Court Opinion

ID: 4523876
Source: CourtListenerOpinion
Date Created: 2020-04-09 14:09:28.06077+00
Date Added: 2024-06-11T08:42:59.781015
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
                               APPROVAL OF THE APPELLATE DIVISION
        This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the
     internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.

                                                         SUPERIOR COURT OF NEW JERSEY
                                                         APPELLATE DIVISION
                                                         DOCKET NO. A-3981-18T3

JUPITER ENVIRONMENTAL
SERVICES, INC.,

                    Plaintiff-Respondent/
                    Cross-Appellant,

v.

WALLACE BROS., INC., and
LIBERTY MUTUAL
INSURANCE COMPANY,

          Defendants-Appellants/
          Cross-Respondents.
_______________________________

                    Argued telephonically March 18, 2020 –
                    Decided April 9, 2020

                    Before Judges Fuentes, Haas and Enright.

                    On appeal from the Superior Court of New Jersey, Law
                    Division, Ocean County, Docket No. L-0413-17.

                    Patrick Thomas Murray, III, argued the cause for
                    appellants/cross-respondents (Peckar & Abramson, PC,
                    attorneys; Patrick Thomas Murray, III, on the briefs).
            Matthew David Lakind argued the cause for
            respondent/cross-appellant (Tesser & Cohen, attorneys;
            Matthew David Lakind, on the briefs).

PER CURIAM

      In this breach of contract case involving the installation of windows at

eight public schools, defendants Wallace Bros., Inc. (Wallace) and its insurer

Liberty Mutual Insurance Company appeal from the Law Division's April 2,

2019 order entering judgment in favor of plaintiff Jupiter Environmental

Services, Inc. (Jupiter). Wallace contends that the court erred by finding that it

breached its contract with Jupiter, and requiring Wallace to pay Jupiter its lost

profits and overhead, plus interest, on two school projects for which Jupiter

performed no work after Wallace deleted these schools from the contract

pursuant to one of its provisions. Wallace also argues that the court erred by

imposing interest upon a different portion of the judgment under the Prompt

Payment Act (PPA), N.J.S.A. 2A:30A-1 to -2.

      Jupiter has filed a cross-appeal from the same judgment, and argues that

the court should have awarded it additional damages for a third school that was

deleted from the contract, together with attorney's fees under the PPA. Jupiter

also asserts that the court miscalculated the amount of lost profits and overhead

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due it, as well as the amount Wallace owed Jupiter for the completion of a fourth

project.

      Having reviewed the parties' contentions in light of the record and

applicable law, we affirm the judgment in part, reverse it in part, and remand for

the entry of a new judgment.

                                        I.

      The parties are fully familiar with the lengthy procedural history and facts

of this matter. Therefore, we need only recite the most salient facts here.1

      Wallace was the general contractor on a construction project to renovate

eight public schools for the Brick Township Board of Education (Brick). As

part of its duties as the general contractor, Wallace was responsible for removing

and replacing windows at each of the schools. Brick and Wallace believed there

was asbestos in all of the windows and, therefore, Wallace was required to safely

remove this hazardous material from the schools.

      Because Wallace was not qualified to remove asbestos, it subcontracted

with Jupiter, an environmental/asbestos removal contractor, to perform the

1
  These facts were developed at a three-day bench trial. The only witnesses at
the trial were Jupiter's vice-president, Pane Repic, and Wallace's president,
Steven Wallace. To avoid confusion between Wallace, the company, and its
president, we hereafter refer to Mr. Wallace as Steven. In doing so, we intend
no disrespect.
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asbestos abatement aspect of the project. The parties agreed that after Wallace

and its other subcontractors took out the windows, Jupiter would take them from

the schools, and later remove the asbestos at its shop.

        Jupiter's bid on the subcontract was broken out with separate prices for

each of the schools. There were eight sets of plans, eight sets of drawings, eight

scheduled start and completion dates, and eight abatement management plans.

After some preliminary negotiations, Wallace accepted Jupiter's offer to

complete all the asbestos removal work for $425,000. During the negotiations,

the parties learned that the windows in two of the schools, Lake Riviera Middle

School (Lake Riviera) and Midstream Elementary School (Midstream) , might

not contain any asbestos. Thus, they agreed that if asbestos was found and

needed to be abated, Jupiter would be entitled to an additional $35,000 for this

work.

