G & K IRON WORKS L.L.C. v. J & S CONSTRUCTION CORP.

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

G & K IRON WORKS, L.L.C.,

Plaintiff,

v.

J & S CONSTRUCTION CORP. and

SABAND INVESTMENT CO., L.L.C.,

Defendants,

and

SABAND INVESTMENT CO., L.L.C.,

Third-Party Plaintiff/

Appellant,

v.

BASAM NAYMEDDIN and ABM

CONSTRUCTION, L.L.C.,

Third-Party Defendants/

Respondents.

____________________________________

TOP ELECTRIC, INC.,

Plaintiff,

v.

J & S CONSTRUCTION CORP., ABM

CONSTRUCTION, L.L.C., and SABAND

INVESTMENT CO., L.L.C., jointly and separately

or in the alternative,

Defendants.

________________________________________

December 26, 2014

Submitted December 15, 2014 - Decided

Before Judges Sabatino and Guadagno.

On appeal from the Superior Court of New Jersey, Law Division, Essex County, Docket No. L-2631-10.

Hadley Perkins, P.C., attorneys for appellant Saband Investment Co., L.L.C. (Paul I. Perkins and Marti B. Alhante, of counsel and on the brief).

Chasan Leyner & Lamparello, P.C., attorneys for respondents Basam Naymeddin and ABM Construction, L.L.C. (Steven L. Menaker, of counsel and on the brief; Maria P. Vallejo, on the brief).

PER CURIAM

Saband Investment Company, L.L.C. ("Saband"), a third-party plaintiff and counterclaim defendant in this contract dispute, appeals a final judgment against it in the sum of $175,107, plus costs, entered in favor of third-party defendants, Basam Naymeddin ("Naymeddin") and Naymeddin's company, ABM Construction ("ABM"), on their counterclaim. For the reasons that follow, we affirm, with a slight modification of the amount of the counterclaim award.

The following pertinent facts emerged at the five-day non-jury trial in July 2013 before Judge Sebastian P. Lombardi. Saband is a company principally owned by a chiropractor, Dr. Richard Sabbagh. Saband owns a building in Paterson that Sabbagh wanted to refurbish for his chiropractic practice on the premises. He initially signed a contract on behalf of Saband with MTH Construction to do the work, but MTH withdrew from the project after a few months.

After Sabbagh met with Naymeddin in or around June 2007 to discuss the unfinished work, the two of them orally agreed that Naymeddin would complete the job for $887,000, except for any change orders that might be issued. However, because neither Sabbagh nor Naymeddin had sufficient funds available to proceed with the project, Naymeddin brought in John Suarez, the owner of J&S Construction Corporation ("J&S"), because J&S had the financial resources and equipment to enable the work to be done. Naymeddin informally agreed with Suarez that their two companies would essentially serve as joint general contractors and split the profits.

As a result of these arrangements, in August 2007 Sabbagh executed a contract with J&S to complete the work. Among other things, the contract between Sabbagh and J&S specified that J&S agreed to be responsible for liquidated damages caused by construction delays and also to make payments to the subcontractors. Naymeddin and ABM were not parties to the contract. Eventually J&S withdrew from the project, leaving Naymeddin and ABM to function as the lone general contractor.

The project ran into financial difficulties. Some checks to subcontractors, including G&K Iron Works, L.L.C ("G&K") and Top Electric, Inc. ("Top Electric"), were not honored. Consequently, G&K filed suit in the Law Division in Essex County against J&S and Saband. Thereafter, Top Electric likewise filed suit, bringing its own case in the Law Division in Bergen County against J&S, Saband, and ABM. The two lawsuits were consolidated in Essex County. Various third-party claims, cross-claims, and counterclaims were brought, including Saband's affirmative claims against Naymeddin and ABM, and a competing counterclaim by Naymeddin and ABM against Saband.

Among other things, Saband contended that Naymeddin and ABM had agreed to abide by the terms of Saband's written agreement with J&S. In particular, Saband claimed that Naymeddin and ABM were bound by J&S's agreement to be responsible for liquidated damages and for payments to the subcontractors.

