Opinion
DOCKET NO. A-5624-11T3
03-18-2013
H.H. HANKINS & BRO., Plaintiff-Respondent/ Cross-Appellant, v. EDGEWOOD PROPERTIES, INC., Defendant-Appellant/ Cross-Respondent.
Andrew D. Ullrich argued the cause for appellant/cross-respondent (The Weingarten Law Firm, LLC, attorneys; Mr. Ullrich, on the brief). William G. Wright argued the cause for respondent/cross-appellant (Capehart & Scatchard, P.A., attorneys; Mr. Wright, on the brief).
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
Before Judges Parrillo and Fasciale.
On appeal from the Superior Court of New Jersey, Law Division, Cumberland County, Docket No. L-197-09.
Andrew D. Ullrich argued the cause for appellant/cross-respondent (The Weingarten Law Firm, LLC, attorneys; Mr. Ullrich, on the brief).
William G. Wright argued the cause for respondent/cross-appellant (Capehart & Scatchard, P.A., attorneys; Mr. Wright, on the brief). PER CURIAM
Defendant Edgewood Properties, Inc., appeals from a judgment in favor of plaintiff H.H. Hankins & Bro. entered after a bench trial. Plaintiff cross-appeals from an order awarding limited attorneys' fees and contends that the judge failed to consider prejudgment interest. We affirm the judgment, but remand on the issues of attorneys' fees and prejudgment interest.
Plaintiff filed its breach of contract complaint alleging that defendant failed to pay for certain materials delivered for a construction project. Plaintiff also alleged that it was entitled to damages based on the doctrine of promissory estoppel. We discern the following facts from the evidence produced during the trial.
Plaintiff is a business selling lumber and construction material. Defendant is a commercial and residential real estate developer. Defendant's construction superintendent, Donald Cain, contacted Brent Hankins to obtain lumber for a townhouse development project. Defendant needed building materials for six five-unit buildings.
Plaintiff purchased materials and stored them at its facility pending defendant's delivery request. Defendant then requested lumber and materials for the project. Luis Flores, a truck driver employed with Shimp Trucking, delivered the material to the project site. He invoiced the delivery, but misplaced the receipt after leaving. The invoice for the materials totaled $13,856.45. The terms provided that Hankins must receive full payment no later than the last business day of the month following the due date. If not, plaintiff would impose a 1.5% per month finance charge.
In February 2007, defendant submitted a purchase order for concrete-filled lally columns. On February 28, 2007, plaintiff issued an invoice for $1712.47, delivered the columns to the site, and obtained a delivery receipt signed by an Elite Framing representative. The same terms as noted above applied to this sale. The monthly late fee, which plaintiff began assessing in May 2007, is $25.69.
The $25.69 finance charge is equal to $1712.47 multiplied by .015.
Plaintiff produced at trial a materials schedule (P-3) and a cost-analysis spreadsheet (P-35) detailing the amounts it paid for the ordered materials. Hankins testified that "[P-35] was an ongoing compilation that [he] kept to see what our position and damages were." The judge did not introduce P-35 into evidence; rather, Hankins testified from it. The judge admitted P-3 into evidence as a compilation document and stated that he "intend[ed] to use it" as a compilation of information related to items plaintiff did not normally stock. Between December 2006 and spring 2012, plaintiff mitigated its damages and sold $222,696 of the $288,576.41 in purchased materials. By trial, the balance owed to plaintiff was $65,879.92.
In summer 2011, a fire destroyed plaintiff's facility, including all of its business records.
The judge issued a five-page written decision and entered a judgment in plaintiff's favor. After the parties submitted post-trial submissions, the judge issued a two-page supplemental written decision, calculated the finance charges and attorneys' fees, and entered final judgment in the amount of $100,671.91. This appeal followed.
On appeal, defendant argues that the judge erred by (1) not basing its decision on reliable evidence, and (2) permitting a trial by ambush. Plaintiff cross-appeals, arguing that the judge erred by (1) not awarding prejudgment interest on its promissory estoppel claim, (2) using the wrong standard to award attorneys' fees, and (3) rejecting plaintiff's claim for storage costs.
