July 9, 2008
ESPJ CONSTRUCTION CORPORATION, A NEW JERSEY CORPORATION, PLAINTIFF-RESPONDENT,
TONY SCHIAVONE D/B/A SEASONAL WORLD, DEFENDANT-APPELLANT.
On appeal from Superior Court of New Jersey, Law Division, Union County, Docket No. L-0164-06.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted April 9, 2008
Before Judges Lisa and Simonelli.
In this breach of contract case, defendant Tony Schiavone, d/b/a Seasonal World, appeals from the May 29, 2007 order entering judgment in the amount of $63,794.71 in favor of plaintiff ESPJ Construction Corporation (ESPJ). We affirm.
Giovanni Espejo (plaintiff) is a mason and the owner of ESPJ, a concrete installation service company. Defendant is the president of Seasonal World, which sold and installed in-ground swimming pools in private residences. There is no dispute the parties had an oral contract involving the pouring of three feet of cement around the pools defendant sold and installed; that plaintiff completed sixty-four jobs throughout the 2003 and 2004 "pool season" for which he was not paid; that defendant was paid by each homeowner $3000 for the three feet of cement plaintiff poured; and that plaintiff supplied the labor and materials for each job. The dispute here concerns the contract's terms.
Plaintiff claims the contract was for services, and the payment terms were as follows: (1) from the first $3000 defendant received from the homeowner, defendant would pay plaintiff $900 to pour and set the first three feet of regular concrete around each pool; (2) defendant would pay plaintiff an additional $500 for any cantilever edge work; and (3) if plaintiff obtained additional work directly from the homeowner, he would pay defendant a ten percent commission on contracts over $3000.*fn1 Defendant claims the contract was for the sale of concrete, pavers and blocks, and the payment terms were as follows: (1) he would pay plaintiff $800 per job only if plaintiff did not obtain a contract with a homeowner for additional work over $3000; and (2) plaintiff would pay defendant ten percent of the gross contract plaintiff obtained from the homeowners.
In support of his claim, plaintiff relied on summaries he prepared of the jobs completed in 2003 and 2004. He testified "[i]n great detail" about how he prepared summaries and calculated the amount defendant owed.*fn2 Plaintiff also testified that he prepared each summary in the regular course of his business during 2003 and 2004; sent them to defendant at the end of the pool season; discussed them with defendant, who said he gave them to his secretary to check if the charges were correct; repeatedly requested payment; and was never paid. The trial judge found plaintiff's testimony about the summaries credible, including his explanation about some mistakes they contained.
Defendant testified that he paid $11,400 to repair "several jobs that [plaintiff] screwed up while he was working for [defendant]," and made "several repairs" on completed jobs.*fn3
However, defendant admitted that he permitted plaintiff to complete the jobs, despite customer complaints, and to continue working until the end of their working relationship. Defendant also admitted that he never sought payment of his ten percent commission or the monies he expended to repair plaintiff's allegedly defective work.
The judge emphasized that "[t]he credibility and believability of all the witnesses was important in this"; that "Plaintiff's account of the terms of the contract [was] sincere and credible"; that plaintiff "testified, credibly"; and that "Plaintiff's testimony and Plaintiff['s] theory of the contract" and "Plaintiff's . . . rendition of the contract arrangement [was] more credible and plausible than Defendant's as to the first $900 owed." The judge found unbelievable defendant's claim that he only paid plaintiff if plaintiff did not get additional work from a homeowner over $3000 because:
First, it is undisputed that Plaintiff interacted with the homeowner. And it was up to Plaintiff to attempt to sell the extras over $3000.
If the Plaintiff was not paid for the first $3000, what would be his incentive to perform the work if he got no extras. The mere hope for additional work? The Court cannot find the Defendant's argument logical.
The judge concluded there was no dispute that the parties entered into an oral agreement for concrete installation services, and that:
After assessing the credibility, demeanor, sincerity, and specific proofs as well as the motive of each witness, the Court finds that it was the intent of the Plaintiff and the Defendant when they entered their oral agreement that Plaintiff be paid $900 for each job poured.
The judge also concluded that defendant owed plaintiff $63,794.71 calculated as follows:
Total amount claimed by plaintiff:$75,794.71
Minus a billing error:- 600.00
Minus defendant's repair costs:- 11,400.00
Defendant first contends that the trial judge erred by admitting the summaries into evidence without the underlying documents. Defendant argued that the summaries were inadmissible because they were not made contemporaneously with the dates of the alleged contracts from which they were prepared; that many of the entries on the 2004 summary were not accurate, rendering that summary unreliable; and that, except for plaintiff's conclusory statement, there was insufficient evidence that plaintiff regularly made the summaries in the regular course of his business.
The judge admitted the summaries under N.J.R.E. 803(c)(6) and N.J.R.E. 1006 after finding that plaintiff made them in the regular course of business; that, despite some mistakes, the summaries were trustworthy; and that plaintiff prepared the summaries shortly after completion of the jobs.
