, and has been led thereby to change his position for the worse . . . ." The doctrine is "designed to prevent a party's disavowal of previous conduct if such repudiation 'would not be responsive to the demands of justice and good conscience.'"

[Heuer v. Heuer, 152 N.J. 226, 237 (1998) (citations omitted).] The doctrine has been deemed applicable to the Consumer Fraud Act, Joe D'Egidio Landscaping, Inc. v. Apicella, 337 N.J. Super. 252, 258 (App. Div. 2001), and by parity of reasoning, to related regulations.

Similar to the present matter, in Apicella, a contractor sued a homeowner, seeking to recover damages owed in connection with paving of the homeowner's driveway. Id. at 255-56. The homeowner counterclaimed for damages alleging poor workmanship and also defended on the basis that the contract was unenforceable because not in writing as required by a regulation adopted under the Consumer Fraud Act. Id. at 256. We ultimately held that the homeowner was equitably estopped from invoking the shield of the regulation because it was his very own conduct -- i.e. insisting that a written contract was unnecessary in light of his long-standing relationship with the contractor -- which caused the violation. Id. at 257. In other words, "one who induces the alleged wrongdoing should not benefit as a result of it." Ibid.

We perceive no meaningful difference here. Hamburger relied on Lyon's insistence that the work proceed to completion without benefit of a formal, written work order. Even more significant here, Hamburger attempted to comply with the applicable regulations by offering to draft a change order, but Lyon declined the invitation, opting instead to forego formality in favor of expediency. Under the circumstances, were we to conclude that defendant is entitled to invoke the very statutory and regulatory protections he consciously repudiated, the result would be to permit defendant to retain, at no cost, the fruits of plaintiff's labor. Such a result would further none of the laudable legislative or regulatory objectives implicated here, nor be responsive to the demands of justice or good conscience.



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