EAGLE ROCK DRYWALL, LLC VS. RIO VISTA HOMES VS. ANDREW ROTHSCHILD (L-877-12, MORRIS COUNTY AND STATEWIDE) ( 2017 )

NOT FOR PUBLICATION WITHOUT THE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-2445-15T3
EAGLE ROCK DRYWALL, L.L.C.,
Plaintiff-Appellant,
v.
RIO VISTA HOMES, L.L.C., RIO
VISTA CONSTRUCTION, L.L.C.,
RIO VISTA HOMES AT NORTHVALE,
L.L.C. and JOHN MAVROUDIS,
Defendants-Respondents.
__________________________________
RIO VISTA HOMES, L.L.C., RIO VISTA
CONSTRUCTION, L.L.C., RIO VISTA
HOMES AT NORTHVALE, L.L.C.,
Third-Party Plaintiffs,
v.
ANDREW ROTHSCHILD,
Third-Party Defendant.
_________________________________________________
Submitted May 2, 2017 – Decided July 28, 2017
Before Judges Messano and Grall.
On appeal from the Superior Court of New
Jersey, Law Division, Morris County, Docket
No. L-877-12.
Hilberth & McAlvanah, P.A., attorneys for
appellant (Thomas R. Hilberth, on the brief).
Mavroudis Law, L.L.C., attorneys for
respondents (John M. Mavroudis, on the brief).
PER CURIAM
Following a bench trial, the Law Division entered an order
for judgment in favor of defendants, Rio Vista Homes, L.L.C. (RV
Homes), Rio Vista Construction, L.L.C. (RV Construction), Rio
Vista Homes at Northvale, L.L.C. (RV Northvale), and John
Mavroudis, the managing member of those limited liability
corporations, dismissing the complaint of plaintiff Eagle Rock
Drywall L.L.C.1 We affirm the order under review, but clarify its
effect.
I.
It is necessary to explicate the tortuous procedural history
leading to trial to explain the legal arguments plaintiff now
raises.
In 2012, plaintiff filed suit against RV Homes, RV
Construction and Mavroudis, seeking monies owed for subcontracting
work it performed at various locations. Plaintiff's complaint
1
The order also dismissed defendants' counterclaim against
plaintiff and their third-party complaint against Andrew
Rothschild, plaintiff's managing member. Defendants filed no
cross-appeal from these provisions of the order for judgment.
2 A-2445-15T3
included additional counts alleging fraud, intentional and
negligent interference with contractual rights, quantum meruit and
allegations intended to support piercing the corporate veils of
RV Homes and RV Construction and hold Mavroudis personally liable.
In February 2013, the parties entered into a written settlement
agreement (the agreement).2
Defendants agreed to make monthly payments until the claimed
balance due was paid. The agreement specifically provided that
upon defendants' failure to cure any default in payments,
defendants' answer would be stricken. Defendants made three
payments before the check for the fourth payment was returned for
insufficient funds.
Plaintiff then moved for judgment.3 The court entered
judgment in November 2013, specifically providing that it was not
entered against "Mavroudis, individually, as he did not sign [the
agreement]." The court also granted plaintiff's subsequent motion
seeking counsel fees as part of the judgment.
2
The settlement agreement included only signature lines for RV
Homes and RV Construction, which Mavroudis signed as each entity's
managing member. In his decision, the trial judge stated "it was
stipulated" that all claims against Mavroudis were dismissed "at
the outset of the litigation." That is undisputed.
3
The motion also sought to set aside a "consent order." There is
no consent order in the record, but we assume that was the
stipulation of settlement referenced in the agreement.
3 A-2445-15T3
In August 2014, plaintiff moved to set aside the judgment and
amend the complaint. Notably, plaintiff never sought to vacate
the agreement.
Rothschild certified that during efforts to collect the
judgment, he learned RV Homes did not own the property where he
performed the work. Rather, RV Northvale, another company managed
by Mavroudis, "was the owner of all the properties for which
[plaintiff] performed work." Plaintiff attached copies of checks
for payments received under the agreement that were drawn upon RV
Northvale's account.
RV Homes and RV Construction filed opposition, supported by
Mavroudis' certification. He denied that RV Northvale was the
common owner of all the properties. Instead, Mavroudis stated
that, from 2007 to 2013, plaintiff entered into subcontracts with
RV Homes and RV Construction as general contractors and was paid
more than $400,000 for the work it performed.
