Opinion
DOCKET NO. A-3208-13T1
07-15-2016
NEW JERSEY-AMERICAN WATER CO., INC., successor by merger to ELIZABETHTOWN WATER CO., a New Jersey Corporation, Plaintiff-Respondent/Cross-Appellant, v. WATCHUNG SQUARE ASSOCIATES, LLC and FIDELITY LAND CORPORATION, Defendants/Third-Party Plaintiffs-Appellants/Cross-Respondents, v. VOLLERS EXCAVATING & CONSTRUCTION, INC. and FRANK FERRARO, Third-Party Defendants/Fourth-Party Plaintiffs-Respondents/Cross-Appellants, v. SALVATORE DAVINO, EDWARD D. MACEIKO, MORETRENCH AMERICAN CORPORATION, PATRICK A. MARCHETTA, A.I.A., TRAVELERS INSURANCE COMPANY, TRAVELERS INDEMNITY COMPANY OF ILLINOIS, TRAVELERS PROPERTY CASUALTY CORPORATION, TRAVELERS INDEMNITY COMPANY, PHOENIX INSURANCE COMPANY, CHARTER OAK FIRE INSURANCE CO., TRAVELERS INDEMNITY COMPANY OF CONNECTICUT, TRAVELERS INSURANCE GROUP HOLDINGS, INC., and CITIGROUP, INC., Fourth-Party Defendants, and MELICK-TULLY ASSOCIATES, P.A. and MENLO ENGINEERING ASSOCIATES, INC., Fourth-Party Defendants-Respondents.
Thomas A. Buonocore argued the cause for appellants/cross-respondents (Law Offices of Thomas A. Buonocore, P.C., attorneys; Mr. Buonocore, of counsel and on the briefs; Mark E. Thompson, on the briefs). Elizabeth J. Sher argued the cause for respondent/cross-appellant New Jersey-American Water Company (Day Pitney LLP, attorneys; Ms. Sher, of counsel and on the briefs; Mark A. Di Gesu and Michael J. Fitzpatrick, on the briefs). J. Charles Sheak and Eugene Y. Song argued the cause for respondents/cross-appellants Vollers Excavating & Construction, Inc. and Frank Ferraro (Sheak & Korzun, P.C., attorneys; Mr. Sheak, of counsel; Mr. Song and Deborah I. Hollander, on the briefs). Thaddeus J. Hubert, IV, and Jeffrey M. Pypcznski argued the cause for respondents Menlo Engineering Associates and Melick-Tully Associates (Hoagland, Longo, Moran, Dunst & Doukas, LLP and Porzio, Bromberg, & Newman, P.C., attorneys; Thaddeus J. Hubert, III, of counsel and on the brief; Mr. Hubert, IV, on the brief; Mr. Pypcznski, joins in the brief of Menlo Engineering).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges St. John, Guadagno and Vernoia. On appeal from Superior Court of New Jersey, Law Division, Morris County, Docket No. L-3027-01. Thomas A. Buonocore argued the cause for appellants/cross-respondents (Law Offices of Thomas A. Buonocore, P.C., attorneys; Mr. Buonocore, of counsel and on the briefs; Mark E. Thompson, on the briefs). Elizabeth J. Sher argued the cause for respondent/cross-appellant New Jersey-American Water Company (Day Pitney LLP, attorneys; Ms. Sher, of counsel and on the briefs; Mark A. Di Gesu and Michael J. Fitzpatrick, on the briefs). J. Charles Sheak and Eugene Y. Song argued the cause for respondents/cross-appellants Vollers Excavating & Construction, Inc. and Frank Ferraro (Sheak & Korzun, P.C., attorneys; Mr. Sheak, of counsel; Mr. Song and Deborah I. Hollander, on the briefs). Thaddeus J. Hubert, IV, and Jeffrey M. Pypcznski argued the cause for respondents Menlo Engineering Associates and Melick-Tully Associates (Hoagland, Longo, Moran, Dunst & Doukas, LLP and Porzio, Bromberg, & Newman, P.C., attorneys; Thaddeus J. Hubert, III, of counsel and on the brief; Mr. Hubert, IV, on the brief; Mr. Pypcznski, joins in the brief of Menlo Engineering). PER CURIAM
In these back-to-back appeals, we address disputes that arose between the owner/developer of a large shopping complex in the Borough of Watchung, and other parties involved in the project. During the massive excavation of the site, which involved moving about 800,000 cubic yards of earth, there were several slope failures from the abutting Watchung Mountain. Most of the claims arising from the multiple slope failures were resolved through partial settlement and arbitration. The settled and arbitrated claims are not at issue here.
