Court Opinion

ID: 4664751
Source: CourtListenerOpinion
Date Created: 2021-03-04 15:08:40.149125+00
Date Added: 2024-06-11T08:02:37.788199
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NOT FOR PUBLICATION WITHOUT THE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-4654-18

YORK MECHANICAL CORP.,

          Plaintiff-Appellant,

v.

KINNEY CONSTRUCTION
SERVICES, INC.,

     Defendant-Respondent.
_________________________

                   Submitted March 18, 2020 – Decided March 4, 2021

                   Before Judges Fuentes, Haas and Enright.

                   On appeal from the Superior Court of New Jersey, Law
                   Division, Hudson County, Docket No. L-1229-19.

                   Skolnick Legal Group, PC, attorneys for appellant
                   (Ronald W. Solares, on the briefs).

                   Cole Schotz PC, attorneys for respondent (Adam, J.
                   Sklar, of counsel and on the brief; Arnold P. Picinich,
                   on the brief).

          The opinion of the court was delivered by
FUENTES, P.J.A.D.

      Plaintiff York Mechanical Corporation is a licensed contractor located in

Union City that supplies and installs heating, ventilation, and air conditioning

(HVAC) equipment. Defendant Kinney Construction Services, Inc., (KCS) is a

construction service company located in Flagstaff, Arizona.          At all times

relevant to this case, defendant was the general contractor of a project located

in Union City. Defendant hired plaintiff as a subcontractor to supply and install

the project's HVAC equipment.

      Plaintiff filed a civil action against defendant alleging breach of contract,

unjust enrichment, quantum meruit, and violation of New Jersey's Prompt

Payment Act (NJPPA), N.J.S.A. 2A:30A-1 to -2.            Before joinder of issue,

defendant filed a motion to dismiss plaintiff's complaint pursuant to Rule 4:6-

2(e), based on the contract's forum selection clause, which provides that any

litigation that arises from the parties' contractual relationship shall be brought

in Coconino County, Arizona. After hearing oral argument, the Law Division

granted defendant's motion and dismissed plaintiff's complaint without reaching

the merits of plaintiff's substantive claims.

      The dispositive issue raised in this appeal concerns the enforceability of

the contract's forum selection clause. Plaintiff argues that enforcement of the

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forum selection clause violates the public policy codified by the Legislature in

the NJPPA. Alternatively, plaintiff argues it never agreed to be bound by the

contract's forum selection clause. Finally, even if we were to reject these two

threshold arguments, plaintiff claims that litigating this case in Arizona would

be seriously inconvenient and impair its ability to prosecute its case. Defendant

argues otherwise.

      After reviewing the record developed before the Law Division and

mindful of our standard of review, we reject plaintiff's arguments and affirm

substantially for the reasons expressed by Judge Vincent J. Militello in his oral

opinion delivered from the bench, as supplemented by his subsequent

memorandum of decision.

                                        I

      Plaintiff's principal place of business is located in Union City, Hudson

County. Defendant is located in Flagstaff, Arizona. Genterra Enterprises, LLC,

(Genterra) hired defendant as general contractor of the construction project

known as Sanitas Horizon Kennedy Center (Sanitas), located on Kennedy

Boulevard in Union City, approximately seven blocks from plaintiff's office.

      As the general contractor, KCS hired all of the various trade

subcontractors necessary to complete the Sanitas project. Through an online

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portal, plaintiff submitted an HVAC subcontractor bid to defendant for the

Sanitas project. Prior to the commencement of the bidding process, defendant

sent an email to the bidders that stated: "Please send your proposal, BSA,

[Blanket Subcontract Agreement] and any questions that you have about the

project to the KCS employee responsible for your trade."

      Plaintiff, through its representative Rick Agolli, downloaded the BSA on

October 12, 2017. Defendant accepted plaintiff's $362,000 bid and awarded it

the HVAC subcontract. On November 30, 2017, Agolli executed and returned

the Purchase Order that outlined the goods and services plaintiff agreed to

provide, as well as the BSA that contained the material terms of the parties'

contractual relationship.

      Although Agolli did not sign the BSA, he initialed each page of the

Purchase Order and made various handwritten modifications and strikeouts of

sections he found objectionable. The last page of the Purchase Order, which

required Agolli's signature to complete the subcontract, expressly provided:

            This Purchase Order is subject to all of the terms and
            conditions of the Blanket Subcontract Agreement
            executed between the Subcontractor and Contractor.
            By signing this Purchase Order or commencing the
            work of this Purchase Order, the Subcontractor accepts
            all of the terms and conditions of the Kinney
            Construction Services Blanket Subcontract Agreement.

