ADAM BAK AND AVA POLANSKY BAK VS. ROBERT AND JANET MCEWAN (L-0394-14 AND L-2255-15, MORRIS COUNTY AND STATEWIDE) (CONSOLIDATED) ( 2020 )

NOT FOR PUBLICATION WITHOUT THE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 NOS. A-2088-17T3
A-2149-17T3
ADAM BAK and AVA
POLANSKY BAK,
Plaintiffs-Appellants,
v.
ROBERT and JANET MCEWAN,
BOB MCEWAN CONSTRUCTION
CORP., TAMKO BUILDING
PRODUCTS, TRI-STATE
INSPECTION SERVICES, LLC,
JOE MAGGIO CONCRETE &
MASONRY, DENNIS GRANT
CONSTRUCTION CO., A & A
EXTERIORS, INC., GIAMIKE,
INC.,
Defendants-Respondents,
and
DUNN & DUNN, INC., and
PELLA WINDOWS,
Defendants.
____________________________
CUMBERLAND MUTUAL
INSURANCE COMPANY, INC.,
Plaintiff,
v.
ROBERT and JANET MCEWAN,
BOB MCEWAN CONSTRUCTION
CORP., TAMKO BUILDING
PRODUCTS, TRI-STATE
INSPECTION SERVICES, LLC,
DUNN & DUNN, INC.,
JOE MAGGIO CONCRETE &
MASONRY, DENNIS GRANT
CONSTRUCTION CO., A & A
EXTERIORS, INC., GIAMIKE,
INC., and PELLA WINDOWS,
Defendants.
ADAM BAK and AVA POLANSKY
BAK,
Plaintiffs,
v.
ROBERT and JANET MCEWAN,
TAMKO BUILDING
PRODUCTS, TRI-STATE
INSPECTION SERVICES, LLC,
DUNN & DUNN, INC., and
PELLA WINDOWS,
Defendants,
A-2088-17T3
2
and
BOB MCEWAN
CONSTRUCTION CORP.,
Defendant-Appellant,
and
JOE MAGGIO CONCRETE &
MASONRY, DENNIS GRANT
CONSTRUCTION CO., A & A
EXTERIORS, INC., GIAMIKE, INC.,
Defendants-Respondents.
CUMBERLAND MUTUAL
INSURANCE COMPANY, INC.,
Plaintiff,
v.
ROBERT and JANET MCEWAN,
BOB MCEWAN CONSTRUCTION
CORP., TAMKO BUILDING
PRODUCTS, TRI-STATE
INSPECTION SERVICES, LLC,
DUNN & DUNN, INC.,
JOE MAGGIO CONCRETE &
MASONRY, DENNIS GRANT
CONSTRUCTION CO., A & A
EXTERIORS, INC., GIAMIKE,
INC., and PELLA WINDOWS,
Defendants.
A-2088-17T3
3
Argued (A-2088-17) and Submitted (A-2149-17)
February 6, 2020 – Decided June 24, 2020
Before Judges Alvarez and DeAlmeida.
On appeal from the Superior Court of New Jersey, Law
Division, Morris County, Docket Nos. L-0394-14 and
L-2255-15.
Francis A. Kirk argued the cause for appellants Adam
Bak and Ava Polansky Bak in Docket No. A-2088-17
(Tesser & Cohen, attorneys; Francis A. Kirk, on the
briefs).
Robert W. Bannon, II, argued the cause for respondent
Bob McEwan Construction Corp. in Docket No. A-
2088-17 (appellant in Docket No. A-2149-17) (Welby,
Brady & Greenblatt, LLP, attorneys; Robert W.
Bannon, II, on the briefs).
Linton W. Turner, Jr., argued the cause for respondents
Robert and Janet McEwan in Docket No. A-2088-17
(Mayfield, Turner, O'Mara & Donnelly, PC, attorneys;
Linton W. Turner, Jr., on the brief).
Edward J. Fanning, Jr., argued the cause for respondent
TAMKO Building Products, Inc. in Docket No. A-
2088-17 (McCarter & English, LLP, attorneys; Edward
J. Fanning, Jr., of counsel and on the brief; Ryan A.
Richman, on the brief).
Elizabeth F. Lorell argued the cause for respondent Tri-
State Inspection Services, LLC in Docket No. A-2088-
17 (Gordon Rees Scully Mansukhani LLP, attorneys;
Elizabeth F. Lorell and JoAnna M. Doherty, of counsel
and on the brief).
A-2088-17T3
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Michael F. Brandman argued the cause for respondent
Joe Maggio, LLC (Weiler & Brandman, attorneys;
Michael F. Brandman, on the briefs).
Frank J. Kunzier argued the cause for respondent
Dennis Grant d/b/a Dennis Grant Construction
Company (Zimmerer, Murray, Conyngham & Kunzier,
attorneys; Frank J. Kunzier, of counsel and on the
briefs; Sidney E. Goldstein, on the briefs).
Peter A. Gaudioso argued the cause for respondent
A&A Exteriors, Inc. (McElroy, Deutsch, Mulvaney &
Carpenter, LLP, attorneys; Peter A. Gaudioso, of
counsel and on the briefs).
Marc A. Deitch argued the cause for respondent
Giamike, Inc. (Kent & McBride, attorneys; Marc A.
Deitch, on the brief).
PER CURIAM
Plaintiffs Adam Bak and Ava Polansky Bak filed suit against defendants
Robert and Janet McEwan (the McEwans), the general contractor Bob McEwan
Construction Corporation (BMCC), the subcontractors involved with the
construction of the home at issue, and the home inspectors. On November 30,
2017, the trial judge granted summary judgment to some defendants, and on
December 1, 2017, granted the remaining motions and cross-motions for
summary judgment. He also dismissed all cross-claims. We now affirm, except
that we reverse and remand the order granting defendant Giamike, Inc.