Apparently without argument, the judge granted plaintiff's
motion, set aside the judgment and joined Northvale as an
additional defendant. His only ratio decidendi appears in the
following handwritten notation on the order: "The issue of whether
[RV] Northvale might be liable is not a proper subject for this
motion." Defendants moved for reconsideration, which plaintiff
opposed. Although there is no order in the record, the judge
4 A-2445-15T3
apparently denied defendants' motion because plaintiff filed its
amended complaint, including the same causes of action as in the
original complaint and adding RV Northvale as a defendant. 4 The
court denied RV Northvale's motion to dismiss, defendants filed
an answer, counterclaim and third-party complaint against
Rothschild, and the matter proceeded to trial.
Rothschild was plaintiff's only witness, and the judge
admitted various documents into evidence. Among other things,
Rothschild admitted that, although he had performed work for
Mavroudis on various properties over the years, he only signed one
contract, in March 2013 shortly after the agreement was executed,
for work on the "Adams" building (the Adams Contract), part of Rio
Vista Greens in Northvale. That contract was expressly between
plaintiff and RV Construction. Rothschild claimed that his wife
read him the contract because he had a limited understanding of
English. Rothschild claimed he never understood his prior oral
agreements were with different entities, but, rather, he assumed
Mavroudis was in control of all the RV properties and projects.
Defendants moved for a directed verdict at the end of
plaintiff's case, and the judge granted the motion as to
4
Although the amended complaint named Mavroudis as a defendant,
there was no count seeking to pierce the corporate veils, and the
complaint contained no factual allegations alleging Mavroudis' was
personally liable.
5 A-2445-15T3
plaintiff's allegations of fraud and misrepresentation. Mavroudis
was the only witness produced by defendants, and the judge admitted
various documents into evidence during his testimony.
Plaintiff and defendants submitted post-trial written
summations, and the judge subsequently issued an oral decision on
the record. He reiterated his mid-trial ruling dismissing those
counts in plaintiff's complaint alleging fraud and
misrepresentation, i.e., counts two, three and four. The judge
also concluded that count one of the complaint contained only
factual allegations and sought "no relief." He therefore limited
his decision to count five of the complaint which "sound[ed] in
quantum meruit."
The judge initially reasoned that plaintiff's motion to
vacate the prior judgment "did nothing to affect the underlying
settlement of the prior litigation." He concluded, "the breach
of working agreement and contract or quasi contract claims asserted
by plaintiff in the present litigation against defendants, [RV]
Homes and [RV] Construction are virtually identical to the claims
asserted in the prior litigation and accordingly, the claims in
the present litigation are barred as to those defendants" by the
doctrine of res judicata.
The judge further found Rothschild's testimony was not
credible, and "Rothschild clearly understood that his [only]
6 A-2445-15T3
contractual relationship . . . was with [RV] Construction." The
judge added: "Fundamentally, the plaintiff failed to prove, by a
preponderance of the evidence that there was any contractual
relationship whatsoever, established with [RV] Northvale."
Additionally, the judge concluded,
the claims plaintiff asserts against [RV]
Northvale were available to be asserted in the
prior litigation. The principle of res
judicata applies both to matters litigated and
determined or settled . . . because that's a
determination, by the parties and those which
could have been presented but were not.
He also rejected plaintiff's argument that a lack of discovery
prevented it from raising the claims against RV Northvale prior
to settlement. He dismissed plaintiff's complaint and entered the
order under review.
II.
Plaintiff argues the judge improperly applied the doctrine
of res judicata to bar its claims against RV Northvale. It
contends the doctrine does not apply because it vacated the earlier
judgment secured against RV Homes and RV Construction and amended
its complaint before the second trial, so as to name all three
entities as defendants. We agree that the doctrine does not apply
to bar plaintiff's claims against RV Northvale.
"The application of res judicata is a question of law" which
we review de novo. Walker v. Choudhary, 425 N.J. Super. 135, 151
7 A-2445-15T3
(App. Div.) (quoting Selective Ins. Co. v. McAllister, 327 N.J.
