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Elizabethtown Water Co., A New Jersey Corporation v. Watchung Square Associates

August 4, 2011

ELIZABETHTOWN WATER CO., A NEW JERSEY CORPORATION, PLAINTIFF-APPELLANT,
v.
WATCHUNG SQUARE ASSOCIATES, L.L.C., AND FIDELITY LAND DEVELOPMENT CORPORATION, DEFENDANTS/THIRD-PARTY PLAINTIFFS-RESPONDENTS,
v.
VOLLERS EXCAVATING & CONSTRUCTION, INC., THIRD-PARTY DEFENDANT/ FOURTH-PARTY PLAINTIFF-RESPONDENT, AND FRANK FERRARO, THIRD-PARTY DEFENDANT-RESPONDENT,
v.
TRAVELERS INSURANCE COMPANY, SALVATORE DAVINO, EDWARD D. MACEIKO, MELICK-TULLY ASSOCIATES, P.A. MARCHETTA, A.I.A., AND MENLO ENGINEERING ASSOCIATES, INC., FOURTH-PARTY DEFENDANTS-RESPONDENTS, AND MORETRENCH AMERICAN CORPORATION, FOURTH-PARTY DEFENDANT.
ELIZABETHTOWN WATER COMPANY, PLAINTIFF-RESPONDENT,
v.
WATCHUNG SQUARE ASSOCIATES, L.L.C., AND FIDELITY LAND DEVELOPMENT CORPORATION, DEFENDANTS/THIRD-PARTY PLAINTIFFS-RESPONDENTS,
v.
VOLLERS EXCAVATING & CONSTRUCTION, INC., THIRD-PARTY DEFENDANT/ FOURTH-PARTY PLAINTIFF-APPELLANT, AND FRANK FERRARO, THIRD-PARTY DEFENDANT-RESPONDENT,
v.
TRAVELERS INSURANCE COMPANY, SALVATORE DAVINO, EDWARD D. MACEIKO, MELICK-TULLY ASSOCIATES, P.A. MARCHETTA, A.I.A., AND MENLO ENGINEERING ASSOCIATES, INC., FOURTH-PARTY DEFENDANTS-RESPONDENTS, AND MORETRENCH AMERICAN CORPORATION, FOURTH-PARTY DEFENDANT.



On appeal from Superior Court of New Jersey, Law Division, Morris County, Docket No. L-3027-01.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued March 22, 2011

Before Judges Wefing, Payne and Hayden.

These appeals involve disputes between the developer of a large shopping complex in Watchung and contractors involved in the project. The trial court denied without prejudice motions for partial summary judgment, and we granted leave to appeal from the resultant orders. The appeals were argued before us back-to-back, and we now consolidate them for purposes of this opinion.

The appeals have a complex factual and procedural history that must be set forth in some detail to properly analyze the contentions the parties advance on appeal. Defendant Watchung Square Associates, L.L.C., (Watchung Square) purchased the site previously occupied by Lockheed Electronics with the intent to convert it into a large shopping center.*fn1 The site is bounded on the south by Route 22 and on the north by the Watchung Mountain. The Watchung Planning Board conducted extensive hearings with respect to the application. One of the issues that generated concern among Board members and surrounding property owners was the effect of the construction on the abutting mountain. From the outset, development plans included a retaining wall. All appropriate approvals were eventually obtained.

In August 1999, Watchung Square contracted with Joseph A. Natoli Construction Corporation (Natoli) to serve as the general contractor for the project, and Natoli, in turn, subcontracted with defendant Vollers Excavating & Construction, Inc. (Vollers) for the site work for the project. Watchung Square's contract with Natoli and Natoli's subcontract with Vollers required the arbitration of disputes that arose between the parties.

Part of the necessary preparatory work to development of the site was relocation of an existing water main owned by plaintiff Elizabethtown Water Company. The main had to be rerouted because in its existing configuration, it ran under the proposed location of a building to be occupied by Target. In addition to the relocation of the main, it was proposed to run the water line up to a tank on the top of the Watchung Mountain. Watchung Square signed two contracts with Elizabethtown Water for this work, and Elizabethtown contracted with Vollers to do the necessary site work. The contracts between Watchung Square and Elizabethtown and Vollers did not contain an arbitration clause.

The project ran into significant delays and incurred significant extra expenses. Who was responsible for those delays, and who was responsible for those expenses are strongly disputed by the parties.

During the development of the project, there were several slope failures from the abutting Watchung Mountain. The first of these occurred on February 10, 2000, in the area in which Vollers was doing work in connection with the Elizabethtown water line; a portion of the slope collapsed onto the area in which the proposed Target store was to be located. This is referred to generally as the Elizabethtown failure. The parties dispute who was responsible for this failure and whether this failure led to several subsequent slope failures that occurred in July, October, and November 2000.

After the February 2000 slope failure, Watchung Square directed Natoli to contract with Moretrench American Corporation (Moretrench) to dewater the site. Moretrench installed a series of wells and pumps, but this proved not to be a permanent solution, and additional slope failures occurred through April 2001.

The parties point to several causes for these failures, including the underlying soil conditions, which involved significant ground water; the manner in which Vollers was excavating for the water main and for the retaining wall; the original design of the retaining wall; and the manner in which Vollers initially began its construction of that wall. Watchung Square asserted that Vollers began its work in this area without making proper preparation for the ground water conditions, while Vollers asserted that Watchung Square was aware of the ground water conditions but failed to disclose them to Natoli or to Vollers. Watchung Square asserted that Vollers was excavating at too steep a grade without proper shoring while Vollers asserted it was following the plans provided to it. Watchung Square asserted that Vollers was responsible for the original design of the retaining wall, and Vollers denied that. Watchung Square said that Vollers was to build the retaining wall in a "top-down" fashion to proceed safely; Vollers said that it was doing so.

After the November 2000 slope failure, Watchung Square contracted directly with Moretrench. This did not prevent another slope failure, which occurred in April 2001.

These slope failures led ultimately to the redesign and extension of the retaining wall. The process of redesigning the wall, and its ultimate construction, involved both delays in completion of the overall project and increased expense. The parties dispute responsibility for the delays and liability for those costs.

In an effort to resolve certain of their disputes, Watchung Square, Natoli and Vollers entered into an agreement in February 2001 that the parties refer to as the "Florida Accord." Under this agreement, the parties agreed that the north retaining wall, abutting the mountain, had to be redesigned and extended and that the projected cost for this work was $1,884,027, of which Watchung Square would contribute $1,284,027, with the balance divided equally between Natoli and Vollers and any extra costs or savings to be divided among them in the same proportion. The agreement included the following paragraph:

In consideration of the aforementioned Terms and Conditions of this Change Order, the parties, as relates to the Site Work Contract, Watchung Square Associates, Joseph

A. Natoli Construction Corporation and Vollers Excavating agree to waive and release any and all claims against each other arising from and/or in connection with any and all actions to date with regard to any and all slope ...


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