The principal parties in this complex, multi-party, multi-issue, multi-forum litigation are: the property owner, Watchung Square Associates, LLC (Watchung), and its management company, Fidelity Land Development Corporation (Fidelity); the general contractor, Joseph A. Natoli Construction Corporation (Natoli); the excavator, Vollers Excavating and Construction, Inc. (Vollers); and the water supply company, New Jersey-American Water Company, Inc., successor by merger to Elizabethtown Water Company (EWC).
Certain issues in the litigation were addressed by us in Elizabethtown Water Co. v. Watchung Square Associates, LLC, 376 N.J. Super. 571 (App. Div. 2005) (Elizabethtown I), and Elizabethtown Water Co. v. Watchung Square Associates, LLC, Nos. A-3971-09, A-3972-09 (App. Div. Aug. 4, 2011) (Elizabethtown II).
I.
Descriptions of the project and issues related to the excavation are set forth in our earlier opinions and will not be repeated, except as relevant to the resolution of the issues raised on appeal here.
On October 9, 2001, EWC filed a complaint against Watchung and Fidelity, seeking payment on a book account, damages for breach of contract, and quantum meruit. Thereafter, answers, counterclaims, third-party complaints, third-party counterclaims, fourth-party complaints, subrogation claims, cross-claims for contribution and indemnification, and motions to compel arbitration were filed. As detailed in our prior opinions, various other claims were resolved in a lengthy arbitration that involved Watchung and Vollers, but not EWC. See Elizabethtown I, supra, 376 N.J. Super. at 574-76 (noting the scope of arbitration and holding third-party contract claims against Vollers not subject to arbitration); see Elizabethtown II, supra (holding that decisions in arbitration did not preclude Watchung from proceeding with its claims against EWC). More than 100 days of hearings were held in the arbitration, and the arbitrators issued their award in August 2007. Elizabethtown II, supra, slip op. at 9. Watchung attempted, unsuccessfully, to have the arbitration award set aside, but it was confirmed by order entered in February 2008 and affirmed on appeal in July 2009. Id. at 10; Vollers Excavating & Constr., Inc. v. Watchung Square Assocs., LLC, No. A-3242-07 (App. Div. July 27, 2009).
Various motions for summary judgment were granted in full or in part. By the time trial began on January 21, 2014, the only claims remaining in the case, other than related claims for insurance coverage, were (1) Watchung's contract claims against EWC, and (2) EWC's breach of contract claim against Vollers, which was contingent on Watchung's claim. Because of this, Watchung proceeded at trial as the plaintiff.
These insurance claims are addressed in separate back-to-back appeals at docket numbers A-3445-13 (EWC's appeal) and A-3436-13 (Vollers' appeal).
Trial took place before Judge Donald S. Coburn and a jury over four days between January 21 and February 12, 2014. The trial record discloses the following relevant facts.
In 1999, Watchung entered into a contract with Natoli for about $39 million, under which Natoli, as general contractor, would prepare the eighty-acre site and construct an 800,000 square foot shopping center known as Watchung Square (Natoli General Contract). At the very rear of the Watchung Square site, Natoli was to construct a retaining wall. Behind the retaining wall site, the slope rose steeply, about 350 feet, to a residential area.
On October 28, 1999, the site work portion of the Natoli General Contract was separated into a distinct $11 million contract that covered clearing, earth work, utilities, curbing, and paving (Natoli Site Contract). Natoli subcontracted the site work to Vollers. Vollers was in the excavating business and did earth work and utility work necessary to develop sites for construction. Joseph Moretti, as field superintendent, was the Vollers employee responsible for every aspect of its work on the site. Moretti worked for Vollers for about forty years and was retired at the time of trial.
