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First American Title Insurance Company v. Semester Consultants

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


March 29, 2012

FIRST AMERICAN TITLE INSURANCE COMPANY, PLAINTIFF-APPELLANT,
v.
SEMESTER CONSULTANTS, INC., A NEW JERSEY CORPORATION, AND THOMAS J. OLENIK, DEFENDANTS-RESPONDENTS.

On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-9836-09.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued March 14, 2012

Before Judges Graves, J.N. Harris and Haas.

Plaintiff First American Title Insurance Company appeals from an order granting summary judgment and dismissing its claims against defendant Thomas Olenik for negligence, fraud, unjust enrichment, and breach of implied covenant of good faith and fair dealing. Plaintiff also appeals from the trial court's denial of its own motion for summary judgment against Olenik and, on some counts of its complaint, against defendant Semester Consultants, Inc. ("Semester").

On appeal, plaintiff argues that the trial court incorrectly determined that Olenik, a licensed professional engineer, could not be held individually liable for his negligence in the preparation of site plans for, and surveys of, property it owned in Jackson, New Jersey. It also asserts that the court erred in finding that neither defendant had engaged in fraud. We reverse the trial court's order granting summary judgment to Olenik on plaintiff's claim of negligence and remand for proceedings in conformity with this opinion. In all other respects, the trial court's orders are affirmed.

There is no dispute as to the material facts. Plaintiff's property is primarily comprised of wetlands and related buffer areas. Plaintiff decided to apply for a permit from the New Jersey Department of Environmental Protection ("DEP") that would enable it to sell the property for the construction of a single-family home. As part of this process, plaintiff entered into a contract with Semester, a New Jersey corporation that was engaged in the business of providing professional engineering and land surveying services. Olenik is Semester's president and sole owner.

On September 8, 2003, plaintiff and Olenik signed a "Contract for Engineering Services." Semester agreed to prepare a boundary survey, a topographic survey, and a site plan. It also agreed to prepare an analysis of freshwater wetlands on the property and to apply for a DEP Letter of Interpretation ("LOI") Application as part of the permit process. Plaintiff paid Semester $28,500 for its work.

On September 1, 2004, defendants provided plaintiff with a "LOI Plan." Olenik had "designed, drawn, and checked" this plan, which was submitted to the DEP. Upon review, the DEP advised plaintiff that the property would have to have a buffer zone three times larger than that proposed in the plan prepared by defendants. In response, defendants suggested that plaintiff file a different type of permit application, even though they predicted that this application would not be approved.

Plaintiff ultimately decided to retain a new consulting firm to assist it with the DEP permit process. Several years later, it asked defendants to give it the surveys and site plan that they had been retained to prepare under the contract. Instead, in 2008, defendants turned over a "Concept Plan." This plan had been "designed, drawn and checked" by Olenik in 2004. Defendants' LOI Plan and their Concept Plan contained a number of significant survey errors that prevented them from being used as part of plaintiff's ongoing permit application. For example, the surveys did not show a twenty-foot easement and they did not reveal the existence of a "gore area" along the northern boundary of the property. The property boundary lines were also inaccurately drawn.

When defendants refused to return the monies plaintiff had paid under the contract, it filed a complaint in the Law Division. Plaintiff alleged a breach of contract by Semester. Olenik was not named in this count of the complaint. In the remaining counts, plaintiff alleged negligence, fraud, unjust enrichment, and breach of implied covenant of good faith and fair dealing against both Semester and Olenik.

Plaintiff filed a motion for summary judgment. Semester opposed the motion. Olenik filed a cross-motion for summary judgment on the personal liability claims against him. In an oral opinion, the court granted plaintiff's breach of contract claim against Semester, finding that Semester had not provided all of the items required by the contract. The court found that the amount of damages would be determined at a later date.

On the negligence claim, the court found that defendants also failed to include information as to the easement and the boundaries of the property, and the Court finds that that constituted negligence and the failure to do that was unreasonable under the circumstances.

The property's boundaries were not indicated in the LOI or the concept plan and the Court finds, therefore, that . . . that does constitute negligence as a matter of law and that the defendants are liable to the plaintiff for any damages that arise from that breach. And again, the Court can't make determination as to the damages.

Finding no evidence that defendants had made any material or knowingly false misrepresentations and that they had performed some of the work required by the contract, the court dismissed plaintiff's remaining claims against both defendants.

Although the court had specifically found that defendants had both been negligent, it ruled that Olenik could not be held personally liable for this negligence. The court reasoned that, because plaintiff had not demonstrated that "Olenik intended to perpetrate a fraud, accomplish a crime, or otherwise evade the law[,]" the "Court does not find his conduct would rise to the level as to require this Court to pierce the corporate veil." Therefore, despite its earlier finding that Olenik had been negligent in the work he performed under the contract, the court found that it was "appropriate for the case to be dismissed against Olenik as an individual."

On November 15, 2010, the court entered an order granting plaintiff's motion for summary judgment on the breach of contract and negligence counts as to Semester only. A second order was entered that granted Olenik's motion for summary judgment on all counts.

