YORK MECHANICAL CORP v. KINNEY CONSTRUCTION SERVICES, INC
Annotate this CaseNOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
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SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-4654-18
YORK MECHANICAL CORP.,
Plaintiff-Appellant,
v.
KINNEY CONSTRUCTION
SERVICES, INC.,
Defendant-Respondent.
_________________________
Submitted March 18, 2020 – Decided March 4, 2021
Before Judges Fuentes, Haas and Enright.
On appeal from the Superior Court of New Jersey, Law
Division, Hudson County, Docket No. L-1229-19.
Skolnick Legal Group, PC, attorneys for appellant
(Ronald W. Solares, on the briefs).
Cole Schotz PC, attorneys for respondent (Adam, J.
Sklar, of counsel and on the brief; Arnold P. Picinich,
on the brief).
The opinion of the court was delivered by
FUENTES, P.J.A.D.
Plaintiff York Mechanical Corporation is a licensed contractor located in
Union City that supplies and installs heating, ventilation, and air conditioning
(HVAC) equipment. Defendant Kinney Construction Services, Inc., (KCS) is a
construction service company located in Flagstaff, Arizona. At all times
relevant to this case, defendant was the general contractor of a project located
in Union City. Defendant hired plaintiff as a subcontractor to supply and install
the project's HVAC equipment.
Plaintiff filed a civil action against defendant alleging breach of contract,
unjust enrichment, quantum meruit, and violation of New Jersey's Prompt
Payment Act (NJPPA), N.J.S.A. 2A:30A-1 to -2. Before joinder of issue,
defendant filed a motion to dismiss plaintiff's complaint pursuant to Rule 4:6-
2(e), based on the contract's forum selection clause, which provides that any
litigation that arises from the parties' contractual relationship shall be brought
in Coconino County, Arizona. After hearing oral argument, the Law Division
granted defendant's motion and dismissed plaintiff's complaint without reaching
the merits of plaintiff's substantive claims.
The dispositive issue raised in this appeal concerns the enforceability of
the contract's forum selection clause. Plaintiff argues that enforcement of the
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forum selection clause violates the public policy codified by the Legislature in
the NJPPA. Alternatively, plaintiff argues it never agreed to be bound by the
contract's forum selection clause. Finally, even if we were to reject these two
threshold arguments, plaintiff claims that litigating this case in Arizona would
be seriously inconvenient and impair its ability to prosecute its case. Defendant
argues otherwise.
After reviewing the record developed before the Law Division and
mindful of our standard of review, we reject plaintiff's arguments and affirm
substantially for the reasons expressed by Judge Vincent J. Militello in his oral
opinion delivered from the bench, as supplemented by his subsequent
memorandum of decision.
I
Plaintiff's principal place of business is located in Union City, Hudson
County. Defendant is located in Flagstaff, Arizona. Genterra Enterprises, LLC,
(Genterra) hired defendant as general contractor of the construction project
known as Sanitas Horizon Kennedy Center (Sanitas), located on Kennedy
Boulevard in Union City, approximately seven blocks from plaintiff's office.
As the general contractor, KCS hired all of the various trade
subcontractors necessary to complete the Sanitas project. Through an online
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portal, plaintiff submitted an HVAC subcontractor bid to defendant for the
Sanitas project. Prior to the commencement of the bidding process, defendant
sent an email to the bidders that stated: "Please send your proposal, BSA,
[Blanket Subcontract Agreement] and any questions that you have about the
project to the KCS employee responsible for your trade."
Plaintiff, through its representative Rick Agolli, downloaded the BSA on
October 12, 2017. Defendant accepted plaintiff's $362,000 bid and awarded it
the HVAC subcontract. On November 30, 2017, Agolli executed and returned
the Purchase Order that outlined the goods and services plaintiff agreed to
provide, as well as the BSA that contained the material terms of the parties'
contractual relationship.