Preparing the Watchung Square site was a "major earthwork project" that involved moving about 800,000 cubic yards of earth. A significant part of the earth work was cutting back the slope at the rear of the property so that a building, to be used by retailer Target, and a second building, referred to as Building One, could be constructed on a flat footprint. That work included massive cutting and filling throughout the site, including cutting and grading the rear slope all along the Watchung Mountain. The site plans show that the retaining wall along the mountain was to be at an elevation of 184 feet at the bottom and 200 feet at the top.
On August 26, 1999, Watchung and EWC entered into an agreement concerning the relocation of about 1000 feet of an existing water main that was located on the property (the Relocation Agreement). The Relocation Agreement was necessary because, as the excavation and development of the site was designed, the existing water main would have been about forty feet above ground level after the area was excavated, and would have gone directly through the area proposed for the Target building. Watchung asked EWC to relocate the water main so that it went around the proposed Target building and "married up" to the existing line further up the slope. EWC was to receive $78,447 for the work under the Relocation Agreement.
EWC also entered into a contract with Fidelity in September 1999 entitled the Elizabethtown Water Company Business and Industrial Customer Main Extension Agreement (Extension Agreement), dealing with issues such as installing hydrants and laying piping to bring water to the buildings that would be constructed on the site. The Extension Agreement was unrelated to the Relocation Agreement and is not relevant to the issues on appeal.
EWC hired Vollers, which was already on site doing the major excavation under the Natoli Site Contract, as the contractor to perform the work under the Relocation Agreement (the EWC/Vollers Agreement). Frank Cosentino, who worked on the project for Fidelity and Watchung as a "facilitator of information," testified for Watchung regarding Vollers' dual role at the site.
He agreed that it made sense for EWC to subcontract with Vollers because that company was already on site. Each project had a different contract. Cosentino conceded that the Relocation Agreement provided for the installation of the water line, but not for the cutting of the slope at the rear of the property, or the construction of a retaining wall. He agreed that EWC had no responsibility for the retaining wall or to dewater the hillside. He also agreed that EWC had no responsibility to do any engineering analysis of the stability of the hillside except as it might pertain to their trenching requirements for installing the new water main.
The Relocation Agreement called for the installation of a twelve-inch pipe at a depth of four feet. It was standard practice for EWC to lay pipe at a depth of between three-and-a-half and four feet, which was an industry standard in New Jersey, based on the frost depth.
A crew headed by Vollers' employee, Glenn Jannarone, was responsible for cutting the trenches and laying the pipe for the relocation of the water main. Jannarone's crew was completely separate from the other Vollers employees working at the site under the Natoli Site Contract (the Vollers/Natoli Crew). Vollers' employees used different job codes on time sheets and other records for work done under the Natoli Site Contract and work done under the EWC/Vollers Agreement.
Moretti testified that, on a given day, there were about four Vollers employees on Jannarone's crew and about twenty-five performing the site contract work on the Vollers/Natoli Crew. Jannarone's crew used a single piece of equipment to dig a trench for the water main and the Vollers/Natoli Crew used fifteen or eighteen pieces of equipment, many of which were very large, as necessary to perform mass excavation. The plan for relocating the water main was to dig a trench for the pipe towards the proposed retaining wall site, pass the pipe under that site, and then lay pipe at a forty-five degree angle on the slope to join an existing water pipe further up the hillside.
Moretti explained that the path for the water line past the proposed retaining wall site was in an area where the Natoli Site Contract called for significant dirt removal and grading, so the Vollers/Natoli Crew moved the dirt out of the way so the water crew could come in and put their pipe in as required. At deposition, Moretti agreed with the characterization that moving the dirt out of the way was earth work done for EWC. At trial he clarified that the work was done for EWC to put their pipe in, but not as part of their contract.
Moretti testified that the whole area had to be excavated under the Natoli Site Contract, including the rear of the property between the sites for Building One and Target, which was the location of the February slope failure. At that time, the Vollers/Natoli Crew was working at this particular site to prepare for the installation of the water line by the Jannarone crew. According to Moretti, the Vollers/Natoli Crew had essentially completed excavating the area around and behind the expected footprint for Building One and Target, excavating to an elevation of 184 feet in the parking area that was to be at the front and sides of those buildings. The site of the proposed retaining wall had been excavated from an elevation of about 240 feet to 198 feet, and the Vollers/Natoli Crew left a "two-and-a-half-to-one" grade slope from the wall site to the parking area, which left a pie shape, or "toe," of earth from the parking area to the wall site.
