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Rational Contracting, Inc., D/B/A Rational Roofing v. Discovery Properties 78

February 28, 2012

RATIONAL CONTRACTING, INC., D/B/A RATIONAL ROOFING, PLAINTIFF-RESPONDENT,
v.
DISCOVERY PROPERTIES 78, LLC, ANTHONY LAM, AND LAM DEVELOPMENT, LLC, DEFENDANTS-APPELLANTS, AND BOILING SPRINGS SAVINGS BANK, EXTECH BUILDING MATERIALS CORP., F/K/A EXTECH INDUSTRIES, INC., P.J. DEGRACIA CONTRACTING, INC., FEDERAL, INC., T/A FEDERAL IRONWORKS, DEFENDANTS.



On appeal from the Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-3556-09.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted February 6, 2012

Before Judges Parrillo, Skillman and Hoffman.

In this breach of contract action, defendants Discovery Properties 78, LLC, Anthony Lam, and Lam Development, LLC, (defendants), appeal from entry of judgment, following a bench trial, awarding plaintiff Rational Contracting, Inc. (Rational) $63,000 for services rendered and $18,573.35 in attorney's fees. We affirm.

Collectively, defendants own property at 76-78 Palisades Avenue in Jersey City and operated as the general contractor on development of this site. Rational installs roofs and siding on buildings. Henry Bilge is the president and owner of Rational as well as Allied Metals/Allied Specialty Group, Inc. (Allied), an affiliated company.

Sometime prior to April 2007, Anthony Lam, principal of the defendant entities, contacted Allied to provide the material and installation of metal facade paneling for the project. Allied provided an estimate for the small amount of metal roofing to be done at the project, in the amount of $10,704.50, which Lam accepted. Allied also prepared an estimate for the fabrication and installation of the metal facade paneling in the amount of $145,890. That estimate was eventually rejected as too high.

In the meantime, Lam instructed Allied to commence working on the standing metal roofing, but to prepare shop drawings of the proposed facade panels for approval by defendants' architects, Lindemon Winckelmann Deupree Martin Russell & Associates, P.C. (Lindemon). Lindemon's architect on the project, Ronald Russell, who had specified a certain type system, rejected Allied's first submission with detailed comments and when resubmitted, rejected the revised version as well.

Two days later, on August 1, 2007, Lam spoke with Bilge, expressing concern over the cost of Allied's proposal. Bilge offered, as an alternative, that the work be done by Allied's sister company, Rational, at a lesser price because no shop drawings would be involved, the attendant engineering costs would be eliminated, and material from a different manufacturer would be used.*fn1 Lam agreed and that day signed a contract with Rational for the roof and paneling work in the amount of $110,000 - $45,000 less than the price quoted by Allied.

The contract called for three installation payments: "40% deposit[,] 35% at the mid[]way point, balance to be paid upon completion." On August 15, 2007, Lam paid Bilge $30,000. Rational then immediately began work and continued working on the project for four to six weeks until about September 10, 2007. During this time, James Lindemon, principal of the architectural firm, stopped by the project site once a week and Russell, the project architect, stopped by the site two or three times each week. Moreover, Lindemon performed scheduled inspections of the project approximately once every three weeks.

As of September 10, 2007, when Rational ceased working, the project was not yet fully finished, although the metal roof was complete and the installation of the panels was 80% done. By then, Rational had called upon defendants for the payment that was due at the midway point. Responding to the September 10 invoice, on September 13, 2007, Lam wrote that "[w]e are working with the bank diligently regarding the funding of the work you completed for the project. We hope to resolve this issue with them shortly and make a payment available to you soon. Sorry for the delay and thank you for your patience." Despite this assurance, Rational refused to continue work on the project until the second installment was paid.

Defendants next communicated with Rational on September 28, 2007 when they forwarded a September 18, 2007 letter from their architect detailing deficiencies in Rational's paneling work, which the architect estimated was 75% completed. In this correspondence, Lindemon stated that the panels were not installed in accordance with the architect's comments on the shop drawings and specifically found fault with the lack of "weather/moisture protection beneath the panels." Rational responded in writing, stating: [w]e were never required to perform any installation and/or repairs of exterior sheathing (Dens Glass or other), exterior weather barrier (Tyvek or other) and all door/window flashing. Any repairs and/or changes to the exterior sheathing, exterior weather barrier, and door/window flashing are the responsibility of the company that installed those systems. . . .

. . . [W]e encountered many problems due to improper construction of the wall and brick facade, and installation of the windows. . . . This required addition[al] work in the engineering and fabrication of the Aluminum Composite Panel System. This will result in additional charges.

The contract . . . is now void, due to late payments. To proceed with this project, we require the outstanding debt of $50,000.00 to be paid in full, with interest. . . .

While the parties communicated thereafter, Rational never did any more work on the project since defendants did not make any further payments as requested by Rational required under the contract. Both parties agreed that by the time Rational ceased work, the project was 75% to 80% completed. Up until then, neither defendants nor their architect ever complained about the work being done by Rational, even though they were present on site several times a week. The first complaint voiced was the September 18, 2007 letter from the architect, which Rational received on September 28.

When Rational ceased work on the project, waterproofing was not yet completed as this was, according to Bilge, the last stage of the project, as was removal of the plastic sealer, usually taken off at the very end. As to the latter, Rational informed defendants that when the outside temperature reaches 70-75 ...


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