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County of Hudson v. Doric Apartment Corporation


March 17, 2011


On appeal from Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-200-08.

Per curiam.


Argued November 9, 2010

Before Judges Payne and Baxter.

When the Doric Apartments were built on Manhattan Avenue in Union City in the 1960s, Hudson County permitted the developer to expand the structure's parking lot by digging back into the Palisades and then installing a retaining wall on County property that supported the County's roadway and sidewalk. The wall gave way in a storm on April 17, 2007, as did a County-owned wall further along Manhattan Avenue, compromising Manhattan Avenue and its adjoining sidewalk and causing the road to be closed.

The County performed repairs, including reconstruction of the Doric's wall, and then sought to charge the Doric for its costs. When the Doric refused to make payment, the County sued, alleging negligent maintenance and unjust enrichment. Prior to trial, the claim of negligent maintenance was dismissed as factually unsupported. Following a jury trial, the jury found that the Doric had been unjustly enriched in the amount of $112,106, which the court later increased to $123,437 to account for prejudgment interest.

Before trial took place, the County had applied to the New Jersey Department of Transportation (NJDOT) for Federal Highway Administration (FHWA) emergency relief, submitting proof of $169,719.82 in costs incurred in the demolition and reconstruction of the Doric's wall and $368,035.42 in costs incurred in the demolition and reconstruction of the County's wall. At the time of trial, the County's FHWA application remained pending. The jury's verdict was entered on July 13, 2009 and amended on August 21, 2009.

On September 25, 2009, Demetrio Arencibia, the Assistant Hudson County Engineer wrote to Eileen Schack, an employee of the NJDOT stating:

The payment voucher for $537,755.24 with supporting payment documentation was delivered to your attention yesterday.

As explained, the County is attempting to collect payment from the Doric Apartments for part of the Doric wall costs. The County recently obtained a Judgment (Docket No. HUD-L-200-08) for $112,106.00 plus interest and costs against the Doric. Please let me know how this Judgment could affect the payment voucher as submitted. You might need to verify with your finance or legal departments.

If you need any further information, please let me know.

Despite notice of the judgment, on December 9, 2009, the County received from the NJDOT a check for $537,755.24 as reimbursement for the County's total costs of $552,195.24 to repair the two walls, less $14,440 in non-reimbursable costs.

Upon notification to the Doric of the payment, the Doric moved pursuant to Rule 4:50-1 to modify the amended judgment or mark it as satisfied as the result of the County's receipt of reimbursement. On February 16, 2010, prior to the hearing on the Doric's motion, the motion judge asked the County's counsel to determine the NJDOT's position "with respect to this reimbursement, whether [it] had any interest in intervening or otherwise." Counsel drafted a letter, dated February 17, 2010, informing the NJDOT of the Doric's motion,*fn1 but had heard nothing from the agency at the time of the motion hearing on March 5, 2010.

Following argument, the Doric's motion was granted pursuant to Rule 4:50-1(b) (new evidence) and (f) (any other reason justifying relief from the operation of the judgment). The judge found, in light of the NJDOT's reimbursement of the County's expense for demolition and repair of the Doric wall, that the County could not claim that the Doric had been "unjustly" enriched to the County's detriment because the County had been made whole. Accordingly, the judge vacated the judgment against the Doric.

The County has appealed. We reverse and reinstate the judgment against the Doric.

In reaching our conclusion, we are satisfied that the judge properly relied on Rule 4:50-1(b) in considering evidence of the NJDOT's payment of the County's FHWA emergency relief claim. Although the pendency of that claim was known by the Doric at the time of trial, payment had not been made. In the circumstances presented, the new evidence was arguably material to the issue of unjust enrichment upon which the case turned, could not have been discovered by due diligence prior to trial and, arguably, was of a type that could change the trial's result if a second trial occurred. DEG, LLC v. Twp. of Fairfield, 198 N.J. 242, 264 (2000).

A closer issue exists as to whether equitable relief pursuant to Rule 4:50-1(f) was properly granted. As the Court has stated:

No categorization can be made of the situations which warrant redress under subsection (f) . . . [T]he very essence of

(f) is its capacity for relief in exceptional situations. And in such exceptional cases its boundaries are as expansive as the need to achieve equity and justice. [Court Inv. Co. v. Perillo, 48 N.J. 334, 341 (1966).]