The plan was that the Jannarone crew would proceed to install the water pipe before the retaining wall was installed. In order to install the water line through the sloping area, the Jannarone crew would have had to dig a trench about twenty-four feet deep because of the grade at that point. Moretti explained that he would have used a "trench box" to install the water line through the wedge of dirt and thought Jannarone would have done the same.
Moretti testified that the Jannarone crew was not in the immediate area when the Vollers/Natoli Crew was performing site grading in the vicinity of the February slope failure. At the time of the slope failure, he testified that the trenching for the water line had stopped about thirty or forty feet away from the "toe" of that slope, which was about thirty feet from the proposed retaining wall location. Thus, the last pipe installed for the water line prior to the slope failure was about sixty-five to seventy feet from the proposed retaining wall location. Jannarone would be able to continue trenching past the proposed retaining wall location and up the slope as soon as the Vollers/Natoli Crew "got done and out of his way."
Cosentino testified that his impression from his observations was that the excavation for the water line trench extended to between the Target pad and the Building One pad and may have reached the bottom of the slope. He acknowledged that his observations were from a distance and that, while he thought the Jannarone crew had reached at least past the Target pad site, he could not verify the precise location. He said, "[a]t the time it was very, very difficult to even determine where the slope was and wasn't because of the activity that was going on, so there's no way I [c]an verify that."
On February 10, 2000, there was a slope failure causing a tremendous gouge in the hill and a great slide of dirt down in-between the Target and Building One site. The slide caused delay to the project because the dirt had to be cleared and the hill had to be re-stabilized. It was subsequently decided that the planned retaining wall needed to be redesigned, and a stronger retaining wall was designed and constructed, at significant additional cost.
Ryan C. Linthicum, a principal at Langan Engineering and Environmental Services, the company that designed the new retaining wall, was qualified without objection as an expert in the field of civil engineering. He was retained to perform an analysis of the February slope failure and, at trial, opined that it was caused by Vollers' failure to dewater or provide any temporary sheeting and shoring, and overcutting the area "beyond the proposed site grades" when excavating in the proposed retaining wall area.
Linthicum based his opinion that the area had been "overcut" on "the deposition of Joe Moretti," which he interpreted to mean that "[they had] gone beyond the site grades and also removed that toe" of earth in the area of the February slope failure. He acknowledged that Vollers would have had the obligation under the Natoli Site Contract to excavate the area where the slope failure occurred, even assuming that EWC had nothing to do with the project and no water main needed to be relocated. However, he said that there was evidence that the Vollers/Natoli Crew "went beyond the site grades" required under the Natoli Site Contract and overcut the slope. He believed the "only reason" for the Vollers/Natoli Crew to overcut the slope was to facilitate the installation of the water line by the Jannarone crew.
Moretti agreed that under the site contract with Natoli, "there would be no reason to cut below the two-and-a-half-to-one grade," and at trial he was adamant that the Vollers/Natoli Crew had not cut beyond that. At trial he said it would have been an improper overcut to cut "the whole slope" down to 184 or 185 feet all the way to the proposed wall site.
During his deposition, however, Moretti's testimony suggested a possible overcut. When asked about a reference to "complete cut at water line relocation," he said that meant "that the slope and the parking area were put to sub-grade." Elsewhere in his deposition, he said that Vollers had excavated to an elevation of 184.1 feet "to the area where the proposed wall was going to be." At trial he said that this statement was not correct.
At the close of Watchung's case, the judge granted EWC's motion, in which Vollers joined, for involuntary dismissal of Watchung's claims. In granting EWC's and Vollers' motion for involuntary dismissal, Judge Coburn accepted as true for purposes of the motion that the Vollers/Natoli Crew had "cut down to the 184 at the wall, despite the fact that under the [Natoli Site C]ontract" it should have been cut to a more gradual slope. The judge noted that Linthicum acknowledged that the slope at issue had to be excavated under the Natoli Site Contract "whether there was a water pipe going in or not." He explained:
And the fact is that the duty to bring the slope down had nothing to do with the water company's contract at all. Therefore, what the Plaintiff has proved is the opposite of what it contends. The Plaintiff has proved that the Natoli work done on the slope was not done under the water company's contract.The judge noted that the reason Moretti decided to have the Vollers/Natoli Crew overcut the slope made no difference.
