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Builders v. Estate of Paton

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


May 14, 2010

DREAM BUILDERS, PLAINTIFF-APPELLANT/ CROSS-RESPONDENT,
v.
ESTATE OF TODD PATON AND DEBORAH PATON, DEFENDANTS-RESPONDENTS/CROSS-APPELLANTS.

On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-2972-07.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued January 5, 2010

Before Judges Wefing, Grall and Messano.

Plaintiff Dream Builders appeals from the judgment entered in favor of defendants, the Estate of Todd Paton and Deborah Paton, following a jury trial.*fn1 Specifically, plaintiff contends that the judge erred in denying its motion for a new trial; that we should "exercise original jurisdiction" and enter judgment in its favor on defendants' Consumer Fraud Act claim, N.J.S.A. 56:8-1 to -184 (the CFA); and, that the award of counsel fees to defendants on their CFA claim was excessive. Defendants have cross-appealed. They contend that the judge erred in denying their request to enter judgment not only against plaintiff, but also against Tim Bainbridge, its principal.

We have considered the arguments raised in light of the record and applicable legal standards. We affirm in part, reverse in part, and remand the matter for further proceedings consistent with this opinion.

I.

The salient evidence adduced at trial revealed that defendants hired plaintiff to construct a first-floor extension and second-floor addition to their home in Emerson. All of their dealings were with Bainbridge.

The parties signed a contract on September 5, 2006 in the amount of $139,200 that provided for installment payments to be made according to an attached schedule. Disputes arose during the later part of 2006 after a significant amount of the work was done and after defendants had paid all but $8700 of the total contract amount.

Bainbridge testified that Deborah Paton ultimately told him to leave the site and return the key; she could not specifically recall whether she gave such an order or whether Bainbridge simply stopped working. Bainbridge claimed that defendants owed plaintiff approximately $23,000, reflecting the final two payments under the contract, and an additional $15,000 in change orders that he claimed defendants had approved.*fn2

It was undisputed that defendants signed and paid several change orders Bainbridge presented to them during the course of the work. However, Bainbridge claimed that the unsigned change orders for which plaintiff sought payment were orally agreed to beforehand. He also acknowledged on cross-examination that the contract and most of the change orders did not contain his contractor's license number or the Division of Consumer Affairs' toll-free number that were both required by regulation to be on the documents.

Deborah Paton testified regarding a litany of problems that existed after plaintiff ceased working on the home. She did not pay the final two installments under the contract because she believed that plaintiff would never finish the work. She also indicated that plaintiff had damaged the wood floors in her home during construction.

Robert Costa, defendants' engineering and construction expert, testified that most of the problems were due to plaintiff's poor workmanship. He estimated the total costs of repairs to be $55,651. That was in contrast to the testimony of Douglas Radick, plaintiff's architectural expert, who testified that plaintiff's work complied with the plans supplied by defendants, and that many of the delays, change orders, and extra costs were the result of problems with the plans themselves.

The jury concluded that defendants had breached their contract with plaintiff and awarded damages of $8700. It rejected an alternative theory of recovery, i.e., that defendants had been unjustly enriched. As to defendants' counterclaim, the jury concluded that plaintiff had breached the contract and violated the CFA. It further decided that defendants' "ascertainable loss for plaintiff's violation of the [CFA]" was $15,000. The jury rejected defendants' claims for unjust enrichment, intentional or negligent infliction of emotional distress, and fraud in the inducement. In response to a specific interrogatory -- "What amount of money... will fairly and reasonably compensate defendants/counterclaimants" --the jury answered "$60,000."

Plaintiff moved for judgment notwithstanding the verdict (JNOV), or alternatively for a new trial, which the judge denied. The judge granted defendants' motion for counsel fees and costs under the CFA, awarding them the entire amount they sought; but, he denied their oral application to enter the judgment against both plaintiff and Bainbridge individually. The final order of judgment was entered against plaintiff and in favor of defendants for $161,964.63 which was comprised of the following: $51,300 ($60,000 - $8700) in contract damages; $45,000 ($15,000 x 3) in CFA damages; and $65,664.63 in counsel fees and costs.