Over four months later, plaintiff filed a motion for reconsideration. In that motion, plaintiff asserted that the court's order granting summary judgment to Olenik was inconsistent with its finding that he had been negligent. Plaintiff also argued that the corporate veil should be pierced to hold Olenik personally liable. On April 15, 2011, the court denied the motion in a brief oral opinion. The court did not explain the discrepancy between its finding of negligence against both defendants and its dismissal of the negligence claim against Olenik. The court found that plaintiff's motion was untimely, but it considered and denied it, finding that plaintiff had not raised any new arguments that had not previously been considered.

Plaintiff and Semester then negotiated a Consent Order for Final Judgment. On May 24, 2011, the parties agreed that judgment would be entered in plaintiff's favor against Semester in the amount of $28,500.

Plaintiff next filed a motion for relief from final judgment under Rule 4:50-1. Again seeking to pierce the corporate veil, plaintiff argued for the first time that Olenik had improperly incorporated Semester as a general corporation rather than as a professional service corporation under the Professional Service Corporation Act ("PSCA"), N.J.S.A. 14A:17-1 to -18. The trial court denied the motion in an oral opinion. It found that the fact that Olenik had not complied with the PSCA was not "new information" and that plaintiff should have previously investigated and raised this issue. This appeal followed.

On appeal, plaintiff argues that the trial court erred by granting Olenik's motion for summary judgment. Plaintiff contends that this ruling was contrary to the court's finding that Olenik was negligent and that, in any event, the corporate veil should have been pierced so that Olenik could be held personally liable.

When a party appeals a trial court's grant of summary judgment, we review de novo whether summary judgment was proper. Simonetti v. Selective Ins. Co., 372 N.J. Super. 421, 427 (App. Div. 2004). Accordingly, the court must first decide whether there was a genuine issue of fact, and then, if there was not, whether the trial court's ruling on the law was correct.

Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608 (1998). In performing our appellate function, we consider "whether the competent evidential materials presented, when viewed in the light most favorable to the non-moving party, are sufficient to permit a rational factfinder to resolve the alleged disputed issue in favor of the non-moving party." Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995); see also R. 4:46-2(c).

Plaintiff contends, and we agree, that the trial court erred in ruling that Olenik could not be held personally liable on a professional negligence claim. We begin by again noting that the trial court specifically found that both Olenik and Semester were negligent in their preparation of the LOI and Concept Plans. That being the case, it is difficult to reconcile this finding with the court's order dismissing plaintiff's negligence claim against Olenik. "Where there is a conflict between a judge's written or oral opinion and a subsequent written order, the former controls." Taylor v. Int'l Maytex Tank Terminal Corp., 355 N.J. Super. 482, 498 (App. Div. 2002) (citations omitted). Plaintiff raised this specific issue in both its motion for reconsideration and its Rule 4:50-1 motion. However, the trial court declined to address the inconsistency on either occasion.

We can therefore only speculate whether the court's inclusion of both "defendants" in its negligence finding was a mistake or a part of its larger ruling. Later in its oral opinion, the court made a blanket legal conclusion that Olenik could not be held personally liable for any claim because he had incorporated his business. Therefore, it is possible that it determined that, regardless of whether Olenik was, in fact, negligent, he could not be held legally liable unless the court was able to pierce the corporate veil, which it believed protected him. This ambiguity should have been addressed in the court's consideration of plaintiff's subsequent motions.

In any event, it is clear that the court's ruling was incorrect as a matter of law. There was simply no need to pierce the corporate veil for plaintiff's negligence claim against Olenik to either proceed or succeed. A corporate officer, like Olenik, is subject to individual liability for his negligence if he owes the plaintiff an independent duty imposed by law. Saltiel v. GSI Consultants, Inc., 170 N.J. 297, 316 (2002). "One who undertakes to render services in the practice of a profession or trade is required to exercise the skill and knowledge normally possessed by members of that profession in good standing in similar communities." Levine v. Wiss & Co., 97 N.J. 242, 246 (1984) (citing Restatement (Second) of Torts § 299A (1965)). As a licensed professional engineer, Olenik clearly owed such a duty to plaintiff and he could be found liable for his individual negligence whether or not the corporate veil was pierced.

Because we find that the trial court incorrectly ruled, as a matter of law, that Olenik could not be found individually liable for his negligence, we reverse the court's decision to grant Olenik summary judgment on this count of the complaint. In doing so, we expressly vacate the trial court's apparent finding that Olenik was in fact negligent. As stated herein, it is not clear whether the trial court intended to find that Olenik was negligent or whether this was an inadvertent error. Therefore, the "factual finding" made by the court on this issue will not be binding on the parties on remand.

Because of the remand, plaintiff's claim that the trial court erred in denying its Rule 4:50-1 motion is moot. Plaintiff had argued that, under the PSCA, licensed professionals, such as Olenik, may only incorporate as "professional corporations." N.J.S.A. 14A:17-3. Thus, even though they have incorporated, the licensed professionals employed by the corporation "remain personally and fully liable and accountable for any negligent or wrongful acts or misconduct committed by" them. N.J.S.A. 14A:17-8. Since its negligence claim will now be considered anew, plaintiff may raise this issue on remand. Whether plaintiff will prevail on its negligence claim remains to be seen. Plaintiff will shoulder the burden of proof and Olenik will be entitled to present evidence demonstrating his lack of liability.

Plaintiff's remaining arguments on appeal are without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).

Affirmed in part; reversed in part; and remanded for further proceedings consistent with the views expressed in this opinion. We do not retain jurisdiction.

20120329

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