LESSNER ELECTRIC COMPANY VS. FIDELITY AND DEPOSIT COMPANY OF MARYLAND (L-1353-17, UNION COUNTY AND STATEWIDE) ( 2018 )

NOT FOR PUBLICATION WITHOUT THE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-0081-17T3
LESSNER ELECTRIC COMPANY,
Plaintiff-Appellant,
v.
FIDELITY AND DEPOSIT COMPANY OF
MARYLAND, ZURICH AMERICAN
INSURANCE CO., and APS
CONTRACTING, INC.,
Defendants-Respondents.
_____________________________________
Argued July 31, 2018 – Decided August 8, 2018
Before Judges Sabatino and Mawla.
On appeal from Superior Court of New Jersey,
Law Division, Union County, Docket No. L-1353-
17.
Glenn C. Slavin argued the cause for appellant
(Slavin & Morse, LLC, attorneys; Glenn C.
Slavin, on the brief).
Eric J. Levine argued the cause for
respondents Fidelity and Deposit Company of
Maryland and Zurich American Insurance Company
(Baron Samson, LLP, attorneys; Eric J. Levine,
on the brief).
Daniel Connolly Carmalt argued the cause for
respondent APS Contracting, Inc. (Carmalt Law,
LLC, attorneys; Daniel Connolly Carmalt, on
the brief).
PER CURIAM
Plaintiff Lessner Electric Company (Lessner) appeals from
August 22, 2017 and September 20, 2017 orders dismissing its
complaint alleging breach of contract, delay damages, and unjust
enrichment on grounds of a failure to state a claim. We affirm.
In July 2013, Lessner entered into a subcontract with
defendant APS Contracting, Inc. (APS) to perform electrical work
on the construction of the Union County Family Courthouse. In
pertinent part, the contract between Lessner and APS stipulated
as follows:
To the fullest extent permitted by law,
[Lessner] waives its right to any claim for
damage for delay from [APS] . . . . [Lessner]
expressly confirms its understanding that this
is a complex project with multiple prime
contractors and/or numerous other
subcontractors, which conditions may result
in, by way of example only and not by the way
of limitation, coordination and interference
issues, out of sequence work, recurring
schedule revisions, compression and/or
acceleration of the [w]ork, stoppage of the
[w]ork, and/or other unspecified delays to the
[p]roject and for which [Lessner] may not be
compensated. [Lessner] expressly undertakes
and assumes the risks of the above and
disclaims any liability for same on the part
of [APS].
[(Emphasis added).]
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Defendants Fidelity and Deposit Company of Maryland, and its
parent company Zurich American Insurance Co. (collectively, the
surety) insured the performance of APS through a warranty bond.
In April 2015, APS was removed from the project, and the surety
assumed APS's role for the remainder of the project.
In August 2015, the surety entered into an Assignment and
Ratification Agreement (ratification agreement) with Lessner to
reaffirm its subcontract, bring Lessner current for certain
payments and costs Lessner believed were due from APS, and have
Lessner complete the remainder of its work.
The ratification agreement expressly stipulated in paragraph
2: "Except as otherwise modified by this Agreement, the terms of
the Subcontract remain in full force and effect." The ratification
agreement further stated Lessner "hereby: (i) ratifies and affirms
its obligations under the Subcontract . . . [and] (iv) agrees
. . . [it] shall complete the Subcontract and the Subcontract Work
. . . for [the] Surety, as a subcontractor for [the] Surety, in
accordance with the terms of the Subcontract and Contract [with
APS] . . . ." The ratification agreement also set forth the amount
Lessner claimed it required from the surety in order to return and
complete its work. This figure was comprised of the original
amount agreed upon between Lessner and APS with an addition for a
change order, less sums already paid to Lessner.
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The surety and Lessner agreed on no other conditions on
Lessner's return to the project, other than to contract for the
payment of the sums due under the original contract. However, the
ratification agreement did identify damages Lessner claimed it had
suffered as a result of the delay of the project. Specifically,
paragraph 4 of the ratification agreement released APS and the
surety,
from any and all claims, of any type or kind,
known or unknown, asserted or unasserted,
which in any way arise from, relate to, or
concert the Subcontract, the Contract, the
Project, the Bond, and/or the [Lessner's]
performance under the Subcontract, which
claims have accrued or arise out of or relate
to events occurring prior to the date of this
Agreement, excluding only: . . . (ii) such
claims as may be identified . . . in Rider A,
which is attached hereto and made a part
hereof.