And, therefore, I am obliged to enter a verdict on behalf of the Defendant's [sic] against the Plaintiff dismissing the case with prejudice and with costs.
We note that Watchung had released both Vollers and Natoli from claims under the Natoli Site Contract arising from the February slope failure. Elizabethtown II, supra, slip op. at 6-7.
Judgment was entered by order dated February 25, 2014. By order dated March 4, 2014, EWC's indemnification claim against Vollers was dismissed as "amicably resolved," thus resolving all remaining issues as to all parties in this matter. Watchung and Fidelity appealed, and EWC and Vollers cross-appealed.
Frank Ferraro also filed a cross-appeal but asserts no points of error in his appeal and therefore his appeal is dismissed. R. 2:8-2. --------
II.
Watchung argues that it presented sufficient evidence to raise a jury question as to EWC's liability for breach of contract and the trial judge erred in dismissing the case under Rule 4:37-2(b), which provides:
After having completed the presentation of the evidence on all matters other than the matter of damages (if that is an issue), the plaintiff shall so announce to the court, and thereupon the defendant, without waiving the right to offer evidence in the event the motion is not granted, may move for a dismissal of the action or of any claim on the ground that upon the facts and upon the law the plaintiff has shown no right to relief. Whether the action is tried with or without a jury, such motion shall be denied if the evidence, together with the legitimate inferences therefrom, could sustain a judgment in plaintiff's favor.
As the Supreme Court has explained, a motion made pursuant to this rule "requires the trial court to scrutinize the evidence presented until that point and to determine if that evidence would support a verdict in the plaintiff's favor." Perez v. Professionally Green, LLC, 215 N.J. 388, 406-07 (2013). "The judicial response to a motion for involuntary dismissal at trial 'is quite a mechanical one'" because the judge "'is not concerned with the worth, nature or extent (beyond a scintilla) of the evidence, but only with its existence, viewed most favorably to the party opposing the motion.'" Id. at 407 (citing Dolson v. Anastasia, 55 N.J. 2, 5 (1969)).
If the court "finds that 'reasonable minds could differ,' then 'the motion must be denied.'" ADS Assocs. Grp., Inc. v. Oritani Sav. Bank, 219 N.J. 496, 511 (2014) (quoting Verdicchio v. Ricca, 179 N.J. 1, 30 (2004)). "Conversely, 'a dismissal is appropriate when no rational jury could conclude from the evidence that an essential element of the plaintiff's case is present.'" Perez, supra, 215 N.J. at 404 (quoting Pron v. Carlton Pools, Inc., 373 N.J. Super. 103, 111 (App. Div. 2004)).
In granting EWC's and Vollers' motion for involuntary dismissal, the judge accepted as true that the Vollers/Natoli Crew had cut down to the 184 feet at the wall, despite the fact that it should have been cut to a more gradual slope under the Natoli Site Contract. Further, the slope at issue had to be excavated under the Natoli Site Contract "whether there was a water pipe going in or not." The judge noted that it made no difference if Moretti decided to have the Vollers/Natoli Crew overcut the slope in order "to make it easier for the other crew who just happened to be working for Vollers" or for some other reason.
At most, the evidence that Watchung presented at trial created a fact question as to whether the Vollers/Natoli Crew breached the Natoli Site Contract by excavating the area of the February slope failure improperly. Indeed, the essence of Watchung's theory that Vollers "overcut" the hillside is based on the grading requirements of the Natoli Site Contract and the possibility that the Vollers/Natoli Crew failed to leave the designated graded slope when it performed the excavation required under that contract.
Watchung has no right to collect from EWC for a breach of the Natoli Site Contract, and it failed to present evidence from which a jury could have fairly concluded that any "overcut" by the Vollers/Natoli Crew could properly be attributed to EWC. There was nothing to suggest that Jannarone or others involved with installing the water line participated in, asked for, or encouraged the overcut by the Vollers/Natoli Crew. There was not even evidence to support that overcutting the slope would have made the installation of the water line easier for the Jannarone crew.