"As a general rule, admission or exclusion of proffered evidence is within the discretion of the trial judge whose ruling is not disturbed unless there is a clear abuse of discretion." Dinter v. Sears, Roebuck & Co., 252 N.J. Super. 84, 92 (App. Div. 1991); see also Purdy v. Nationwide Mut. Ins. Co., 184 N.J. Super. 123, 130 (App. Div. 1982). We give "substantial deference" to the trial judge's evidentiary rulings. Benevenga v. Digregorio, 325 N.J. Super. 27, 32 (App. Div. 1999) (citations omitted), certif. denied, 163 N.J. 79 (2000).
Also, our review of a trial judge's findings is a limited one. Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974) (quoting Fagliarone v. Twp. of N. Bergen, 78 N.J. Super. 154, 155 (App. Div.), certif. denied, 40 N.J. 221 (1963)). "'[W]e do not disturb the factual findings and legal conclusions of the trial judge unless we are convinced that they are so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice[.]'" Ibid. We give particular deference to the trial judge's credibility determinations. Connell v. Diehl, 397 N.J. Super. 477, 490 (App. Div. 2008); Rieder Comtys., Inc. v. Twp. of N. Brunswick, 227 N.J. Super. 214, 223-24 (App. Div.), certif. denied, 113 N.J. 638 (1998). However, "[a] trial court's interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference[,]" and is subject to de novo review. Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995) (citations omitted). With these standards in mind, we review defendant's contention.
N.J.R.E. 803(c)(6) permits the admission of business records. "The purpose of the business records exception is to 'broaden the area of admissibility of relevant evidence where there is necessity and sufficient guarantee of trustworthiness.'" Liptak v. Rite Aid, Inc., 289 N.J. Super. 199, 219 (App. Div. 1996) (quoting State v. Hudes, 128 N.J. Super. 589, 599 (Cty. Ct. 1974)). It is "founded upon the theory 'that records which are properly shown to have been kept as required normally possess a circumstantial probability of trustworthiness, and therefore ought to be received in evidence.'" State v. Matulewicz, 101 N.J. 27, 30 (1985) (quoting Mahoney v. Minsky, 39 N.J. 208, 218 (1963)). There are three requirements for admissibility under the exception:
First, the writing must be made in the regular course of business. Second, it must be prepared within a short time of the act, condition or event being described.
Finally, the source of the information and the method and circumstances of the preparation of the writing must justify allowing it into evidence. [Feldman v. Lederle Labs., 132 N.J. 339, 354 (1993) (quoting Matulewicz, supra, 101 N.J. at 29).]
If the trial court, "after examining . . . [the record(s)] and hearing the manner of their preparation explained, entertains serious doubt as to whether they are dependable or worthy of confidence[,]" then the "general acceptance of reliability" will not attach. Matulewicz, supra, 101 N.J. at 30 (quoting Mahoney, supra, 39 N.J. at 218). The trial judge decides admissibility of purported business records, and the fact-finder judges its credibility. Liptak, supra, 289 N.J. Super. at 219-20 (citing Mahoney, supra, 39 N.J. Super. 218-19).
N.J.R.E. 1006 permits the use of summaries. There are three kinds of evidence summaries that may be presented in court. The first is a "primary evidence summary" which is "typically used to condense voluminous materials that cannot be conveniently examined in court." Heinzerling v. Goldfarb, 359 N.J. Super. 1, 8 (Law Div. 2002) (quoting United States v. Bray, 139 F.3d 1104, 1112 (6th Cir. 1998)). Next are "'pedagogical-device summaries'" "which are presented to summarize, clarify or simplify proofs admitted in the case." Ibid. Finally, "'secondary-evidence summaries'" "are hybrids of the first two categories, admitted 'not in lieu of the evidence they summarize but in addition thereto.'" Ibid. A summary "'must fairly condense the underlying material[,]'" id. at 12 (quoting C. Mueller & L. Kirkpatrick, Evidence § 10.16 at 1236), and it "'cannot embellish with information not contained in the originals.'" Id. at 11. Any summaries admitted under N.J.R.E. 1006 must be "substantially balanced and fair[.]" Id. at 15.
Based upon our review of the record, we discern no abuse of discretion here. The trial judge properly admitted the summaries under N.J.R.E. 803(c)(6), N.J.R.E. 1006, and applicable case law.
Defendant next contends the oral contract is unenforceable under New Jersey's Uniform Commercial Code (UCC), N.J.S.A. 12A:1-101 to 9-110, specifically N.J.S.A. 12A:2-102, because it was a contract for the sale of goods that was not in writing. We disagree.
The UCC applies to "transactions in goods[,]" and not service contracts. Quality Guaranteed Roofing, Inc. v. Hoffman-La Roche, Inc., 302 N.J. Super. 163, 165 (App. Div. 1997). "Goods" are defined "as moveable items for sale 'other than the money in which the price is to be paid.'" Advanced Enters. Recylcing, Inc. v. Bercaw, 376 N.J. Super. 153, 162 (App. Div. 2005) (quoting N.J.S.A. 12A:2-105(1)).
