Court Opinion

ID: 4431121
Source: CourtListenerOpinion
Date Created: 2019-08-20 19:52:30.179355+00
Date Added: 2024-06-11T14:50:59.502640
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NOT FOR PUBLICATION WITHOUT THE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-2056-16T3

CHRISTOPHER HOUGHTON,

        Plaintiff-Respondent,

v.

STEVE HOURAN, HOURAN FUCETOLA
CONSTRUCTION, LLC, and HOURAN
USA CONSTRUCTION, LLC,

        Defendants/Third-Party
        Plaintiffs-Appellants,

v.

SHEILA HOUGHTON,

        Third-Party Defendant-
        Respondent,

and

S&L ARCHITECTURE STUDIO, LLC,

     Third-Party Defendant.
_________________________________

              Argued May 23, 2018 – Decided June 21, 2018

              Before Judges Koblitz, Manahan, and Suter.

              On appeal from Superior Court of New Jersey,
              Law Division, Bergen County, Docket No. L-
              1982-15.
            Michael J. Confusione argued the cause for
            appellants   (Hegge   &    Confusione,   LLC,
            attorneys; (Michael J. Confusione, of counsel
            and on the brief).

            Jeffrey S. Wilson argued the cause for
            respondents   (Hedinger   &    Lawless   LLC,
            attorneys; Jeffrey S. Wilson, on the brief).

PER CURIAM

      Defendants       Steve    Houran   (Houran),      Houran      Fucetola

Construction, LLC (Houran Fucetola), and Houran USA Construction,

LLC   (Houran   USA)    (collectively    defendants)    appeal   from     the

December 20, 2016 judgment entered against them in favor of

plaintiff Christopher Houghton for defendants' breach of contract

and violation of home improvement regulations.              We affirm the

liability and compensatory damages portion of the judgment because

there was substantial evidence to support them.             We vacate the

attorney's fee award because of a lack of findings under Rule 1:7-

4(a) and remand that issue for findings of fact and conclusions

of law.    We also vacate the judgment based on a lack of findings,

to the extent that it imposed individual liability upon defendant

Houran for compensatory damages and for attorney's fees, and remand

those issues to the trial court for findings consistent with Rule

1:7-4(a).    We have not retained jurisdiction.

      In   September    2014,   plaintiff   filed   a   complaint    seeking

compensatory, treble and punitive damages and attorney's fees from

                                     2                               A-2056-16T3
defendants     for   breach     of   contract,     misrepresentation,         and

violation of the Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -

48, arising from a home improvement contract that he signed with

Houran Fucetola. Defendants' answer1 included a counterclaim for

breach   of   contract    and   unjust     enrichment   and     a    third-party

complaint     against    plaintiff's       wife,   Sheila    Houghton,     which

additionally alleged tortious interference with the contract.2

Sheila Houghton filed a third-party counterclaim.

                                       I

     A bench trial was conducted in November 2016, from which we

glean the facts.        In 2013, Kenneth Schier of S&L Architecture

Studio was hired to prepare architectural plans for an addition

to plaintiff's home in Ridgewood, New Jersey.               Plaintiff searched

for a contractor through Home Advisors.             Defendant Steve Houran

received the referral, contacted plaintiff and met with him.

Plaintiff gave Houran a copy of the architectural plans.                  Houran

prepared the written contract based on these plans.                 It was signed

on September 16, 2013, by plaintiff and Houran Fucetola.

1
   Defendants' answer acknowledged that Steve Houran is the owner
and managing member of Houran Fucetola and Houran USA.
2
 Defendants filed a third party complaint against S&L Architecture
Studio, LLC. This claim was dismissed.

                                       3                                 A-2056-16T3
     The contract did not include the business address of Houran

Fucetola, the start and completion date for the project or the

total price to be paid by plaintiff. It did include sub-categories

of work to be completed and the price for the foundation, framing,

roofing, siding, flooring, electrical, and plumbing.              The contract

included    a   schedule    of   payments   that   were    due    upon   certain

benchmarks.