On appeal, Watchung stresses that the EWC/Vollers Agreement contained a specific line item for "extra depth" excavation and argues that court's determination that the Relocation Agreement did not require excavation of the slope is contrary to the evidence. However, the judge did not determine that the Relocation Agreement did not require any excavation of the slope. The evidence was clear that, had the slope failure not occurred, the Vollers/Natoli Crew would have moved "out of the way" for the Jannarone crew, which would have proceeded to trench through increasing depths to lay the water line, while excavating the slope using a trench box. However, the evidence also showed that the Jannarone crew never reached this point prior to the slope failure, and Watchung did not present evidence to tie the massive site excavation done by the Vollers/Natoli Crew to the Relocation Agreement rather than the Natoli Site Contract.
Similarly, Watchung argues that there was no reason for Vollers to have excavated to an elevation of 184 feet in the area of the proposed wall but for the installation of the waterline pursuant to the Relocation Agreement, and it contends that if EWC had hired a subcontractor other than Vollers, that subcontractor "would have been required to excavate to approximately 184' feet [sic] to allow the waterline to pass under the proposed retaining wall."
This argument, however, does not assist Watchung. Indeed, under Watchung's theory, it should have to prove less simply because Vollers was present on the job site in a dual capacity. If EWC had employed a different company to lay the water line, the mere fact that the subcontractor would have had to trench through increasing depths when approaching and passing the proposed retaining wall site would not relieve Watchung of the obligation of proving that the slope failure that occurred was a result of that particular subcontractor engaging in that particular excavation, as opposed to Vollers performing a far more extensive excavation under the Natoli Site Contract. Watchung failed to provide such proof here.
Watchung also suggests that Judge Coburn had already made a determination that there was a jury question as to whether the wall-area excavation was being done under the Natoli Site Contract or the Relocation Agreement when he said as much in the midst of Linthicum's testimony. However, this comment by the judge was before Linthicum testified that the Natoli Site Contract would have required excavation of the site regardless of whether or not a water line had to be laid.
Watchung argues that the judge's reasoning was flawed in considering a cost estimate given by Linthicum as "proof that excavation was not required under the Relocation Agreement." This evidence, however, was used by the judge in what amounted to a side comment regarding how unreasonable it would have been to expect EWC's contractor to excavate the entire slope in the waterline area, given the costs involved. The judge noted that "more to the point" was the fact that Linthicum "was absolutely clear that under the contracts and in particular the specifications, in which area he is an expert," Vollers had the obligation to excavate the area for Natoli "whether there was a water pipe going in [for EWC] or not."
Contrary to Watchung's contention on appeal, the judge did not consider the fact of what was bid on the relocation job or what the costs of excavation might be in concluding that Watchung had failed to show that the relevant excavation work was done under the Relocation Agreement.
Next, Watchung argues that the court failed to view the evidence in the light most favorable to it in "assuming for purposes of this motion" that Moretti "decided on his own" to excavate further than was required under the Natoli Site Contract, "perhaps because that would make it easier" for the Jannarone crew to finish laying the waterline if it did so. However, in ruling on the motion, the judge did not "assume" that Moretti "decided on his own" to have the Vollers/Natoli Crew overcut the slope. Rather, the judge's reasoning was that, because the evidence established that the Vollers/Natoli Crew was not acting pursuant to the Relocation Agreement when it arguably overcut the slope, the reasons for the overcut were immaterial.
Similarly, Watchung contends that the court failed to consider the "flip" between Moretti's deposition testimony and his trial testimony, arguing that "the jury could have found that Moretti was lying." In deciding the motion, however, the judge expressly assumed that Moretti had been lying at trial when he said that the Vollers/Natoli Crew had not overcut the slope and that the deposition testimony suggesting an overcut was true.
Finally, Watchung argues that the court "necessarily rejected Linthicum's testimony in dismissing [Watchung's] claims," pointing to Linthicum's opinions that Vollers had overcut the slope and that there was no reason to do so other than to facilitate the installation of the waterline. However, the judge did not reject Linthicum's speculation as to the reason the Vollers/Natoli Crew might have overcut the slope, but determined that such reasons did not, in the absence of any other evidence, establish that the Vollers/Natoli Crew was working under the Relocation Agreement rather than the Natoli site agreement when it did so.
III.
Watchung contends that the judge erred as a matter of law in dismissing at the summary judgment stage its claim that it was an intended, third-party beneficiary of the EWC/Vollers Agreement. Watchung contends that "[t]he grant of summary judgment was in error because [Watchung] presented evidence that established that EWC and Vollers intended that Watchung would be the intended beneficiary of their contract and neither of those parties presented any evidence to the contrary."