This appeal ensued.

II.

(a)

Plaintiff contends that the judge erred in denying its motion for JNOV or a new trial by raising a number of challenges to the proceedings, many of which were never raised below. Plaintiff argues that: 1) defendants' counterclaim was insufficient to allege a cause of action under the CFA; 2) defendants' ultimate theory of recovery under the CFA rested upon plaintiff's alleged regulatory violations that were not pled at all; 3) the jury instructions and verdict sheet were "confusing and inadequate with respect to the CFA claim"; 4) defendants failed to prove a violation of the CFA; 5) the charge and verdict sheet regarding the breach of contract claim were "plainly erroneous" and led to "an inconsistent verdict"; and 6) defendants received a "double recovery." We agree with plaintiff that defendants failed to prove their entitlement to damages under the CFA, and therefore reverse that portion of the judgment.

During argument on the post-verdict motions, plaintiff, among other things, averred that defendants had failed to "prove an ascertainable loss directly attributable to [plaintiff's] unlawful practice." It contended that "there [wa]s no... causal relationship[]" between any regulatory violations defendants may have proven and any losses they claimed.

Denying plaintiff's request for JNOV, the judge correctly noted that plaintiff never moved to dismiss, Rule 4:37-2(b), and never sought judgment in its favor, Rule 4:40-1, on the CFA claim at trial. He therefore properly denied the JNOV motion. See Pressler, Current N.J. Court Rules, comment 3 on R. 4:40-2 (2010) ("A [JNOV] cannot be entered unless an appropriate motion has first been made during trial."). The judge denied the motion for a new trial without any extended discussion, finding that "it d[id] not clearly and convincingly appear that there was a miscarriage of justice under the law." See R. 4:49-1(a).

The standards governing our review are well known. A trial judge's ruling on a motion for a new trial claiming that the jury's verdict was against the weight of the evidence "shall not be reversed unless it clearly appears that there was a miscarriage of justice under the law." R. 2:10-1. "That inquiry requires employing a standard of review substantially similar to that used at the trial level, except that [we] must afford 'due deference' to the trial court's 'feel of the case,' with regard to the assessment of intangibles, such as witness credibility." Jastram ex rel. Jastram v. Kruse, 197 N.J. 216, 230 (2008) (quoting Feldman v. Lederle Labs., 97 N.J. 429, 463 (1984)).

Rule 4:49-1(a) requires that a motion for a new trial be granted "if, having given due regard to the opportunity of the jury to pass upon the credibility of the witnesses, it clearly and convincingly appears that there was a miscarriage of justice under the law." See also Dolson v. Anastasia, 55 N.J. 2, 7 (1969). The judge must engage in "[a] process of evidence evaluation... [that] is not a pro forma exercise, but calls for a high degree of conscientious effort and diligent scrutiny." Id. at 6. "On a motion for a new trial, all evidence supporting the verdict must be accepted as true, and all reasonable inferences must be drawn in favor of upholding the verdict." Boryszewski v. Burke, 380 N.J. Super. 361, 391 (App. Div. 2005), certif. denied, 186 N.J. 242 (2006).

"CFA claims brought by consumers as private plaintiffs can be divided, for analytical purposes, into three categories. Broadly defined, the categories are claims involving affirmative acts, claims asserting knowing omissions, and claims based on regulatory violations." Bosland v. Warnock Dodge, Inc., 197 N.J. 543, 556 (2009) (citing Cox v. Sears, Roebuck & Co., 138 N.J. 2, 17 (1994)) (citation omitted). "To some extent, the proofs required will vary depending upon the category into which any particular claim falls." Bosland, supra, 197 N.J. at 556. "[I]f a claimed CFA violation is the result of a defendant's affirmative act, 'intent is not an essential element.'" Ibid. (quoting Cox, supra, 138 N.J. at 17-18). "Likewise, intent is not an element if the claim is based on a defendant's alleged violation of a regulation, because 'the regulations impose strict liability for such violations.'" Ibid. (quoting Cox, supra, 138 N.J. at 18).