(Giamike) summary judgment against BMCC, and the orders dismissing
A-2088-17T3
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BMCC's cross-claims against A&A Exteriors, Inc. (A&A), Giamike, Dennis
Grant d/b/a Dennis P. Grant Construction Company (Grant), and Joe Maggio,
LLC (Maggio).
Plaintiffs bought a home from the McEwans for $2.8 million in August
2012. The McEwans had occupied the premises since 2005. During Superstorm
Sandy, the roof was damaged and water leaked into the home, although plaintiffs
alleged they experienced water leaks prior to the storm. After retaining various
consultants and experts, they eventually gutted the house, ultimately
demolishing it in May 2015. They have since commenced construction of a new
23,000 square foot home.
I.
Plaintiffs' complaint alleged multiple causes of action, including
negligence, breach of warranties, misrepresentation, fraudulent concealment,
product liability, and consumer fraud against the various defendants. BMCC
filed cross-claims against its subcontractors for indemnification and
contribution.
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On April 15, 2015, plaintiffs 1 filed the first amended complaint against
the following defendants: the McEwans; BMCC; TAMKO Building Products,
Inc. (Tamko); Tri-State Inspection Services, LLC (Tri-State); Dunn & Dunn,
Inc. (Dunn);2 Maggio; Grant; A&A; Giamike; and Pella Windows (Pella). The
complaint specifically alleged the following counts: breach of contract against
the McEwans (count one); breach of implied warranty of habitability against the
McEwans and BMCC (count two); breach of implied warranty of workmanlike
construction against BMCC (count three); breach of implied warranty of fitness
for intended purpose against BMCC and the McEwans (count four); negligence
against all defendants (count five); general contractors' negligence against
BMCC (count six); home inspector's breach of contract against Tri-State (count
seven); breach of the covenant of good faith and fair dealing against the
McEwans (count eight); knowing misrepresentation against the McEwans
(count nine); negligent misrepresentation against the McEwans (count ten);
fraudulent concealment in the sale of real estate against the McEwans (count
eleven); product liability in the form of defective design against BMCC and
1
For ease of reference, this opinion will use plaintiffs' first names when
referring to them individually.
2
Plaintiffs represent that Dunn became defunct and did not participate in the
action.
A-2088-17T3
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Tamko (count twelve); product liability in the form of manufacturing defect
against Tamko (count thirteen); product liability in the form of breach of
warranty against BMCC and Tamko (count fourteen); and a violation of the
Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -224, against all defendants
(count fifteen).
II.
On September 5, 2014, BMCC filed an order to show cause with
temporary restraints, seeking to enjoin plaintiffs from altering, modifying, or
demolishing the home. On September 15, 2014, the court held a case
management conference, during which plaintiffs advised that demolition was
scheduled in approximately thirty days but that they would be able to obtain a
preliminary expert report identifying the structural and other defects. Once the
report was prepared, defendants could inspect the residence with their respective
experts. Plaintiffs also represented that, before demolition, they would provide
timely notice to defendants, who could be present during demolition. Based
upon that agreement, BMCC withdrew the order to show cause.
On September 22, 2014, the trial court memorialized the agreement in an
order. It stated plaintiffs would produce a preliminary expert report and afford
A-2088-17T3
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defendants a period of ten days after receipt to inspect the property and
undertake testing.
Tamko and BMCC filed motions to dismiss for failure to state a claim
pursuant to Rule 4:6-2(e). On February 6, 2015, the trial court granted Tamko's
motion in part, dismissing the negligence claim (count five) with prejudice. The
trial court granted BMCC's motion to dismiss in part, dismissing plaintiffs'
claims for breach of implied warranty of habitability (count two), defective
design product liability (count twelve), and product liability breach of warranty
(count fourteen), with prejudice. The court also dismissed the CFA claim (count
fifteen) against Tamko and BMCC without prejudice.
On February 17, 2015, BMCC filed its answer to the complaint. BMCC
asserted the following cross-claims against co-defendants Maggio, Grant, A&A,
and Giamike: contractual indemnification, contribution, and common law
indemnification. Subcontractor defendants filed answers in July 2015
(Giamike), May 2015 (Grant), March 2015 (A&A), and July 2014 (Maggio). By
February 2017, both Pella and Giamike had settled with plaintiffs.
After the court rescheduled trial for December 11, 2017, twenty-three
motions and cross-motions were filed by the parties. The motions were filed
A-2088-17T3
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over a two-month period and were adjourned by the court to November 17, 2017,
to be heard simultaneously.
On September 15, 2017, Tamko filed a motion for summary judgment
seeking dismissal of plaintiffs' remaining claims for alleged breach of warranty,
design defect, and manufacturing defects.
On October 3, 2017, Giamike filed a cross-motion for summary judgment
dismissing all cross-claims asserted by BMCC. It requested oral argument if
opposition to the motion was submitted.
BMCC filed opposition to Giamike's cross-motion for summary judgment
on November 7, 2017, requesting an order denying Giamike summary judgment
and also awarding BMCC summary judgment that Giamike was required to
defend and indemnify. A&A, Grant, and Maggio each submitted a letter to the
court on November 9, 2017, seeking to be heard on Giamike's indemnification
motion. Defendants had until October 13, 2017, to file all their motions, a
deadline set with consent of all counsel.
On October 10, 2017, the McEwans filed motions for summary judgment
as to liability, plaintiffs' lack of proof of damages, and plaintiffs' failure to
mitigate damages. On October 31, 2017, BMCC, Maggio, A&A, and Tamko all
A-2088-17T3
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filed cross-motions joining the McEwans' motions for summary judgment for
plaintiffs' lack of proof of damages and plaintiffs' failure to mitigate damages.
Also on October 10, 2017, BMCC filed a motion for sanctions and
dismissal based on plaintiffs' spoliation of evidence due to the demolition of the
structure. Tri-State, Maggio, A&A, and Tamko all filed cross-motions joining
the spoliation motion. On October 13, 2017, BMCC filed a motion for summary
judgment based on the statute of limitations and other defenses. Maggio and
A&A both filed cross-motions on October 31, 2017, joining this motion for
summary judgment as well.