"'The scope of appellate review of a trial court's fact-finding function is limited.'" Seidman v. Clifton Sav. Bank, S.L.A., 205 N.J. 150, 169 (2011) (quoting Cesare v. Cesare, 154 N.J. 394, 411-12 (1998)). "'[W]e do not disturb the factual findings and legal conclusions of the trial judge unless we are convinced that they are so manifestly unsupported by or inconsistent with the competent, relevant[,] and reasonably credible evidence as to offend the interests of justice.'" Ibid. (quoting In re Trust Created By Agreement Dated Dec. 20, 1961, ex rel. Johnson, 194 N.J. 276, 284 (2008)). "Deference is especially appropriate when the evidence is largely testimonial and involves questions of credibility." Ibid. (quoting Cesare, supra, 154 N.J. at 411-12). "Because a trial court hears the case, sees and observes the witnesses, and hears them testify, it has a better perspective than a reviewing court in evaluating the veracity of witnesses." Ibid. (quoting Cesare, supra, 154 N.J. at 411-12).
I.
We begin by addressing defendant's argument that the verdict was based on insufficient evidence. Defendant contends that the judge improperly awarded plaintiff $13,856.45 for the materials delivered in November 2006, $65,879.92 for specially ordered materials, and $15,693.71 in finance charges.
A.
Regarding the award of $13,856.45, defendant contends that there was insufficient evidence to show that the material was delivered to the project site; however, there was ample evidence in the record to the contrary. The judge found that the materials were delivered to the project site and stated
[c]entral to this matter [of delivery] is the credibility of Mr. Hankins. The court carefully listened to and observed the extended testimony of Mr. Hankins. His testimony was direct, concise[,] and candid. In general, his ability to recall and relate the facts was very good. . . . In short, there was nothing about his body language, eye contact, facial expression, vocal inflection, or demeanor which would suggest that he was being less than truthful and forthcoming. . . . His testimony was also internally consistent and corroborated by the exhibits. Put simply, his testimony had the ring of truth.Therefore, the judge's findings are not "so manifestly unsupported by or inconsistent with the competent, relevant[,] and reasonably credible evidence as to offend the interests of justice." Seidman, supra, 205 N.J. at 169 (internal quotation marks omitted).
Luis M. Flores . . . transported several loads of materials from [plaintiff's facility] to [the] site. The court finds the testimony of Flores to be credible with regard to the fact that the goods were delivered to [defendant]. He testified that he would retain the signed original delivery receipt and a copy was given to the buyer. All of the loads he received from [plaintiff] for the project were delivered. No loads went undelivered. As to the contested delivery, Flores testified that on his way back from Cherry Hill he realized that he had misplaced the signed original delivery receipt. Flores explained that the paperwork is sometimes misplaced. He promptly notified Hankins. Mr. Hankins repeatedly contacted [defendant] to obtain a copy of the delivery receipt from [defendant's] records. Putting it mildly, he was given the run around. . . . [Defendant] repeatedly indicated that it would look into the matter, without denying that the load had been delivered. Despite numerous requests by Mr. Hankins, [defendant's] owners would not meet to discuss the contested load.
The court finds that the disputed delivery was, in fact, delivered . . . to
the . . . site. The delivery was confirmed by the testimony of Flores and Mr. Hankins, and corroborated by the photographs taken by Mr. Hankins. Although Hankins was unable to produce a signed delivery receipt, its absence was explained by Flores. More important, [defendant] never specifically denied receiving the delivery. . . . Towl[e] testified that he looked for the delivered items but could not find them. The court finds this testimony unconvincing. . . . The court awards damages in favor of [plaintiff] . . . on Invoice No. 2428369 . . . in the amount of $13,856.45.
[(Emphasis added).]
The judge also noted that two other witnesses corroborated "the surrounding circumstances" of the delivery.
B.