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            This Purchase Order together with the Blanket
            Subcontract constitute the entire Subcontract[.]

      The cover page of the BSA states: "This Blanket Subcontract Agreement

together with an executed project specific Purchase Order describing the work

and Subcontract amount constitute the Subcontract." The first paragraph of the

first page of the BSA states: "The Contractor and Subcontractor understand that

engagement to execute a specific contract for work shall be confirmed through

the execution of a project specific Purchase Order . . . . Contractor and

Subcontractor, for the consideration named in a project specific Purchase Order,

agree as follows[.]"

      The remainder of the BSA contains various references that highlight the

incorporation of the BSA and the Purchase Order and makes clear that these two

documents contain the material terms of the parties' contractual relationship.

Indeed, Section 26.1 of the BSA, entitled "Entire Contract," provides: "This

blanket subcontract agreement together with a written project specific purchase

order describing the work and subcontract amount constitutes the entire

subcontract between the parties." Of particular relevance here, Section 26.11 of

the BSA, titled "Jurisdiction and Venue," provides:

            All terms of this Contract shall be governed by the laws
            of the State of Arizona. The jurisdiction and any suit
            or proceeding shall be in Coconino County, Arizona.

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      The ramifications of this provision reverberate throughout the BSA. For

example, Section 4, entitled "Payments," provides that claims for payment are

governed by Arizona's Prompt Payment Act, A.R.S § 32-1181 to -1188.1 Section

25.2, listed as "Immigration and Control Act," and Section 25.3, listed as

"Employee Background Checks," also apply Arizona law.

      At some point after plaintiff began work on the subcontract, defendant

terminated their contractual relationship. Plaintiff had been paid $112,000 of

the $362,000 due under the contract.

      Defendant's motion to enforce the contract's forum selection clause came

for oral argument before Judge Militello.     Plaintiff argued that the forum

selection clause was unenforceable because "the blanket subcontract agreement

was never signed." Furthermore, plaintiff maintained that the NJPPA required

the action to be tried in New Jersey. However, in response to Judge Militello's

questions, plaintiff's counsel conceded that "the Purchased Order was signed."

      Defendant argued that the Purchase Order "[c]learly and unambiguously

incorporates the blanket subcontract agreement."      Thus, it was irrelevant

whether the BSA was signed because the forum selection clause was

1
 This section of the BSA references the former citation of the Arizona's Prompt
Payment Act, which is A.R.S § 32-1129 to -1129.07.
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incorporated by reference in the Purchase Order. In response to plaintiff's

invocation of the NJPPA as an insurmountable impediment to the enforcement

of the forum selection clause, defendant's counsel argued that acceptance of

plaintiff's position "would obviate every single forum selection clause in the

construction industry."    Defendant noted that plaintiff had not cited any

authority to indicate that the Legislature intended to bring about such a radical

departure from well-settled principles of contract law when it adopted the

NJPPA.

      At the conclusion of oral argument, Judge Militello granted defendant's

motion and dismissed plaintiff's complaint. Relying on this court's opinion in

Wilfred McDonald Inc. V. Cushman Inc., 256 N.J. Super. 58, 63-64 (App. Div.

1992), the judge found plaintiff did not produce any evidence that the forum

selection clause "was the product of fraud or overweening bargaining power."

The judge also found no basis to conclude that adherence to the forum selection

clause would violate a strong public policy of this State or seriously

inconvenience plaintiff. Finally, Judge Militello found the BSA was a part of

the subcontract because the Purchase Order included an "incorporation clause

expressly referencing all provisions of the BSA."

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                                       II

      This court "reviews de novo the trial court's determination of [a] motion

to dismiss under Rule 4:6-2(e)." Dimitrakopoulos v. Borrus, Goldin, Foley,

Vignuolo, Hyman & Stahl, P.C., 237 N.J. 91, 108 (2019). "Rule 4:6-2(e)

motions to dismiss should be granted in 'only the rarest [of] instances.'" Banco

Popular N. Am. v. Gandi, 184 N.J. 161, 165 (2005) (alteration in original)

(quoting Printing Mart-Morristown v. Sharp Elecs. Corp., 116 N.J. 739, 772

(1989)). To decide this motion, we must assume the facts asserted by plaintiff

in its pleading are true and "give [it] the benefit of all inferences that may be

drawn in [its] favor." Gandi, 184 N.J. at 166. However, "if the complaint states

no basis for relief and discovery would not provide one, dismissal is the

appropriate remedy." Ibid. Finally, we must determine whether the motion

judge correctly interpreted the law and the legal consequences that flow from

established facts, without giving his findings and legal conclusions any special

deference. Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366,

378 (1995).

