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Richard A. Pulaski Construction Co., Inc. v. Air Frame Hangars

July 1, 2008

RICHARD A. PULASKI CONSTRUCTION CO., INC., PLAINTIFF-RESPONDENT,
v.
AIR FRAME HANGARS, INC., COUNTY OF MERCER, CHARLES B. YATES, WILLIAM C. AND CATHERINE DALTON, GARY AND SUSAN SMOTRICH, ROBERT BAUS, TUDOR CORPORATION, WILLIAM AND PHYLLIS GLATZ, CLEMENT ZILKA, WALTER KNOUSE, WILLIAM HOLT, AIRTEX PRODUCTS, INC., WASHINGTON ROAD ASSOCIATES, WEEKEND AIR CHARTER SERVICE, INC., NICHOLAS ESPOSITO, BRETT NORTGREN, ROBERT AND JEANETTE AGSTER, MERCER COUNTY GENERAL AVIATION HANGAR CONDOMINIUM COMPLEX ASSOCIATION, JAMES A. MEHLING AND KAREN F. RITTERSON, DEFENDANTS, AND BRUCE W. RITTERSON DEFENDANT-APPELLANT.



On certification to the Superior Court, Appellate Division.

SYLLABUS BY THE COURT

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).

In this appeal the Court considers whether New Jersey recognizes a cause of action in prima facie tort and, if so, the contours of that cause of action.

In February 1996, Air Frame Hangars, Inc. (Air Frame), entered into a lease with the County of Mercer for development of "condominium-style" aircraft hangars for private airplane owners at Mercer County Airport. Defendant, Bruce W. Ritterson (Ritterson), was the president and a shareholder of Air Frame. Air Frame entered into an agreement with plaintiff, Richard A. Pulaski Construction Co., Inc. (Pulaski), whereby Pulaski agreed to perform site work for the aircraft hangars in exchange for the contract sum of $167,113. By all accounts, Pulaski performed on its contract. Air Frame, however, failed to pay as agreed, even though Air Frame completed and sold a number of the condominium-style hangars to third parties.

In August 1997, Pulaski filed a construction lien against the improved realty. That lien later was declared defective, as it identified the municipality in which the realty was located as Trenton, when the Airport in fact is located in Ewing Township. The filing and service of the lien claim triggered settlement discussions between the parties, which were ultimately unsuccessful. In October 1997, Pulaski filed a demand for arbitration against Air Frame. In February 1998, during the pendency of the arbitration, Pulaski filed its first complaint against Air Frame and Mercer County -- but not against Ritterson -- seeking to collect on its unpaid contract balance. By agreement, that suit was later dismissed without prejudice, with the statute of limitations tolled during the pendency of the arbitration proceedings. Air Frame defaulted in the arbitration proceeding and, in April 1999, an award for the contract balance plus interest, totaling $136,817, was entered against Air Frame.

On May 6, 1999, Pulaski filed a verified complaint seeking to confirm the arbitration award. It added as defendants those purchasers who acquired aircraft hangars from Air Frame after Pulaski filed its construction lien claim. Those defendants successfully moved for summary judgment, and Pulaski's construction lien claim was dismissed as procedurally deficient. The complaint did not list Ritterson as a party. On November 1, 1999, Pulaski filed an amended complaint and, for the first time, added a fraud claim against Ritterson.

Ritterson moved for summary judgment, and the trial court granted that application. The trial court explained that a fraud cause of action did not lie because even if Ritterson had made fraudulent misrepresentations to the aircraft hangar purchasers as to the quality of title, Pulaski never detrimentally relied on those representations. Pulaski appealed, and the Appellate Division affirmed the dismissal of the fraud claim against Ritterson, applying the same rationale relied on by the trial court. However, the Appellate Division went on to hold that the matter should be remanded for a determination of whether the facts alleged could support a cause of action against Ritterson on a different tort theory, namely, for prima facie tort.