        Of particular importance to the issues involved in these appeals, Section

5.2 of the subcontract allowed Wallace to reduce or add to Jupiter's scope of

work in any manner and for any reason. Section 5.2 stated:

              The Subcontractor may be ordered in writing by the
              Contractor, without invalidating this Subcontract, to
              make changes in the Work within the general scope of
              this Subcontract consisting of additions, deletions or
              other revisions, including those required by
              Modifications to the Prime Contract issued subsequent

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            to the execution of this Agreement, the Subcontract
            Sum and the Subcontract Time being adjusted
            accordingly.    The Subcontractor, prior to the
            commencement of such changed or revised Work, shall
            submit promptly to the Contractor written copies of a
            claim for adjustment to the Subcontract Sum and
            Subcontract Time for such revised Work in a manner
            consistent with requirements of the Subcontract
            Documents.

            [(emphasis added).]

      Work on the project began in October 2015. A scheduling problem soon

developed at the Osbornville Elementary School 2 (Osbornville). Brick wanted

the work to be completed during the winter break so as not to interfere with the

kindergarten to grade four students who attended the school. Jupiter notified

Wallace that it could not meet this schedule.

      Accordingly, Wallace invoked Section 5.2 of the subcontract and deleted

Osbornville from the project. Wallace then made arrangements with Brick's

design professionals permitting it to encapsulate the asbestos, rather than

remove it, and Wallace was able to complete the Osbornville project on its own.

2
  In their respective briefs, the parties provide different spellings of the name
of this school. Wallace refers to it as the "Osborneville Elementary School,"
while Jupiter states it is the "Osberneville Elementary School." We refer to this
institution by the name listed on Brick's website, which is the "Osbornville
Elementary School." http://www.brickschools.org/Schools/Osbornville-ES (last
visited Mar. 22, 2020).
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                                       5
      In February 2016, testing reports at Lake Riviera and Midstream

confirmed there was no asbestos in the windows at either school. Because

Wallace no longer needed an asbestos removal expert like Jupiter to remove the

windows and asbestos at these schools, it removed them from the subcontract

pursuant to Section 5.2.

      Jupiter completed the asbestos removal work needed at the five remaining

schools. At the end of the project, Wallace calculated that it owed Jupiter

$54,184.50 for its work at the Lanes Mill Elementary School (Lanes Mill).

However, Jupiter demanded that Wallace pay it approximately $190,000, which

included payment for the Osbornville, Lake Riviera, and Midstream schools that

had been deleted from the subcontract.        Because the parties remained at

loggerheads, they participated in mediation to attempt to resolve the dispute, but

they were not successful.     Jupiter subsequently commenced this breach of

contract action.

      Following the trial, the judge concluded that Wallace did not owe Jupiter

anything on the Osbornville project because Wallace deleted this school from

the subcontract pursuant to Section 5.2 and Jupiter performed no work on it. In

so ruling, however, the judge determined that contrary to the clear language of

Section 5.2 that permitted the contractor to modify the subcontract for any

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                                        6
reason whatsoever, Wallace could only properly delete a school from the

subcontract if the deletion was caused by "unforeseen circumstances," or if the

owner of the project, in this case Brick, ordered the deletion.

      The judge's conclusion that Section 5.2 was subject to conditions that

nowhere appear in the subcontract was based upon a misreading of Steven's trial

testimony.     On direct examination, Steven was asked to explain his

"understanding" of Section 5.2. Steven replied:

                   It is very common in our business that work is
             added and deleted in the contract after you start. It
             could be because of unforeseen conditions, and you
             need a change order to fix it. It could be that simply
             the owner adds work to the contract or simply the owner
             removes work from the contract. I mean, we're doing a
             job right now where the owner just took $300,000
             worth of work out of the contract and you know it
             happens.

                   In this job, for instance, this is, you know at . . .
             the last two jobs, which was Midstream[] and Lake
             Riviera, . . . we always knew it was going to be a
             discussion because it was clean demolition, and
             [Wallace was] doing the clean demolition. Jupiter was
             not doing the clean demolition on the job. But at that
             point[,] and given the discussion and given other
             factors that factored in, which was scheduling, it was
             . . . beneficial to the project to just do the clean
             demolition with the men that were doing the clean
             demolition and not bring another contractor in.

             [(emphasis added).]

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As Steven later reiterated, he was only providing illustrative examples, rather

than an exhaustive list, of the circumstances where Section 5.2, which by its

terms was not subject to any conditions, might be invoked by the contractor.