      Our Supreme Court has noted that "[i]f the language of a contract 'is plain

and capable of legal construction, the language alone must determine the

agreement's force and effect.'" Manahawkin Convalescent v. O'Neill, 217 N.J.

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99, 118 (2014) (quoting Twp. of White v. Castle Ridge Dev. Corp. 419 N.J.

Super. 68, 74-75 (App. Div. 2011)); see also Watson v. City of E. Orange, 175

N.J. 442, 447 (2003) ("Under our law, when the terms of a contract are clear and

unambiguous, . . . the court must enforce those terms as written."). The same

standard applies to integrated agreements. YA Global Investments, L.P. v. Cliff,

419 N.J. Super. 1, 11 (App. Div. 2011).

      "'[U]nder New Jersey law, two or more writings may constitute a single

contract even though they do not refer to each other. Whether two writings are to

be construed as a single contract, however, depends on the intent of the parties.'"

Alpert, Goldberg, Butler, Norton & Weiss, P.C. v. Quinn, 410 N.J. Super. 510, 533

(App. Div. 2009) (alteration in original) (quoting Van Orman v. Am. Ins. Co., 680

F.2d 301, 306 (3d Cir. 1982)). "The basic question is whether the parties assented

to a writing as the complete integration of their agreement." Alpert, 410 N.J. Super.

at 533. The court in Alpert cited to Williston on Contracts for the principle of

incorporation by reference in a contract:

             Generally, all writings which are a part of the same
             transaction are interpreted together. One application of
             this principle is the situation where the parties have
             expressed their intention to have one document's
             provision read into a separate document. So long as the
             contract makes clear reference to the document and
             describes it in such terms that its identity may be
             ascertained beyond doubt, the parties to a contract may

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            incorporate contractual terms by reference to a
            separate, non-contemporaneous document, including a
            separate agreement to which they are not parties, and
            including a separate document which is unsigned. . . .
            And, in order to uphold the validity of terms
            incorporated by reference, it must be clear that the
            parties to the agreement had knowledge of and assented
            to the incorporated terms.

            [Ibid. (alteration in original) (emphasis added) (quoting
            4 Williston on Contracts § 30:25 (Lord ed. 1999)).]

      Therefore, "[i]n order for there to be a proper and enforceable

incorporation by reference of a separate document, the document must be

described in such terms that its identity may be ascertained beyond doubt and

the party to be bound by the terms must have had 'knowledge of and assented to

the incorporated terms,'" even when a document that is incorporated is not

signed. Alpert, 410 N.J. Super. at 533.

      Here, the BSA was clearly identified as a part of the agreement between

the parties in the Purchase Order. The reference to the BSA was located directly

above where plaintiff signed the subcontract. The record shows plaintiff's

representative carefully reviewed the Purchase Order and read each page.

Plaintiff's representative made several modifications and strikeouts and placed

his initials at the bottom of every page. The record includes information listed

on the online bidding portal, including the time and date plaintiff downloaded

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the BSA.      This showed that plaintiff, a sophisticated business entity,

acknowledged the BSA. Whether or not its representative reviewed the BSA

before he executed the subcontract does not negate that the BSA was integrated

by reference after it was clearly identified.

      Additional evidence or extrinsic evidence was not required to determine

whether the BSA was incorporated by reference. Judge Militello properly

determined that the BSA was incorporated by reference into the agreement

between the parties:

            After hearing arguments, I found that [p]laintiff had in
            fact consented to litigating all claims in Arizona, as
            evidenced by the Purchase Order. Specifically, I found
            it particularly telling that Mr. Agolli struck several
            provisions, added language to various sections, and
            initialed each page of the Purchase Order. For example,
            in Paragraph 7, Mr. Agolli crossed out the phrase "fully
            automated binding system." Moreover, in Paragraph 21
            of the Purchase Order, Mr. Agolli made note that
            coating would not be provided, despite contractual
            language to the contrary. Although these changes may
            seem slight, they were significant for purposes of the
            motion. Each edit suggested that Mr. Agolli not only
            read the Purchase Order, but carefully reviewed each
            line of the contract, including the forum selection
            clause.