On October 13, 2017, Tri-State moved for summary judgment on
plaintiffs' negligence, breach of contract, and CFA claims. Maggio also filed a
motion for summary judgment.
On November 6, 2017, plaintiffs' counsel filed a letter with the trial judge
requesting, with the consent of defendants' counsel, an adjournment until
December 1, 2017, or December 15, 2017, of the summary judgment motions
filed by Maggio, Tri-State, and A&A. Also on that date, plaintiffs' counsel filed
a letter with the civil presiding judge requesting, with consent of all counsel, an
adjournment of the December 11, 2017, trial date because of the numerous
pending summary judgment motions. This request was denied.
A-2088-17T3
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On November 9, 2017, BMCC submitted a letter to the court noting that
subcontractor defendants sought relief from BMCC's cross-claims in their
motions seeking summary judgment relief against plaintiffs. BMCC, as a result,
requested that its cross-claims be adjudicated at trial or during post-trial motion
practice to allow "for all parties to be heard on the issues related to the" cross-
claims.
On November 15, 2017, Giamike's counsel filed a letter confirming that
the cross-claim indemnification issues would not be heard during oral argument
scheduled for November 17, 2017. The letter also confirmed that the trial court
scheduled argument on the indemnification issues for December 1, 2017, and
that all briefs must be filed by November 27, 2017.
On November 17, 2017, the trial judge heard oral argument on all opposed
motions against plaintiffs. Those motions were: Tamko's motion for summary
judgment; the McEwans' motions for summary judgment based on plaintiffs'
lack of proof of damages, failure to mitigate, and liability; and BMCC's
summary judgment motion pursuant to the statute of limitations and other
defenses. The court reserved decision.
On November 22, 2017, plaintiffs filed a motion on short notice to adjourn
the trial date and reschedule the motions for summary judgment that were not
A-2088-17T3
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fully briefed. On November 30, 2017, plaintiffs filed a supplemental
certification in further opposition to the McEwans' motion for summary
judgment for failure to prove damages.
Also on November 30, 2017, the trial judge issued a statement of reasons
granting summary judgment to all defendants, and entered numerous orders on
November 30, 2017, and December 1, 2017, reflecting his decision, and also
dismissing all cross-claims.
III.
In this appeal, we focus on the summary judgment dismissals anchored in
plaintiffs' lack of proof of damages, which are dispositive. We summarize the
relevant undisputed facts and circumstances from the summary judgment record.
BMCC purchased the property in 2004 with the intention to build a home
for the McEwans. The 7000 square-foot residence was located on a 5.4 acre lot.
Construction began that year and the certificate of occupancy issued on August
4, 2005.
BMCC was the general contractor for the construction of the home.
Robert was the sole shareholder of BMCC. As the general contractor, BMCC
retained the various subcontractors for construction.
A-2088-17T3
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Grant was the framing subcontractor for the project and performed the
rough framing and installation of windows. A&A installed stucco on the house
and detached three-car garage. Maggio installed the foundation walls and
footings.
Giamike installed Tamko roof shingles on the home in September 2004,
and on the pool shed and detached garage in September 2005. Tamko had a
limited warranty for the Lamarite roofing shingles used by Giamike. The limited
warranty was written on each shingle tile, and permitted the original owner to
transfer the warranty to subsequent purchasers only once and only during the
first two years after purchase.
Janet acquired title to the property from BMCC after the completion, and
she and Robert lived in the home until its August 21, 2012 sale to plaintiffs.
Plaintiffs purchased the residence from her in May 2012, in "as is" condition for
$2,850,000.
On May 24, 2012, prior to the closing, Tri-State inspected the home on
plaintiffs' behalf. Tri-State was unable to access the roof during the inspection
because of overcast and rainy weather, plus the "significant pitch" of the roof .
Additionally, some areas in the attic were inaccessible because they were too
small. Ava observed portions of the inspection and remembered that Tri-State
A-2088-17T3
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inspected the bedrooms, kitchen, and foyer. Tri-State did not observe any water
leakage even though it was raining at the time, but did observe stains from
previous water leaks in the unfinished attic above the garage.
During Superstorm Sandy in late October 2012, approximately 100
shingles were blown off the roof. On November 5, 2012, Tri-Con Construction,
Ltd. (Tri-Con) issued a proposal to plaintiffs to replace 100 shingles and roof
caps. Tri-Con fixed the roof damage using Lamarite shingles left by the
McEwans. Tri-Con did not observe any other damage to the roof during the
repairs.
Plaintiffs filed a homeowner's insurance claim with their carrier, Chubb
Insurance Co., on November 6, 2012, claiming that Superstorm Sandy damaged
the roofing shingles, a window, and some siding. Chubb closed the insurance
claim file in February 2013, because plaintiffs failed to respond to its inquiries .
On November 7, 2012, Ava called Tamko to open a claim under Tamko's
limited warranty, and on April 8, 2013, she submitted a written warranty claim.
Tamko denied plaintiffs' warranty claim on May 5, 2013, because of the two -
year non-transferability clause.
Ava alleged that she "notice[d] potential problems" with the home such as
"a rotten window and several leaks," in September 2012, before Superstorm
A-2088-17T3
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Sandy. While living in the home, the McEwans only observed water leakage
through some windows manufactured by Pella in the unfinished attic area of the
home and from an opening for a lightning rod through the roof. Tri-Con had
caulked sealant around the lightning rod in 2011, waterproofed the chimney next
to it, and replaced small pieces of shingle around it.
In an April 2013 letter, plaintiffs' counsel notified the McEwans' attorney
of the alleged defects discovered in the home. In a letter dated April 15, 2013,
the McEwans' counsel informed plaintiffs "for settlement purposes only" that
the McEwans were "agreeable to purchasing back" the residence from plaintiffs.