Regarding the ordered materials, defendant argues that plaintiff never produced documentation to confirm it made the purchases. Defendant also contends that plaintiff failed to establish the elements of promissory estoppel.
Defendant wanted to complete one building per week, thereby requiring an abundant amount of material that Hankins testified that plaintiff did not normally stock. In light of earlier deliveries, some of which defendant paid for, and the extent of the project, plaintiff reasonably relied on defendant's promise to purchase the specially ordered materials.
The doctrine of promissory estoppel requires plaintiff to show that there has been "(1) a clear and definite promise; (2) made with the expectation that the promisee will rely on it; (3) reasonable reliance; and (4) definite and substantial detriment." Segal v. Lynch, 211 N.J. 230, 253 (2012). The judge found that plaintiff established the elements for promissory estoppel and verified that it purchased material for the project. The judge stated that
[b]oth Hankins and Cain testified that Hankins received verbal approval from Towle[] for supplying the materials for six buildings. Hankins testified that many of the items . . . were special order items, not items typically kept in inventory. Cain also confirmed that a lot of the items were special order items. The court finds their testimony in that regard to be credible and convincing.Therefore, the judge's decision to award $65,879.92 for specially ordered materials on plaintiffs promissory estoppel claim is "supported by sufficient, credible evidence in the record." Ingraham v. Trowbridge Builders, 297 N.J. Super. 72, 84 (App. Div. 1997).
The court finds that [plaintiff] specially ordered items for the planned six . . . townhouses. Those specially ordered items included . . . . These items were specially ordered because [plaintiff] was advised to have the materials ready for an expedited building schedule of approximately one building per week . . . . Indeed, the testimony made clear that [defendant] had experienced problems with prior suppliers who . . . could not meet quantity required for the project . . . . [Defendant] was clearly looking for a supplier who could
supply the needed quality and sequence, so that construction would not be delayed. Time was ostensibly of the essence. . . .
. . . .
[Plaintiff] was put on notice that it was to supply the goods for six multifamily units. [Plaintiff] ordered the appropriate quantities of the required goods. [Defendant] does not complain that the goods did not meet specifications or that they were priced incorrectly. Instead, [defendant] claims that [plaintiff] should not recover [because defendant] had not placed a binding order, that the goods were not specially ordered[,] and/or because [plaintiff] failed to mitigate its damages. The court finds these defenses to be factually baseless.
The court also finds that [plaintiff] used reasonable efforts to mitigate its damages by selling off much of the specially ordered items over time. In addition, [plaintiff] was able to return certain items to the manufacturers and receive a refund, which was passe[d] along to the [defendant's] account. . . . [Plaintiff] undertook ongoing, diligent efforts to mitigate its damages. . . .
The record demonstrates that [plaintiff] was very successful in reducing the balance owed through such sales, returns[,] and cancellations. Indeed, of the opening total of $288,576.41 of specially ordered but not deliver items, [plaintiff] was able to sell to other buyers, return to manufacturers[,] or cancel orders in the following amounts over time:
$48,249.41 by 12-30-06
$45,604.10 by 1-31-07
$68,405.20 by 1-31-08
$20,373.4 by 1-31-09
$13,712.11 by 1-31-10These sales . . . resulted in [plaintiff] mitigating its damages by a total of $222,696.49. This leaves an unpaid balance after mitigation sales, returns[,] and cancellations of only $65,879.92. . . . [Defendant's] claim that [plaintiff] failed to mitigate its damages is baseless. The court awards damages in favor of [plaintiff] . . . on the specially ordered materials, after mitigation, in the amount of $65,879.92.
. . . .
[(Emphasis added).]
