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Rubino & Co. v. County of Essex

April 21, 2008


On appeal from Superior Court of New Jersey, Law Division, Essex County, Docket No. L-10165-02.

Per curiam.


Argued January 15, 2008

Before Judges Fuentes, Grall and Chambers.

Plaintiff Rubino & Company appeals from a judgment entered by the Law Division rejecting its claim to recover $736,248.25 plus prejudgment interest for work performed for defendant Essex County. Defendant cross-appeals from the trial court's denial of its motion to amend its answer to include a counterclaim seeking a set-off.

Plaintiff's claim is based on accounting services that it performed during the 1990s in connection with County Medicare and Medicaid cost reports. The cost reports related to Essex County Hospital Center, which contained a psychiatric hospital and, up until 1996, a geriatrics center. The parties entered into two separate contracts. The first agreement covered a series of annual contracts pursuant to which Rubino would be paid a fixed fee for doing the cost reports (the fixed fee contract); the second contract promised to pay plaintiff a contingency fee based on a percentage of the amount of retroactive reimbursements that it recovered (the contingency contract). It is the latter contract that is in dispute in this appeal, and under which plaintiff sought to recover.

The trial court held that the three projects for which plaintiff sought recovery under the contingency contract were not encompassed by that agreement. The court found that the contingency contract promised reimbursement only for the years prior to 1993, the year the parties entered into the contract, and not for matters arising thereafter. The court further held that the parties did not modify the contingency contract to include those projects, and that plaintiff's compensation under the annual fixed fee contracts constituted its compensation for those three projects. In addition, the court held that plaintiff was not entitled to compensation on an hourly basis with respect to a fourth project, because that project also was covered by the relevant annual fixed fee contract.

After reviewing the record, we affirm substantially for the reasons expressed by Judge Winard in his oral opinion delivered from the bench on May 5, 2006. In so doing, we incorporate by reference the trial court's factual findings, which are well-supported by the competent evidence developed in the record. Rova Farms Resort, Inc. v. Investors Ins. Co., 65 N.J. 474, 483-84 (1974). We add only the following brief comments.

When interpreting contractual provisions a court will examine the plain language of the contract and the parties' intent, as evidenced by the contract's purpose and the surrounding circumstances. Highland Lakes Country Club & Cmty. Ass'n v. Franzino, 186 N.J. 99, 115 (2006). Where the terms of a contract are clear and unambiguous, there is no room for interpretation and the terms must be enforced as written. B.D. v. Div. of Med. Assistance & Health Servs., 397 N.J. Super. 384, 391 (App. Div. 2007). The court has no right to rewrite the contract merely because it might have drafted it differently, nor to make a better contract for the parties than they themselves have seen fit to enter into. Schor v. FMS Fin. Corp., 357 N.J. Super. 185, 191 (App. Div. 2002) (citing Karl's Sales & Serv., Inc. v. Gimbel Bros., Inc., 249 N.J. Super. 487, 493 (App. Div.), certif. denied, 127 N.J. 548 (1991)). Here, the plain language of the agreement indicates that the contingency contract was to apply to cost reimbursements predating the signing of the agreement.

We also reject plaintiff's argument based on the implied covenant of good faith and fair dealing. Specifically, plaintiff contends that defendant included an anticipated $3 million payment from the State, minus plaintiff's fee, as a "phantom" revenue line item in its 1998 budget, and then failed to pay plaintiff its fee. This, according to plaintiff, defeated its reasonable and justified expectations and constituted bad faith.

A covenant of good faith and fair dealing is implied in every contract in New Jersey, whereby each party to a contract is forbidden to do anything that will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract. Iliadis v. Wal-Mart Stores, Inc., 191 N.J. 88, 109-10 (2007). Here, even assuming that budget fraud was committed, the injured parties would have been the taxpayers of Essex County and the State of New Jersey, not plaintiff. More to the point, based on the record developed, we have no basis to conclude that the County acted in bad faith towards plaintiff in this matter.



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