On appeal from Superior Court of New Jersey, Law Division, Special Civil Part, Morris County, Docket No. DC-1318-09.
The opinion of the court was delivered by: The opinion of the court was delivered by Payne, J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted November 16, 2010
Before Judges Wefing, Payne and Koblitz.
In an action filed in the Special Civil Part, plaintiff, Sean Wood, L.L.C., sought payment in the amount of $14,583.25 from defendants, the Hegarty Group, Inc. and Kenneth Hegarty, individually, that it alleged was owed on two contracts for rigging out, loading and delivering industrial machinery and tanks to two of the Hegarty Group's customers. The Hegarty Group counterclaimed, alleging lost profits in excess of the Special Civil Part's jurisdictional limit of $15,000 as the result of a breach of contract by Wood, resulting in the Hegarty Group's inability to completely satisfy a purchase order by its customer, Perry Videx Company.
Following a six-day bench trial in the matter, the trial judge issued a written decision in which he awarded Wood a judgment against the Hegarty Group in the sum of $2,500 and dismissed the Hegarty Group's counterclaim as the result of its failure to mitigate damages. All parties have appealed. We affirm the judgment in favor of Wood, but remand to permit that judgment to be reduced by $500 to reflect a credit given by Wood to the Hegarty Group and to permit the entry of that judgment against Kenneth Hegarty as well as the Hegarty Group. We also affirm the dismissal of the Hegarty Group's counterclaim.
Evidence at trial disclosed that Wood entered into a contract with the Hegarty Group, dated December 26, 2008, that required Wood to rig out of their location in Carlstadt, New Jersey and transport thirteen stainless steel tanks to the facilities of Perry Videx in South Jersey at a price of $16,500 and to pump the oil from and transport three injection molding machines to Perry Videx at a price of $6,083.25 for a total price of $22,583.23. A $10,000 deposit was made on the contract. A second contract with the Hegarty Group, dated January 6, 2009, required Wood to load and transport tanks to a customer in North Collins, New York for a price of $5,000 with a fifty percent deposit.
Both contracts were executed on behalf of the Hegarty Group by Kenneth Hegarty, who was understood by Wood's president, Sean Wood, to be the owner of the company. A business card given by Hegarty to Wood listed his position as Operations Manager. A police report entered in evidence in the matter listed Hegarty as the "owner" of the Hegarty Group. However, at trial, Hegarty denied that he was either a shareholder or employee of the Hegarty Group. Although he said he was assumed to be its vice-president, he was instead merely "helping" the company. Hegarty testified that, in the months of December 2008 through February 2009, he was unemployed and collecting unemployment insurance benefits. Hegarty testified that the Hegarty Group was his wife's company, but that she authorized him to make deals and sign contracts. He stated that neither he nor his wife received a paycheck from the Hegarty Group, and that its only salaried employee was receptionist Amelia Barone, the niece of Hegarty's wife. Further, he stated that he had purchased the tanks and machinery that were subsequently sold by the Hegarty Group to Perry Videx by use of his own funds.
The second contract was performed in January 2009, but upon performance, the remaining balance of $2,500, which was further reduced by a $500 credit given by Wood, was not paid by Hegarty. At trial, Hegarty and painting contractor Mark Brill stated that discussions had occurred regarding joint marketing, and that Wood had agreed to contribute $2,500 to the endeavor, using for that purpose the remaining balance of the second contract with the Hegarty Group. Thus, nothing was owed on that contract.
Wood acknowledged that discussions had occurred, but he stated that he had not agreed to make a monetary contribution to the effort.
In connection with the first contract, the drained injection molding machines and five of the tanks were delivered to Perry Videx on January 16, 2009. However, as the result of Sean Wood's concern that the remaining balance would not be paid, Wood determined that he would only permit the delivery of the remaining tanks COD. Both Hegarty and Perry Videx were informed of this condition; neither manifested assent. On Thursday, January 22, 2009, three tractor trailer trucks carrying the remaining eight tanks were dispatched from Main Trucking, the trucker retained by Wood. On arrival at the Perry Videx facility, one truck bearing two tanks was unloaded. However, Wood insisted that the company be paid prior to permitting the other two trucks to be unloaded. When payment was not forthcoming, Wood directed the trucks to return with their loads to Main Trucking's facility. According to Linda B. Jacobs, a Perry Videx employee, upon learning of Wood's COD demand, she called Hegarty to determine whether he would authorize Perry Videx to pay the balance that Hegarty owed to Wood and to subtract that amount from the balance due from Perry Videx to Hegarty. Hegarty refused to authorize that transaction.