     Work commenced on the addition in March 2014, after building

permits    were   obtained.      The   construction   project      immediately

struck a sour note, with the defendants undertaking demolition

work while the Houghtons were away, contrary to their instruction.

The work proceeded until April 23, 2014, when Houran sent a

termination notice, claiming that delays were attributable to the

owner's interference with the scope of the work and "trigger[ed]"

by "the decision to remove portions of the contract."                    By that

point,    plaintiff   had   paid   $51,861.74,     which    was    80%   of   the

contract.       The construction was not finished.           Plaintiff hired

contractors to remediate and complete the work.

     Schier testified as an expert in residential construction

that there were multiple problems with the construction which was

"[b]elow acceptable reasonable standards," describing it as "the

worst construction project [he] had ever seen in [his] career."

He testified that the foundation was improperly constructed, the

                                       4                                 A-2056-16T3
ridge beam was not made of microllam as required by the plans, the

construction    used    improper   fasteners,    lacked      headers,     used

improper joist hangers, did not have hurricane straps, was missing

floor joists, and the second floor stairs now were sagging.              There

were other workmanship problems as well.

      The   Village     of   Ridgefield    building     inspector,      Carlo

Madrachimov, testified, "there [were] multiple failures on this

. . . project," which included the depth of the footing, framing

deficiencies, and use of a ridge beam made of "regular nominal

lumber."    He said that the architect's plans were not followed.

      Houran testified that he had many years' experience in the

construction industry and completed hundreds of home improvement

renovations. He said they ran into some issues in the construction

that required four change orders, all of which were agreed to by

plaintiff through email.       His firm was not able to complete the

project because plaintiff "excised" parts of the contract.                  He

blamed Sheila Houghton for interfering with their work.                 Houran

was   not   permitted   to   testify   about   issues   he   had   with    the

architectural plans because defendants had not named any expert

witnesses in their answers to discovery.         David Sanchez, who was

employed by Houran USA on the project, testified that Sheila would

not let the project go forward as she "was always there having a

                                       5                             A-2056-16T3
little comment or asking something or saying something to do their

own way."

       The trial court issued a written opinion on November 17,

2016,3 finding that defendants breached the contract by sending

the termination notice and that Sheila did not interfere with

defendants' work.         The court described Houran's testimony as

"lacking detail, or any support by reference to the applicable

architectural codes."       The court did not consider his testimony

credible because photographs in evidence showed "the poor quality

of his work."     The court found that plaintiff suffered actual

damages of $41,493.06, consisting of the cost to remediate and to

complete the work, less the balance remaining on the contract.

       The court held that the contract violated portions of the

"Home    Improvement      Practices"        regulations,   N.J.A.C.    13:45A-

16.2(a)(12),    because    it   did    not    include   defendants'   business

address, the dates or time period the work would begin or be

completed by, or the total price to be paid by the buyer.                   The

court denied plaintiff's request for treble damages under the CFA,

however, because his damages arose from "shoddy work and breach

of contract," and were not causally related to the CFA violations.

3
    The record does not include an order from November 17, 2016.

                                        6                              A-2056-16T3
Plaintiff was entitled to an award of attorney's fees under the

CFA, citing Cox v. Sears Roebuck & Co., 138 N.J. 2 (1993).

       The trial court's December 20, 2016 "Order for Judgment"

provided in the "whereas" clauses that "sufficient evidence had

been presented that the defendant Steven Houran was individually

liable under the 'Home Improvement Practices' regulations of the

CFA"   and   that   plaintiff's    attorney's   fee   certification   was

"reasonable and proper based on the complexity of this case and

the amount of time reasonably expected for a case of this nature."

The court entered a judgment against all defendants, including

Houran individually, in the amount of $68,193.06, consisting of

$41,493.06 in compensatory damages and $26,700 in attorney's fees

and costs.

