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Bob Mcewan Construction Corp v. White Rock Lake Association

July 14, 2011

BOB MCEWAN CONSTRUCTION CORP., PLAINTIFF-APPELLANT,
v.
WHITE ROCK LAKE ASSOCIATION, INC., DONOHUE ENGINEERING CO. AND ECOLSCIENCES, INC.,
DEFENDANTS-RESPONDENTS.



On appeal from the Superior Court of New Jersey, Chancery Division, Morris County, Docket No. C-82-09.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued March 22, 2011

Before Judges Carchman and St. John.

This is an appeal from the dismissal of an action that, in part, alleges engineering malpractice. In the malpractice count of the complaint plaintiff alleges that defendant Donahue Engineering Co. and defendant EcolSciences, Inc. "negligently and carelessly provided advice and counsel" to plaintiff Bob McEwan Construction Corp. by reason of their providing opinions that certain lots under contract of purchase were exempt from the Highlands Water Protection and Planning Act, N.J.S.A. 13:20-1 to -35, (the Highlands Act) and developable. It claimed damages including the cost of the lots, which it asserts cannot be developed.

The motion judge dismissed plaintiff's complaint, without prejudice, concluding that plaintiff was obligated to exhaust its administrative remedies and pursue an exemption before the Department of Environmental Protection (the DEP) prior to continuing with this action. Thereafter, plaintiff did so, and the application was denied. A subsequent motion for reconsideration was denied.

We reverse and remand. Plaintiff may proceed with its professional negligence cause of action, and defendant may raise, if appropriate, a defense that plaintiff failed to mitigate damages; however, any failure of plaintiff to pursue its remedy before the DEP is not a bar to its proceeding to prosecute its negligence action.

These facts are not complex. Plaintiff is a builder who engages in the development and construction of homes. On July 21, 2005, plaintiff entered into a contract with defendant White Rock Lake Association, Inc. for the purchase of two vacant lots. The contract included a contingency requiring "[p]roof that property is exempt from the Highlands Act." The contract did not specify which party had the burden of proving the property was exempt from the Highlands Act, but plaintiff acknowledged its "responsibility as purchasers."

Plaintiff subsequently retained Donohue, a professional engineering firm with which plaintiff had a previous relationship, to provide engineering services for this project. Donohue was engaged to do "whatever was required to get a subdivision before the Planning Board . . . and to conform with the ordinances." Plaintiff and Donohue did not enter into a written contract for this project. Another firm, EcolScience, an environmental consultant, was hired to prepare a preliminary investigation report, not to provide opinions about the Highlands Act. However, EcolScience provided an opinion on the applicability of the Highlands Act. In a March 22, 2006 letter, EcolScience explained:

Although the site is located within the Highlands Preservation Area, the standard three hundred foot buffers from Highlands open water/wetlands do not apply to the proposed lots. It is my understanding that you propose to develop the site with two single-family residences that will connect to the existing sewer[,]s service area.

Therefore, as long as the cumulative disturbance proposed on both lots does not exceed an acre and the cumulative impervious surfaces does not exceed 1/4 acre, development of the two lots is exempt from the standards of the Highlands Preservation Area.

Donohue delivered an oral report regarding the applicability of the Highlands Act to these lots. At the April 11, 2006 meeting of the Jefferson Township Planning Board (the Board), the Board noted in the minutes:

Mr. Donahue stated what we are showing is a conceptual dwelling and driveway and concrete walkway configuration on both lots. The total proposed impervious area on the site is 7,984 sq. ft., which is 18.3% of an acre, less than 1/4 acre, which is under one of the criteria of the highlands act. Along with that we have proposed disturbance on both lots combined being 29,766 sq. ft., which is ...


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