            ....

            In opposition to the underlying motion, [p]laintiff
            argued that [d]efendant was asking the court to "make
            an extreme logical leap by requesting enforcement of

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an agreement that was never signed." See Pl. Opp.
Brief, pg. 5. . . . In Alpert, the court addressed whether
a signed agreement, incorporating an unsigned
agreement, could bind the parties. There, the
defendants retained the plaintiff in a legal malpractice
action. At the commencement of the relationship, the
defendants signed a Retainer Agreement. While noting
some billing details, the Retainer Agreement did not
outline the firm's billing practices and policies. Rather,
the agreement referenced a second document, or
"Master Retainer," that contained such details. The
defendants thereafter challenged the validity of the
Master Retainer, arguing that they neither signed nor
assented to the terms of the Master Retainer.

The Alpert court acknowledged that New Jersey case
law provides little guidance on the principle of
incorporation by reference. Consequently, the court
looked to Williston on Contracts[.]

....

The Alpert court ultimately found that the Retainer
Agreement did not define with sufficient specificity the
Master Retainer. Rather, the Retainer Agreement
simply reiterated that a client is bound "by our standard
billing practices and firm policies." Alpert, supra, 410
N.J. Super. at 535. This, the court reasoned, was not
specific or identifiable "such that the [firm's] practices
and policies may be ascertained beyond doubt." Ibid.
More importantly, the defendants were never shown a
copy of the Master Retainer, and therefore, could not
have assented to such. Unlike Alpert, [p]laintiff here
had a copy of both the BSA and Purchase Order. Upon
reviewing the Purchase Order, namely the
incorporation clause, Mr. Agolli could have easily
referred to the BSA. Similarly, the Purchase Order did

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            in fact specifically define the BSA. As noted, the clause
            in question stated:

                  By signing this Purchase Order or
                  commencing the work of this Purchase
                  Order, the Subcontractor accepts all the
                  terms and conditions of the Kinney
                  Construction Services Blanket Subcontract
                  Agreement. This Purchase Order together
                  with the Blanket Subcontract constitute the
                  entire Subcontract.

            Not only does this provision identify the BSA, but it
            also clearly provides that these two agreements
            constitute the entire Subcontract (emphasis added). A
            simple reading of this clause would alert a reader that
            by signing one document, he is in turn, assenting to a
            second document. Therefore, this court can in fact make
            such [a] logical leap to infer that [p]laintiff did assent
            to the terms of the BSA by signing the Purchase Order.

      We thus hold that Judge Militello properly determined that the BSA and

the Purchase Order constituted the entire subcontract between the parties.

                                            III

      We next consider whether the NJPPA prohibits the enforcement of forum

selection clauses. N.J.S.A. 2A:30A-2(f) of the NJPPA provides:

            All contracts for the improvement of structures entered
            into after the effective date [Sept. 1, 2006] . . . between
            owners, prime contractors, subcontractors or
            subsubcontractors shall provide that disputes regarding
            whether a party has failed to make payments required
            pursuant to this section may be submitted to a process
            of alternative dispute resolution. Alternative dispute

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             resolution permitted by this section shall not apply to
             disputes concerning the bid solicitation or award
             process, or to the formation of contracts or
             subcontracts. In any civil action brought to collect
             payments pursuant to this section, the action shall be
             conducted inside of this State and the prevailing party
             shall be awarded reasonable costs and attorney fees.

             [(emphasis added).]

      Plaintiff argues that enforcement of the forum selection clause in the

parties' agreement would violate the strong public policy underpinning the

NJPPA. In support of this argument, plaintiff cites an unpublished opinion from

this court. Rule 1:36-3 makes clear that absent certain exceptions not relevant

here, "[n]o unpublished opinion shall constitute precedent or be binding upon

any court." We thus will rely exclusively on published opinions from this court

that have addressed the enforceability of forum selection clauses.

      Defendant argues the forum selection clause does not eviscerate the public

policy codified in the NJPPA because an Arizona court is just as capable of

enforcing the public policy protections in the statute as a New Jersey c ourt.

Stated differently, defendant argues that the agreed upon venue for this dispute

may consider the evidence on the issues raised by the parties and apply New

Jersey law to determine whether plaintiff has presented a cognizable claim under

the NJPPA.