       On appeal, defendants contend that the trial court erred by

finding that they breached the contract and by rejecting their

claim of anticipatory breach by plaintiff.            Houran contends he

should have been able to testify as an expert about the work

performed by his company.         Even if there were liability on the

part of the company because the contract was breached or the home

improvement regulations were violated, defendants claim the court

should not have held Houran individually liable for damages or for

attorney's fees.      Although not raised before the trial court,

                                     7                           A-2056-16T3
defendants argue the court erred by not apportioning the award of

attorney's fees between the breach of contract and CFA claims.

                                    II

     We afford a deferential standard of review to the factual

findings of the trial court on appeal from a bench trial.                   Rova

Farms Resort, Inc. v. Inv'rs Ins. Co., 65 N.J. 474, 483-84 (1974).

These findings will not be disturbed unless they are "so manifestly

unsupported by or inconsistent with the competent, relevant and

reasonably   credible    evidence    as    to    offend    the   interests    of

justice."    Id. at 484 (quoting Fagliarone v. Twp. of N. Bergen,

78 N.J. Super. 154, 155 (App. Div. 1963)).                However, our review

of a trial court's legal determinations is plenary.                 D'Agostino

v. Maldonado, 216 N.J. 168, 182 (2013) (citing Manalapan Realty,

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

     There was ample evidence to support the court's finding that

defendants breached this contract.              To establish his breach of

contract claim, plaintiff was required to prove that (1) "[t]he

parties entered into a contract containing certain terms"; (2)

"plaintiff did what the contract required                 [him] to do"; (3)

"defendant[s]   did     not   do    what   the     contract      required    the

defendant[s] to do"; and (4) "defendant[s'] breach, or failure to

do what the contract required, caused a loss to the plaintiff."

Model Jury Charge (Civil), 4.10A "The Contract Claim - Generally"

                                      8                                A-2056-16T3
(approved May 1998); see Globe Motor Co. v. Igdalev, 225 N.J. 469,

482 (2016).    No one disputed that there was a written contract and

that plaintiff paid defendants pursuant to the contract.

     The contract provided that the work was to be completed per

the final architectural plans.          The evidence, which largely was

unrefuted, showed that defendants' construction work varied widely

from these plans, consisting of among other things, improper ridge

beams,   headers,    fasteners,    hangers       and   straps.       Houran's

testimony, found not to be credible, was inconsistent with the

photographic evidence.     The work that was performed by defendants

needed   to   be   repaired,   resulting    in    additional     expenses    to

plaintiff.

     We agree with the trial court that the evidence did not

support defendants' anticipatory breach of contract claim.                  "An

anticipatory breach is a definite and unconditional declaration

by a party to an executory contract – through word or conduct –

that he will not or cannot render the agreed upon performance."

Ross Sys. v. Linden Dari-Delite, Inc., 35 N.J. 329, 340-41 (1961).

If the breach goes to the essence of the contract, the non-

breaching party may treat the contract as terminated and refuse

to render continued performance.            Id. at 341.          Anticipatory

repudiation can be found "where reasonable grounds support the

obligee's belief that the obligor will breach the contract.'"

                                    9                                 A-2056-16T3
Spring Creek Holding Co. v. Shinnihon U.S.A. Co., 399 N.J. Super.

158, 180 (App. Div. 2008) (quoting Danzig v. AEC Corp., 224 F.3d

1333, 1337 (2000)).

     Houran's and Sanchez's testimony that Sheila "interfered" and

asked them to "change" things evidenced nothing specific that

would have prevented performance under the contract.                    Houran

testified he could have completed the contract, which undercut his

claims   about   Sheila.    Houran     also   complained      that   plaintiff

"excised" certain portions of the contract              but this was not

material   because   by    that    time,    plaintiff   had    substantially

performed and defendant never demanded reasonable assurance from

plaintiff.   See Spring Creek, 339 N.J. Super. at 179-80.

