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Sunkavally v. Kommineni

Superior Court of New Jersey, Appellate Division

July 10, 2013

SRINIVAS SUNKAVALLY, Individually and Derivatively, and on Behalf of VSK HOMES, INC., Plaintiff-Respondent/ Cross-Appellant,
KALYAN KOMMINENI and PADMA CHAVA, Defendants/Third-Party Plaintiffs-Appellants/ Cross-Respondents, and VENU MARRI and VMS CONSTRUCTION, LLC, Defendants/Third-Party Cross-Appellants.


Argued May 7, 2013

On appeal from Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-7576-09.

Dennis J. Drasco argued the cause for appellants/cross-respondents (Lum, Drasco & Positan, LLC, attorneys; Mr. Drasco, of counsel and on the brief; Scott E. Reiser, on the brief).

Craig L. Levinsohn argued the cause for respondents/cross-appellants (Aronsohn Weiner & Salerno, P.C., attorneys; Mr. Levinsohn, on the briefs).

Before Judges Reisner, Yannotti and Harris.


Defendants Kaylan Kommineni and Padma Chava[1] appeal from a portion of a January 17, 2012 final judgment, granting plaintiff Srinivas Sunkavally $246, 759 in damages, following a bench trial.[2] Defendants also appeal from a March 16, 2012 order denying their reconsideration motion. Sunkavally, together with third-party defendants Venu Marri and VMS Construction, LLC (VMS), cross-appeal from a provision of the January 17, 2012 final judgment dismissing all remaining claims.

Having reviewed the record, we conclude that, except for the calculation of Sunkavally's damage award, the trial judge's decision is supported by sufficient credible evidence and is consistent with applicable law. We conclude that the trial judge miscalculated Sunkavally's damages, but that the correct sum can be readily calculated from the record evidence. Accordingly, we modify the judgment in favor of Sunkavally by reducing it from $246, 000 to $104, 000. We affirm the January 17, 2012 judgment as modified, but we remand for the limited purpose of entering an amended judgment reflecting that modification.


The evidence is set forth at length in the trial judge's comprehensive written opinion dated December 23, 2011, and need not be repeated here in the same level of detail. By way of background, the case arose from disputes over the construction of two large houses in Upper Saddle River, and the conduct of two construction companies, VSK and VMS. The main actors in the case, Sunkavally, Marri, and Kommineni, were either long-time friends or were acquainted through family members. Perhaps because they were dealing with friends and family members, they conducted their business dealings informally and with little or no documentation.[3] They claim to have conducted significant transactions in cash. In addition, they litigated this case without expert accounting testimony.

Marri, who had considerable experience in the construction industry, agreed to help Kommineni, a financial analyst, with renovations to Kommineni's home on Sunrise Lane (the Sunrise project).[4] Eventually, Kommineni decided instead to build a new house on the site. With Marri's advice, Kommineni decided to form a corporation for two purposes: first, to enable Kommineni to obtain a new home warranty for his house, which could only occur if the house were built by a corporation; and second, to invest in other real estate projects, which eventually included building a house on West Saddle River Road (the Saddle River project). Marri declined to invest in the corporation, but suggested asking his friend Sunkavally to invest. Sunkavally, a doctor living in Illinois, agreed to the proposal, and he and Kommineni formed a construction company called VSK. About two years later, when some tension developed between Marri and Kommineni, Sunkavally formed a separate construction company, VMS, as a vehicle for additional construction projects that Marri would carry out.

According to Sunkavally, he invested "[a]pproximately a hundred thousand" dollars of his own money in VSK.[5] He testified that his role in the company was limited to providing funds. He relied on Marri and Kommineni to operate the company. Kommineni, in turn, primarily relied on Marri, because of his prior construction experience. Sunkavally admitted that he did not expect to invest money in the construction of Kommineni's house and did not expect to make a profit on that construction. That was consistent with Marri's testimony that neither he nor Sunkavally intended that VSK would make a profit on building Kommineni's residence.

Later in Sunkavally's testimony, when he addressed the investment property on West Saddle River Road, he stated that he invested "probably something in the neighborhood of two hundred thousand" dollars in the Saddle River project. He also testified that VMS contributed some funding to that project, but he did not know the amount. All parties agreed that VSK lost money on ...

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