On August 1, 2013, plaintiffs provided a "settlement book," which consisted of
a list of cost estimates for the correction of the defects. Settlement discussions
continued into at least January 2014.
Plaintiffs rented a townhouse to live in while they started work on the
home. Plaintiffs allege they attempted to remediate the defects and removed
sheetrock, most of which had been removed by April 21, 2014. They retained
additional consultants as exposed areas in the home revealed other conditions
after sheetrock had been removed.
In a letter from plaintiffs' counsel dated July 14, 2014, plaintiffs notified
defendants that they decided to demolish the entire residence "in light of the cost
A-2088-17T3
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and the discovery of pervasive mold," and build a new home on the site.
However, in November 2017, Ava certified that they decided to demolish the
home based on a combination of factors that included mold but also included
"labor intensive" defects, stigma attached to having to disclose the mold, and
their architect's "unwillingness" to "stand behind a substantially new structure"
if built on the old foundation.
Plaintiffs' July 14, 2014, letter also stated that if defendants wanted to
conduct inspections of the property, they needed to do so before July 25.
Plaintiffs would give notice when the stucco and stone work would be removed
from the façade of the house so that anyone who wished to be present could
observe that phase of the demolition.
BMCC's counsel and an expert inspected the home on July 21, 2014. In a
letter dated July 25, 2014, BMCC stated that the expert was not able to
"adequately and properly assess plaintiffs' claims based on the limited
information available from plaintiffs," and that a preliminary report specifically
identifying alleged construction defects would enable adequate assessment of
the allegations. BMCC, therefore, requested that plaintiffs refrain from
demolishing the home until such a report was produced, and its expert had
adequate time to review it, otherwise defendants would be prejudiced by
A-2088-17T3
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destruction of evidence. Maggio's and Tamko's counsel also sent letters
notifying plaintiffs that demolition of the home would result in sanctions . By
August 2014, all of the insulation had been removed.
In May 2015, plaintiffs demolished the entire home, including the
concrete basement; only the detached three-car garage remained. Plaintiffs'
architect, Tomasz Adach, created plans for the new 23,044 square foot
residence. The plans were filed on October 6, 2015.
IV.
Plaintiffs' Experts
Plaintiffs retained numerous experts and consultants to generate reports
on the alleged construction defects that existed between 2012 and 2015.
Frederick Larson, with EnviroVision Consultants, Inc., wrote a report dated
February 24, 2014, addressing mold remediation procedures. He wrote another
report, dated April 17, 2014, identifying additional areas of mold after the
removal of building materials that had previously covered studs, insulation, and
sheathing. He recommended plaintiffs continue to follow the mold remediation
procedure identified in the initial report. EnviroVision obtained swab surface
and bulk material samples on June 13, 2014, at the request of plaintiffs after
"substantial demolition" had occurred.
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In a June 23, 2014 report, Larson noted additional areas of moisture and
fungal growth, and again recommended plaintiffs follow the initial remediation
plan and hire a professional mold remediation company to perform the required
abatement and cleanup. A final October 24, 2014 report recommended that
plaintiffs "look[] into the cost and other benefits of partial or complete
demolition of the house to see if that option [was] economically feasible or
reasonable when weighing [their] options." Should plaintiffs choose fungal
remediation, the use of a professional mold remediation company was
recommended.
Anthony Piccione, from Building Evaluations, Inc., created a
"Replacement Cost Estimate" dated December 1, 2014, and a revised report
dated May 18, 2016. Piccione initially projected reconstruction costs of
$3,897,902. His revised report increased the costs to $4,050,535.
SOR Testing Laboratories, Inc. issued findings on laboratory testing of
the slate roofing on December 3, 2014. The company concluded that the
shingles were prematurely weathered and had completed approximately 66% of
the service life in nine years, estimating that only two or three years of service
life remained.
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A real estate appraiser, Jon Brody, from Appraisal Consultants Corp., on
April 27, 2015, assessed the subject property's land value as $703,000 . In
valuing the property, Brody assumed that the residence had no economic value
and that "even though the structures remain[ed] on the site, they [were not]
valued." He testified at his deposition that plaintiffs had specifically limited the
scope of his report to valuing only the land.
Frederick A. Porcello, on behalf of Porcello Engineering, Inc., on April
12, 2016, identified fifty-six alleged construction defects in writing. During his
deposition, Porcello noted that his company did not perform a cost analysis of
the home deficiencies.
After oral argument, plaintiffs submitted a certification on November 30,
2017, acknowledging that the Porcello report named "certain defects" that were
not previously identified "in all likelihood because not all defects could be
discovered or confirmed until demolition had occurred." Plaintiffs attached two
more documents: a July 1, 2014, letter from plaintiffs' architect, Adach; and a
February 5, 2015 report from Todd Heacock, P.E., of Warren Professional
Services, L.L.C.
Adach's letter stated that the "numerous deficiencies to be repaired or
replaced and their value equate a new construction; hence the cost of materials
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would be the same for new construction as for reconstruction work." He also
wrote that "the labor costs for the reconstruction would be substantially higher"
and recommended they build a new home.
Heacock's report addressed his observations and opinions about the
alleged construction deficiencies. He stated that the effort to replace and
remediate the various issues with the alleged defects, such as roofing, mold, and
framing, would be labor intensive.
Defendants' Experts
BMCC submitted in support of summary judgment an expert report from
Jonathon P. Dixon & Associates, P.C., Professional Engineering. This report
addressed numerous documents, including Larson's EnviroVision reports, the
SOR report, Porcello's construction defects report, Adach's recommendation
letter, and Piccione's building replacement cost estimate. The report disputed
the conclusions and recommendations made by plaintiffs' experts.
Gerry Ross, a Tamko employee, also prepared an expert report on Tamko's
behalf. Ross's report opined that the roof shingles were improperly installed in
numerous locations, that the shingles were not defective, there was no
manufacturing defect that caused leaks, that if leaks did occur they did not result
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from any design or manufacturing defect in the shingles, and that the shingles'
design did not pose a hazard for anyone attempting to walk or stand on the roof .