Although Agolli did not sign the BSA, he initialed each page of the
Purchase Order and made various handwritten modifications and strikeouts of
sections he found objectionable. The last page of the Purchase Order, which
required Agolli's signature to complete the subcontract, expressly provided:
This Purchase Order is subject to all of the terms and
conditions of the Blanket Subcontract Agreement
executed between the Subcontractor and Contractor.
By signing this Purchase Order or commencing the
work of this Purchase Order, the Subcontractor accepts
all of the terms and conditions of the Kinney
Construction Services Blanket Subcontract Agreement.
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This Purchase Order together with the Blanket
Subcontract constitute the entire Subcontract[.]
The cover page of the BSA states: "This Blanket Subcontract Agreement
together with an executed project specific Purchase Order describing the work
and Subcontract amount constitute the Subcontract." The first paragraph of the
first page of the BSA states: "The Contractor and Subcontractor understand that
engagement to execute a specific contract for work shall be confirmed through
the execution of a project specific Purchase Order . . . . Contractor and
Subcontractor, for the consideration named in a project specific Purchase Order,
agree as follows[.]"
The remainder of the BSA contains various references that highlight the
incorporation of the BSA and the Purchase Order and makes clear that these two
documents contain the material terms of the parties' contractual relationship.
Indeed, Section 26.1 of the BSA, entitled "Entire Contract," provides: "This
blanket subcontract agreement together with a written project specific purchase
order describing the work and subcontract amount constitutes the entire
subcontract between the parties." Of particular relevance here, Section 26.11 of
the BSA, titled "Jurisdiction and Venue," provides:
All terms of this Contract shall be governed by the laws
of the State of Arizona. The jurisdiction and any suit
or proceeding shall be in Coconino County, Arizona.
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The ramifications of this provision reverberate throughout the BSA. For
example, Section 4, entitled "Payments," provides that claims for payment are
governed by Arizona's Prompt Payment Act, A.R.S § 32-1181 to -1188. 1 Section
25.2, listed as "Immigration and Control Act," and Section 25.3, listed as
"Employee Background Checks," also apply Arizona law.
At some point after plaintiff began work on the subcontract, defendant
terminated their contractual relationship. Plaintiff had been paid $112,000 of
the $362,000 due under the contract.
Defendant's motion to enforce the contract's forum selection clause came
for oral argument before Judge Militello. Plaintiff argued that the forum
selection clause was unenforceable because "the blanket subcontract agreement
was never signed." Furthermore, plaintiff maintained that the NJPPA required
the action to be tried in New Jersey. However, in response to Judge Militello's
questions, plaintiff's counsel conceded that "the Purchased Order was signed."
Defendant argued that the Purchase Order "[c]learly and unambiguously
incorporates the blanket subcontract agreement." Thus, it was irrelevant
whether the BSA was signed because the forum selection clause was
1
This section of the BSA references the former citation of the Arizona's Prompt
Payment Act, which is A.R.S § 32-1129 to -1129.07.
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incorporated by reference in the Purchase Order. In response to plaintiff's
invocation of the NJPPA as an insurmountable impediment to the enforcement
of the forum selection clause, defendant's counsel argued that acceptance of
plaintiff's position "would obviate every single forum selection clause in the
construction industry." Defendant noted that plaintiff had not cited any
authority to indicate that the Legislature intended to bring about such a radical
departure from well-settled principles of contract law when it adopted the
NJPPA.
At the conclusion of oral argument, Judge Militello granted defendant's
motion and dismissed plaintiff's complaint. Relying on this court's opinion in
Wilfred McDonald Inc. V. Cushman Inc., 256 N.J. Super. 58, 63-64 (App. Div.
1992), the judge found plaintiff did not produce any evidence that the forum
selection clause "was the product of fraud or overweening bargaining power."
The judge also found no basis to conclude that adherence to the forum selection
clause would violate a strong public policy of this State or seriously
inconvenience plaintiff. Finally, Judge Militello found the BSA was a part of
the subcontract because the Purchase Order included an "incorporation clause
expressly referencing all provisions of the BSA."