      Here, the judge found that because it was not anticipated by the parties

that Jupiter would be unable to complete work on the Osbornville school in a

timely manner, Wallace was permitted to invoke Section 5.2 and remove this

school from the subcontract. Therefore, the judge concluded that Wallace was

not required to pay Jupiter anything in connection with this part of the project.

      However, the judge also relied upon his misunderstanding of Steven's

testimony to next rule that unlike what happened with Osbornville, Wallace did

not have a "good reason" to delete the Lake Riviera and Midstream schools from

the subcontract. As noted above, Wallace removed these two schools after it

was confirmed there was no asbestos for Jupiter to remove at either school.

However, because the parties contemplated that this might happen, the judge

found that the absence of asbestos-removal work for which Jupiter's expertise

was needed was not an "unforeseen" circumstance, and had not been ordered by

Brick. Accordingly, the judge ruled that Wallace had to reimburse Jupiter for

its lost profits and overhead on these two projects even though nothing in the

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                                        8
subcontract required this and Jupiter had not performed any work at these

schools.

      The judge then determined the amount of lost profits and overhead he

believed was due to Jupiter for Lake Riviera and Midstream. In doing so, he

remarked that "neither party provided any real assistance to the [c]ourt to assess

the measure of damages." By thereafter employing a series of calculations that

were not well explained, the judge found that Wallace should pay Jupiter

$19,749 in lost profits and overhead, together with $19,800 for "General

Conditions and Insurance," $11,872.50 for "Retainage on Completed Work,"

and $2819.05 in pre-judgment interest under Rule 4:42-11. The sum of these

awards is $54,240.55.

      The judge also ordered Wallace to pay Jupiter an additional $54,184.50,

representing the money due for the Lanes Mill school. The judge rejected

Jupiter's request for its attorney's fees and costs under the PPA in connection

with pursuing this payment, and found that the PPA did not apply because "the

trial was really about the deletion of Midstream[] and Lake Riviera and

Osbornville and not about that issue." However, the judge then inconsistently

ordered Wallace to pay Jupiter $8794.82 in interest under the PPA. These

appeals followed.

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                                        9
                                       II.

      We begin by addressing the issues raised by the parties regarding

Wallace's decision to delete three schools from the subcontract. In its appeal,

Wallace asserts that the judge erred by concluding that Wallace breached the

subcontract by deleting the Lake Riviera and Midstream schools and, as a result,

ordering Wallace to pay Jupiter for work it did not perform on these projects.

In its cross-appeal, Jupiter claims that the judge incorrectly ruled that Wallace

properly removed the Osbornville school from the project.        Only Wallace's

arguments have merit.

      Our review of a trial court's fact-finding in a non-jury case is limited.

Seidman v. Clifton Sav. Bank, S.L.A., 205 N.J. 150, 169 (2011). "The general

rule is that findings by the trial court are binding on appeal when supported by

adequate, substantial, credible evidence." Ibid. (quoting Cesare v. Cesare, 154
N.J. 394, 411-12 (1998)). However, questions of law are subject to plenary

review on appeal with no deference granted to the trial court's conclusions.

Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995).

We also review mixed questions of law and fact de novo. In re Malone, 381
N.J. Super. 344, 349 (App. Div. 2005).

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                                      10
      It is well established that "[t]he interpretation and construction of a

contract is a matter of law for the trial court, subject to [our] de novo review on

appeal." Cumberland Farms, Inc. v. N.J. Dep't. of Envtl. Prot., 447 N.J. Super.
423, 438 (App. Div. 2016) (citing Fastenberg v. Prudential Ins. Co. of Am., 309
N.J. Super. 415, 420 (App. Div. 1998)).          "Accordingly, we pay no special

deference to the trial court's interpretation and look at the contract with fresh

eyes." Kieffer v. Best Buy, 205 N.J. 213, 223 (2011).

      Courts usually enforce contracts as written where, as here, the language

of the agreement is unambiguous. Kampf v. Franklin Life Ins. Co., 33 N.J. 36,

43 (1960). Indeed, unambiguous language controls the rights and obligations of

the parties, even if it was unwise in hindsight. Karl's Sales and Serv., Inc. v.

Gimbel Bros., Inc., 249 N.J. Super. 487, 493 (App. Div. 1991). Thus, a court

"will not make a better contract for [the] parties than they themselves have seen

fit to enter into, or alter it for the benefit of one party and to the detriment of the

other." James v. Fed. Ins. Co., 5 N.J. 21, 24 (1950) (quoting Kupfersmith v.

