On appeal from the Superior Court of New Jersey, Law Division, Mercer County, Docket No. L-3215-05.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted October 29, 2008
Before Judges Cuff and Baxter.
Plaintiff Gleason Design Associates, Inc. appeals from a July 6, 2007 order that dismissed its complaint against defendant Pizzelli Associates, Inc. on the basis of the entire controversy doctrine. The motion judge concluded that because Gleason was aware of the existence of a claim against Pizzelli at the time Gleason settled litigation in Atlantic County, but failed to join Pizzelli in the Atlantic County litigation, the present professional negligence suit against Pizzelli was barred by the entire controversy doctrine. We reverse.
Both the Atlantic County litigation and the instant matter arise out of the same series of contracts related to the installation of soil at a commercial building site in Hamilton Township in Atlantic County. In particular, on or about September 19, 2002, Gleason entered into a contract with third-party defendant Benderson Development Co., Inc. (Benderson). That contract required Gleason to regrade the surface of Benderson's land to accommodate the improvements Benderson intended to make, including drainage areas, parking lots and buildings. The contract between Benderson and Gleason did not specify the number of cubic yards of soil Gleason was obliged to deliver to the site. Instead, Benderson provided measurements by Benderson's surveyors, third-party defendant Control Point Associates, Inc., showing the elevations of various parts of the construction site as of January 10, 2002. In formulating its construction bid, Gleason relied upon those contour drawings to calculate the amount of soil necessary to perform its contract with Benderson.
Gleason was the successful bidder, and signed the contract with Benderson in September 2002. Gleason then engaged the services of Pizzelli to survey the site and to install markings that would identify the areas of the site that had to be excavated and the areas that had to be filled to attain the grading called for by Benderson's contour drawings.
Relying upon the drawings furnished by Benderson, Gleason calculated the quantity of fill needed to attain the specified grade change. Gleason then contracted with third-party defendant Carey Excavating, Inc. (Carey) for the delivery of 25,000 cubic yards, agreeing to pay $7.40 per cubic yard delivered and installed. Not long after the work began, Carey reported to Gleason that the indicated grades had been reached without even spreading all of the approximately 17,000 cubic yards that had been delivered at that time. Gleason, assuming that it had over-estimated its needs, consulted with Pizzelli to verify the accuracy of the staking and, after being assured by Pizzelli of its accuracy, instructed Carey to remove the excess material from the site. Carey then disposed of the excess soil at a construction site adjacent to the Benderson site. Whether Carey gave or sold the material to the contractors there is unknown.
Approximately six months later, after Carey had disposed of the excess fill, Benderson revealed for the first time that the Control Point contour drawings that Benderson had supplied to Gleason were incorrect. Specifically, by letter of April 10, 2003, Benderson informed Carey and Gleason that the "survey that the contract was awarded on was incorrect. Due to this error, an additional 7,500 to 15,000 cubic yards of additional soil may become necessary." Benderson assured both Carey and Gleason that it would reimburse Gleason for the additional soil to be supplied, stating "[r]est assured, whatever amount is determined necessary, Benderson Development Co., Inc. will reimburse Gleason Design Associates at the appropriate unit rate."
Thus, by its April 10, 2003 letter, Benderson implicitly admitted that the error in its own contour drawings had been the cause of Gleason's and Carey's erroneous belief that they had brought excess fill to the site. Notwithstanding the payment assurances Benderson made in its April 10, 2003 letter, Benderson bypassed Gleason by canceling Gleason's contract, and began to deal directly with Carey. Benderson justified the cancellation of its contract with Gleason by asserting that Gleason had stolen soil from the site. Dealing directly with Carey, Benderson induced Carey to deliver all of the remaining soil for the site, including the soil that Carey would have had to deliver if it had fulfilled its contract with Gleason for 25,000 cubic yards of material.
Benderson, however, paid Carey only for the delivery of soil in excess of 25,000 cubic yards on the assumption that Gleason had paid Carey for the 25,000 cubic yards specified in Carey's contract with Gleason. Ultimately, Benderson also reneged on its April 10, 2003 assurances to Gleason as well. Specifically, Benderson paid Gleason only $78,000 of the $235,000 amount that was due to Gleason under the September 19, 2002 contract.
On June 27, 2003, Carey instituted suit in Atlantic County against Gleason and Benderson to recover the sums due from each.
Four days after suit was instituted, Benderson settled with Carey. Gleason, in turn, filed a third-party complaint against Benderson for breach of contract, unjust enrichment and tortious circumvention of the subcontract relationship between Gleason and Carey. In all of the pleadings and discovery exchanged between Gleason and Benderson in the Atlantic County litigation, Benderson never repudiated its letter of April 10, 2003 nor denied it had issued faulty drawings for the existing contours. Moreover, Benderson never denied ...