Super. 168, 173 (App. Div.), certif. denied, 164 N.J. 188 (2000)),
certif. denied, 211 N.J. 274 (2012). The doctrine "serves the
purpose of providing 'finality and repose; prevention of needless
litigation; avoidance of duplication; reduction of unnecessary
burdens of time and expenses; elimination of conflicts, confusion
and uncertainty; and basic fairness[.]'" Wadeer v. N.J. Mfrs.
Ins. Co., 220 N.J. 591, 606 (2015) (quoting First Union Nat'l Bank
v. Penn Salem Marina, Inc., 190 N.J. 342, 352 (2007)). "[W]hen a
controversy between parties is once fairly litigated and
determined it is no longer open to relitigation." Ibid. (quoting
Lubliner v. Bd. of Alcoholic Beverage Control, 33 N.J. 428, 435
(1960)).
We have explained that for the doctrine to apply,
(1) the judgment in the prior action must be
valid, final, and on the merits; (2) the
parties in the later action must be identical
to or in privity with those in the prior
action; and (3) the claim in the later action
must grow out of the same transaction or
occurrence as the claim in the earlier one.
[Bondi v. Citigroup, Inc., 423 N.J. Super.
377, 422 (App. Div. 2011) (emphasis added)
(quoting Watkins v. Resorts Int'l Hotel and
Casino, Inc., 124 N.J. 398, 412 (1991)),
certif. denied, 210 N.J. 478 (2012).]
It is clear, and indeed it was RV Northvale's essential defense,
that the other defendants were different legal entities, and their
8 A-2445-15T3
obligations to plaintiff were not RV Northvale's obligations. As
such, res judicata does not bar plaintiff's claims against RV
Northvale.5
However, appeals are taken from orders and final judgments,
and not the reasoning employed by judges in reaching their
decisions. Do-Wop Corp. v. City of Rahway, 168 N.J. 191, 199
(2001). For the reasons explained in Part III, we affirm the
order as to RV Northvale because, in the end, the judge concluded
plaintiff failed to prove any of the claims made in its complaint
as to that defendant.
We affirm the order as to RV Homes and RV Construction
because, even though plaintiff inexplicably vacated the judgment
against these entities, the agreement, which was never set aside,
is entitled to preclusive effect. Generally speaking, both res
judicata and collateral estoppel require the entry of a final
judgment on the merits in the previous action. Bondi, supra, 423
N.J. Super. at 422; see also Hennessey v. Winslow Twp., 183 N.J.
593, 599 (2005) (setting forth elements of collateral estoppel,
5
Later in his decision, the judge determined plaintiff's claims
against RV Northvale were barred by "the doctrine of res judicata,
collateral estoppel and/or waiver." (Emphasis added). Plaintiff
does not specifically address collateral estoppel or waiver in its
brief. Because we are affirming for other reasons, there is no
need to address those issues.
9 A-2445-15T3
including "the court in the prior proceeding issued a final
judgment on the merits") (citations omitted). "Obviously, once a
vacatur motion is granted, collateral estoppel will not apply,
because the requisite judgment on the merits will be lacking."
Perez v. Rent-A-Center, Inc., 186 N.J. 188, 200 (2006) (citing
Aetna Cas. & Sur. Co. v. Ply Gem Indus., Inc., 313 N.J. Super. 94,
107 (Law Div. 1997)), cert. denied, 549 U.S. 1115, 127 S. Ct. 984,
166 L. Ed. 2d 710 (2007).
However, the Court has recognized that "the doctrine of
collateral estoppel applies whenever an action is 'sufficiently
firm to be accorded conclusive effect.'" Hills Dev. Co. v.
Bernards, 103 N.J. 1, 59 (1986) (quoting Restatement (Second) of
Judgments, § 13 at 132 (1982)). "Simply put, for collateral-
estoppel purposes, 'the question to be decided is whether a party
has had his day in court on an issue.'" State v. K.P.S., 221 N.J.
266, 278 (2015) (quoting McAndrew v. Mularchuk, 38 N.J. 156, 161
(1962)).
Here, plaintiff had its day in court against RV Homes and RV
Construction and obtained a settlement of its claims. Both sides
relied on that settlement and began to perform, before plaintiff
obtained a judgment because of defendants' default. Despite the
order vacating that judgment, plaintiff was precluded from re-
litigating allegations against those two entities.
