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Brothers General Construction & Painting, LLC v. Tocci Building Corp., Inc.

Superior Court of New Jersey, Law Division, Union

September 17, 2018


          Scott I. Fegley, Esq. of the Fegley Law Firm on behalf of Plaintiff Brothers General Construction & Painting, LLC

          Gary J. Repke, Jr. Esq. of Cohen Seglias Pallas Greenhall & Furman, P.C. on behalf of Defendant Tocci Building Corporation, Inc.



         The present matter is before the Court on plaintiff, Brothers General Construction & Painting, LLC's (hereinafter "Brothers General") motion seeking to estop defendant, Tocci Building Corporation, Inc. (hereinafter "Tocci") from asserting the arbitration clause in the parties' contract and Defendant's cross-motion to compel arbitration and stay the underlying action.[1] The motions are opposed.

         I- Facts

         By way of background, the underlying matter arises out of a construction project for j the construction of an Embassy Suites Hotel in Berkley Heights, New Jersey (hereinafter the j "Project"). The Project is located at 250 Connell Drive, Berkley Heights, New Jersey | (hereinafter the "Subject Premises"). At all times relevant to the underlying action, the owner of the Subject Premises was Connell Hospitality LLC (hereinafter "Connell Hospitality").

         As set forth in Brothers General's Complaint, Plaintiff is a New Jersey limited liability company with its principal place of business located at 193 Tenby Chase Drive, No. T27l, Delran, New Jersey 08075. Tocci is a Massachusetts corporation with its principal place of located at 660 Main Street, Woburn, Massachusetts 01801.

         On or about January 19, 2015, Connell retained Tocci to perform certain construction management and general contracting services in connection with the Project (hereinafter the "Connell-Tocci Prime Contract").

         In furtherance of the Connell-Tocci Prime Contract, Tocci entered into a subcontract with Brothers General on or about April 2, 2015 (hereinafter the "Tocci-Brothers General Subcontract" or "Subcontract"). See Certification of Scott I. Fegley, Esq. ("Fegley Cert."), Ex. B.

         Pursuant to the Tocci-Brothers General Subcontract, Brothers General was hired to perform the painting and wall covering finishes for the Project. Id. at p. 3. Brothers General's scope of work included: sealed concrete and special coatings, painting, and mockup. Id. The total contract price after execution of approved changed orders was $378, 597.63.

         In relevant part, Section 11.3 of the Tocci-Brothers General Subcontract states:

If the Trade-Contractor [Brothers General] has made Application for Payment as required, the Construction Manager [Tocci] will process such Application for Payment in accordance with this Agreement [the Tocci-Brothers General Subcontract] and will pay the Trade Constractor [Brothers General] promptly after the Construction Manager [Tocci] is paid for the Work contained therein by the Owner [Connell Hospitality]: Payment by the Owner [Connell Hospitality] to the Construction Manager [Tocci] for Work included in-any Application for Payment shall be a condition precedent to Construction Manager's [Tocci's] obligation to make payment for such Work to the Trade Contractor [Brothers General]. Retainage will be in accordance with Paragraph 2.1.

Id. at p. 18, § 11.3 (emphasis added).

         Of particular importance to the subject motion is paragraph of the rider to the Tocci-Brothers General Subcontract (the "Rider"), which contains the disputed arbitration provision. The full text of paragraph R.16 states:

