August 23, 2013
J. RICCIARDELLA & SONS QUALITY HOMES, INC., Plaintiff-Respondent,
BASSAM MAMARY and GEORGINA MAMARY, Defendants-Appellants.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued April 17, 2013
On appeal from Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-3559-08.
John R. Edwards, Jr., argued the cause for appellants (Price, Meese, Shulman & D'Arminio, P.C., attorneys; Mr. Edwards, on the brief).
Elaine Berkenwald argued the cause for respondent (Law Offices of Giblin & Giblin, attorneys; Ms. Berkenwald, of counsel and on the brief).
Before Judges Grall, Simonelli and Accurso.
Plaintiff J. Ricciardella & Sons Quality Homes, Inc. and defendants Bassam and Georgina Mamary entered into a $1.4 million contract for the construction of a new home in Franklin Lakes. Plaintiff declared breach when defendants refused to pay the sixth of twelve scheduled payments, each but the first due as benchmarks in the project were met.
A jury trial was held on their competing claims. In addition to claiming breach based on defendants' failure to make the sixth payment, plaintiff alleged that defendants had not paid for work done out of order prior to the breach. Defendants' claims were that plaintiff terminated the contract without cause, failed to properly perform the work done and violated the Consumer Fraud Act, N.J.S.A. 56:8-1 to -20. At the close of plaintiff's case, the trial court denied defendants' motion for judgment pursuant to Rule 4:40-1.
The jurors found that plaintiff established a breach based upon defendants' failure to make the sixth payment, and for that reason did not wrongfully terminate the contract. They further found that plaintiff was entitled to $350, 000 for work done over and above the $430, 000 it had been paid. The $350, 000 amount included $183, 603 for the sixth payment. The jurors resolved defendants' claims against them, concluding that plaintiff had neither breached the contract nor violated the Consumer Fraud Act.
The trial court subsequently denied defendants' motion for judgment notwithstanding the verdict and entered a $350, 000 judgment in favor of plaintiff plus pre-judgment interest in the amount of $26, 053.42 and $315 for costs.
Defendants appeal and raise eight issues for our consideration:
I. THE TRIAL COURT ERRED IN DENYING [DEFENDANTS'] MOTIONS FOR JUDGMENT.
II. THE INTERPRETATION OF A CONTRACT IS AN ISSUE OF LAW FOR THE COURT TO DECIDE AND THE SIXTH PAYMENT WAS NOT DUE AS A MATTER OF LAW.
III. THE BUILDER'S UNLAWFUL TERMINATION OF THE CONTRACT RELEASED [DEFENDANTS] FROM FURTHER PERFORMANCE.
IV. THE PLAINTIFF FAILED TO PROVE AN ECONOMIC LOSS.
V. THE QUOTIENT VERDICT REQUIRES A NEW TRIAL.
VI. THE GROSSLY EXCESSIVE VERDICT REQUIRES A NEW TRIAL.
VII.NUMEROUS EVIDENTIARY RULINGS REQUIRE A NEW TRIAL.
VIII. THE BUILDER'S MISREPRESENTED CORPORATE STATUS (STILL EXTANT) BARS RECOVERY.
Plaintiff's evidence at the lengthy trial primarily consisted of the testimony of plaintiff's principal, James Ricciardella, Ricciardella's partner, his son, and the contractors and lawyer who worked for plaintiff on the project. Defendants' witnesses were the Mamarys and a friend of theirs who is a civil engineer. The witnesses for each side gave competing descriptions of the cause and severity of problems ranging from the installation of cracked bricks and different colored mortar on the home's exterior to structural flaws and the adequacy of efforts made to correct them.
Although resolution of the parties' competing allegations on proper performance largely turned upon an assessment of credibility, the evidence pertinent to the question whether the sixth payment was due under the terms of the contract was undisputed. Defendants claimed that the payment was not due because the basement staircase had not been installed and could not be installed until the basement floor was poured. Plaintiff did not dispute that the basement floor was not poured. Plaintiff contended that its installation of a temporary staircase, suspended from the ceiling and resting upon gravel met this condition.
