On appeal from Superior Court of New Jersey, Law Division, Mercer County, Docket No. L-2320-08.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted September 21, 2011
Before Judges Graves, J. N. Harris, and Koblitz.
Defendants Louis Marut (Louis) and his wife, Deborah Marut (Deborah), are the owners of Brandiellon, Inc. (Brandiellon), a New Jersey corporation doing business as L & M Landscaping. Defendants appeal from an order dated February 5, 2010, dismissing their answer, counterclaim, and third-party complaint with prejudice; a subsequent order denying defendants' motion to restore their pleadings; and a final judgment in the amount of $2,510,798.22 following a proof hearing. We affirm except for a limited remand for the purpose of determining an appropriate award of reasonable attorneys' fees and costs of suit to plaintiff Orest Chaykowsky; and for further findings regarding plaintiff's claims against Deborah.
The relevant facts adduced from the record and the proof hearing are not complicated. Plaintiff owns several acres of land in Hopewell with two structures on it. The main house has approximately 8500 square feet of living space, and there is a smaller guest house on the property. In the summer of 2005, Louis contacted plaintiff with a proposal to improve plaintiff's property. The proposal included construction of a new 1200-foot driveway to the main house; a stone courtyard for vehicles in front of the house; a driveway connecting the main house to the guest house with a parking area for the guest house; a swimming pool; decorative boulders and stone walls; stone pillars for electric gates; a pathway from the main house to the guest house; landscape lighting; clearing and grading of plaintiff's property; planting of trees and shrubs; and the installation of a drainage system.
Following their initial discussion, plaintiff paid Louis $3500 for more detailed designs. According to plaintiff, Louis said the cost of the improvements shown on the design plans would not exceed $750,000, and plaintiff agreed to have the work done. Plaintiff paid for the work as it was performed based on invoices that Louis presented. However, the parties' verbal agreement was never reduced to writing, and plaintiff was never provided with a list of the materials that would be used to complete the project.
Defendants began clearing trees from plaintiff's property in the fall of 2005, and plaintiff made regular payments based on invoices that Louis presented. Most of the payments were by check. But plaintiff also made some cash payments because Louis "said he had to pay his amigos in cash." Whenever plaintiff made a cash payment, he had Louis initial the invoice to confirm the payment.
By late May or early June 2006, plaintiff had paid Louis more than $750,000 and plaintiff was concerned because Louis and his crew began showing up less frequently. When plaintiff confronted him, Louis said he needed another $100,000 to finish the job, and plaintiff agreed to the additional payment because he wanted the job finished.
In August 2006, plaintiff noticed "the property where the drainage was supposedly installed was soaking wet after almost any rainfall," and in September, after returning from a vacation, plaintiff observed that nothing had been done while he was away. When plaintiff asked Louis "what was going on," Louis said he needed another $100,000, but plaintiff refused to give him any more money. In a letter dated October 4, 2006, plaintiff's attorney terminated defendants' services.
Plaintiff commenced this action in September 2008, alleging among other things, breach of contract; violations of the Consumer Fraud Act (CFA), N.J.S.A. 56:8-2 to -20; and fraud. Defendants filed an answer and counterclaim, and a third-party complaint against plaintiff's son, Steven Chaykowsky. In their counterclaim, defendants alleged they had not been paid for labor and materials in the amount of $277,207. In their third-party complaint, defendants alleged damages resulting from Steven's "misrepresentations."
In February 2009, plaintiff served defendants with interrogatories and a notice to produce documents. On June 5, 2009, defendants responded to the discovery requests but failed to produce: (1) 1099 or W-2 forms for the individuals who performed work on plaintiff's property; (2) documents relating to lawsuits filed against defendants; (3) documents relating to judgments against defendants; (4) documents relating to complaints made by defendants' clients to various agencies; (5) defendants' payroll records for the time period they performed work on plaintiff's property; (6) defendants' books and records from 2005 to the date of the request; (7) invoices for materials defendants' purchased for work they performed on plaintiff's property; and (8) documents regarding all subcontractors that performed work on plaintiff's property.
Due to defendants' incomplete discovery response, plaintiff filed a motion to dismiss defendants' pleading without prejudice pursuant to Rule 4:23-5(a)(1). That application was granted on November 6, 2009. In a subsequent motion, which was filed on January 15, 2010, plaintiff sought to dismiss defendants' pleading with prejudice. In a supporting certification, plaintiff's attorney stressed that defendants had failed to produce critical business records:
[Defendants'] books and records also will reveal how the Defendants applied the money that they received from Plaintiff. Did they use the Plaintiff's payments to pay for materials and for labor and subcontractors who worked at Plaintiff's property, or did Defendants spend the money on other things? Were the funds deposited into the business account, or used for Defendants' personal purposes? Were subcontractors paid the amounts listed on the invoices provided to Plaintiff? Were subcontractors not paid with the money given to Defendant Marut by Plaintiff, resulting in them leaving the job? This goes to Defendants' fraudulent scheme in violation of the Consumer Fraud Act, which requires these expenses to be spelled out in a ...