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      Defendant relies on our opinion in Wilfred, a case in which the plaintiff

sought relief under the Franchise Practices Act, N.J.S.A. 56:10-1 to -31. The

defendant moved to dismiss the plaintiff's Superior Court action and transfer

venue to Nebraska pursuant to the franchise agreement's forum selection clause.

256 N.J. Super. 61. Although the trial court recognized there were "substantial

questions as to the applicability" of the Franchise Practices Act, it restrained the

partial termination of the parties' contractual relationship to preserve the status

quo. Id. at 62.

      In the context of this dispute, we were asked to consider whether

enforcement of the forum selection clause, which would result in the application

of the Franchise Practices Act by another state, would be contrary to our State's

public policy. We found no public policy impediment and upheld the forum

selection clause. We noted that "[u]nderlying [the plaintiff's] notion is the

premise that only New Jersey courts are equipped to properly interpret and apply

the [Franchise Practices] Act and that to allow other state courts to do so would

result in diverse and inconsistent applications." Id. 65.        We rejected this

isolationist notion and held that the same way we presume that "our courts fairly

and competently analyze and apply other states' laws, courts in our sister states

are capable of construing and applying our State's laws." Id. at 66.

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      We also rejected a similar argument predicated on a section of the

Franchise Practices Act which provides:

            Any franchisee may bring an action against its
            franchisor for violation of this act in the Superior Court
            of the State of New Jersey to recover damages sustained
            by reason of any violation of this act and, where
            appropriate, shall be entitled to injunctive relief. Such
            franchisee, if successful, shall also be entitled to the
            costs of the action including but not limited to
            reasonable attorney’s fees.

            [N.J.S.A. 56:10-10.]

      We held that unlike other statutes which expressly preclude foreign forum

selection clauses, N.J.S.A. 56:10-10 did not explicitly preclude enforcement of

a foreign forum selection in this context. Ibid. To conclude otherwise would

constitute what the United States Supreme Court characterized in M/S Bremen

v. Zapata Off-Shore Co., 407 U.S. 1, 12 (1972), as a "provincial" view.

      In Hoffman v. Supplements Togo Management, LLC., we reaffirmed the

analytical paradigm for determining the enforceability of forum selection

clauses: "The courts of our State have generally enforced . . . forum selection

clauses, where: (1) they are not the product of fraud or undue bargaining power,

(2) they would not violate public policy, and (3) their enforcement would not

seriously inconvenience the parties at trial." 419 N.J. Super. 596, 606 (App.

Div. 2011), (citing Caspi v. Microsoft Network, L.L.C., 323 N.J. Super. 118,

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122 (App. Div. 1999); Wilfred, 256 N.J. Super. at 63-64).         Applying this

approach to the facts of this case, we discern no legal grounds to overturn Judge

Militello's order enforcing the forum selection clause.

      In Skuse v. Pfizer, Inc., our Supreme Court recently upheld an arbitration

agreement that was disseminated by the employer to the employees via e-mail

notice. The e-mail apprised the recipient that it contained a "mandatory review

of an agreement along with other relevant documents within a prescribed period,

and digital confirmation that the employee has reviewed the materials provided."

244 N.J. 30, 57 (2020). In upholding the validity of this electronic notice and

the enforceability of the arbitration provision transmitted therein, the Court

noted that

             no principle of New Jersey contract law bars
             enforcement of a contract because that contract is
             communicated by e-mail, rather than by the transfer of
             a hard-copy document. If we were to adopt such a rule,
             it would invalidate contracts that have been negotiated
             and transmitted electronically for decades. We decline
             to do so here.

             [Id. at 54.]

      In the course of its analysis, the Court in Skuse also approvingly quoted

our opinion in Caspi, in which we upheld a duly negotiated forum selection

clause because there "was nothing about the style or mode of presentation, or

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the placement of the provision, that can be taken as a basis for concluding that

the forum selection clause was proffered unfairly, or with a design to conceal or

de-emphasize its provisions." 244 N.J. at 55, (quoting Caspi, 323 N.J. Super. at

125-26).

      Against this legal backdrop, we decline to construe the NJPPA to provide

an indiscriminate statutory injunction prohibiting the enforcement of a duly

negotiated and agreed upon forum selection clause. We are satisfied that had

the Legislature intended to adopt such a significant deviation from our State's

contract law jurisprudence, it would have done so using clear, unequivocal

language.

      Affirmed.

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