When dismissing the claim, Judge Coburn noted that, if Watchung's position were correct, "then every subcontractor would always be . . . making the owner an intended beneficiary and I don't think that's the law, and indeed that's been conceded by [Watchung]." The contract had "no express language" making Watchung an intended beneficiary, so:
[I]t was the obligation of [Watchung] in opposing the motion for summary judgment to point to circumstances from which one would be allowed to prove that the EWC and Vollers parties, when they entered into their contract, intended to make [Watchung] a beneficiary of that contract, and no such evidence coming forward, I will grant the motion brought by Vollers on this intended beneficiary issue[.]
We review an order granting summary judgment under the same standard as the motion judge. Bhagat v. Bhagat, 217 N.J. 22, 38 (2014). We have explained "that third-party beneficiaries may sue upon a contract made for their benefit without privity of contract." Rieder Cmtys. v. N. Brunswick, 227 N.J. Super. 214, 221-22 (App. Div.) (citing Houdaille Constr. Materials, Inc. v. Am. Tel. & Tel. Co., 166 N.J. Super. 172, 184-185 (Law Div. 1979)), certif. denied, 113 N.J. 638 (1988).
A third party may only enforce a contract if it is an intended beneficiary, rather than an incidental beneficiary, of the agreement. Broadway Maint. Corp. v. Rutgers, State Univ., 90 N.J. 253, 259 (1982) (citing Standard Gas Power Corp. v. New England Cas. Co., 90 N.J.L. 570, 573-74 (E. & A. 1917)). The general rule is that, absent clear and specific indications to the contrary, a property owner is not the intended third-party beneficiary of a contract between a general contractor and a subcontractor. See, e.g., Insulation Contractor & Supply v. Kravco, Inc., 209 N.J. Super. 367, 375-76 (App. Div. 1986) (noting that it "is not the pattern or custom and usage within the building trade" for separate parties within "the sequential chain of payment in the construction industry" to have rights as third-party beneficiaries).
Watchung points to nothing specific or unique in the contract or specifications that suggests an intention by Vollers and EWC that Watchung would not, like other property owners, simply be an incidental beneficiary, but would, instead, obtain rights to enforce the EWC/Vollers Agreement. This absence distinguishes the present case from those Watchung contends are "similar." See Broadway Maint., supra, 90 N.J. at 260-61 (noting several specific contractual provisions making each contractor responsible to the others for any delay, including an agreement to pay damages); Werner v. Kent Parking Garage, Inc., 133 N.J.L. 104, 105 (Sup. Ct. 1945) (tenant was an intended beneficiary of a contract that expressly required the defendant to supply heat to the landlord "and his tenants"). We conclude that the judge properly applied the law to the facts when he granted summary judgment.
IV.
Watchung next argues that the trial judge erred in dismissing its negligence claims against EWC, Vollers, and Ferraro based on the economic loss doctrine. Watchung contends that the damage to the site falls within "the well—recognized exception" that the economic loss doctrine does not apply "where the alleged negligence causes personal injury or property damage."
In June 2012, Judge Stephan C. Hansbury, relying on Saltiel v. GSI Consultants, Inc., 170 N.J. 297 (2002), held that "under New Jersey law a tort remedy does not arise through a contractual relationship unless the breaching party owes an independent duty imposed by law. And I don't see an independent duty." Accordingly, the judge dismissed all non-contract claims in the litigation. The claim was also raised before Judge Coburn who held again that all tort claims were barred by the economic loss doctrine.
The economic loss doctrine precludes the tort liability of parties to a contract when the relationship between them is based on a contract, "unless the breaching party owes an independent duty imposed by law." Saltiel, supra, 170 N.J. at 316-17 (citing New Mea Constr. Corp. v. Harper, 203 N.J. Super. 486, 493 (App. Div. 1985)). The doctrine "evolved as part of the common law, largely as an effort to establish the boundary line between contract and tort remedies." Dean v. Barrett Homes, Inc., 204 N.J. 286, 295 (2010). The Saltiel Court explained that "recovery of intangible economic loss is generally determined by contract" and "most jurisdictions hold that a contractor's liability for economic loss is limited to the terms of the contract." Id. at 309-10 (quoting W. Page Keeton et al., Prosser & Keeton on the Law of Torts, § 92, at 655 (5th ed. 1984)).