Delaware Ins. Co., 84 N.J.L. 271, 275 (E. & A. 1912)). The parties, especially

sophisticated ones like Wallace and Jupiter, are generally in the best position to

determine their respective needs and obligations in negotiating a contract.

Brundage v. Estate of Carambio, 195 N.J. 575, 601 (2008).

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                                         11
      Applying these principles here, we conclude that Wallace was permitted

to delete Lake Riviera and Midstream from the subcontract without penalty for

any reason, including the fact that Jupiter's expert services were no longer

needed when the two schools were found to be asbestos-free. Section 5.2 is

clear on its face. Read in a straightforward manner, this section provides that

Wallace, as the contractor, may order Jupiter, its subcontractor, to make any

changes, including deletions of work.       There is nothing in Section 5.2 or

anywhere else in the parties' agreement that limits Wallace's authority to make

these changes, and the subcontract does not require Wallace to pay Jupiter for

any schools that were deleted from the project.

      Under these circumstances, the judge mistakenly considered Steven's brief

testimony citing two examples of situations where Section 5.2 "could be"

invoked. Extrinsic evidence of this nature should only be considered by a court

in interpreting the terms of a contract where the parties' agreement is ambiguous.

Conway v. 287 Corporate Ctr. Assocs., 187 N.J. 259, 268-70 (2006). That is

simply not the case here, and neither party convincingly argues otherwise.

      As already discussed, the judge also misinterpreted Steven's statement that

Section 5.2 "could be" applied when there were "unforeseen conditions"

necessitating the deletion of a school project or when Brick requested the

                                                                          A-3981-18T3
                                       12
deletion. Contrary to the judge's conclusion, Steven made clear that he was not

providing an exhaustive list of all of the many circumstances where a project

could be deleted. Thus, while the possibility that the two schools would be

found to be free of asbestos might not have been "unforeseen," this did not

prevent Wallace from advising Jupiter that its expert services were not needed

on these projects. Because Wallace had the authority under Section 5.2 to delete

schools from the subcontract for any reason, the judge erred by declaring that a

breach occurred when Wallace removed Lake Riviera and Midstream, and by

awarding Jupiter damages for its lost profits and overhead for these schools.

      For this same reason, the judge correctly found that Wallace did not

breach the agreement by removing the Osbornville project, and he properly

denied Jupiter's request for damages in connection with this removal. In so

ruling, we recognize that the judge's decision on Osbornville, while correct, was

based on his belief that Wallace had a "good reason" for deleting this school

from the subcontract. While we disagree with the judge's analysis on this issue,

it is well established that an appellate court is "free to affirm the trial court's

decision on grounds different from those relied upon by the trial court." State

v. Heisler, 422 N.J. Super. 399, 416 (App. Div. 2011) (citing Isko v. Planning

Bd. of Livingston, 51 N.J. Super. 162, 175 (1968), abrogated on other grounds,

                                                                           A-3981-18T3
                                       13
Commercial Realty & Res. Corp. v. First Atlantic Props. Co., 122 N.J. 546, 565

(1991)).

      To summarize, we affirm the judge's decision denying Jupiter's request

for damages concerning the Osbornville school. We reverse the judge's ruling

awarding damages to Jupiter in connection with the work it did not perform at

the Lake Riviera and Midstream schools. 3 We therefore remand this matter to

the Law Division to enable it to amend the judgment to reflect the deletion of

the award of damages to Jupiter in connection with the latter two schools.

                                       III.

      We next turn to the parties' contentions concerning the PPA. Wallace

argues that the trial judge erred by granting Jupiter $8794.82 in interest pursuant

to the PPA on the $54,184.50 Wallace owed Jupiter for the work it performed at

the Lanes Mill school. Jupiter asserts that the judge properly awarded it this

interest, but mistakenly denied its request for attorney's fees under the PPA.

      By way of background, the PPA establishes a strict timeframe pursuant to

which payments are due from a prime contractor to a subcontractor which it has

3
  Based upon this ruling, we need not address the parties' respective contentions
that the judge miscalculated the amount of damages that would have been owed
by Wallace to Jupiter if there had been a breach of the subcontract. Because
there was no breach by Wallace in deleting the three school projects, it is not
liable for the payment of any damages to Jupiter on this issue.
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                                       14
retained to provide materials and services. N.J.S.A. 2A:30A-2(a). If these

deadlines for payment are not met, and the subcontractor "has performed in

accordance with the provisions of its contract with the prime contractor,"

penalties such as pre-judgment interest and attorney's fees may be imposed if

the subcontractor files suit and is successful on its claims. N.J.S.A. 2A:30A-

2(b), (c), and (f). However, the prime contractor may avoid these penalties if it

provides the subcontractor with "a written statement of the amount withheld and

the reason for the withholding," and "engage[s] in a good faith effort to resolve

the reason for the withholding." N.J.S.A. 2A:30A-2(d).