     Defendants contend the court erred by not allowing Houran to

testify as an expert witness.             "The admission or exclusion of

expert testimony is committed to the sound discretion of the trial

court." Townsend v. Pierre, 221 N.J. 36, 52 (2015). "The decision

as to exclusion must stand unless so wide of the mark that a

manifest denial of justice resulted."           Ratner v. General Motors

Corp., 241 N.J. Super. 197, 202 (App. Div. 1990).

     Houran testified as a fact witness about construction of the

addition; he did not have training or experience to testify about

the architectural plans.          Also, defendants did not provide the

names of, or reports from, any expert witnesses in their answers

                                     10                                A-2056-16T3
to discovery.        We discern no abuse of discretion by precluding

Houran's testimony as an expert under these circumstances.

     Defendants appeal the judgment to the extent that it imposed

individual liability on Houran to pay damages and attorney's fees

because plaintiff's contract was with Houran Fucetola and not

Houran individually.         The judgment simply provided in a "whereas"

clause that "sufficient evidence had been presented that the

defendant Steve Houran was individually liable," citing to the

home improvement regulations of the CFA.             The trial court made no

findings of fact to support this portion of the judgment.

     Rule 1:7-4(a) requires that in all actions tried without a

jury the court "shall by an opinion or memorandum decision, either

written or oral, find the facts and state its conclusions of law."

"The purpose of the rule is to make sure that the court makes its

own determination of the matter."             In re Tr. Created by Agreement

Dated Dec. 20, 1961, by & between Johnson and Hoffman, Lienhard &

Perry, 399 N.J. Super. 237, 254 (App. Div. 2006).                "When a trial

court issues reasons for its decision, it 'must state clearly

[its] factual findings and correlate them with relevant legal

conclusions,    so    that    parties   and    the   appellate   courts   [are]

informed of the rationale underlying th[ose] conclusion[s].'"

Avelino-Catabran v. Catabran, 445 N.J. Super. 574, 594-95 (App.

                                        11                             A-2056-16T3
Div. 2016) (alterations in original) (quoting Monte v. Monte, 212

N.J. Super. 557, 565 (App. Div. 1986)).

     Here, the compensatory damages portion of the judgment was

based on a breach of contract.     The contract was between Houghton

and Houran Fucetola.     Houran was not individually liable solely

as a managing member of the limited liability company.                 See

N.J.S.A. 42:2C-30 (providing that "[t]he debts, obligations, or

other liabilities of a limited liability company . . . are solely

the debts, obligations, or other liabilities of the company[,] and

[they] do not become the debts, obligations, or other liabilities

of a member or manager solely by reason of the member acting as a

member or manager acting as a manager").

     The   power   to   look   beyond   the   corporate   form   is   well

established. Stochastic Decisions, Inc. v. DiDomenico, 236 N.J.

Super. 388, 393 (App. Div. 1989).       "It is only upon proof of fraud

or injustice that a court will pierce the corporate veil to impose

liability on the corporate principals."         Touch of Class Leasing

v. Mercedes-Benz Credit, 248 N.J. Super. 426, 441 (App. Div. 1991)

(citations omitted).

     Here, the court made no findings of fraud or injustice that

would support its order that Houran was individually responsible

for the breach of contract by the limited liability companies.

In the absence of findings, we must vacate the judgment to the

                                   12                             A-2056-16T3
extent it imposed individual liability on Houran and remand that

issue to the trial court for appropriate findings of fact and

conclusions of law.

     The December 20, 2016 judgment awarded $26,700 in attorney's

fees and costs to plaintiff against defendants, including Houran

individually.      Defendants   contend       the   court   erred   in    awarding

attorney's fees against defendant Houran individually and by not

allocating fees between the breach of contract and CFA claims.

     An    award    of   attorney's    fees    is    reviewed    for   "abuse     of

discretion."       Masone v. Levine, 382 N.J. Super. 181, 193 (2005).