In order to obtain relief under this subsection, the Doric must have shown both that the circumstances giving rise to its claim were exceptional and that enforcement of the judgment against it would be unjust, oppressive or inequitable. Lawson Mardon Wheaton, Inc. v. Smith, 160 N.J. 383, 404-07 (1999).

With those principles in mind, we reject any arguments by the Doric that are premised on the applicability of the collateral source rule to this matter - a rule that has been applied only in a tort context. Prior to 1987, that rule prohibited a tortfeasor from reducing the amount of a tort judgment by the amount of money received by the injured person from other sources. See Perreira v. Redinger, 169 N.J. 399, 406-07 (2001); County of Bergen Emp. Benefit Plan v. Horizon Blue Cross Blue Shield of N.J., 412 N.J. Super. 126, 132 (App. Div. 2010). In 1987, the common-law rule was replaced by N.J.S.A. 2A:15-97, the applicability of which, by its terms, is limited to "civil action[s] for personal injury or death." As we have previously recognized:

Section 97's purpose is twofold: "to eliminate the double recovery to plaintiffs that flowed from the common-law collateral source rule and to allocate the benefit of that change to liability carriers." Perreira, supra, 169 N.J. at 403. The latter goal was clearly the containment of spiraling liability insurance costs. Id. at 410. By reducing a plaintiff's tort judgment by the amount of benefits already received (with limited statutory exceptions not here relevant), the Legislature intended to reduce the burden to liability carriers, rather than health insurers. Id. at 410-11. [Id. at 133.]

As is evident, neither the language of N.J.S.A. 2A:15-97 nor its purpose is applicable to the present matter, which sounds in quasi-contract, not tort, the County's sole negligence claim having been dismissed prior to trial.

The issue, as we view it, turns on the interaction between the doctrine of unjust enrichment and New Jersey's strong public policy, recognized particularly in tort cases, against permitting double recoveries. Finderne Mgmt. Co. v. Barrett, 402 N.J. Super. 546, 580 (App. Div. 2008), certif. denied, 199 N.J. 542 (2009).

The Supreme Court has held:

To establish unjust enrichment, a plaintiff must show both that defendant received a benefit and that retention of that benefit without payment would be unjust. The unjust enrichment doctrine requires that the plaintiff show that it expected remuneration from the defendant and that the failure of remuneration enriched defendant beyond its contractual rights. [VRG Corp. v. GKN Realty Corp., 135 N.J. 539, 554 (1994) (citations omitted); see also Iliadis v. Wal-Mart Stores, Inc., 191 N.J. 88, 110 (2007).]

The record in the present matter reflects that the Doric received wall repairs for which it did not pay. Indeed, this was the basis for the jury's verdict. As such, the Doric was "enriched beyond its contractual rights." Ibid. Consequently, it was properly ordered to pay the County for its costs of demolition and repair. To have ordered otherwise would have inequitably enriched the Doric.

At the motion hearing, the judge determined that it would be "unjust" for the judgment against the Doric to stand in light of the fact of the NJDOT's payment. We regard the judge's focus to have been misdirected upon the County in reaching that determination, since by viewing the case in that fashion, the judge permitted the Doric to retain the benefit of the wall repairs without cost. From this perspective, we find the County's eventual receipt of the NJDOT's funds to be irrelevant for purposes of the implementation of the doctrine of unjust enrichment. The Doric should not be permitted in equity to avoid lawfully imposed liability simply because an amount roughly equivalent to the judgment against it was later offered by a governmental entity with no relationship to the Doric.

It can be argued that, to prevent double recovery, the County should disgorge its award from the NJDOT to the extent that it duplicates damages recovered from the Doric. However, the County has on more than one occasion notified the NJDOT of the existence of the judgment against the Doric, and the NJDOT has failed to act. The courts thus lack the power to proceed on its behalf.

The judgment of the motion judge is reversed and the August 21, 2009 judgment against the Doric Apartment Corporation is reinstated.

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