By letter dated January 22, Sean Wood informed Hegarty that, as the result of his refusal to pay the balance for the work performed, two oversize trailer loads were placed in storage, where they would remain until payment was received. Hegarty was also informed that the cost of storage was $100 each per day, and that he was responsible for that amount, plus the additional shipping charges incurred for the return of the two trailers. Hegarty responded in an undated letter, stating that there was no refusal, as the contract did not specify COD. "After a complete inspection and acceptance from Perry Videx, the contract would have been fulfilled; I would have received payment, and forwarded you the money owed in a timely fashion." The letter continued:
Due to the damage that you caused during rigging and shipment, and lack of shipping the man hatches that you removed, I was penalized $18,069.00 from Perry Videx because they denied the acceptance of the tank. As per the rate of storage at $100.00 per day, that will be paid by you for not fulfilling the contract. I have already filed a police report in Carlstadt, NJ and as of January 25, 2009, the tanks were considered stolen, because there was no correspondence relayed to Hegarty Group as to the location of the tanks after they were removed from final location.
According to Sean Wood, on Monday, January 26, he spoke with Al Beck, the Hegarty Group's "lead man" at the time, who claimed that Hegarty had lost $18,000 as the result of the non-delivery, and that if the money were restored, Wood could do what he wanted with the tanks. On January 27, Wood responded to Hegarty's letter, stating, in part:
Your letter in regards to Fulfillment of Contracts is unacceptable. . . . I have fulfilled my contract with the only change being placing a COD on the balance of the tanks. This was necessary when I was told of your intent of none [sic] payment for the tank work.
I would like for us both to take a deep breath and examine the following possibility grant me to this Friday Jan 30, 2009 to find another buyer for the remaining tanks. This was your ultimate design to b[u]y and then resell all of the tanks. If I am not successful I will pay the difference on your losses based on the following.
A settlement offer was then outlined.
Wood spent Monday and Tuesday seeking another purchaser for the remaining tanks obtaining, on Wednesday, January 28, a firm offer for four of the tanks in the amount of $12,500. Beck was informed of the offer, and he agreed to advise Wood of Hegarty's response to it.
Hegarty rejected the offer, testifying that Wood would have kept the purchase price as payment for amounts he claimed were due to him, and that Hegarty would not have received his lost profits. On January 29, Hegarty, accompanied by the Ridgefield police, took possession of the tanks. Hegarty directed Main Trucking to deliver them to a specified lot, where they were unloaded in a fashion that destroyed their commercial value.
On January 30, Wood filed suit against the Hegarty Group*fn1
alleging breach of contract, the creation of a constructive trust, unjust enrichment, breach of the covenant of good faith and fair dealing, and conversion. Counsel for Wood also prepared a notice to cease and desist, addressed to Hegarty and the Hegarty Group and personally served on February 2, which stated:
PLEASE TAKE FURTHER NOTICE THAT pursuant to the New Jersey Uniform Fraudulent Transfer Act, N.J.S.A. 25:2-20, et seq. and all other applicable laws of the State of New Jersey and the United States of America, you are hereby placed on notice that you are to jointly and severally cease and desist from the direct or indirect, absolute or conditional, voluntary or involuntary disposal or parting with thirteen (13) aboveground stainless steel tanks which have come into the physical and/or constructive possession of Hegarty Group, Inc. by virtue of rigging and trucking services rendered by Sean Wood, LLC or an interest in the said chattels as well as the payments of money, releases, leases and the creations of liens and other encumbrances involving the said chattels.
Hegarty claims to have entered into a contract to sell the tanks for scrap prior to service of the cease and desist order. At some point prior to February 11, they were cut up, and in the period between February 11 and February 20, they were sold to Donjon Recycling for a total price of $4,104.06.
Testimony at trial also disclosed that, on March 6, 2009, Linda B. Jacobs, the Manager, Sales Administration, at Perry Videx wrote a letter to Amelia Barone ...