"[A]buse of discretion is demonstrated if the discretionary act

was not premised upon consideration of all relevant factors, was

based upon consideration of irrelevant or inappropriate factors,

or amounts to a clear error in judgment."                Ibid. (citing Flagg v.

Essex Cty. Prosecutor, 171 N.J. 561, 571 (2002)).

     The CFA allows courts to award "reasonable attorney's fees"

to a successful plaintiff under certain circumstances.                    N.J.S.A.

56:8-19.     A plaintiff may recover attorney's fees for violations

of the CFA even where the plaintiff has failed to establish an

ascertainable loss.       Cox, 138 N.J. at 24; Branigan v. Level on the

Level, Inc., 326 N.J. Super. 24, 31 (App. Div. 1999).                    Here, the

trial     court    awarded   fees     although      it   found   there    was     no

                                       13                                  A-2056-16T3
ascertainable   loss    by    plaintiff     arising   from    the   regulatory

violations.

     An    employee    or    officer   of   a   corporation    can    be    held

individually liable under the CFA "when the basis for the CFA

claim is a regulatory violation rather than an affirmative act or

knowing misrepresentation."        Allen v. V & A Bros., Inc., 208 N.J.

114, 133 (2011).       In Allen, the Court recognized this involved

"fact-sensitive determinations."            "[I]ndividual liability for a

violation of the CFA will necessarily depend upon an evaluation

of both the specific source of the claimed violation that forms

the basis for the plaintiff's complaint as well as the particular

acts that the individual has undertaken."             Id. at 136.     The same

analysis should apply when determining whether attorney's fees

awarded under the CFA for regulatory violations can be assessed

individually against an employee or officer of a corporation or

limited liability company.

     The   trial   court     awarded    attorney's     fees   based    on   the

uncontested violation of the home improvement regulations.                  The

contract itself had made no provision for an award of fees in the

event of a breach.      The judgment provided in a "whereas" clause

that plaintiff's counsel submitted a certification "in accordance

with Rule 4:42-9(a) and RPC 1.5(a)" in the amount of $26,700 and

the court found that amount "to be reasonable and proper based on

                                       14                              A-2056-16T3
the complexity of this case and the amount of time reasonably

expected for a case of this nature."     However, the court made no

findings about the fees charged, the hours spent on the case,

whether the hours related to the breach of contract or CFA claim

or any of the other factors under RPC 1.5.     See R. 1:7-4(a).

     We do not know whether the court determined a lodestar or

whether it chose to enhance it.    See Rendine v. Pantzer, 141 N.J.

292, 337 (1995) (providing that after determining the lodestar,

the trial court should "consider whether to increase that fee to

reflect the risk of nonpayment in all cases in which the attorney's

compensation   entirely   or   substantially   is   contingent     on    a

successful outcome").     The court did not give reasons for why

Houran should be held individually liable for these fees.

     Defendants complain that the attorney fee award should be

allocated because there were no ascertainable losses attributable

to the CFA claim.    However, attorney's fees do not have to be

proportionate to the damages.     "Although there is no requirement

that an award of attorneys' fees be proportionate to damages, 'the

amount of damages a plaintiff recovers is certainly relevant to

the amount of attorney's fees to be awarded . . . .'"      Chattin v.

Cape May Greene, Inc., 243 N.J. Super. 590, 616 (App. Div. 1990)

(quoting Riverside v. Rivera, 477 U.S. 561, 574 (1986)).

                                 15                              A-2056-16T3
    We vacate the award of attorney's fees because of these lack

of findings.   We remand the issue of attorney's fees to the trial

court to make findings of fact and conclusions of law.     In that

regard the court is to determine the amount of attorney's fees

that are reasonable and then whether the fees should be assessed

against Houran individually.

    Affirmed in part; vacated and remanded in part.      We do not

retain jurisdiction.

                                16                         A-2056-16T3