We agree with defendants that they were entitled to judgment on that claim at the close of plaintiff's case and to judgment notwithstanding the verdict. A defendant in a civil case is entitled to judgment if a reasonable jury giving plaintiff the benefit of all favorable evidence and inferences could not find that plaintiff established its claim. Dolson v. Anastasia, 55 N.J. 2, 5-6 (1969); accord Besler v. Bd. of Educ. of W. Windsor-Plainsboro Reg'l Sch. Dist., 201 N.J. 544, 572 (2010). In reviewing an objection to the denial of a motion for judgment at the close of the plaintiff's case or after the verdict, this court applies the same standard. Raspa v. Office of Sheriff, 191 N.J. 323, 334 (2007); Frugis v. Bracigliano, 177 N.J. 250, 269 (2003).
The question whether the sixth payment was due required an interpretation of the contract. But the trial court did not address the pertinent contractual provisions in ruling on defendants' motions.
As noted at the outset of this opinion, the total contract price was $1.4 million. Paragraph 4.1 of the contract provided for scheduled payments to be made "as provided by the payment schedule (schedule B) . . . within 15 days from when Contractor request[s] payments to be made based upon competition [sic] of work pursuant to the payment schedule."
Paragraph 4.2 provides for the contractor to identify the work that had to be completed for all but the first payment. It states:
Each Application for Payment shall be based upon the schedule of values submitted by the Contractor in accordance with the contract documents. The schedule of values shall allocate the entire Contract Sum among the various portions of the work and be prepared in such form and supported by such data to substantiate its accuracy as the Contractor may require.
Schedule B is the schedule of values. With respect to the sixth payment, $175, 000, it identifies this work:
Framing Inspection from Town
a. Electrical Work Inspected by Town
b. Plumbing Work Inspected by Town
c. A/C Duct Work Completed
d. Wiring for Alarm System Completed
e. Vacuum System Piping Completed
f. Oak Flooring Installed
g. Staircase Installed
Paragraph 4.1 and Schedule B are modified by another provision of the contract. It addresses defendants' election to purchase and install some elements of the project, specifically staircases. Paragraph 30, addressing owners' credits and allowances, provides:
In each instance where Owner desires a credit, Owner assumes the responsibility of purchasing and installation. Owner desires to purchase his own staircases, including the Foyer, basement and attic stairs and have them installed by his own subcontractor. An allowance of Thirty Five Thousand and One Hundred dollars ($35, 100.00) as Per Schedule A numbers 18 and 19. . . .
Numbers 18 and 19 on Schedule A, "Job Specifications" provide:
Foyer staircase in all Oak and Oak spindles as per plans and as per Glen Rock Stair's estimate - $35, 100.00 allowance as per Owners request for paragraph's [sic] number 18 and 19. Owner to install if Owner obtains.
Staircase to basement and attic to have oak treads and pine risers as per plans and Glen Rock Stair's estimate. Owner to install if Owner obtains.
Although defendants acknowledged they assumed responsibility for the selection and installation of the basement staircase, they contended that it could not be done because the basement floor was not complete. Mr. Ricciardella's description of the makeshift staircase he admittedly installed to be in a position to demand payment leaves no room for reasonable persons to disagree on that point. Although neither the payment schedule nor the specifications mention the basement floor, the contract cannot be understood to permit the contractor to provide a temporary staircase because the contractor has not done the work necessary for a permanent one.
There is no question that defendants, having undertaken to install the basement staircase, would have had no right to withhold the sixth payment on that ground if plaintiff had finished the basement floor. But plaintiff, who had supplied the payment schedule, acknowledged that he had not done that. Instead, plaintiff undertook to force payment by installing a temporary staircase.