The question of whether a particular contract falls within the UCC depends upon whether it is one for a sale of goods (plus incidental services), which falls within the UCC, or one for services (plus incidental providing of labor and materials), which does not. Quality Guaranteed Roofing, Inc., supra, 302 N.J. Super. at 166. The UCC is applicable "'if the sales aspect predominates[,] and is inapplicable if the service aspect predominates.'" Ibid. (quoting Custom Commc'ns Eng'g, Inc. v. E.F. Johnson Co., 269 N.J. Super. 531, 537 (App. Div. 1993)). Such is a question of fact determined by examining "'the language and circumstances surrounding the contract . . . the compensation structure of the contract . . . [and] the interrelationship of the goods and services to be provided; whether one is incidental to the other as well as the intrinsic worth of the goods being provided.'" Id. at 166-67.
A contract within the UCC is subject to N.J.S.A. 12A:2-201, which provides, in relevant part:
(1) Except as otherwise provided in this section a contract for the sale of goods for the price of $500 or more is not enforceable by way of action or defense unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought or by his authorized agent or broker. . . . [T]he contract is not enforceable under this paragraph beyond the quantity of goods shown in such writing.
(3) A contract which does not satisfy the requirements of subsection (1) but which is valid in other respects is enforceable.
(b) if the party against whom enforcement is sought admits in his pleading, testimony or otherwise in court that a contract for sale was made, but the contract is not enforceable under this provision beyond the quantity of goods admitted; or
(c) with respect to goods for which payment has been made and accepted or which have been received and accepted [N.J.S.A. 12A:2-606].
"[T]o prevail under . . . N.J.S.A. 12A:2-201(3)(b), plaintiff must prove the existence of a valid oral contract and must demonstrate that the defendant admitted that a contract was reached." Integrity Material Handling Sys., Inc. v. Deluxe Corp., 317 N.J. Super. 406, 414 (App. Div.), certif. denied, 160 N.J. 91 (1999). "To prevail under N.J.S.A. 12A:2-201(3)(c), the plaintiff must prove the oral contract and demonstrate that goods or payment were accepted by the defendant." Ibid. One may not invoke the Statute of Frauds defense if one has received and accepted payment, however, and if that is the case, "[t]he agreement, . . . , is only enforceable with respect to the amount of goods for which payment has been accepted." Id. at 415 (citing N.J.S.A. 12A:2-201(3)(c)).
Based upon our review of the record, we are satisfied the UCC does not govern the contract here because it was one for services, namely the pouring and setting of concrete, not goods. The concrete is not a "moveable item for sale," nor is there any evidence that either defendant or his customers intended to resell the concrete after its installation. See Quality Guaranteed Roofing, supra, 302 N.J. Super. at 168 (contract for the installation of roofs did not fall within the UCC because it was predominantly a contract for services).
Even if the UCC applied, we are satisfied that, because the exceptions in N.J.S.A. 12A:2-201(3)(b) and (c) apply, N.J.S.A. 12A:2-201(1) does not bar plaintiff's claim. Defendant admitted that the parties had an oral contract and that plaintiff performed the work reflected in the summaries.
"[P]art performance . . . may take the [oral] agreement out of the statute of frauds[.]" (citations omitted). This is so because "[w]here the statute works the intolerable mischief of operating as a fraud the statute should be no bar to the granting of relief to one who has, in good faith, so performed the parol agreement as to irretrievably change the situation of the parties to the disadvantage of the plaintiff." [Lahue v. Pio Costa, 263 N.J. Super. 575, 599 (App. Div.) (citing Cauco v. Galante, 6 N.J. 128, 138 (1951)), certif. denied, 134 N.J. 477 (1993).]
Here, there is no dispute that plaintiff completed sixty-four jobs during the 2003 and 2004 pool seasons, and was not paid. Thus, the "part performance" exception is met, and the contract is enforceable for the amount specified by the trial judge.
Defendant next contends the contract is unenforceable because there was no agreement as to payment terms. Defendant also contends that plaintiff failed to prove a quantum meruit claim because he was unable to establish the reasonable value of the work performed. These contentions are without sufficient merit to warrant further discussion. R. 2:11-3(e)(1)(E). However, we add the following comments.
Defendant admitted the parties had an oral contract and that plaintiff completed sixty-four jobs for which he was not paid. The trial judge found, and we agree, that the payment terms were those established by plaintiff. Thus, the contract is enforceable. Also, plaintiff is entitled to quantum meruit damages. He established that he performed services in good faith; that defendant accepted the services; and that he expected payment. Plaintiff also established the reasonable value of the services. Starkey v. Estate of Nicolaysen, 172 N.J. 60, 68 (2002).