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II
This court "reviews de novo the trial court's determination of [a] motion
to dismiss under Rule 4:6-2(e)." Dimitrakopoulos v. Borrus, Goldin, Foley,
Vignuolo, Hyman & Stahl, P.C., 237 N.J. 91, 108 (2019). "Rule 4:6-2(e)
motions to dismiss should be granted in 'only the rarest [of] instances.'" Banco
Popular N. Am. v. Gandi, 184 N.J. 161, 165 (2005) (alteration in original)
(quoting Printing Mart-Morristown v. Sharp Elecs. Corp., 116 N.J. 739, 772
(1989)). To decide this motion, we must assume the facts asserted by plaintiff
in its pleading are true and "give [it] the benefit of all inferences that may be
drawn in [its] favor." Gandi, 184 N.J. at 166. However, "if the complaint states
no basis for relief and discovery would not provide one, dismissal is the
appropriate remedy." Ibid. Finally, we must determine whether the motion
judge correctly interpreted the law and the legal consequences that flow from
established facts, without giving his findings and legal conclusions any special
deference. Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366,
378 (1995).
Our Supreme Court has noted that "[i]f the language of a contract 'is plain
and capable of legal construction, the language alone must determine the
agreement's force and effect.'" Manahawkin Convalescent v. O'Neill, 217 N.J.
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99, 118 (2014) (quoting Twp. of White v. Castle Ridge Dev. Corp. 419 N.J.
Super. 68, 74-75 (App. Div. 2011)); see also Watson v. City of E. Orange, 175 N.J. 442, 447 (2003) ("Under our law, when the terms of a contract are clear and
unambiguous, . . . the court must enforce those terms as written."). The same
standard applies to integrated agreements. YA Global Investments, L.P. v. Cliff,
419 N.J. Super. 1, 11 (App. Div. 2011).
"'[U]nder New Jersey law, two or more writings may constitute a single
contract even though they do not refer to each other. Whether two writings are to
be construed as a single contract, however, depends on the intent of the parties.'"
Alpert, Goldberg, Butler, Norton & Weiss, P.C. v. Quinn, 410 N.J. Super. 510, 533
(App. Div. 2009) (alteration in original) (quoting Van Orman v. Am. Ins. Co., 680 F.2d 301, 306 (3d Cir. 1982)). "The basic question is whether the parties assented
to a writing as the complete integration of their agreement." Alpert, 410 N.J. Super.
at 533. The court in Alpert cited to Williston on Contracts for the principle of
incorporation by reference in a contract:
Generally, all writings which are a part of the same
transaction are interpreted together. One application of
this principle is the situation where the parties have
expressed their intention to have one document's
provision read into a separate document. So long as the
contract makes clear reference to the document and
describes it in such terms that its identity may be
ascertained beyond doubt, the parties to a contract may
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incorporate contractual terms by reference to a
separate, non-contemporaneous document, including a
separate agreement to which they are not parties, and
including a separate document which is unsigned. . . .
And, in order to uphold the validity of terms
incorporated by reference, it must be clear that the
parties to the agreement had knowledge of and assented
to the incorporated terms.
[Ibid. (alteration in original) (emphasis added) (quoting
4 Williston on Contracts § 30:25 (Lord ed. 1999)).]
Therefore, "[i]n order for there to be a proper and enforceable
incorporation by reference of a separate document, the document must be
described in such terms that its identity may be ascertained beyond doubt and
the party to be bound by the terms must have had 'knowledge of and assented to
the incorporated terms,'" even when a document that is incorporated is not
signed. Alpert, 410 N.J. Super. at 533.
Here, the BSA was clearly identified as a part of the agreement between
the parties in the Purchase Order. The reference to the BSA was located directly
above where plaintiff signed the subcontract. The record shows plaintiff's
representative carefully reviewed the Purchase Order and read each page.
Plaintiff's representative made several modifications and strikeouts and placed
his initials at the bottom of every page. The record includes information listed
on the online bidding portal, including the time and date plaintiff downloaded
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the BSA. This showed that plaintiff, a sophisticated business entity,
acknowledged the BSA. Whether or not its representative reviewed the BSA
before he executed the subcontract does not negate that the BSA was integrated
by reference after it was clearly identified.