On remand, the trial court embraced the existence of a prima facie tort claim. The trial court cited to Section 870 of the Restatement (Second) of Torts, which provides that one who intentionally causes injury to another is subject to liability for that injury, if his conduct is generally culpable and not justifiable under the circumstances. It also provides that liability may be imposed even if the actor's conduct does not come within a traditional category of tort liability. The case was tried without a jury. Pulaski presented persuasive proofs that, following his receipt of the construction lien claim and the demand for arbitration, Ritterson nevertheless transferred title to nine aircraft hangar condominiums to third party purchasers. The evidence showed that in each affidavit of title prepared for the transfers, Ritterson stated under oath that no liens had been filed on the property and that Air Frame did not have any pending lawsuits or other legal obligations which may be enforced against the property. The trial court found that Ritterson's intentional, false swearing constituted a prima facie tort. The trial court entered judgment in Pulaski's favor in the amount of $105,932, $19,155 in prejudgment interest, and an additional $20,269 in counsel fees. Ritterson appealed, and the Appellate Division affirmed in an unpublished per curiam opinion.

Ritterson's petition for certification was granted by the Supreme Court. 192 N.J. 479 (2007).

HELD: Assuming, without deciding, that New Jersey common law may admit of a cause of action for prima facie tort, its availability is limited exclusively to those instances that do not fall within a traditional tort cause of action. Because Pulaski had available another cause of action, the separate claim for a prima facie tort must fail.

1. Although descriptions of the prima facie tort cause of action appear sporadically in our jurisprudence, this Court has neither upheld a prima facie tort claim nor explicitly defined its limits. In Taylor v. Metzger, 152 N.J. 490, 523 (1998), this Court explicitly declined to recognize a claim in prima facie tort but addressed the Restatement and the development of the prima facie tort in other jurisdictions. The Court explained that such a cause of action encompasses the intentional, willful and malicious harms that "fall within the gaps of the law," and noted that prima facie tort claims have been most frequently permitted "only in the limited situations in which plaintiffs would have no other cause of action." Supra, 152 N.J. at 523. Because a prima facie tort cause of action, however defined, may lie only if no other tort is available, the Court need not address whether New Jersey recognizes that tort or otherwise defines its contours. The Court addresses instead whether Pulaski's claim satisfies that universally recognized threshold requirement. (pp. 11-16)

2. At its core, Pulaski's complaint is for breach of contract. Although its construction line claim was procedurally defective, Pulaski nevertheless had a judgment entered in its favor and against Air Frame for the amount of the arbitration award. Thus, Pulaski successfully had prosecuted a traditional cause of action at law for its breach of contract claim and was awarded a judgment in the full amount it sought. The only remaining issue is the efficacy of that remedy, an issue that arises only due to Air Frame's insolvency. However, a defendant's insolvency by itself does not give rise to a prima facie tort claim; in order for that tort to be available, there can be no other cause of action cognizable. Stated differently, a prima facie tort may be triggered by the absence of a cause of action, but not by the lack of an effective remedy. Here, Pulaski had available to it a proper cause of action. For that reason alone, its separate claim for a prima facie tort must fail. (pp. 16-18)

3. Even if the focus is shifted away from Air Frame and to Ritterson, Pulaski nonetheless possessed a separate, viable remedy against him. For there to be substance to Pulaski's claim against Ritterson, it had to have been couched as a claim to pierce Air Frame's corporate veil. It was through that vehicle, if at all, that Pulaski could transcend Air Frame's corporate structure and separate legal existence to reach Ritterson individually. Pulaski never sought to pierce Air Frame's corporate veil, electing instead -- only after its fraud claim had been dismissed by the trial court and as part of its first appeal -- the more exotic claim that Ritterson's actions constituted a prima facie tort. In these circumstances, the existence of the doctrine allowing Pulaski to pierce a corporate veil also serves to negate the applicability of the prima facie tort doctrine, as the presence of the former supplants the need for the latter. (pp. 18-20)

The judgment of the Appellate division is REVERSED, and the cause is REMANDED to the Law Division for entry of judgment in favor of Bruce W. Ritterson.

CHIEF JUSTICE RABNER and JUSTICES LONG, LaVECCHIA, ALBIN, WALLACE and HOENS join in JUSTICE RIVERA-SOTO's opinion.

The opinion of the court was delivered by: ...


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