      That is what occurred in this case. At the end of the renovations, Wallace

had not yet paid Jupiter for its work at Lanes Mill. However, the parties

disagreed as to the amount due, with Wallace asserting the figure was

$54,184.50, and Jupiter claiming it was owed $55,500. In addition, the parties

were still battling over Jupiter's argument that it should be paid for the three

schools that had been deleted from the contract.

      Section 12.2 of the parties' subcontract provided that "[u]pon the partial

or entire disapproval by the Contractor of the Subcontractor's application for

payment, the Contractor shall provide written notice to the Subcontractor. When

the basis for the disapproval has been remedied, the Subcontractor shall be paid

                                                                         A-3981-18T3
                                      15
the amounts withheld." In compliance with this provision and as required by

the PPA, Wallace provided Jupiter with its written reasons for denying Jupiter's

demands for payment, and the parties thereafter attempted to resolve their

dispute by negotiating in good faith. They even participated in mediation.

When they were unable to amicably adjust their differences, Jupiter commenced

its lawsuit.

      Under these circumstances, we detect no violation of the PPA on

Wallace's part. Therefore, the judge mistakenly awarded Jupiter interest on the

$54,184.50 he determined was due Jupiter for the Lanes Mill school. Because

Jupiter failed to demonstrate that Wallace failed to comply with the PPA, Jupiter

was also not entitled to attorney's fees and costs under that statutory scheme.

      In addition, Jupiter could not claim attorney's fees under the "American

Rule."   "New Jersey strictly adheres to the 'American rule' in regards to

attorney's fees," under which each party bears its own legal fees and costs. First

Atlantic Fed. Credit Union v. Perez, 391 N.J. Super. 419, 425 (App. Div. 2007)

(citing Van Horn v. City of Trenton, 80 N.J. 528, 538 (1979)). "Consistent with

this policy, attorney's fees are not recoverable absent express authorization by

statute, court rule or contract." Ibid. (citing State of New Jersey, Dep't of Envtl.

Prot. v. Ventron Corp., 94 N.J. 473, 505 (1983)). Due to the inapplicability of

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                                        16
the PPA, there was no statute, court rule, or contract provision that allowed

Jupiter to recover its attorney's fees and costs in this matter. Therefore, we

affirm the judge's denial of Jupiter's request for reimbursement of these

expenses.

      In its cross-appeal, Jupiter also alleges that it was actually owed $55,500

for its work at Lanes Mill. However, the judge's determination that Steven

adequately demonstrated that Jupiter was due the lesser amount is supported by

sufficient credible evidence in the record and, therefore, we reject Jupiter's

contention on this point without need for any additional discussion. R. 2:11-

3(e)(1)(E).

      Accordingly, we reverse the portion of the judgment that awarded interest

under the PPA to Jupiter for the Lanes Mill school, and remand for the entry of

a corrected judgment for the $54,184.50 the judge found Jupiter was owed for

its work on this part of the project.4 We affirm the judge's denial of Jupiter's

request for attorney's fees and costs, albeit for different reasons than those

expressed by the judge. See Heisler, 422 N.J. Super. at 416.

4
  Because the judge stated it was granting Jupiter interest on the Lanes Mill
project under the PPA, he stated he would not consider whether Jupiter might
be due interest on the award under Rule 4:42-11. Thus, on remand, the court
may consider whether interest on this award is appropriate under Rule 4:42-11.
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                                      17
                                        IV.

      In sum, we reverse the portions of the April 2, 2019 judgment awarding

damages to Jupiter for the Lake Riviera and Midstream schools, and interest

under the PPA for the Lanes Mill School. We affirm the judge's rulings denying

Jupiter's claim for damages in connection with the Osbornville school, and its

request for attorney's fees and costs under the PPA. We remand the matter to

the Law Division to enable the court to expeditiously enter a revised judgment

reflecting only the amount due to Jupiter for the completed work at the Lanes

Mill school, after considering whether Jupiter is entitled to interest on that award

under Rule 4:42-11.

      Affirmed in part; reversed in part; and remanded. We do not retain

jurisdiction.

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