Regardless of the theory under which a CFA claim proceeds, the consumer must "demonstrate that he or she has suffered an 'ascertainable loss.'" Bosland, supra, 197 N.J. at 555 (quoting Meshinsky v. Nichols Yacht Sales, Inc., 110 N.J. 464, 472-73 (1988)); N.J.S.A. 56:8-19. An ascertainable loss is "a definite, certain and measurable loss, rather than one that is merely theoretical." Bosland, supra, 197 N.J. at 558 (citing Thiedemann v. Mercedes-Benz USA, L.L.C., 183 N.J. 234, 248 (2005)). "In addition, the CFA requires a consumer to prove that the loss is attributable to the conduct that the CFA seeks to punish by including a limitation expressed as a causal link." Bosland, supra, 197 N.J. at 555 (citing Meshinsky, supra, 110 N.J. at 472-73). In this case, defendants "had the burden of showing the connection between the [plaintiff's] improper practice and the ascertainable loss." Hoffman v. Asseenontv.Com, Inc., 404 N.J. Super. 415, 428 (App. Div. 2009) (citing Dabush v. Mercedes Benz, USA, LLC, 378 N.J. Super. 105, 116 (App. Div.), certif. denied, 185 N.J. 265 (2005)). To the extent defendants' CFA claim rested upon alleged regulatory violations, defendants needed to prove "a causal link between the violation and damages." Branigan v. Level on the Level, Inc., 326 N.J. Super. 24, 30 (App. Div. 1999) (citing Roberts v. Cowgill, 316 N.J. Super. 33, 41 (App. Div. 1998)).

Reviewing the evidence before the jury in a light most favorable to defendants, plaintiff violated certain regulations adopted pursuant to the Contractor's Registration Act, N.J.S.A. 56:8-136 to -152 (the CRA), and codified at N.J.A.C. 13:45A-16.1 to -17.14. See Czar, Inc. v. Heath, 198 N.J. 195, 202-04 (2009) (discussing legislative history and purposes of the CRA). Plaintiff did not display its registration number on the contract, most invoices, or change orders, N.J.A.C. 13:45A-17.11(d)(2). It further failed to display the Division of Consumer Affairs' toll-free number on its documents, N.J.A.C. 13:45A-17.11(f). Lastly, plaintiff did not reduce every change order to writing, N.J.A.C. 13:45A-16.2(a)(12). The judge instructed the jury as to each of these regulatory violations.

However, it is quite clear that defendants suffered no damages as a result of plaintiff's failure to adhere to these requirements. Defendants paid all sums due under the initial contract but for the last two payments totaling $8700. The jury did not award plaintiff the damages that it sought to recover based upon its claim that unsigned change orders were nonetheless orally agreed to by defendants, and defendants did not pay any of the amounts contained on the unsigned change orders. Thus, we fail to see how defendants demonstrated a "causal link" between the regulatory violations and any "ascertainable loss."

In their brief, defendants argue that their CFA claim "did not rest solely upon regulatory violations[,]" because they proved that plaintiff "misrepresented the quality of its work (through its brochure and through... Bainbridge's statements)." Deborah Paton testified that Bainbridge showed her photographs of work plaintiff had completed, and that she "saw a house that he [had] finished." She claimed that Bainbridge represented that if "we hired him, he would make us extremely happy and... everything would be perfect."