A reasonable jury, properly instructed on what was needed to show a breach on this provision, could not have concluded that defendants breached by failing to tender the sixth payment. In short, an explicit pre-condition of their obligation to pay was not satisfied. See Duff v. Trenton Beverage Co., 4 N.J. 595, 604 (1950). Thus, defendants were entitled to judgment on this claim.
The erroneous denial of judgment requires an adjustment of plaintiff's damage award. The jurors unanimously found that defendants breached the contract by not making the sixth payment and awarded plaintiff $183, 603 for that breach. Thus, the judgment must be reduced by that amount.
The question remains whether the remainder of the judgment in plaintiff's favor must be vacated. The verdict sheet indicates that the $350, 000 award in favor of plaintiff represents plaintiff's entitlement "to monetary compensation over and above what he has already been paid." The notations on the verdict sheet clearly indicated that the total includes the $183, 600 awarded for the sixth payment and an additional $166, 397.
The difficulty here is that we cannot discern whether the $166, 397 represents the jurors rough estimate of lost profits (which is suggested in a handwritten notation in the margin of the verdict sheet — " 10% profit on 1.4 million, " — and supported by Ricciardella's testimony that profit was built into the contract price) or an amount for the fair value of work plaintiff performed without receiving compensation (a claim of plaintiff's that was submitted to the jury and supported by Ricciardella's testimony that some work was done ahead of the payment schedule).
Because the verdict sheet precludes us from being certain about the basis for the award of an additional $166, 397 to plaintiff, plaintiff is entitled to a new trial on its claim for the value of work done ahead of the payment schedule.
We have also considered whether the reversal of the verdict in favor of plaintiff requires a new trial on defendants' claim of breach of contract based on plaintiff's tender of substandard performance. Defendants submitted significant evidence of poor performance — use of cracked bricks, different shades of mortar, an irregular garage floor, etc. That claim was submitted to the jury along with defendants' claim of consumer fraud.
The verdict sheet, however, was fashioned in a manner that directed the jurors not to consider relief for poor performance if they determined that plaintiff had not wrongfully terminated the contract upon defendants' refusal to make the sixth payment. Questions seven through eleven on the verdict sheet address defendant's claims. The verdict sheet, with the jury's responses included and the jury's notations omitted, reads as follows.
7)Did the plaintiff wrongfully terminate the contract?
If yes, go to #8
If no, go to #10
8)Did the plaintiff breach the contract?
Yes __ No __
If yes, go to #9
If no, go to #10
9)Did the defendants suffer damages as a result of that breach?
Yes__ No __
If yes, in what amount?
10)Did the plaintiff violate the Consumer Fraud Act?
Yes __ No √
If yes, go to #11
If no, please do not address
Questions 11, 12 or 13
11)Did the defendants suffer damages as a result of that violation?
If yes, go to #12
The jury's finding that plaintiff's termination was not wrongful is inextricably related to the jury's determination that defendants breached the agreement by failing to make the sixth payment. For that reason, defendants are entitled to a new trial on their claim that plaintiff's termination was wrongful.
Moreover, as the verdict sheet was structured, the jury's determination that plaintiff did not wrongfully terminate foreclosed consideration of defendants' claim based upon poor workmanship. Accordingly, defendants are entitled to a new trial on that claim as well.
The erroneous denial of judgment in defendants' favor on plaintiff's claim of breach by failure to make the sixth payment has no relevance to defendants' claim of consumer fraud, however. Thus, a new trial on that claim is unwarranted.
Because we have concluded that there should be another trial on the contract claims identified above, it is unnecessary for us to address defendants' other objections to the court's evidentiary rulings and the verdict. Any questions about plaintiff's corporate status and its capacity to sue and be sued may be addressed on remand.
We note that a new trial may be unnecessary. The parties' contract includes an arbitration clause that either party may invoke.
Reversed and remanded for further proceedings.