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Honeywell International, Inc. v. O.A. Peterson Construction Co.

June 10, 2008

HONEYWELL INTERNATIONAL, INC., PLAINTIFF-RESPONDENT,
v.
O.A. PETERSON CONSTRUCTION CO., INC., DEFENDANT-APPELLANT.



On appeal from the Superior Court of New Jersey, Law Division, Essex County, Docket No. L-4595-05.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted March 4, 2008

Before Judges Gilroy and Baxter.

Defendant O.A. Peterson Construction Co., Inc., appeals from the June 25, 2007 order of the Law Division, which entered judgment in favor of plaintiff Honeywell International, Inc.,*fn1 in the amount of $20,950.20. We affirm in part; reverse in part; and remand to the trial court for further proceedings consistent with this opinion.

Plaintiff is engaged in the business of, among other matters, manufacturing and supplying materials and services for heating, ventilation, and air conditioning systems. Defendant is engaged in the business of providing construction management and general contracting services for third-party construction projects.

Commencing in January 2000, defendant submitted three invoices to plaintiff: 1) an invoice dated January 26, 2000, in the amount of $1,500, Job No. 99-205; 2) an invoice dated January 27, 2000, in the amount of $6,784.43, part of which was paid, reducing the balance to $1,995.67, Job No. 99-247; and 3) an invoice dated April 5, 2000, in the amount of $75,750.80, Job No. 99-070. On August 15, 2003, plaintiff sent a bill to defendant in the amount of $80,519.87 for materials purchased by defendant for third-party projects. On June 7, 2005, plaintiff filed its complaint against defendant seeking to collect monies owed on its book account. Defendant filed its answer, not only denying liability to plaintiff, but also asserting that it was entitled to a setoff in the amount of $79,246.47 for monies plaintiff owed on its three invoices.

The matter was tried without a jury. Prior to commencement of testimony, the parties stipulated to the following facts: 1) "Honeywell International, Inc., merged with and into Allied Signal in 1999"; 2) "Allied Signal amended its certificate of incorporation in 1999 to change its name from Allied Signal to Honeywell International, Inc."; 3) "any mon[ies] that O.A. Peterson is successful in establishing at . . . trial as being due and owing from Allied Signal shall constitute equal dollar-for-dollar credit against any mon[ies] that plaintiff Honeywell International is successful in establishing at trial as due and owing to it from O.A. Peterson"; and 4) "there remains unpaid by O.A. Peterson to Honeywell the sum of $80,519.87."

Following the stipulation, plaintiff rested, leaving defendant to its proofs concerning the monies allegedly due on its three invoices. Defendant asserted that the work and material rendered to plaintiff, as evidenced by the three invoices, were authorized by Allied Signal, separate from the work performed by defendant under the $144,800 purchase order for renovation of the second floor of the Solvay Building (the Solvay project). Plaintiff denied liability for payment on the three invoices, asserting that the invoices covered work that was included within the scope of the February 18, 1999 purchase order for the Solvay project. In support of its claim that it was entitled to an offset, defendant presented testimony from Lisa Freedman, its bookkeeper and Assistant Comptroller; and Kurt Vanden Berg, its former estimator and Project Manager. Plaintiff countered with testimony from John McClellan, its current Director of Facilities of its Morristown headquarters; and John Friend, its Purchasing Agent at Morristown.

Freedman testified as follows. Defendant does not owe plaintiff $80,519.87, the amount stipulated, but only $1,273.28, which represents the difference between the amount stipulated and the total of its three invoices owed by plaintiff. Between 1998 and 2000, defendant performed approximately sixty to seventy construction projects at Allied Signal's Morristown complex. The construction projects were awarded to defendant by Allied Signal, either by a competitive bid proposal process or on a time and material basis. Each project was assigned a job number by defendant for accounting and billing purposes. The Solvay project was assigned Job No. 99-010. Each of the construction projects at Allied Signal's facilities was conducted under the supervision of Vanden Berg.

On January 8, 1999, Vanden Berg submitted a bid proposal in the amount of $144,800 "to furnish all material, labor, supervision, construction tools, facilities and equipment to complete the interior renovation on [the Solvay project] as per plans and specifications prepared by Allied Signal." Although Allied Signal's plans and specifications included the purchase and installation of carpet, the proposal submitted by defendant excluded it because defendant had not received a quote from its subcontractor, Fromkin Brothers, Inc. Defendant's bid proposal was reviewed by Allied Signal's project manager, Kim Lyons, who noted that defendant's proposal did not include the purchase and installation of carpet as specified in the plans and specifications. Nevertheless, Allied Signal awarded the contract to defendant on January 20, 1999. On February 18, 1999, Allied Signal prepared and forwarded a purchase order to defendant for the Solvay project in the amount of $144,800. On February 23, 1999, defendant executed and returned the purchase order to plaintiff, after which defendant completed all the work agreed upon.

Freedman testified regarding defendant's three outstanding invoices. The first invoice was for Job No. 99-205 dated January 26, 2000, for the construction of an insulated knee wall in the AB Building, D-wing, in the amount of $1,500. The AB Building is a separate building from the Solvay Building, and the work performed there was not related to the $144,800 purchase order for the Solvay project. The second invoice dated January 27, 2000, in the amount of $1,995.67, represented the balance due for work performed under Job No. 99-247 for the construction of a wall and door unrelated to the Solvay project.

The third invoice dated April 5, 2000, in the amount of $75,750.80 was for work performed under Job No. 99-070, representing additional work that had been authorized by Kim Lyons at the Solvay Building, separate from the work the parties had agreed on under Job. No. 99-010. The invoice amount of $75,750.80 consisted of charges by Fromkin for carpet installation in the amount of $48,760, and for labor and material to paint five additional offices and remove vinyl adhesive from four walls in one office, all located in the Solvay Building in the amount of $2,400; defendant's labor charge of $14,710.20; and a 15% profit factor of $9,880.54. Attached to the third invoice were copies of invoices received by defendant from Fromkin for the material used and labor performed.

In support of her testimony that the labor and material charged under Job No. 99-070 was not included in the scope of the work under Job No. 99-010, Freedman referenced Fromkin's estimate for the installation of carpet and flooring in the amount of $48,760, which was dated February 3, 1999, approximately one month after defendant had submitted its bid to perform the work on the Solvay project for $144,800. Freedman also noted a handwritten note she had received from Lyons, acknowledging that defendant's bid did not include the installation of the carpet before defendant received the award of the bid from Allied Signal. According to Freedman, because of Allied Signal's unique working relationship with defendant, it was common practice for Allied Signal to verbally award defendant construction contracts in excess of $5,000 and to confirm the ...


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