In June 2016, Mark Sussman of Lasser Sussman Associates, LLC,
completed a real estate appraisal of the home as of April 15, 2013, at the request
of all defendants. He opined that the market value of the property as of that
2013 date was $2,225,000.
V.
In a written statement of reasons, the trial court first addressed the statute
of limitations issue. It rejected plaintiffs' assertion that the discovery rule
applied to toll the time from which the statute began to run, reasoning that the
discovery rule did not apply in contract cases. The trial court found that the
statute of limitations had expired in 2011, six years after substantial completion
of the home. It concluded that the statute of limitations was an "absolute bar to
recovery."
The court next briefly addressed the product liability claims, holding that
the Products Liability Act (PLA), N.J.S.A. 2A:58C-1 to -11, subsumed those
claims. With regard to defendants' spoliation claims, the judge found that
plaintiffs demolished their home after defense counsel notified them of the
potential spoliation issue. Doing so "absolutely impaired the ability of the
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defendants to test the alleged 'mold' to counter the plaintiffs' claim that they
were forced to demolish their home on this basis," and that it was "crucial
evidence" that went to the heart of the case. The court held that plaintiffs'
spoliation of the evidence mandated dismissal of the complaint as the sanction.
Most significantly, the trial court found that plaintiffs failed to establish
damages, through expert opinion or otherwise. Specifically, plaintiffs presented
no evidence as to the cost of repairs, the diminution in value of the home as a
result of any alleged defects, or even that the house was unrepairable. Plaintiffs'
"testimony alone as to their reason for demolishing the home [was] insufficient
as a matter of law." The discovery plaintiffs presented did not support "any
proper measure of damages," as there was no expert opinions as to the impaired
property value.
The "so-called quotes to perform work [were] mere hearsay." It held that
there were "myriad other legal issues presented by the various defendants which
[had] been reviewed by the court," but that based upon its analysis of the other
issues discussed in the statement of reasons, it was "abundantly clear that
summary judgment" was appropriate.
Thus, the court concluded that plaintiffs failed to present genuine issues
of material facts. Furthermore, Robert could not be held personally liable to
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plaintiffs because he was not an owner of the home. BMCC had no liability to
plaintiffs as a general contractor because it was not legally responsible for its
subcontractors. Tamko was entitled to summary judgment because plaintiffs
failed to present any expert evidence as to the shingles' defects, and failed to file
suit within the time required by the warranty. Tri-State had no liability based
upon its contract's express provisions.
VI.
Now on appeal, plaintiffs assert the following errors in the grant of
summary judgment:
POINT I: THE COURT ERRED IN REFUSING TO
ADJOURN SUMMARY JUDGMENT MOTIONS
AND THE TRIAL ON CONSENT OF ALL PARTIES.
POINT II: THE COURT ERRED IN DECIDING
SUMMARY JUDGMENT MOTIONS WHEN THE
OPPOSING PARTIES REQUESTED
ADJOURNMENTS ON CONSENT AND ADVISED
THAT THEY INTENDED TO FILE FACTUAL AND
LEGAL OPPOSITION.
POINT III: THE COURT ERRED IN DECIDING
SUMMARY JUDGMENT MOTIONS THAT WERE
RETURNABLE LESS THAN 30 DAYS PRIOR TO
TRIAL, IN CONTRAVENTION OF R. 4:46-1.
POINT IV: THE COURT ERRED IN GRANTING
SEVERAL SUMMARY JUDGMENT MOTIONS
WITHOUT CITING THE SUPPOSEDLY
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UNDISPUTED FACTS AND THE APPLICABLE
LAW SUPPORTING THOSE DECISIONS.
POINT V: THE COURT ERRED IN GRANTING
SUMMARY JUDGMENT MOTIONS WHEN
MULTIPLE DISPUTED MATERIAL FACTS
EXISTED, AND THE COURT FAILED TO AFFORD
THE BENEFIT OF THE DOUBT TO THE PARTY
OPPOSING SUMMARY JUDGMENT.
POINT VI: THE COURT ERRED IN FAILING/
REFUSING TO CONSIDER SUPPLEMENTAL
SUBMISSIONS IN OPPOSITION TO MOTIONS
SEEKING RELIEF REGARDING ALLEGED
SPOLIATION OF EVIDENCE.
POINT VII: THE COURT ERRED IN RELYING
UPON CERTAIN FACTS THAT WERE CONTRARY
TO FACTS CITED BY EITHER THE MOVING
PARTY OR OPPOSING PARTY.
POINT VIII : THE COURT MADE PATENTLY
INCORRECT RULINGS ON LEGAL ISSUES ON
SEVERAL MOTIONS.
POINT IX: SUMMARY JUDGMENT WAS
IMPROPERLY ENTERED IN LIGHT OF
CONFLICTING EXPERT OPINIONS.
POINT X: IN REVERSING AND REMANDING,
THE APPELLATE DIVISION SHOULD RULE OUT
THAT SUMMARY JUDGMENT COULD NOT
HAVE BEEN GRANTED TO THE DEFENDANTS
AND THEREFORE THE CASE SHOULD BE
REMANDED FOR TRIAL, NOT FOR FURTHER
MOTION ARGUMENT.
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POINT XI: IF THE DECISIONS ARE REVERSED,
AND THE MOTIONS ARE REMANDED, THEY
SHOULD BE ASSIGNED TO A DIFFERENT JUDGE.
POINT XII: IF THE DECISIONS ARE
REVERSED, AND THE CASE IS REMANDED, IT
SHOULD BE REMANDED TO A DIFFERENT
COUNTY.
By way of separate appeal, BMCC raises the following points:
POINT I: THE TRIAL COURT ERRED IN
GRANTING DEFENDANT GIAMIKE'S MOTION
FOR SUMMARY JUDGMENT AGAINST BMCC.