Rider A was entitled "PENDING REQUESTS FOR CHANGE ORDERS AND
RESERVED CLAIMS," and allegedly included Lessner's non-waiver of
a claim for delay damages although the rider did not describe them
specifically as such.1
In September 2016, Lessner asserted a claim against the surety
seeking "additional compensation due to the delay damages"
1
The bottom of Rider A obliquely references a May 20, 2015
"Scheduling Concerns/Delays" letter. However, the letter was not
supplied to the motion judge, and is not part of the record before
us.
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totaling $1.82 million allegedly resulting in a twenty-four month
delay caused by APS's replacement on the project. The surety
noted Lessner's sole remedy for delay under the contract was to
seek an extension of time to complete its work. The surety also
noted there had been "no meeting of the minds" under the
ratification agreement to compensate Lessner for delay damages.
Lessner filed a complaint in the Law Division for breach of
contract against defendants seeking payment of the delay damages.
The complaint asserted three counts against the surety, alleging
a breach of the bonding agreement, the contract with APS, and
unjust enrichment. The surety and APS filed motions to dismiss
for failure to state a claim. Defendants argued their motions
should be granted because of the express waiver of delay damages
clause under the contract with APS, and that delay damages were
not recoverable under the express terms of the bond and the Bond
Act, N.J.S.A. 2A:44-143 to -147.
The motion judge granted the surety's motion to dismiss. The
judge found Lessner knew of its delay damages claim, yet entered
into the ratification agreement, which did not provide for payment
of the alleged damages. The judge also concluded the express
waiver of delay damages under the contract with APS was binding,
and therefore likewise dismissed the claims against APS. This
appeal followed.
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We begin by reciting our standard of review. Appellate review
of a trial court's ruling on a motion to dismiss is de novo.
Frederick v. Smith, 416 N.J. Super. 594, 597 (App. Div. 2010)
(citing Seidenberg v. Summit Bank, 348 N.J. Super. 243, 250 (App.
Div. 2002)). "A complaint should be dismissed for failure to
state a claim pursuant to Rule 4:6-2(e) only if 'the factual
allegations are palpably insufficient to support a claim upon
which relief can be granted.'" Ibid. (quoting Rieder v. State
Dep't of Transp., 221 N.J. Super. 547, 552 (App. Div. 1987)).
"This standard requires that 'the pleading be searched in depth
and with liberality to determine whether a cause of action can be
gleaned even from an obscure statement.'" Ibid. (quoting
Seidenberg, 348 N.J. Super. at 250); see also Printing Mart-
Morristown v. Sharp Elecs. Corp., 116 N.J. 739, 746 (1989).
On appeal, Lessner asserts the motion judge prematurely
dismissed its complaint and applied the wrong legal standard for
Rule 4:6-2(e) motions by requiring Lessner to prove the allegations
in the complaint, rather than afford it every favorable inference.
Lessner argues APS acted in bad faith and contrary to the intent
of the contract by delaying the project by two years. Lessner
asserts the motion judge failed to search the contract to
understand its intent. Additionally, Lessner argues the "no delay
damages" clause allowed for a modification, and the surety
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allegedly ratified the modification provision when it entered into
the ratification agreement, which contained Rider A. We address
these arguments in turn.
"A contract is an agreement resulting in obligation
enforceable at law. . . . To be enforceable as a contractual
undertaking, an agreement must be sufficiently definite in its
terms that the performance to be rendered by each party can be
ascertained with reasonable certainty." W. Caldwell v. Caldwell,
26 N.J. 9, 24-25 (1958) (citing Friedman v. Tappan Dev. Corp., 22
N.J. 523, 531 (1956)). "The polestar of contract construction is
to discover the intention of the parties as revealed by the
language used by them." Karl's Sales & Serv. v. Gimbel Bros., 249
N.J. Super. 487, 492 (App. Div. 1991).
"Generally, the terms of an agreement are to be given their
plain and ordinary meaning." M.J. Paquet v. N.J. DOT, 171 N.J.
378, 396 (2002). "[W]here the terms of a contract are clear and
unambiguous there is no room for interpretation or construction
and the courts must enforce those terms as written." Karl's Sales,
249 N.J. Super. at 493 (citing Kampf v. Franklin Life Ins. Co.,
33 N.J. 36, 43 (1960)); see also Cty. of Morris v. Fauver, 153
N.J. 80, 103 (1998).
