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Trico Equipment, Inc v. Ellsee Construction Co.

December 19, 2012

TRICO EQUIPMENT, INC., PLAINTIFF-RESPONDENT/ CROSS-APPELLANT,
v.
ELLSEE CONSTRUCTION CO., L.L.C., DEFENDANT-APPELLANT/ CROSS-RESPONDENT.



On appeal from Superior Court of New Jersey, Law Division, Mercer County, Docket No. L-2091-08.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted April 23, 2012

Before Judges A. A. Rodriguez and Ashrafi.

Defendant Ellsee Construction Co., L.L.C., rented heavy construction equipment from plaintiff Trico Equipment, Inc. The equipment failed mechanically while Ellsee was using it. Trico alleged that Ellsee had misused the equipment and later sued for about $10,000 in repair costs. Ellsee denied liability and filed a counterclaim alleging loss of part of the rental fee and other causes of action. The case was tried for two days without a jury. Dissatisfied with the judge's decision, both sides have appealed the net judgment of $2,059.95 in favor of Trico. We now reverse the judgment and order that both the complaint and the counterclaim be dismissed with no recovery for either party.

Had common law contract and tort law been the only grounds for relief in this dispute between two corporate entities, the case may have settled as a matter of the parties' business decision, and the judgment would likely not have warranted appeals as a matter of sound legal advice. Added to the mix, however, is the New Jersey Consumer Fraud Act ("CFA"), N.J.S.A. 56:8-1 to -20. The stakes are higher, the legal issues are more complex, and neither party has accepted the outcome after trial.

I.

The facts are not complicated. Defendant Ellsee needed to demolish two wooden outbuildings on a building lot. On January 18, 2005, it called Trico and requested to rent an excavator, a heavy-duty machine on tracks with a hydraulic arm and a bucket. On one prior occasion, during the spring of 2002, Ellsee had rented equipment from Trico for a period of several months. Ellsee still had a credit account on file with Trico.

Trico processed Ellsee's January 2005 request by means of its computerized record-keeping system, and it arranged for delivery of the machine to Ellsee's job site the next day. Ellsee used the excavator on January 19 and 20, but the machine sprang a hydraulic leak and stopped working on the second day. After retrieving the machine, Trico sent an invoice to Ellsee for rental and related fees totaling $2,066.50. Ellsee paid that amount by credit card.

Trico examined the excavator in its yard and concluded that the leak resulted from damage to a mechanical part and that Ellsee's misuse of the equipment must have caused the damage. Repairs cost Trico $9,961.10. Trico issued another invoice to Ellsee for the repair costs. Ellsee refused to pay the second invoice.

In January 2008, Trico sued Ellsee based on its rental contract. Ellsee counterclaimed against Trico, alleging breach of contract, common law fraud, negligent misrepresentation, and violation of the CFA. Five witnesses testified at the bench trial in 2009, all current or former employees of one party or the other. No experts testified.

Trico contended its standard contract terms placed responsibility on the renter if the equipment was damaged during its use. But Trico did not have a written contract to establish the terms of the rental agreement. Although its computerized system was designed to generate such a contract, and a contract number was assigned and appeared on other documents, Trico was never able to find a copy of its standard rental contract for the transaction. Instead, it relied on the other documents it had maintained pertinent to the January 2005 rental, and also on its standard practices in the rental of equipment, the documents generated at the time of its 2002 rental of equipment to Ellsee, and practices and customs in the equipment rental industry.

Trico presented testimony by its vice-president and general manager, Steven Scattolini. He testified that Trico received the request from Ellsee and had a computer record of information that should have automatically printed a contract on Trico's standard form. The pertinent information was electronically communicated to a carrier that would transport the requested equipment to the job site. Scattolini testified about Trico's standard contract terms pertaining to damage to the equipment itself while in the possession of a renter and the alternatives available to the renter in obtaining insurance coverage. He testified that Trico's contract form (Exhibit P-29 at the trial) had not changed between 2002 and the time of trial. Reciting the exclusion language contained in the waiver of damages provisions of the form contract, paragraph 25 on the reverse side, he testified that the waiver provisions only applied to catastrophic damage to the equipment and not to lesser mechanical failures, or to damage that was caused by the customer's misuse of the equipment.*fn1

On the same day that the machine was delivered to the job site, Trico had faxed to Ellsee another of its standard forms, an Insurance Certificate Request (Exhibit P-9). In addition to designating the equipment Ellsee was renting and its value, the document provided notice to the renter of the need to obtain insurance coverage for liability to third parties and for physical damage to the equipment itself. The faxed form included the following statement: "If Physical Damage coverage is not provided by you, the rental will be surcharged 14% of the rental fee in the form of a Physical Damage Waiver."*fn2

Scattolini explained to the judge that the phrase "physical damage waiver" meant that Trico would waive a claim against the renter for catastrophic damage to the equipment in exchange for the fourteen percent surcharge and in accordance with the terms stated on the reverse side of its standard contract form. Scattolini also reviewed for the court the prior 2002 rental contracts between Trico and Ellsee that contained allegedly identical terms.

The documents in evidence also showed that on the morning of January 19, 2005, the excavator had arrived at Ellsee's job site at 10:45, and not first thing in the morning as Ellsee had requested. Trico's foreman, Blake McClaren, testified that Trico inspected and photographed all equipment before it was turned over to the renter for use. In this case, the driver who transported the excavator had called and reported a minor leak in the equipment that he had detected when driving it onto the trailer bed for transport. McClaren personally went to Ellsee's job site to inspect the equipment. He quickly repaired the leak, which was not significant, and he thoroughly photographed and inspected the excavator, including by operating it. The machine had no mechanical defect or other damage when it was turned over to Ellsee. The photographs McClaren took that morning were admitted in evidence, as well as Trico's standard ...


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