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Dean Testa and Donna Testa v. Ground Systems


February 4, 2011


On appeal from Superior Court of New Jersey, Law Division, Morris County, Docket No. L-233-08.

Per curiam.


Argued October 4, 2010

Before Judges Rodriguez and Grall.

Plaintiffs, Dean and Donna Testa, appeal from the dismissal of their claims for damages based on negligence and breach of a contract to inspect a septic system. The defendants are Ground Systems, Inc. (GSI), and "an inspector for" GSI, Steve Austin, the licensed sanitary inspector who performed the inspection and prepared and signed the report on behalf of GSI.

Austin was granted summary judgment in his individual capacity. The Testas challenge that ruling on appeal.

Additionally, the Testas' claims against GSI were dismissed at trial in the midst of the presentation of plaintiffs' case based on the trial judge's determination that they could not establish liability or damages with expert evidence. The Testas were barred from presenting expert evidence by pretrial orders that they do not challenge on appeal. Although the Testas had survived motions for summary judgment after a different judge barred their expert, the Testas' attorney invited the judge assigned to try the case to take his proffer of plaintiffs' evidence and determine if his clients could reach the jury without expert evidence. The judge accepted that invitation and dismissed the complaint with prejudice. The Testas challenge that ruling on the merits.

The unusual circumstances under which the order dismissing the claims against GSI was entered require us to identify the applicable standard of review. The procedure invoked by plaintiffs' counsel is not authorized by the rules, but this court has noted that the practice is, in effect, an impromptu substitute for summary judgment. Klier v. Sordoni Skanska Constr. Co., 337 N.J. Super. 76, 83-85 (App. Div. 2001) (reversing a sua sponte dismissal of plaintiff's case at trial on the ground that plaintiff did not have notice or a fair opportunity to defend). Because the judge in this case made the dispositive ruling at the urging of plaintiffs' counsel and without objection from the defense, we overlook the procedural irregularity.

Given the circumstances under which the order was entered, we conclude that it is proper to assess the need for expert testimony as we would if the issue had been raised by the defense on motion for summary judgment or at the close of plaintiffs' case. See R. 4:37-2(b); R. 4:46-2(c). In both cases, the inquiry "'is the same: whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.'" Tomeo v. Thomas Whitesell Constr. Co., Inc., 176 N.J. 366, 370, (2003) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52, 106 S. Ct. 2505, 2512, 91 L. Ed. 2d 202, 214 (1986)). Under both standards, we must give the Testas the benefit of their evidence and favorable inferences. Id. at 370. There is no question that we must apply that standard to address the Testas' objections to the summary judgment awarded Austin. R. 4:46-2(c).

Having selected the applicable standard, we state the facts in the light most favorable to the Testas. In 1996, the Testas were interested in purchasing a residence in Rockaway, New Jersey but wanted an inspection of its sewage disposal system before they closed. On the recommendation of their home inspector, the Testas called and retained Austin.

Austin inspected the property on March 30, 1996, and Dean Testa was present. According to Dean, Austin asked if the Testas wanted a visual inspection of the tank, and Dean said he did. The lid to the tank was covered, but Dean agreed to do the digging necessary to uncover the tank's lid in order to avoid the delay and expense of an excavation by Austin. Austin showed Dean approximately where the tank would be, and after Dean cleared it, they removed the lid. Dean saw water at the top of a tank composed of concrete and some "wood forms." That was the only tank Austin inspected.

Austin told Dean the system would include features beyond the tank they uncovered - a distribution box and a leach field with gravel and pipes. The water from the tank would flow to a distribution box and through its pipes to a gravel leach field where it would percolate to the rock bed.

Austin's inspection also included testing of the leach field. The water inside the house was turned on to create a flow and dye was placed in the tank. The leach field was then probed to see if its water contained dye, which would mean that the system was failing. According to Dean, Austin told him he approximated the location of the leach field with reference to the location of the tank and his visual observation of the property.

Austin prepared a report on his inspection dated April 8, 1996. He signed that report on behalf of GSI, and it was printed on GSI's stationary. That report is the only evidence in the record connecting Austin with GSI, other than an answer to interrogatories that describes Austin as an "inspector for GSI." In his report, Austin describes what he did to "evaluate the working condition" of the sewage and water disposal system, referencing the dye test, water flow test, probing and the opening of the "septic tank" to see whether the waste water held "a steady level through the test."

Austin also described the septic system and warned about its condition. He said, "the disposal system is a split system," with kitchen and laundry water discharged to a tank separate from the tank for bathroom waste water. He noted that the average life expectancy of a "septic system" is twenty to twenty-five years and that this "disposal" was thirty-four years old. Austin cautioned, "[s]ince this is an older disposal system, extra care should be exercised in its use." He recommended frequent pumping. In addition, he warned the Testas to expect "replacement to [sic] this system . . . in the near future."

GSI admitted that Austin had used the terms "sewage disposal system," "septic tank," "septic system," "disposal," "disposal tank" and "split system" in accordance with their "normal usage" and the definitions set forth in N.J.A.C. 7:9A-2.1. GSI set forth the regulation's definition of septic tank as follows: "a water-tight receptacle which receives the discharge of sanitary sewage from a building sewer or part thereof, and is designed and constructed so as to permit settling of settleable solids from the liquid, partial digestion of the organic matter, and discharge of the liquid portion into a disposal field or seepage pit." The dictionary definition of cesspool is "a covered hole or pit for waste or sewage." Webster's II New College Dictionary 328 (1995).

Upon receipt of Austin's report, the Testas purchased the home. According to Dean, they regularly had the system pumped and had no trouble between 1996 and 2007. Dean asserts that the Testas would not have purchased the house unless it had a septic system.

In 2007, the Testas decided that they needed a larger home and put their Rockaway house on the market. Before they had a buyer, they purchased a new home. Subsequently, they accepted an offer on the Rockaway property, but the buyer withdrew the offer after receiving an inspection report declaring the waste-water system "unsatisfactory." Although the Testas did not intend to present testimony from the buyer or the buyer's inspector, the Testas would testify that the buyer presented the report to them upon withdrawing the offer.

After the offer was withdrawn, the Testas, believing they could not sell a house without a septic system, installed a septic system, made other repairs to the house and sold it to a different buyer. By the time that sale closed, about eighteen months had passed.

According to Dean, he made observations of the Rockaway property while the work to remove and replace the sewage system was underway. Several components of the system described by Austin were not in the ground. There was one tank, not two, and there was no distribution box, leach field or water-tight tank, as described by Austin. The single "tank" had a dirt base with a wood and concrete top; it was not water tight.

The Testas sought damages for the costs they incurred to install a septic system and pay the carrying costs for their property during the period commencing on the date they discovered the error in the report and the need to install a septic system and ending on the date of subsequent sale. They had the bills to establish the work that was done and the expenses they incurred.

We conclude that the Testas did not need expert testimony to establish a breach of the contract to provide services or negligence. The theory of their case was that defendants' report described components of the property's sewage system that did not exist. As is often the case when the litigation involves the quality of professional services, the Testas' contract and negligence claims rest on proof that the service rendered fell short of what they reasonably expected from the professional. See Couri v. Gardner, 173 N.J. 328, 340-41 (2002) (discussing overlapping contract and negligence claims that require the plaintiff to establish a deviation from the applicable standard of care).

Expert testimony is necessary if the subject "is beyond the ken of the average juror," Landrigan v. Celotex Corp., 127 N.J. 404, 413 (1992), not if "the subject can be understood by jurors utilizing common judgment and experience," Campbell v. Hastings, 348 N.J. Super. 264, 270 (App. Div. 2002). While expert testimony is generally required to establish the standard of care, it is not necessary when the conduct at issue is "such an obvious breach of an equally obvious professional norm that the fact-finder could resolve the dispute based on its own ordinary knowledge and experience." Brach, Eichler, Rosenberg, Silver Bernstein, Hammer & Gladstone, P.C. v. Ezekwo, 345 N.J. Super. 1, 12 (App. Div. 2001). Just as a jury does not need an expert to explain that a competent dentist does not pull the wrong tooth, a jury does not need an expert to explain that an inspection report should not describe components of a system that are not in place. See Hubbard v. Reed, 168 N.J. 387, 396 (2001).*fn1 In this case, GSI provided the meaning of the terms Austin used to describe the sewage disposal system he inspected. Dean Testa's testimony about the differences between the structures he observed and those described by Austin, if believed, would permit a jury to conclude that Austin described a system that never existed.

We are also convinced that the Testas did not need an expert to establish damages. The trial judge concluded that the only viable measure of damages was the difference in the value of the property with and without the system described in Austin's report. In his view, they needed an expert to establish damages under that measure. While there is no question that expert testimony would be needed to establish the relative value of the property, the judge erred in concluding that the difference in the value of the property with and without a septic system was the only valid measure of damages.

Under basic principles of contract law, "a party who breaches a contract is liable for all of the natural and probable consequences of the breach of that contract." Litton Indus., Inc. v. IMO Indus., Inc., 200 N.J. 372, 408 (2009) (internal quotations omitted). Remedies for breach include compensatory damages, which put non-breaching parties in the position they would have been if the contract had been performed. Totaro, Duffy, Cannova and Company, L.L.C. v. Lane, Middleton & Company, L.L.C., 191 N.J. 1, 12-13 (2007).

Similarly, in fixing damages in actions based on professional negligence, the measure is the amount that will put the "plaintiff in as good a position as he or she would have been had the" professional not breached the contract. Saffer v. Willoughby, 143 N.J. 256, 271 (1996) (internal quotations and alterations omitted). The value the non-breaching party lost or the amount the non-breaching party had to pay is an acceptable measure of damages for professional negligence and breach of contract for professional services. Lieberman v. Employers Ins. of Wausau, 84 N.J. 325, 342 (1980); Carbis Sales, Inc. v. Eisenberg, 397 N.J. Super. 64, 84-85 (App. Div. 2007).

Under the foregoing principles, there was a second measure of damages the would place the Testas in the position they would have occupied but for the negligence. That measure is the cost of replacing what they expected to receive when they relied on Austin's report. See generally Lane v. Oil Delivery, Inc., 216 N.J. Super. 413, 419-20 (App. Div. 1987) (concluding that the owner of personal property may testify about its value based on the cost of replacement and taking into account "depreciation, age, wear and tear, [and] condition"). The Testas had the essential evidence; the bills for their expenditures established replacement cost, and Austin's report provided the evidence relevant to reduce the replacement cost to reflect value in light of depreciation over the system's useful life and stated age. While the permissible award may be far less than the full replacement cost the Testas demanded, proof of damages under this measure did not require an expert. Similarly, the Testas did not need an expert to establish the expenses they incurred to retain ownership of their property while the work was done.

While a jury might well conclude that these expenses were not a natural and probable consequence of defendants' breach or negligence, that was a question a jury could resolve without expert testimony.

In sum, because expert testimony was not required to establish liability or damages, the order dismissing these claims against GSI is reversed.

We also reverse the grant of summary judgment in favor of Austin. There is no evidence of the existence of a relationship between GSI and Austin that would shield Austin from personal liability. Tort liability of a principal and agent and employer and employee is both joint and several. Moss v. Jones, 93 N.J. Super. 179, 184 (App. Div. 1966). Contractual liability of an agent may depend on disclosure of agency, but the facts pertinent to disclosure in this case are in dispute. Id. at 183-84. Finally, there is absolutely no evidence that Austin is shielded from liability by his status in the corporation under the rules enunciated in Saltiel v. GSI Consultants, Inc., 170 N.J. 297, 304-18 (2002).

Our opinion should not be read to express our view of the ultimate merits of the Testas' claims. We have addressed two narrow questions - whether expert testimony is essential and whether Austin was entitled to summary judgment based on his relationship with GSI.

The orders granting judgment in favor of Austin and GSI are reversed, and the matter is remanded for further proceedings.

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