Courts may not "remake a better contract for the parties than
they themselves have seen fit to enter into, or to alter it for
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the benefit of one party and the detriment of the other." Ibid.
(citing James v. Fed. Ins. Co., 5 N.J. 21, 24 (1950)). "A court
has no power to rewrite the contract of the parties by substituting
a new or different provision from what is clearly expressed in the
instrument." E. Brunswick Sewerage Auth. v. E. Mill Assocs., Inc.
365 N.J. Super. 120, 125 (App. Div. 2004).
Here, as we noted, the contract between Lessner and APS
contained an express waiver of delay damages. Lessner concedes
as much, and also does not dispute the ratification agreement
generally reaffirmed the terms and conditions of the contract with
APS.
The motion judge concluded:
[The contract] says no damages for delay. And
when [Lessner] . . . ratified, [it] knew what
the delay was at that point. At that point
in time, now [the] surety is in. It's not APS
you're suing or anything like that, it's the
surety that comes in and says . . . do you
want to finish . . . this job? Here's your
contract, list everything that's outstanding,
list your retainage . . . and then we'll have
a Rider A which has things that you're going
to ask them for that are beyond the price of
the contract, and they're going to say yes to
some things and no to . . . some other things.
But when a contract provision is clear, and
we all know what delay damages are, when
that's clear then I think [defendants have] a
right to have that interpreted with the plain
meaning. No damages for delay.
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Our de novo review leads us to the same conclusion as the
motion judge. Lessner's complaint could only proceed if defendants
were responsible for payment of delay damages. The plain language
of the contract provides for a clear waiver of delay damages.
Therefore, the motion judge properly dismissed Lessner's complaint
for failure to state a claim.
Moreover, the ratification agreement did not contain a mutual
agreement to compensate Lessner for delay damages, and thus did
not modify or afford greater rights to Lessner than those set
forth in its contract with APS. Indeed, as we noted, at most
Rider A merely reflected Lessner's position that it was not waiving
its right to assert a claim for delay damages. However, the
complaint and the record do not support Lessner's argument that
the surety agreed to compensate Lessner for any alleged delay
damages. Thus, in the absence of any evidence of a mutual
agreement to modify the contract, dismissal of Lessner's complaint
for delay damages was appropriate.2
Furthermore, as the motion judge noted, the surety did not
have greater obligations than APS had under the contract. In
disputes such as the one at bar, we have held "[t]he rights of a
2
Because we have determined the contract and the ratification
agreement enforceable, as interpreted by the trial judge in
dismissing Lessner's contract claims, it follows that Lessner's
unjust enrichment claim cannot survive as well.
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third-party beneficiary . . . depend upon and are measured by the
terms of the bond, the contractual undertaking between the promisor
and the promisee." Ribiera & Lourenco Concrete Constr. Co. v.
Jackson Health Care Assocs., 231 N.J. Super. 16, 24 (App. Div.
1989). "[A] surety is chargeable only according to the strict
terms of its undertaking and its obligations cannot and should not
be extended either by implication or by construction beyond the
confines of its contract." Eagle Fire Prot. Corp. v. First Indem.
of Am. Ins. Co., 145 N.J. 345, 356 (1996) (quoting Monmouth Lumber
Co. v. Indem. Ins. Co. of N. America, 21 N.J. 439, 452 (1956)).
Finally, Lessner argues, for the first time on appeal, the
delay damages waiver should not be enforced because "APS did not
act reasonable and, in fact, acted in bad faith in its dealings
with Lessner." Our Supreme Court has stated:
It is a well-settled principle that our
appellate courts will decline to consider
questions or issues not properly presented to
the trial court when an opportunity for such
a presentation is available "unless the
questions so raised on appeal go to the
jurisdiction of the trial court or concern
matters of great public interest."
[Nieder v. Royal Indem. Ins. Co., 62 N.J. 229,
234 (1973) (quoting Reynolds Offset Co., Inc.
v. Summer, 58 N.J. Super. 542, 548 (App. Div.
1959)).]
Our review of the record reveals Lessner's bad faith argument
was not asserted either in its pleadings or argued before the
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motion judge. For these reasons, we decline to consider that
claim here.
Affirmed.
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