10 A-2445-15T3
We address briefly the impact of this conclusion. As noted,
plaintiff moved to vacate the judgment against RV Homes and RV
Construction based upon their breach of the agreement, but it
never sought to set aside the agreement reached with those
defendants. In their written summation, defendants argued that
in its amended complaint, plaintiff failed to assert any claim
under the agreement, but defendants never argued the agreement was
void or unenforceable.
As a result, we wish to make clear that the agreement is
still in full force and effect, and plaintiff retains all its
rights thereunder.
III.
The balance of plaintiff's arguments addressed to the order
for judgment as to RV Northvale lack sufficient merit to warrant
extensive discussion in a written opinion. R. 2:11-3(e)(1)(E).
We address them briefly seriatim.
Plaintiff argues Mavroudis, who admittedly no longer had any
ownership interest in RV Northvale at the time of trial, had "a
serious credibility issue," implying the judge should have
rejected his testimony and assumedly accepted Rothschild's. This
ignores the well-known standard guiding our review:
Final determinations made by the trial court
sitting in a non-jury case are subject to a
limited and well-established scope of review:
11 A-2445-15T3
"we 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[.]"
[Seidman v. Clifton Sav. Bank, S.L.A., 205
N.J. 150, 169 (2011) (quoting In re Trust
Created By Agreement Dated December 20, 1961,
ex. rel. Johnson, 194 N.J. 276, 284 (2008)
(internal quotation marks omitted)).]
Moreover, "[b]ecause 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 v. Cesare, 154 N.J. 394, 412
(1998)).
Plaintiff also contends the judge relied on specific lien
release language in the Adams Contract, which defendants urged
foreclosed any claim against RV Northvale. Importantly, in
rendering his decision, the judge specifically reached no
conclusion on the effect of the lien release language, nor do we.
Plaintiff argues the judge erred in directing a verdict in
defendants' favor on those counts sounding in breach of the implied
covenant of good faith and fair dealing. Notably, none of the
counts in the original complaint or the amended complaint actually
contained such allegations, and, in his ruling, the judge never
referred to counts two, three and four as stating such a claim.
12 A-2445-15T3
Nevertheless, in its summation, plaintiff argued the proofs
established a breach of the implied covenant of good faith and
fair dealing, and, for the sake of completeness, we address the
argument.
"[E]very contract in New Jersey contains an implied covenant
of good faith and fair dealing." Sons of Thunder, Inc. v. Borden,
Inc., 148 N.J. 396, 420 (1997). "Neither party shall do anything
which will have the effect of destroying or injuring the right of
the other party to receive the fruits of the contract[.]"
Kalogeras v. 239 Broad Ave., L.L.C., 202 N.J. 349, 366 (2010)
(quoting Palisades Props, Inc. v. Brunetti, 44 N.J. 117, 130
(1965)). Here, however, there was no contract, written or oral,
between plaintiff and RV Northvale. McQuitty v. Gen. Dynamics
Corp., 204 N.J. Super. 514, 520 (App. Div. 1985) (finding that
"one cannot read additional terms," including a duty of good faith
and fair dealing, "into a non-existent contract").
Finally, plaintiff contends the judge should have awarded
judgment in its favor on the theory that RV Northvale was unjustly
enriched. "To prove a claim for unjust enrichment, a party must
demonstrate that the opposing party 'received a benefit and that
retention of that benefit without payment would be unjust.'"
Thieme v. Aucoin-Thieme, 227 N.J. 269, 288 (2016) (quoting Illiadis
v. Wal-Mart Stores, Inc., 191 N.J. 88, 110 (2007)). "That quasi-
13 A-2445-15T3
contract doctrine also 'requires that plaintiff show that it
expected remuneration from the defendant at the time it performed
or conferred a benefit on defendant and that the failure of
remuneration enriched defendant beyond its contractual rights.'"
Ibid. (emphasis added) (quoting Illiadis, supra, 191 N.J. at 110).
Here, plaintiff admitted that it was paid for all the work
it supplied under the Adams Contract, and it only sought
remuneration on the unpaid balance for prior work from RV Northvale
because the checks it received under the settlement agreement were
drawn on RV Northvale's account. In other words, when it performed
the work upon which it based the claim, plaintiff never expected
remuneration from RV Northvale.
Affirmed.
14 A-2445-15T3