Naymeddin and ABM denied such liability to Saband, contending that their role was solely to assure that the work that was completed after J&S's departure was done properly, but that they did not assume in full the liabilities and responsibilities that J&S had assumed under its contract. More affirmatively, Naymeddin and ABM asserted in their counterclaim that Saband owed them sums for work they had performed. Saband denied such liability, arguing that, at the very least, it was subject to offsets for the sums that it was affirmatively claiming against Naymeddin and ABM.

While the litigation was pending, Saband settled the claims of G&K and Top Electric. Saband contended that Naymeddin and ABM were liable, in full or in part, for these payments by virtue of their roles as the ultimate general contractor.

After considering the proofs, including testimony from the principals Sabbagh and Naymeddin, Judge Lombardi issued an oral opinion on September 6, 2013. The judge accepted the fact, which was essentially uncontested at trial, that Saband was liable to Naymeddin and ABM on their counterclaim for breach of contract concerning unpaid sums due to them for their work on the project. The judge largely rejected, however, Saband's competing claim that Naymeddin and ABM were responsible for liquidated damages and other offsets that were instead the responsibility of J&S. After making various calculations, Judge Lombardi awarded Naymeddin and ABM the net amount of $175,107 on their counterclaim.

Saband now appeals, contending that the judge erred in his application of contract law principles and also with respect to several of his calculations. There is no cross-appeal by Naymeddin and ABM, who do not challenge the sufficiency of the judgment in their favor.

After careful consideration of the record, we affirm Judge Lombardi's findings of fact and conclusions of law, substantially for the sound reasons articulated in his oral opinion. Several well-established principles of law and appellate review support our conclusion.

"Final determinations made by the trial court sitting in a non-jury case are subject to a limited and well-established scope of review[.]" Seidman v. Clifton Sav. Bank, 205 N.J. 150, 169 (2011). "'[W]e do not disturb the factual findings and legal conclusions of the trial judge unless we are convinced that they are so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice[.]'" In re Trust Created By Agreement Dated December 20, 1961, 194 N.J. 276, 284 (2008) (quoting Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974)). The court's findings of fact are "binding on appeal when supported by adequate, substantial, credible evidence." Cesare v. Cesare, 154 N.J. 394, 411-12 (1998); see also Brunson v. Affinity Fed. Credit Union, 199 N.J. 381, 397 (2009).

The determinations of the trial judge that we have been asked to review here involve fundamental principles of contract law. It is well established that a contract is formed when there is a "meeting of the minds" between the parties evidenced by an offer and an unconditional acceptance. Morton v. 4 Orchard Land Trust, 180 N.J. 118, 129-30 (2004) (citing Johnson & Johnson v. Charmley Drug Co., 11 N.J. 526, 538-39 (1953)). In addition, a contract "must be sufficiently definite 'that the performance to be rendered by each party can be ascertained with reasonable certainty.'" Weichert Co. Realtors v. Ryan, 128 N.J. 427, 435 (1992) (quoting Borough of W. Caldwell v. Borough of Caldwell, 26 N.J. 9, 24-25 (1958)). To be enforceable, parties to a contract must "agree on essential terms and manifest an intention to be bound by those terms." Ibid.

Despite Saband's arguments to the contrary, the trial court had ample grounds to conclude that Naymeddin did not agree to be responsible (or have his company ABM be responsible) for the continuing financial obligations of the construction project in the same way that Suarez had been when J&S was involved. In his testimony, Naymeddin expressly disavowed that he had the financial capacity to assume such responsibilities. Indeed, it was undisputed that J&S was brought into the project specifically for financial reasons. The trial judge found Naymeddin's testimony on this subject to be credible, despite the contrary testimony of Sabbagh. The judge also found significant that Naymeddin is not a native speaker of English and thus may not have fully appreciated some of the contractual concepts implicated when he and his company entered into their unwritten arrangement with Saband. We will not second-guess the judge's findings on these pivotal facts, as they are supported by substantial credible proof in the record. Rova Farms, supra, 65 N.J. at 484.