Trade Contractor [Brothers General] shall have no claim for additional compensation for any act, omission, or discretion of the Owner [Connell Hospitality] whatsoever, except to the extent that the Construction Manager [Tocci] shall, pursuant to the provisions of the General Contract, have a claim against the Owner [Connell Hospitality]. The Trade Contractor [Brothers General] agrees to be bound by the decision of the Architect and/or Owner [Connell Hospitality] and further agrees that any decision or determination reached by any authority duly constituted or appointed under the terms of the Contract Documents or by any Court of competent jurisdiction involving the Interpretation or construction of the terms and provisions of any of the Contract Documents and/or the manner that the Construction Manager [Tocci] shall be determinative and conclusive, and the Trade Contractor [Brothers General] will be bound thereby to the Construction Manger [Tocci] to the same extent and in the same manner that the Construction Manager [Tocci] is bound to the Owner [Connell Hospitality]. The Trade Contractor [Brothers General] further agrees to become a party to and to be bound by any proceeding involving the Construction Manger [Tocci], the Architect, or the Owner [Connell Hospitality] to the extent that such proceedings involve any of the rights or obligations of the Trade Contractor [Brothers General] under the subcontract. In the event of any dispute, controversy, or claim between the Construction Manager [Tocci] and the Trade Contractor [Brothers General], The Trade Contractor [Brothers General] agrees to proceed with the work or extra work without delay and without regard to such dispute, controversy, or claim or the pendency of any proceeding in relation to the same. The failure of the Trade Contractor [Brothers General] to comply with the provisions of this paragraph shall constitute a material breach of this agreement with all the remedies of the Construction Manager [Tocci] provided for in this Article 16. Nothing in this Agreement shall be constituted as providing the Trade Contractor [Brothers General] with any specific provision(s) for dispute resolution or arbitration other than those specifically granted herein notwithstanding the existence of any such provision in the Owner [Connell Hospitality] - Construction Manager [Tocci] agreement. However, at the election of Construction Manager[Tocci], the parties agree to arbitrate any such claim or dispute in accordance with Construction Industry Rule of the American Arbitration Association and the locale shall be Boston, Massachusetts. This Agreement to arbitrate, if so elected, shall be specifically enforceable under the prevailing arbitration law.

Id. at R. 16 (emphasis added, not in original).[2]

         On or about February 22, 2017, Connell Hospitality sent Tocci a Notice of Termination. Tocci disputed the alleged basis for its "wrongful termination" and purportedly requested to meet with Connell in an effort to complete the remaining work on the Project. However, on March 2, 2017, Connell Hospitality demanded Tocci vacate the Subject Premises. Tocci complied with Connell Hospitality's request and last performed work on the Project on March 2, 2017.

         Thereafter, Tocci claims that it made repeated demands of payment from Connell Hospitality, which Connell Hospitality refused. As a result, Tocci filed a construction lien claim against Connell Hospitality and the Subject Premises on March 28, 2017. In addition, Tocci served Connell with a demand for arbitration before the American Arbitration Association ("AAA") on May 13, 2017.

         In answering Tocci's Arbitration Demand, Connell Hospitality made certain allegations implicating the work performed by Brothers General on the Project. Specifically, Connell Hospitality alleged that Brothers General was "undercapitalized[, j" "unqualified[, ]" "woefully understaffed[, ]" and provided "poor workmanship" on the Project. Connel further alleged that there were "large sunken pockets, uneven surfaces, bowing and rough textures" on certain building walls, which Brothers General was responsible. Moreover, Connell Hospitality alleged that Brothers General painted and/or installed wall coverings "on various services before those surfaces were properly taped, spackled, cleaned and otherwise ready to receive paint and/or wall covering." Furthermore, Connell Hospitality alleged that "[g]ouges, overspray and mud [were] visible under installed wall coverings" causing a significant amount of work to be "rejected and redone[.]" Finally, Connell Hospitality alleged that Brothers General had painted "many surfaces that were not ready to be painted" and that such efforts were examples of the "hundreds of unremedied defects" and "substandard work" that needed to be remediated.

         Based on Connell Hospitality's allegations, and pursuant to Rule 7 of the AAA's Construction Industry Rules, Tocci filed a Request for Joinder of Additional Parties (hereinafter the "Joinder Request"), citing to paragraph R.16 of the Subcontract.

         By correspondence dated July 31, 2017, Tocci served the Joinder Request on Brothers General by regular mail and notified it that if it objected to the joinder that it was required to file a written objection with the AAA within fourteen (14) days.

         The AAA sent Brothers General a second letter via email informing it of Tocci's Joinder Request and stating that any objection ...

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