POINT II: THE SUBCONTRACT
INDEMNIFICATION CLAUSE IS ENFORCEABLE
AND REQUIRED SUBCONTRACTOR
DEFENDANTS TO INDEMNIFY BMCC FOR EVEN
BMCC'S OWN NEGLIGENCE, WHICH AS A
MATTER OF LAW WAS NONE.
POINT III: THE TRIAL COURT ERRED IN
CANCELLING ORAL ARGUMENT AND SUA
SPONTE DISMISSING BMCC'S CROSS-CLAIMS
AGAINST THE SUBCONTRACTOR
DEFENDANTS.
Because plaintiffs failed to produce proof of damages, we only address
the claim of error regarding that issue. The patchwork of expert reports and
opinions plaintiffs obtained simply did not fill the void. The remaining issues
plaintiffs raise are made moot by the disposition.
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26
VII.
"An appellate court reviews an order granting summary judgment in
accordance with the same standard as the motion judge." Bhagat v. Bhagat, 217
N.J. 22, 38 (2014). That standard requires the court to "review the competent
evidential materials submitted by the parties to identify whether there are
genuine issues of material fact and, if not, whether the moving party is entitled
to summary judgment as a matter of law." Ibid. (citing Brill v. Guardian Life
Ins. Co. of Am., 142 N.J. 520, 540 (1995)); R. 4:46-2(c). If "a legal issue is
involved in the absence of a genuine factual dispute, that standard is de novo,
and the trial court rulings 'are not entitled to any special deference.'" Henry v.
N.J. Dep't of Human Servs., 204 N.J. 320, 330 (2010) (quoting Manalapan
Realty, LP v. Manalapan Twp. Comm., 140 N.J. 366, 378 (1995)).
"An issue of fact is genuine only if, considering the burden of persuasion
at trial, the evidence submitted by the parties on the motion, together with all
legitimate inferences therefrom favoring the non-moving party, would require
submission of the issue to the trier of fact." R. 4:46–2(c). The "'genuine issue
[of] material fact' standard mandates that the opposing party do more than
'point[] to any fact in dispute' in order to defeat summary judgment." Globe
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27
Motor Co. v. Igdalev, 225 N.J. 469, 479 (2016) (alterations in original) (quoting
Brill, 142 N.J. at 529).
N.J.R.E. 101(b)(2) defines the "burden of producing evidence" as "the
obligation of a party to introduce evidence when necessary to avoid the risk of
a judgment or peremptory finding against that party on an issue of fact." That
burden "has been described as so light as to be 'little more than a formality. '"
State v. Segars, 172 N.J. 481, 494 (2002) (quotations omitted) (quoting Mogull
v. CB Commercial Real Estate Co., Inc., 162 N.J. 449, 469 (2000)). Moreover,
that burden "is met whether or not the evidence produced is found to be
persuasive." Ibid.Compensatory damages are designed "to put the injured party in as good
a position as he would have been if performance were rendered as promised."
St. Louis, L.L.C. v. Final Touch Glass & Mirror, Inc., 386 N.J. Super. 177, 188
(App. Div. 2006) (quoting 525 Main St. Corp. v. Eagle Roofing Co., 34 N.J.
252, 254 (1961)). Generally, the appropriate award of damages is the diminution
in the value of the property or the reasonable cost of restoring or repairing the
damage. Velop, Inc. v. Kaplan, 301 N.J. Super. 32, 64 (App. Div. 1997).
"Damages for defective construction, whether those damages are the result
of a breach of contract or negligence of the contractor, are often determined by
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28
using the reasonable cost of remedying the defects unless that cost is clearly
disproportionate to the property's probable loss of value." St. Louis, L.L.C., 386
N.J. Super. at 188. When "the cost of repairs vastly exceeds . . . the probable
market value of the property," then it may be unfair to use the restoration-cost
method of quantifying property damage. Mosteller v. Naiman, 416 N.J. Super.
632, 638 (App. Div. 2010) (alteration in original) (quoting Correa v. Maggiore,
196 N.J. Super. 273, 285 (App. Div. 1984)).
Moreover, if the cost-of-repairs approach would result in "unreasonable
economic waste," then that method should not be employed. Ibid. (quoting
Correa, 196 N.J. Super. at 285). "However, reasonable repair costs that exceed
the diminution of the property's value are appropriate 'in some circumstances[,
such as] where the property owner wishes to use the property rather than sell
it.'" Ibid. (alterations in original) (quoting Velop, Inc., 301 N.J. Super. at 64);
cf. St. Louis, L.L.C., 386 N.J. Super. at 191-92 (explaining the damages in that
case would not cause economic waste because the damage award was "not in
excess of the value of the property, nor would it permit a substantial upgrade of
the house").
To evaluate which method of quantifying damages is appropriate, parties
must present expert opinions providing the value of the impaired property and
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29
cost of repairs or restoration. See St. Louis, L.L.C., 386 N.J. Super. at 193-94(relying on expert opinion when determining that the trial court did not err in
ruling that the cost of repair was the proper element of consideration for
determining damages); Velop, Inc., 301 N.J. Super. at 64-66 (holding that the
proper measure of damages was the difference between the contract price and
the market value of the property because the expert opinion presented a
restoration cost that would have resulted in approximately two million dollars
more than the value of the property).
VIII.
Here, the trial court granted defendants' motions for summary judgment
because plaintiffs did not present proof of damages despite producing many
expert opinions. Their discovery "did not support any proper measure of
damages." Plaintiffs did not present expert testimony as to the value of the
impaired property. This glaring void in plaintiffs' proofs means there is no
genuine issue of material fact which is in dispute, and that defendants are
entitled to judgment as a matter of law. See Brill, 142 N.J. at 540.