C
Defendant contends that there is no document in the record setting forth the actual amount of the finance charge. The judge entered judgment in plaintiff's favor of $15,693.71 for interest on unpaid balances and stated that
[p]laintiff has established the right to recover interest on the delinquent invoices at the rate of 1.5 percent per month or [eighteen] percent per year. . . . TheIn his written decision, the judge stated:
evidence at trial revealed that [defendant] submitted a credit application to [plaintiff] on August 3, 2006. The terms of the service fee, which is actually a finance charge, is set forth in a letter sent to all credit account holders, including [defendant], at the inception of the account after the credit application is received and approved. Account statements issued by [plaintiff] to [defendant] stated: "To avoid finance charges, full payment must be received in our office no later than the last business day of the month following [the] due date." Invoices state: "Finance charges on all past due accounts according to New Jersey law." Clearly, [defendant] was on notice and aware that a finance charge would be imposed on delinquent invoices. [Defendant] also knew the finance rate that would be assessed. Indeed, [defendant] asked [plaintiff] to waive the initial finance charge, which [plaintiff] agreed to do.
. . . .
Plaintiff's counsel shall submit the interest . . . calculations to the court . . . .
Plaintiff established the right to recover interest in the delinquent invoices at the rate of 1.5 percent or [eighteen] percent per year. Account statements issued by [plaintiff] to [defendant] stated: "To avoid finance charges, full payment must be received in our office no later than the last business day of the month following [the] due date." Invoices state: "Finance charges on all past due accounts according to New Jersey law." Thus, [defendant] was only on notice and aware that a finance charge would be imposed on delinquent invoices. Therefore, defendant is only
liable for interest on the delinquent invoices, not on items that were never invoiced.
The judge did not impose a finance charge on the promissory estoppel claim because there were no invoices for those materials.
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Here, the judge relied on the letter sent to all credit account holders advising them of the 1.5% per month finance charge. The judge also found that plaintiff provided defendant with account statements informing them that "[t]o avoid finance charges," full payment would be due by the end of the month. Further, the judge stated that the invoice also informed defendant of a "finance charge." As such, defendant cannot now claim that it was unaware of the 1.5% finance charge.
II.
We reject defendant's contention that plaintiff subjected it to trial by ambush. "Our pre-trial practice is designed to eliminate the element of surprise at trial by requiring a litigant to disclose the facts and theories upon which a cause of action or defense is based." Humenik v. Gray, 350 N.J. Super. 5, 18, 19 (App. Div.) (upholding trial court's exclusion of defendant's argument on causation where defendant raised it for the first time after trial commenced and gave no "advanced indication that it would rely" on said explanation), certif. denied, 174 N.J. 194 (2002). "This basic principle is designed to ensure that the outcome of litigation shall depend on its merits in the light of all of the available facts, rather than the last minute craftiness on the part of either party." Id. at 18-19. "To permit last-minute changes in strategy would be 'akin to trial by ambush.'" Id. at 19 (quoting Plaza 12 Assocs. v. Carteret Borough, 280 N.J. Super. 471, 477 (App. Div. 1995)). Here, defendant did not propound interrogatories or depose Hankins on whether he had a written statement of all damages. Defendant demanded a written statement of damages and plaintiff objected stating that no such document existed at the time of the request. Defendant never objected to plaintiff's response and did not follow up on its document demand. "The discovery rules are not to be used, as here, to preclude a party from presenting its case when the evidence neither surprises, misleads[,] or prejudices the opposing party." Plaza 12 Assocs., supra, 280 N.J. Super. at 477. Absent "exceptional circumstances, a party receiving a 'plainly unresponsive answer to an interrogatory seeking the facts' regarding a critical issue in the litigation has the burden to seek a more responsive answer or be barred at trial from objecting to evidence based on the insufficient or unresponsive answer." Ibid. "The party cannot wait until trial and 'sandbag' his opponent by then making an objection to the adequacy of the answers to interrogatories." Ibid. Therefore, plaintiff did not "ambush" defendant
III.
Plaintiff contends on its cross-appeal that the judge applied the wrong standard regarding its award of attorneys' fees, did not address its request for prejudgment interest, and erred by failing to award storage costs.