However, there was no proof that the photographs or the home defendants inspected somehow misrepresented the work plaintiff had performed. Bainbridge's statements assuring defendants' satisfaction with plaintiff's work were not misrepresentations or the kind of sharp dealing that the CFA was intended to curb. See Gennari v. Weichert Co. Realtors, 148 N.J. 582, 607 (1997) (distinguishing misrepresentations that were actionable under the CFA from "idle comments or mere puffery"); see also N.J. Citizen Action v. Schering-Plough Corp., 367 N.J. Super. 8, 13 (App. Div.) ("[T]here is indeed a distinction between misrepresentations of fact actionable under the CFA and mere puffing about a product or a company that will not support relief."), certif. denied, 178 N.J. 249 (2003).

Defendants also claim that they would not have hired plaintiff if they knew it was not licensed. However, defendants did not prove plaintiff was unlicensed; they only proved that the license number was not on the some of the documents.

This was essentially a contractual dispute. As we have noted, "A breach of warranty or breach of contract is not per se unfair or unconscionable and does not alone violate the Consumer Fraud Act." Palmucci v. Brunswick Corp., 311 N.J. Super. 607, 616 (App. Div. 1998) (citing Gennari, supra, 288 N.J. Super. 504, 533 (App. Div. 1996); D'Ercole Sales, Inc. v. Fruehauf Corp., 206 N.J. Super. 11, 25 (App. Div. 1985)).

In short, defendants failed to establish all the necessary elements to support their counterclaim for a violation of the CFA based upon allegations of misrepresentations or poor workmanship.

Injustice is manifest whenever a verdict is not supported by adequate evidence. Therefore, plaintiff's motion for a new trial as to defendant's CFA claim should have been granted. We therefore need not consider the balance of plaintiff's arguments directed toward that portion of the judgment.

Additionally, because our review of the record firmly convinces us of the insufficiency of defendants' proofs regarding their CFA claim, we have chosen to exercise our original jurisdiction. See R. 2:10-5; Ladenheim v. Klein, 330 N.J. Super. 219, 224 (App. Div. 2000) (noting the propriety of exercising original jurisdiction when the record discloses no support for a party's claim). Although plaintiff did not move for judgment as required by Rules 4:37-2 and 4:40-1, we may consider an issue not properly raised at trial when there is legal error and justice requires. Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 235 (1973). Therefore, we enter judgment in favor of plaintiff on defendants' CFA claim.

Additionally, we remand the matter for the trial judge to reconsider the amount of counsel fees and costs awarded to defendants. Although defendants did not prevail on their CFA claim, they are still entitled to an award because they proved regulatory violations in defense of plaintiff's affirmative claim. See Scibek v. Longette, 339 N.J. Super. 72, 86 (App. Div. 2001); Branigan, supra, 326 N.J. Super. at 30-31; Roberts, supra, 316 N.J. Super. at 45. Plaintiff does not contend otherwise.

Rather, plaintiff argues that the judge erred in awarding the entire amount requested by defense counsel in light of defendants' limited success. For example, it notes that the jury rejected defendants' claims for unjust enrichment, emotional distress and fraud; therefore, the time that defense counsel spent in pursuing such claims was not recoverable. In light of our holding above, defendants' success has been further limited.

As we noted in Branigan,

The amount of reasonable attorneys' fees to be awarded pursuant to [the CFA]... is within the sound discretion of the trial court, guided by those principles that run consistently through our caselaw when courts address the appropriate quantum of fees allowable pursuant to various fee-shifting statutes. Thus, along with other factors, courts must look at the level of success achieved in the litigation. [326 N.J. Super. at 31 (citations omitted) (emphasis added).]

In awarding defendants the entire amount they sought, the trial judge did not consider the level of success achieved in the litigation. We therefore remand the matter so that the judge may consider an award of counsel fees commensurate with the limited success defendants achieved on their CFA claim, and in accordance with other applicable precedent.

III.

Plaintiff also contends for the first time on appeal that the judge's instructions on the competing breach of contract claims, together with the verdict sheet, "were plainly erroneous, [and] le[d] to an inconsistent verdict." In essence, plaintiff argues that having found defendants breached their contract with plaintiff by failing to pay the final $8700 due, the jury could not also have found that plaintiff breached its contract by having failed to perform the work in a workmanlike manner.

"A building contractor is not entitled to recover unless he has substantially complied with the contract, but if he has, he is entitled to recover the contract price, less a fair allowance to the owner for minor defects or omissions." Jardine Estates, Inc. v. Donna Brook Corp., 42 N.J. Super. 332, 337 (App. Div. 1956) (citations omitted). The facts of Jardine Estates closely mirror those in this case.

There, the jury found in favor of the plaintiff landowner on its breach of contract claim against the defendant contractor, specifically awarding damages for unfinished work, as well as costs incurred to repair work defectively performed by the defendant. Id. at 336. The jury also awarded the defendant damages for "the balance of the contract price, extras and work on adjoining premises" that remained unpaid by the plaintiff. Ibid. The judge molded the verdict by subtracting the amount awarded to the plaintiff from that awarded to the defendant and entered judgment in favor of the defendant. Ibid. In affirming that order, we noted,

Where there is conflicting testimony as to whether or not the contractor has substantially performed the contract, the issue is to be determined by the trier of the facts. Here, the questions pertaining to the extent of performance, abandonment, the uncompleted work and the defective work were disputed issues of fact, and, therefore, were properly submitted to the jury. The verdict of the jury under the charge of the court determined that [the defendant] did not abandon the contract, but substantially performed, within time; and by its verdict for [the plaintiff] made an allowance for the defects and omissions.

Support for these awards can be found in the testimony and we see no reason to disturb them. [Id. at 338 (citation omitted).]

Perhaps the judge's charge in this case could have more fully explained how the factual assertions each party made impacted upon the legal responsibilities each had to the other. But because the jury verdict in favor of defendants on their breach of contract claim was amply supported by the evidence, we cannot conclude that the charge was plain error or that the jury's verdict was so inconsistent as to require reversal. See R. 2:10-2 (noting our standard of review regarding allegations of plain error requires us to conclude that the trial error was "clearly capable of producing an unjust result"). We therefore affirm that portion of the judgment awarding defendants $51,300 in damages for breach of contract.*fn3

IV.

Defendants' cross-appeal requires little discussion. They argue that the trial judge erred in refusing to enter judgment against both plaintiff and Bainbridge individually. We disagree.

Plaintiff's complaint clearly identified itself as "a corporation of the State of New Jersey." When defendants filed their answer, they inserted Bainbridge's name in the caption as a plaintiff, and they named him in the body of their counterclaim. In its amended complaint, plaintiff stated, "DREAM BUILDERS, Inc., was and is in the business of residential construction with a principal place of business at 111 Washington Avenue, Suite 105, Dumont, New Jersey...." Defendants never sought to implead Bainbridge individually in accordance with our Rules of Court. See R. 4:8-1 (permitting the filing of a third-party complaint as of right); R. 4:7-6 (permitting the joinder of other parties in accordance with Rules 4:28 and 4:29). Defendants could not, simply by filing a pleading naming Bainbridge as a plaintiff, add him individually to the litigation.

Moreover, we fail to discern defendants' argument that somehow plaintiff and/or Bainbridge were responsible for their confusion regarding the legal status of Dream Builders. As noted, in both the complaint and amended complaint, plaintiff asserted it was a corporation. Defendants apparently never sought to clear up any alleged confusion through discovery; they acknowledged, for example, that they never sought to depose Bainbridge.

In short, Bainbridge was never an individual party to this litigation and the judge properly denied defendants' attempts to have the judgment entered against him individually.

In sum, we affirm the award of breach of contract damages in the amount of $51,300 to defendants; we reverse the award of damages under the CFA and remand the matter to the trial court for entry of judgment in favor of plaintiff on that claim; we reverse the award of counsel fees to defendants, and remand that matter to the trial court for further proceedings consistent with our holding.

Affirmed in part; reversed in part; remanded. We do not retain jurisdiction.


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