Plaintiffs on appeal argue that their experts did present evidence as to the
costs of repairs and appraised value of the home, and that the parties' conflicting
expert reports should have prevented summary judgment. In support of the
A-2088-17T3
30
argument that summary judgment is not appropriate where there are conflicting
expert opinions, plaintiffs rely on Davin, LLC v. Daham, 329 N.J. Super. 54(App. Div. 2000). But Davin was a legal malpractice case in which the trial
judge granted summary judgment by relying on his prior experience as a
practicing attorney in knowing that a tenant's lawyer never orders a title search
before advising a client to enter into a lease. Id. at 71. We determined that the
conflicting certifications created a genuine issue of material fact as to whether
ordering a title search for a commercial tenancy was necessary competent
representation. Ibid. That fact was certainly material to the dispute between the
parties. The disputes here are not material.
Plaintiffs name Porcello, Brody, Piccione, Larson, Ali Gurhan of S OR
Testing Laboratories, and Greg Gerdes of Pella Construction as "nominated
experts for whom the defendants did not produce opposing experts[.]"
None of the experts' reports plaintiffs submitted, however, would enable
a trier of fact to properly assess construction defect damages. And that is the
issue—whether those reports would aid a jury in assessing damages. Certainly,
the experts identified defects, the value of the land, the existence of mold, and
issues with the roofing shingles, however, none opine as to the financial
A-2088-17T3
31
consequences of plaintiffs' allegations regarding the harm inflicted by
defendants.3
Porcello, for example, when asked regarding the cost of remediation of
foundation walls at deposition, testified that his firm "[did not] do a cost analysis
on anything." His report did not conclude that the defects required complete
demolition and reconstruction of the residence.
Contrary to plaintiffs' contention, Brody did not appraise the value of the
property and "determine[] that the home itself had zero value, and the only
positive value to the Property was for the land itself." Brody's letter began with
the most significant assumption made in the valuation—that "based on extensive
engineering reports, . . . the single family home and all additional improvements
on the property, due to various forms of damage over time, have no economic
value or economic contributory value to the overall property." At deposition,
Brody testified that plaintiffs defined the limits of his report, and instructed his
firm not to value the improvements made on the land.
Piccione's report provided only the estimated cost of reconstructing the
home. The report did not address any estimate to repair the home prior to
3
No reports by Gerdes are included in the appellate record provided to us.
A-2088-17T3
32
demolition or whether the cost to demolish and rebuild would have been less
than to repair.
Larson's report related to how the remediation process should occur,
including ways to prevent the spread of contamination and the required use of
protective equipment. No conclusions or opinions as to the level of
contamination in the residence, the need to demolish the home, or a cost for the
remediation process were provided. Larson's report detailed the steps necessary
to remediate the home without demolition. His subsequent reports also only
identified additional fungal issues, and although his last one recommended
exploration of the notion of demolition versus remediation expenses, the report
did not do so and no numbers were included. Indeed, Larson testified that he
"never told [Ava] that she should" demolish the entire house and learned
plaintiffs had done so the day before deposition. He never discussed with Ava
the cost of performing the remediation.
Gurhan's report did not state that the cost of replacing the roof shingles
merited demolition of the residence. Rather, the report concluded that some of
the shingles were improperly installed and prematurely weathered, and
estimated the remainder of the shingles' life would be only another two or three
A-2088-17T3
33
years. Some of the roofing experienced "early failure" but that does not equate
to values that would enable a jury to determine damages.
In their reply brief, plaintiffs contend that Adach's letter warranted denial
of summary judgment because it indicated demolition was necessary. Even
though Adach was not designated as an expert, his letter should be considered
because it was "based on his personal observations at the jobsite." Since it sets
forth reasons for his recommendation, it is admissible as a lay opinion. This
argument, however, is raised in a footnote, and thus we do not address it. See
Almog v. Israel Travel Advisory Serv., Inc., 298 N.J. Super. 145, 155 (App. Div.
1997) (stating that courts will not "countenance the raising of additional legal
issues" in footnotes and "need not respond to oblique hint and assertions made"
within them). The letter makes no mention of damages, or of any calculations
contrasting the cost to repair, demolish, or rebuild.
As consequential damages are the remedy for plaintiffs' claims against
defendants, and a required element to establish some of the causes of action, the
order granting summary judgment based on plaintiffs' lack of proper proof of
damages is legally correct and dispositive. See, e.g., Globe Motor Co. v.
Igdalev, 225 N.J. 469, 482 (2016) (identifying damages as an element for a
breach of contract claim); D'Agostino v. Maldonado, 216 N.J. 168, 184-85
A-2088-17T3
34
(2013) (stating that a claim under the CFA requires damages); Carroll v. Cellco
P'ship, 313 N.J. Super. 488, 502 (App. Div. 1998) (naming damages as an
element in a claim for negligent misrepresentation). 4
Plaintiffs further allege that they presented evidence that they suffered
damages in the form of alternate living expenses and costs to investigate the
alleged defects, which did not require expert testimony, and which the court did
not consider. However, the document plaintiffs cite in support of this assertion
is a chart they generated that identified alleged costs they incurred, without any
receipts, invoices, or other supportive evidence.
Many of the "disputed" facts plaintiffs rely on are just the expert opinions.
However, even accepting plaintiffs' expert opinions as true for summary
judgment purposes, they do not establish the facts necessary to support their
claim. Although an expert provided an estimate of the cost of rebuilding the
home, they could not give any estimate of what the costs would have been to
remediate, or even whether demolition was necessary in the first place.
4
Plaintiffs also argue the trial court erred in finding no basis for liability against
BMCC, the McEwans, Tamko, Tri-State, and Maggio in their reply brief. This
too is improper, however. See In re Bell Atl.-N.J., Inc., 342 N.J. Super. 439,
442 (App. Div. 2001) ("It is improper to introduce new issues in a reply brief.");
Liebling v. Garden State Indem., 337 N.J. Super. 447, 465-66 (App. Div. 2001)
("[A]n issue not briefed . . . is deemed waived.").
A-2088-17T3
35
Similarly, plaintiffs' real estate expert valued the land only and "assumed" the
house was of no value, but did not come to his own conclusion. See Igdalev,
225 N.J. at 479 (stating that the party must do more than point to any fact in
dispute). Having reviewed the voluminous materials submitted, and drawing all
inferences in favor of the non-moving parties, we reach the inescapable
conclusion that defendants are entitled to judgment as a matter of law. See R.