Plaintiff sought attorneys' fees at the conclusion of the case relying on language in its invoices stating that
Buyer shall reimburse Seller for all costs of collection, including reasonable attorneys' fees, incurred by Seller to collect any monies owing under this contract.Plaintiff's counsel submitted a certification showing that counsel devoted 143.2 hours towards this litigation totaling $29,246. The judge, however, awarded attorneys' fees in the amount of $3208.36 and stated that
[p]laintiff is also entitled to recover reasonable attorneys' fees in this collection action. The invoices issued by [plaintiff] state: "COLLECTION. Buyer shall reimburse Seller for all costs of collection, including reasonable attorneys' fees, incurred by Seller to collect any monies owing under this contract." Because a specific attorneys' fee rate is not set forth, the attorneys' fees shall be calculated at the rate of [twenty] percent of the first $500 and [ten] percent of the remaining balance. See N.J.S.A. 17:16C-42(d). The court finds an award of attorneys' fees at that rate to be reasonable given the highly contested nature"[A] reviewing court will disturb a trial court's award of counsel fees 'only on the rarest of occasions, and then only because of a clear abuse of discretion.'" Litton Indus., Inc. v. IMO Indus., Inc., 200 N.J. 372, 386 (2009) (quoting Packard-Bamberger & Co., Inc. v. Collier, 167 N.J. 427, 440 (2001)).
of this litigation, the court proceedings involved, the discovery conducted, the contested motion practice, the length of the trial, and the success achieved at trial.
[(Emphasis added).]
Plaintiff argues that the judge erred by relying on N.J.S.A. 17:16C-42(d), which is part of the Retail Installment Sales Act of 1960. Chase Bank USA, N.A. v. Staffenberg, 419 N.J. Super. 386, 400 (App. Div. 2011). N.J.S.A. 17:16C-42(d) provides:
The retail installment contract or retail charge account may provide for the payment of attorney's fees not exceeding [twenty percent] of the first $ 500.00 and [ten percent] on any excess of the amount due and payable under such contract or account when referred to an attorney, not a salaried employee of the holder of the contract or account, for collection.Subsection (d) involves commercial entities of some sort seeking fees against an individual. See Alcoa Edgewater Fed. Credit Union v. Carroll, 44 N.J. 442, 443 (1965) (credit union sought to recover from one of its indebted members); Staffenberg, supra, 419 N.J. Super. at 387 (credit card company seeking attorneys' fees from individual debtor); Capital One Bank v. Monge, 380 N.J. Super. 266, 267 (Law Div. 2005) (same). As such, N.J.S.A. 17:16C-42(d) is inapplicable. Therefore, we remand for the judge to reconsider plaintiff's application for attorneys' fees.
Plaintiff requested that the judge impose prejudgment interest on its promissory estoppel claim and contends that the judge did not address its request. The judge's decision does not address prejudgment interest and we therefore remand for consideration of this issue.
Finally, plaintiff argues that the court erred by not awarding it storage costs for the specially ordered materials that it could not stock at its facility. With regard to the storage costs, the judge stated:
Hankins also seeks recovery of its alleged storage costs for warehousing the specially ordered goods, thereby protect[ing] it from weathering and damage. Missing from the proofs, however, was adequate evidence of the need and actual cost of such storage expenses. Noticeably absent from the record was sufficient documentation verifying the storage expenses, such as leases, invoices[,] and proof of payment. No proof was offered during the plaintiff's case as to the volume of storage space needed, the time period needed[,] and the cost of same. Also[,] absent was proof that the storage expenses claimed was needed for these materials, as opposed to [plaintiff's] other inventory. Moreover, [plaintiff] did not invoice
[defendant] for the storage charges. As a result, [plaintiff] has not met its evidential burden of proving by a preponderance of the evidence that it is entitled to recover storage costs.
Unlike with the specially ordered materials, which plaintiff produced spreadsheets and provided detailed testimony for, and the deliveries, which included invoices and account statements, here plaintiff's proofs are insufficient. We have no reason to disturb these factual findings. Seidman, supra, 205 N.J. at 169.
We affirm the judgment, but remand for the judge to consider plaintiff's request for prejudgment interest and to reconsider attorneys' fees.
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION