MICHAEL KEEFE v. CENTER STREET BUILDERS INC

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

MICHAEL KEEFE, as Administrator

Ad Prosequendum of the Estate

of JEREMIAS GARCIA, deceased,

Plaintiff-Appellant/

Cross-Respondent,

and

TRAVELERS INDEMNITY COMPANY,

Servicing Carrier for American

Zurich Insurance Company1,

Plaintiff-Intervenor/

Respondent-Cross-Appellant,

v.

CENTER STREET BUILDERS, INC.,

O'CONNOR ROOFING & SIDING, YURI

CONSTRUCTION, AJS SIDING &

ROOFING and/or AJS SIDING,

and/or O'CONNOR ROOFING and

SIDING, SEAN O'CONNOR,

FRANCISCO COVARRUBIAS, RUTILIO

PONCE and/or RUTILO PONCE-

CROSCO and PETER FARUOLO,

Defendants,

and

LAWRENCE WILT and WENDY WILT,

Defendants-Respondents.

October 2, 2014

Argued September 17, 2014 - Decided

Before Judges Alvarez, Maven and Carroll.

On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-5874-08.

Gary S. Shapiro argued the cause for appellant/cross-respondent(Shapiro & Sternlieb, LLC, attorneys; Mr. Shapiro, of counsel and on the brief).

Alexander W. Ross, Jr., argued the cause for respondent/cross-appellant (Rakoski & Ross, P.C., attorneys; Mr. Ross, on the brief).

Bruce E. Helies argued the cause for respondents (Wolff, Helies, Duggan, Spaeth & Lucas, attorneys; Mr. Helies, on the brief).

PER CURIAM

This appeal arises from a fatal workplace accident at a home being constructed for defendants Lawrence and Wendy Wilt (the Wilts).2 While installing the roof on the home, Jeremias Garcia fell from a ladder and sustained catastrophic injuries. The fall rendered him a quadriplegic, and he later died from his injuries. Plaintiff Michael Keefe, as administrator ad prosequendum of Garcia's estate, appeals from a June 29, 2012 Law Division order granting the Wilts' motion for summary judgment on counts one, two, and six of plaintiff's complaint.3 On appeal, plaintiff argues that material issues of fact exist that preclude summary judgment. Travelers Indemnity Company, which was granted leave to intervene, argues in its cross-appeal that a separate issue of material fact exists as to whether Lawrence negligently hired an incompetent subcontractor. Having reviewed appellants' arguments in light of the record and applicable law, we affirm.

II.

The following material facts are gleaned from the motion record. In 2003, the Wilts purchased the subject property. On June 2, 2006, they entered into a single-page contract with their wholly-owned company, defendant Center Street Builders, Inc. (CSB), "as the general contractor," to construct a new home on the property as per plans drawn by the architect, Michael Monroe, at a cost of $900,000. CSB's normal construction contract was ten pages long. Its one-page contract with the Wilts did not include an estimated completion date or a specific listing of the services and materials included. Although the contract referenced the architect's plans, it did not attach them.

The funds to construct the home were paid by the Wilts to CSB by way of personal checks and a construction loan from Valley National Bank. CSB was paid $1,067,000, despite the $900,000 contract price. CSB then paid the various subcontractors and suppliers, as evidenced by its numerous checks, which are part of the record. Wendy also wrote three small checks to the municipality, with "Grading Plan," "Affordable Housing Fund," and "Permit Fee" noted in the memo lines. CSB did not earn a profit on the construction project, and Lawrence did not maintain a ledger itemizing money earned or spent on the project.

The construction permits taken out for the home in June 2006 listed Lawrence as the property owner and CSB as the contractor, along with CSB's contractor license number. In 2006, CSB had two employees, Lawrence and Glen Gargiulo. On October 17, 2006, defendant AJS Siding & Roofing, Inc. (AJS) submitted a written proposal to CSB to install a cedar shake roof on the home. CSB accepted the proposal the following day, as evidenced by Lawrence's signature as a member of the company. AJS submitted invoices to CSB, which CSB then paid by company checks. At some point, defendant O'Connor Siding & Roofing (O'Connor) became the successor corporation to AJS, and also submitted invoices, which were similarly paid by CSB checks.

Yuri Construction (Yuri) acted as a subcontractor for AJS. Yuri employed Garcia as a roofer. It is undisputed that on December 18, 2006, the first day Yuri performed roofing at the site, Garcia was working on installing the cedar shake roof when he fell from a ladder supplied by Yuri and landed on his head. No guardrails, nets, or safety harnesses were in use at the time. The accident rendered Garcia a quadriplegic, requiring the use of a ventilator and constant care in a long-term nursing facility. On May 9, 2011, he died from his injuries. AJS's workers' compensation carrier, Travelers, obtained a statutory lien in excess of $3 million for benefits paid to Garcia and, as noted, was permitted to intervene in this action.

CSB did not maintain a workplace trailer on the job site, nor did it have any process in place to ensure that subcontractors and their employees possessed the proper job training. Gargiulo was CSB's job supervisor, and he was in charge of hiring and firing subcontractors, obtaining permits, and scheduling inspections.

Lawrence also visited the site once or twice a day to check the progress of the work, and to ensure that it was being done in a safe and proper manner. According to Lawrence, he conducted these visits in his capacity as an employee of CSB, rather than as the homeowner. Despite acknowledging his responsibility for workplace safety, he admittedly had no knowledge of Occupational Safety and Health Administration (OSHA) regulations, and was unsure whether workers at the construction site were OSHA compliant. He never attended an OSHA class, held a safety meeting, or ensured that the subcontractors had the necessary equipment to perform their job. He further admitted to being unsure what type of ladder was required for the roofing job, and whether a safety harness was required for the roofers.

As noted, the construction permits originally named CSB as the general contractor. However, in September 2008, nearly two years after Garcia's accident, and after construction was completed, Lawrence applied for a certificate of occupancy for the home. At that time he also sought to change the contractor designation from CSB to himself, as owner of the residence. In his certification he explained that he did so to avoid the necessity of purchasing a homeowner's warranty on the completed residence.

As relevant to this appeal, plaintiff's action against the Wilts alleged negligence (count one); negligent hiring, retention, supervision, and training (count two); and premises liability (count six). During the litigation, plaintiff retained an expert in the field of occupational safety, Vincent A. Gallagher. In addition to his education, training and experience, Gallagher based his opinion on his examination of various pleadings, depositions, interrogatory answers, and other documents produced during discovery. He concluded that CSB and O'Connor/AJS "violated the principles and practices of construction safety management because they failed to plan, monitor[,] and ensure that the work being done at the time of this incident was done safely and in compliance with OSHA regulations." Gallagher rendered no opinion with respect to Wendy's culpability. As to Lawrence, Gallagher opined that he did not have "the foggiest notion of what is required of a residential builder regarding safety," and "was extraordinarily ignorant about OSHA and his responsibility to take reasonable steps to ensure that workers of his contractors and subcontractors worked safely and in compliance with OSHA regulations." Finally, Gallagher concluded

It is my opinion that Lawrence Wilt, the owner of this residence, acted as general contractor and violated the principles and practices of construction safety management. He failed to plan, monitor[,] and ensure that the work being done at the time of this incident was done safely and in compliance with OSHA regulations. It is my opinion that had he planned, monitored[,] and ensured that this work was done in compliance with OSHA regulations, this incident would not have occurred. It is my opinion that his failures were a cause of . . . Garcia's injuries.

Following extensive discovery, the Wilts moved for summary judgment. They argued that their written contract with CSB, as well as the various building proposals, invoices, and voluminous checks paid to contractors and suppliers working on the site, all of which were in the name of CSB, proved that CSB was the general contractor. The Wilts further contended that although Lawrence was regularly present at the worksite, he had "an obligation to be there as a representative of [CSB]." While there, he did not direct "the ways, means, and operations" of the workplace as a homeowner. Although Lawrence changed the general contractor designation to himself individually, he did so nearly two years after the accident simply to avoid the necessity of procuring a homeowner's warranty. For these reasons, the Wilts argued that regarding count one, "there can be no question of fact that [CSB] was the general contractor, not [the Wilts]."

As to count two, the Wilts argued that the case law was clear that plaintiff had the burden to demonstrate that they "either knew or should have known or had sufficient information to know that AJS was not competent to do the work that they were doing. There's no such proofs in this case. Wilt investigated them, he knew they did that kind of work." Regarding count three, they contended that there was no "scintilla of evidence in this case that any condition on [the] property caused this accident to occur."

In opposing the motion, Travelers argued that a material issue of fact was created when Lawrence applied to be listed as contractor on the job. However, the motion judge was quick to note that Travelers was referencing a document made nearly two years after the accident occurred. Travelers responded that it was "up to a jury to decide whether sometimes it's to [Lawrence's] benefit to say [']I'm the contractor if I save a little money.[']"

Travelers further argued that the contract between the Wilts and CSB was a sham. It surmised that, because the contract provided for a construction cost of $900,000 and a construction permit dated six weeks later listed a cost of $800,000, the contract must have been created after Garcia's accident. Another problem, according to Travelers, was that the "so[-]called contract is one sentence long." Travelers argued that if the Wilts really wanted to protect themselves they would have signed CSB's standard ten-page contract. Essentially, both plaintiff and Travelers took the position that a number of factual disputes required jury determination.

The motion judge granted the Wilts' motion for summary judgment, finding that there were no material factual issues in dispute. The court recognized that although the contract was shorter and less substantial than CSB's normal contracts, it still operated to make CSB the general contractor. The judge concluded that "the overwhelming evidence . . . is that [CSB] was . . . the general contractor in this case."

The court next determined that "although OSHA regulations are pertinent in determining the nature and extent of any duty of care, their violation without more does not constitute the basis for an independent or direct tort remedy." Furthermore, "whether there were OSHA violations or not on the site, it wouldn't make [the Wilts] the general contractor." For those reasons, the court found that as a matter of law, CSB was the general contractor.

Regarding count two, the trial court found that the Wilts did not have an obligation "to do something in terms of asking more questions, doing something with reference to what the general contractor was doing." It determined that it could not "hold the Wilts in" on that claim based upon the argument that they should have asked or should have known something about AJS's history of workplace accidents. Additionally, the judge found that no facts or case law supported a determination "that the Wilts were co-general contractors." These appeals by plaintiff and Travelers ensued.

II.

The summary judgment standard is well-established. A trial court must grant a summary judgment motion if "the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law." R.4:46-2(c); see alsoBrill v. Guardian Life Ins. Co. of Am., 142 N.J.520, 529-30 (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). If the evidence submitted on the motion "'is so one-sided that one party must prevail as a matter of law,' the trial court should not hesitate to grant summary judgment." Brill, supra, 142 N.J. at 540 (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S. Ct. 2505, 2512, 91 L. Ed. 2d 202, 214 (1986)).

When a party appeals from a trial court order granting or denying summary judgment, we "'employ the same standard [of review] that governs the trial court.'" Henry v. N.J. Dep't of Human Servs., 204 N.J. 320, 330 (2010) (quoting Busciglio v. DellaFave, 366 N.J. Super. 135, 139 (App. Div. 2004)). Thus, we must determine whether there was a genuine issue of material fact, and if not, whether the trial court's ruling on the law was correct. Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608 (1998). We review legal conclusions de novo. Henry, supra, 204

N.J. at 330.

On appeal, plaintiff and Travelers essentially renew the arguments they presented to the Law Division in urging us to find that material issues of fact exist that preclude summary judgment. We find their arguments unpersuasive, as they are grounded more on speculation and conjecture than the undisputed material facts appearing in the record.

Appellants contend that it is for a jury to decide whether the Wilts were acting as the general contractor on the project and thus owed Garcia a duty of care not to act negligently. It is well-settled that a general contractor at a jobsite has a non-delegable duty to maintain a safe workplace that includes ensuring compliance with legislatively imposed obligations to all employees on the jobsite. Alloway v. Bradlees, Inc., 157 N.J.221, 237 (1999) (citing Kane v. Hartz Mountain Indus., 278 N.J. Super. 129, 142-43 (App. Div. 1994), aff'd o.b., 143 N.J.141 (1996)). Duty is a question of law to be decided by the trial judge. Carvalho v. Toll Bros. & Developers, 143 N.J. 565, 572 (1996).

Appellants contend that a genuine issue of material fact exists as to whether the contract between the Wilts and CSB was a sham. However, appellants must do more than show that there is some metaphysical doubt as to the material facts. Triffin v. Am. Int'l Grp., Inc., 372 N.J. Super. 517, 523-24 (App. Div. 2004); see also Merchs. Express Money Order Co. v. Sun Nat'l Bank, 374 N.J. Super. 556, 563 (App. Div.), certif. granted, 183 N.J. 592 (2005) (summary judgment cannot be resisted by speculation or "fanciful arguments"). Plaintiff and Travelers both doubt the authenticity of the contract and speculate as to why the Wilts allegedly fabricated the document. Yet the fact that the Wilts entered into the contract with CSB, however brief it may be, supports the conclusion that they were attempting to insulate themselves from the liabilities of their corporate enterprise. Indeed, this is a "primary reason for incorporation." State, Dep't of Envtl. Prot. v. Ventron Corp., 94 N.J. 473, 500 (1983). The trial judge recognized this purpose at the motion hearing.

Plaintiff and Travelers argue that other evidence supports a prima facie case of negligence against the Wilts in their individual capacity. However, they posit faulty proofs in order to establish an issue of material fact. According to plaintiff, CSB's name appears nowhere on the building permits. Yet, as the motion judge aptly found, plaintiff and Travelers cite to the building permits applied for two years after the date of the accident, when construction was complete. To the contrary, the record clearly establishes that Lawrence listed CSB as the general contractor on multiple building permits issued before the accident.

Appellants also cite the fact that Wendy issued checks from her personal checking account to pay various fees. They ignore that these three relatively small checks were remitted to the municipality in payment of permits, grading plans, and the affordable housing fund. Lawrence certified that "[t]hese charges are normally those required to be paid prior to the construction of a [residence] and are the responsibility of the homeowners rather than the general contractor." Appellants produce no contrary evidence.

Appellants further contend that the court erred in failing to credit Gallagher's expert opinion. However, Gallagher provided a dearth of facts supporting his bare legal conclusion that Lawrence, as opposed to CSB, functioned as general contractor. It is clear that a question of fact cannot be created by an expert's report based solely on a legal conclusion. Boddy v. Cigna Prop. & Cas. Cos., 334 N.J. Super.649, 658-59 (App. Div. 2000).

Here, in addition to the written contract designating CSB as general contractor, proposals from subcontractors were submitted to CSB, rather than the Wilts individually. Similarly, the large volume of checks produced demonstrate that the Wilts paid CSB for the construction, and that CSB in turn paid its suppliers and subcontractors. We agree with the motion judge that the competent proofs overwhelmingly establish that CSB, not the Wilts, was the contractor. The evidence on this issue was so one-sided that summary judgment in favor of the Wilts was warranted. Brill, supra, 142 N.J.at 540.

Travelers next argues that a separate issue of material fact exists as to whether Lawrence negligently hired an incompetent contractor when he retained AJS. It contends that "by hiring [subcontractors] who were ignorant of OSHA safety requirements or industry standards for roofing work, and being unaware of those standards himself, Lawrence Wilt engaged an incompetent contractor."4

Travelers further posits that a general contractor's failure to confirm a subcontractor's basic familiarity with OSHA regulations and industry safety standards, or failure to make a reasonable inquiry into a subcontractor's safety precautions, constitutes a failure to act with reasonable care. Accordingly, Lawrence "should have noticed that safety requirements were not being followed" and that if he did notice, "then he failed to act as a competent controlling employer, as required by OSHA." However, since we have already determined that CSB, rather than the Wilts, was the general contractor, Travelers' argument fails on this basis.

Affirmed.

1 We have changed the party name to reflect the September 30, 2013 consent order.

2 Since the Wilts share a common surname, at times in this opinion we refer to them by their first names for purposes of clarity and brevity. We intend no disrespect in doing so.

3 No appeal has been taken as to the dismissal of the remaining counts against the Wilts. Additionally, all other defendants have either settled or been dismissed and are not part of this appeal.

4 In its reply brief, plaintiff argues that when Lawrence "'hired' [CSB], he hired an incompetent contractor for the job, which is an independent basis for liability." However, we are not obliged to address points first raised in a reply brief. Randolph Town Ctr., L.P. v. Cnty of Morris, 374 N.J. Super. 448, 452 n.2 (App. Div. 2005), aff'd in part, vacated in part on other grounds, 186 N.J. 78 (2006).