Notably, the evidence in the record that Saband now emphasizes on appeal in an effort to prove that Naymeddin and ABM undertook a more expansive role essentially relates to the construction management aspects of the project. However, although these proofs show Naymeddin's role in identifying subcontractors for various aspects of the project and his input on pricing, they do not substantiate that he or ABM accepted financial responsibility to pay such subcontractors. The proofs also show that Sabbagh and Naymeddin used a process for making payments to the subcontractors that differed from the process that was used prior to J&S's departure.

Furthermore, the terms of the written contract between Sabbagh and J&S required that any modifications to the contract be in writing. Specifically, provision eight of that contract established that any such changes be in writing, "be signed by all parties," and clearly set forth the terms and conditions, including description of the work and price. By altering the process through which payments were to be made to subcontractors after J&S's departure, Saband effectively changed the terms of the contract, without Naymeddin's own written assent.

Moreover, when Sabbagh requested additional work, he and Naymeddin negotiated and signed a change order. There was no similar mutually-executed writing that made Naymeddin and ABM responsible for the entirety of J&S's obligations, including liquidated damages for delays. Indeed, because of the potential tendency for liquidated damages clauses to impose onerous penalties, our courts have been cautious to bind parties to such clauses, relieving them of such obligations where there is inadequate proof that they agreed to be bound by them. Wasserman's Inc. v. Twp. of Middletown, 137 N.J. 238, 248-54 (1994).

Saband further argues that the amount of the trial court's judgment should be reduced to $101,106.94, due primarily to certain amounts that it allegedly overpaid. As an alternative position, Saband argues that the trial court's judgment at least should be reduced to $169,607, due to mathematical errors in the court's calculations.

Judge Lombardi's factual findings concerning the various amounts owed by and between the parties were based on his detailed review of the evidence submitted at trial, such as checks, bank statements, and Saband's own records, many of which were not provided in the appendices on appeal. Applying our limited scope of appellate review, we generally adopt the judge's findings and calculations as to damages.

There were several components of the judgment against Saband. The parties did not dispute that the baseline contract total was $887,000; that Saband still owed Naymeddin $124,450 for a December 21, 2007 change order; and that Saband had paid an aggregate sum for the project of $826,893.06, prior to settling with Top Electric and G&K.

Beyond those undisputed amounts, Judge Lombardi also factored several other amounts into his calculations, which appropriately included the following: (1) $60,107, representing the unpaid amount from the $887,000 contract that Saband admitted was still owed to Naymeddin and ABM; (2) $16,900, representing amounts that Saband paid to J&S after it had withdrawn from the project, to which the judge found that Naymeddin and ABM were entitled; and (3) $5,000, representing the amount that Naymeddin and ABM paid to Top Electric to cover changes requested by Sabbagh but that J&S apparently had not paid, for which the judge found that Naymeddin and ABM were entitled to be reimbursed by Saband.

Judge Lombardi disallowed Saband's claim for $23,450, representing the settlement amount between Saband and G&K, which arose out of G&K's original claim against Saband of $54,800. The judge reasonably found that Naymeddin and ABM were not responsible for this amount, because these claims related to work that G&K had done between July 2007 and November 2007 while J&S was still acting as a general contractor.

We only modify the final judgment in a modest respect, one that is slightly less than the amount assented to in the joint brief of Naymeddin and ABM. This adjustment concerns the offset in Saband's favor for $31,350 associated with the settlement with Top Electric. Top Electric sued Saband for $82,575, but the judge found that a portion of that claim arose prior to Naymeddin's direct involvement with the job, with the remaining sums accruing during the later time when Naymeddin and ABM functioned as the sole general contractor. Eventually, Top Electric and Saband settled for $55,000, which the judge calculated as being 57 percent of Top Electric's $82,575 claim. Actually, the $55,000 settlement amount is 66.6 percent of the $82,575 claim. Thus, applying the judge's intended proportional rationale, $36,6301 ($55,000 x 66.6 percent) is the proper amount of the offset on this item that is due to Saband, instead of $31,350. That adjustment requires a $5,280 reduction of the final judgment to a net figure of $169,827. The trial court accordingly shall enter a modified judgment in that revised amount within thirty days.

Affirmed, as modified.

1 The joint brief of Naymeddin and ABM calculates this offset as a slightly higher sum of $36,666.30.