Watchung's struggle to distinguish the reasoning of Saltiel, and its effort to remove its claims from the scope of the economic loss doctrine and the application of Saltiel, are not persuasive.
V.
Watchung contends that, because "there was no reason or right for Vollers to participate in the trial of the breach of contract claims between [Watchung] and EWC" and it was "manifestly unjust" for it to be forced to defend against both EWC and Vollers, it was an abuse of discretion for the trial judge to deny its motion to preclude Vollers from participating at trial. Watchung repeatedly contends that Vollers was not a "party" and "had no claims pending" at trial other than EWC's claim for indemnification, which had been severed. Watchung essentially contends that, procedurally, the trial court severed all claims against Vollers yet still allowed it to participate in trial as a non-party. This characterization of the issue is incorrect.
As the trial judge correctly noted, EWC had a breach of contract claim against Vollers as well as a contractual indemnification claim, and only the indemnification claim was severed, leaving the claim for breach of contract to proceed to trial. Watchung dismisses this separate claim for breach of contract as irrelevant to the issue of Vollers' participation because, like the indemnification claim, the breach claim was a "pass-through" claim that would only impose liability on Vollers if EWC was found liable. However, the continuing viability of the breach of contract claim at trial is significant, as Vollers unquestionably had the right to participate in a trial that would conclusively determine a claim against it.
Rule 4:38-2(a) provides that a court "may order a separate trial" of any claim or "separate issue" within a litigation "for the convenience of the parties or to avoid prejudice." The decision whether or not to sever a particular claim is left "to the sound exercise of a trial court's discretion." Rendine v. Pantzer, 141 N.J. 292 (1995). Accord Tobia v. Cooper Hosp. Univ. Med. Ctr., 136 N.J. 335, 345 (1994); Innes v. Marzano-Lesnevich, 435 N.J. Super. 198, 245 (App. Div.), certif. granted, 220 N.J. 37 (2014).
Watchung relies on Kane v. Hartz Mountain Industries, Inc., 278 N.J. Super. 129, 134 (App. Div. 1994), aff'd o.b., 143 N.J. 141 (1996), for the proposition that it is "neither necessary nor appropriate" to allow an indemnitor to participate in the case against its indemnitee, essentially arguing that all claims involving Vollers should have been severed as a matter of law. We disagree that our decision in Kane, given the very different factual and legal issues raised there, require severance of EWC's breach of contract claim against Vollers and exclusion of Vollers from the trial.
Watchung further complains that "[a]t minimum, the Trial Court could and should have taken precautions to ensure that [its] right to a fair trial was not impacted by having to prosecute its claims/defenses against both EWC and Vollers," but that there were no limitations imposed on EWC and Vollers presenting duplicative defenses. The trial judge expressly noted a willingness to avoid "doubling up" by EWC and Vollers of defensive materials. Further, Watchung did not demonstrate any suggested limitations or procedures other than barring Vollers wholly from participation at trial. Accordingly, we reject Watchung's contention that it was unduly prejudiced and hold that it was within the trial judge's discretion to allow Vollers to participate at trial.
VI.
Finally, Watchung argues that the trial court was "incorrect as a matter of law" under Rule 4:16-1(b) in disallowing proposed readings of the deposition testimony of Vollers' employees, Moretti and Jannarone, to be admitted against EWC. We disagree.
Watchung has failed to assert any prejudice to its case from the exclusion of the deposition readings, and there is no basis to conclude that the omission of the deposition testimony was material. Moreover, Watchung called Moretti to testify in its case-in-chief, questioning him extensively and referring often to Moretti's deposition testimony for impeachment purposes. Further, there appears to be no reason Watchung could not have called Jannarone as part of its own case.
The Supreme Court "uniformly has endorsed the proposition that 'in reviewing a trial court's evidential ruling, an appellate court is limited to examining the decision for abuse of discretion.'" State v. Kuropchak, 221 N.J. 368, 385 (2015) (quoting Hisenaj v. Kuehner, 194 N.J. 6, 12 (2008)). We conclude there was no abuse of discretion in excluding the deposition testimony.
Affirmed. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION