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Nancy Foulke and Evan Foulke, As Husband and Wife v. Staval

March 11, 2011

NANCY FOULKE AND EVAN FOULKE, AS HUSBAND AND WIFE, PLAINTIFFS-APPELLANTS,
v.
STAVAL, INC., E&S SALES/KITCHEN CLASSICS, L.L.C., DEFENDANT-RESPONDENT.
E&S SALES/KITCHEN CLASSICS L.L.C., PLAINTIFF-RESPONDENT,
v.
EVAN FOULKE AND NANCY FOULKE, DEFENDANTS-APPELLANTS, AND PRESTIGE DEVELOPERS, INC., DEFENDANT.



On appeal from Superior Court of New Jersey, Chancery Division, Bergen County, Docket Nos. C-473-08 and C-32-09.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued November 8, 2010

Before Judges Rodriguez, Grall and LeWinn.

Plaintiffs Nancy and Evan Foulke (collectively the Foulkes) filed a complaint in the Chancery Division, Bergen County, seeking to void a construction lien filed by E&S Sales/Kitchen Classics, L.L.C. (E&S). The case was consolidated with a contract action filed by E&S in Union County, in which E&S alleged that the Foulkes breached their agreement to pay E&S $40,000 to discharge its $49,893 construction lien. This lien was later discovered to be invalid for failure to comply with the technical requirements of the Construction Lien Law, N.J.S.A. 2A:44A-1 to -38.*fn1 Following a bench trial, Judge Koblitz invalidated the lien and enforced the alleged contract.

The Foulkes appeal. They contend that the judge erred in enforcing the agreement because there was: no valid consideration; no meeting of the minds; and no actual or apparent authority enjoyed by the attorney who extended the Foulkes' promise to pay $40,000 in return for the lien's discharge. They also contend that the contract is unenforceable because it was conditioned on events that had not occurred and based on a mutual mistake of fact about the validity of the lien. Finally, they argue that they are entitled to counsel fees pursuant to N.J.S.A. 2A:44A-15a. We affirm substantially for the reasons stated by Judge Koblitz in a decision filed on February 9, 2010, and those set forth in the balance of this decision.

This statement of facts is drawn from findings of fact made by Judge Koblitz after hearing the competent testimony and having the opportunity to assess the credibility of the witnesses. Her findings are adequately supported by the evidence. Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 483-84 (1974). The Foulkes' arguments are based not on the judge's factual findings but on their implications.

The Foulkes contracted with Prestige Developers, Inc. to purchase property and the new residence that Prestige was building on it for $1,762,500. E&S was hired by Prestige to install the home's kitchen cabinets, vanities and countertops, and E&S filed a $49,893 construction lien when it completed the work. Unknown to the principals and representatives of E&S at all times pertinent here, there was a technical error in the lien's filing that precluded its enforcement.

After the Foulkes contracted to buy the property from Prestige, Prestige defaulted on its building loan. Consequently, the property was encumbered with liens and mortgages, including the construction liens filed by E&S and other subcontractors. Prior to closing, a title insurance company advised the Foulkes that it appeared that the liens on the property likely exceeded the price they had agreed to pay. Subsequently, foreclosure proceedings against Prestige were commenced. At that point, the Foulkes had spent in excess of $180,000 on their deposit, advances and payments to subcontractors who, unlike E&S, had not completed their work.

The Foulkes commenced litigation against Prestige but obtained no relief. Consequently, they authorized an attorney, Gerald Salerno, to negotiate payments that would satisfy the creditors and permit them to decide whether to proceed with the closing without paying more than they agreed to pay Prestige.

Salerno, also unaware of the invalidity of E&S's lien, wrote to the attorney for E&S.

I have set forth below a list of all liens and debts which must be paid . . . to be able to convey title[.]

As you can see there is a shortfall with an excess of $75,000.00. My client has approached various creditors in effort to seek a reduction of the amounts due to them . . . . I am presently awaiting conf[i]rmation from the realtors as to a significant reduction in their commission. We are requesting that your client consider accepting the sum of $40,000.00 . . . and provide a Release of Lien. In the event we are able to accomplish this, we intend to close the transaction within the next two weeks . .

Mr. Foulke was copied on the letter. Two days later, counsel for E&S responded, "E&S Sales/Kitchen Classics will accept $40,000.00 in settlement of its Construction Lien Claim on condition that, except for the balance due to Columbia Savings, it ...


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