4:46-2(c).
IX.
Having found that plaintiffs' claims were properly dismissed, we now
reach the issue of BMCC's cross-claims for counsel fees and court costs. BMCC
entered into subcontractor agreements with Giamike, A&A, Grant, and Maggio
for the construction of the residence. These agreements each included
enumerated paragraphs addressing indemnification:
1. Subcontractor agrees to defend, indemnify, and hold
Contractor [BMCC] harmless and, if requested by
Contractor [BMCC], the Owner, their consultants,
agents and employees of any of them, from and against
any and all claims, suits, losses or liability, including
attorneys' fees and litigation expenses, for or on
account of injury to or death of persons, including
subcontractor's employees, or damage to or destruction
of property, or any bond obtained for the same, arising
out of or resulting from any act or omission, or alleged
act or omission, of Subcontractor, its employees or
A-2088-17T3
36
agents, whether caused in part or by a party indemnified
hereunder.
BMCC contends that plaintiffs' lawsuit required Giamike to reimburse it
as called for by the agreement between general and subcontractor, and that it
was not necessary for BMCC to prove Giamike caused the alleged damage.
BMCC contends the trial judge erred by granting Giamike's motion for summary
judgment and dismissing its cross-claims against the other subcontractor
defendants without either explaining its analysis and without oral argument on
the issue.
Maggio and Grant argue that we should exercise original jurisdiction and
render a decision, while A&A argues the trial court's lack of support is harmless
error because we review issues of law de novo.
We rarely exercise original jurisdiction. As our Supreme Court has said,
our
[r]esort to original jurisdiction is particularly
appropriate to avoid unnecessary further litigation, as
where the record is adequate to terminate the dispute
and no further fact-finding or administrative expertise
or discretion is involved, and thus a remand would be
pointless because the issue to be decided is one of law
and implicates the public interest.
[Price v. Himeji, L.L.C., 214 N.J. 263, 294 (2013)
(alteration in original) (quoting Vas v. Roberts, 418
N.J. Super. 509, 523-24 (App. Div. 2011)).]
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37
The interpretation and construction of a contract is a matter of law and
thus we review the trial court's decision de novo. Kaur v. Assured Lending
Corp., 405 N.J. Super. 468, 474 (App. Div. 2009); Manalapan Realty, 140 N.J.
at 378.
Trial courts are required to "find the facts and state its conclusions in
accordance with R. 1:7-4." R. 4:46-2(c). As such, a "trial judge is obliged to
set forth factual findings and correlate them to legal conclusions," and " [t]hose
findings and conclusions must then be measured against the standards set forth
in [Brill, 142 N.J. at 540]." Great Atl. & Pac. Tea Co., Inc. v. Checchio, 335
N.J. Super. 495, 498 (App. Div. 2000). "Cross-motions for summary judgment
do not preclude the existence of fact issues." Ibid.Moreover, Rule 1:6-2(d) requires that a request for oral argument "shall
be granted as of right." If a trial court "decides the motion on the papers despite
a request for oral argument, the trial court should set forth in its opinion its
reasons for disposing of the motion for summary judgment on the papers in its
opinion." LVNC Funding, L.L.C. v. Colvell, 421 N.J. Super. 1, 5 (App. Div.
2011). We have reversed summary judgment where a trial court did not address
the movant's request for oral argument and did not provide on the record a basis
A-2088-17T3
38
for its relaxation of Rule 1:6-2. Great Atl. & Pac. Tea Co., 335 N.J. Super. at
497-98.
Here, the trial court did not state on the record nor did the orders for
dismissal set forth factual findings or draw legal conclusions about BMCC's
cross-claims, making this matter appropriate for a remand. Further aggravating
this error was the trial court's failure to hold oral argument on Giamike's motion
for summary judgment on the indemnification issues raised by BMCC's cross-
claims. It had scheduled argument, but then cancelled it after the parties argued
the motions against plaintiffs. But the issue was not addressed during that
November 17, 2017 argument.
The only reference in the statement of reasons to that cross-claim is a
sentence that "Giamike filed a motion for summary judgment reciting much of
the same argument as Tamko but stating that there is no proof that the roof was
defectively installed and that BMCC indemnified it as a subcontractor." The
trial court also concluded that BMCC had "no liability to plaintiffs as a general
contractor is not legally responsible for its subcontractors." The court ended its
statement of reasons by noting there were "myriad other legal issues presented
by the various defendants which have been carefully reviewed by the court,
A-2088-17T3
39
however, based upon the above analysis it is abundantly clear that summary
judgment is appropriate."
The interpretation of this provision is not purely legal, as the liability of
the subcontractor defendants and BMCC, and the impact of BMCC's liability, if
any, are contested. The subcontractor defendants argue the contracts cannot in
reason require them to indemnify BMCC for its own negligence, while BMCC
contends the contracts do provide for that contingency, but that it was not
negligent.
Giamike also argues that the New Jersey Property-Liability Insurance
Guaranty Association Act (NJPLIGA), N.J.S.A. 17:30A-1 to -20, precludes
BMCC from seeking indemnification, because of Giamike's insurance carrier's
liquidation. Again, the trial court made no findings or conclusions, or even
addressed this argument in any form, in its statement of reasons or on the record.
Contrary to the rule, the court neither made factual findings, drew legal
conclusions, or even allowed oral argument. Thus, the orders dismissing
BMCC's cross-claims must be remanded.
The orders granting summary judgment against plaintiffs are affirmed; the
order granting Giamike summary judgment against BMCC is reversed; and the
A-2088-17T3
40
orders dismissing BMCC's cross-claims against A&A, Giamike, Grant, and
Maggio, are remanded for further proceedings on BMCC's cross-claims.
Affirmed in part; reversed and remanded in part.
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41