Additional evidence or extrinsic evidence was not required to determine
whether the BSA was incorporated by reference. Judge Militello properly
determined that the BSA was incorporated by reference into the agreement
between the parties:
After hearing arguments, I found that [p]laintiff had in
fact consented to litigating all claims in Arizona, as
evidenced by the Purchase Order. Specifically, I found
it particularly telling that Mr. Agolli struck several
provisions, added language to various sections, and
initialed each page of the Purchase Order. For example,
in Paragraph 7, Mr. Agolli crossed out the phrase "fully
automated binding system." Moreover, in Paragraph 21
of the Purchase Order, Mr. Agolli made note that
coating would not be provided, despite contractual
language to the contrary. Although these changes may
seem slight, they were significant for purposes of the
motion. Each edit suggested that Mr. Agolli not only
read the Purchase Order, but carefully reviewed each
line of the contract, including the forum selection
clause.
....
In opposition to the underlying motion, [p]laintiff
argued that [d]efendant was asking the court to "make
an extreme logical leap by requesting enforcement of
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an agreement that was never signed." See Pl. Opp.
Brief, pg. 5. . . . In Alpert, the court addressed whether
a signed agreement, incorporating an unsigned
agreement, could bind the parties. There, the
defendants retained the plaintiff in a legal malpractice
action. At the commencement of the relationship, the
defendants signed a Retainer Agreement. While noting
some billing details, the Retainer Agreement did not
outline the firm's billing practices and policies. Rather,
the agreement referenced a second document, or
"Master Retainer," that contained such details. The
defendants thereafter challenged the validity of the
Master Retainer, arguing that they neither signed nor
assented to the terms of the Master Retainer.
The Alpert court acknowledged that New Jersey case
law provides little guidance on the principle of
incorporation by reference. Consequently, the court
looked to Williston on Contracts[.]
....
The Alpert court ultimately found that the Retainer
Agreement did not define with sufficient specificity the
Master Retainer. Rather, the Retainer Agreement
simply reiterated that a client is bound "by our standard
billing practices and firm policies." Alpert, supra, 410 N.J. Super. at 535. This, the court reasoned, was not
specific or identifiable "such that the [firm's] practices
and policies may be ascertained beyond doubt." Ibid.
More importantly, the defendants were never shown a
copy of the Master Retainer, and therefore, could not
have assented to such. Unlike Alpert, [p]laintiff here
had a copy of both the BSA and Purchase Order. Upon
reviewing the Purchase Order, namely the
incorporation clause, Mr. Agolli could have easily
referred to the BSA. Similarly, the Purchase Order did
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in fact specifically define the BSA. As noted, the clause
in question stated:
By signing this Purchase Order or
commencing the work of this Purchase
Order, the Subcontractor accepts all the
terms and conditions of the Kinney
Construction Services Blanket Subcontract
Agreement. This Purchase Order together
with the Blanket Subcontract constitute the
entire Subcontract.
Not only does this provision identify the BSA, but it
also clearly provides that these two agreements
constitute the entire Subcontract (emphasis added). A
simple reading of this clause would alert a reader that
by signing one document, he is in turn, assenting to a
second document. Therefore, this court can in fact make
such [a] logical leap to infer that [p]laintiff did assent
to the terms of the BSA by signing the Purchase Order.
We thus hold that Judge Militello properly determined that the BSA and
the Purchase Order constituted the entire subcontract between the parties.
III
We next consider whether the NJPPA prohibits the enforcement of forum
selection clauses. N.J.S.A. 2A:30A-2(f) of the NJPPA provides:
All contracts for the improvement of structures entered
into after the effective date [Sept. 1, 2006] . . . between
owners, prime contractors, subcontractors or
subsubcontractors shall provide that disputes regarding
whether a party has failed to make payments required
pursuant to this section may be submitted to a process
of alternative dispute resolution. Alternative dispute
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resolution permitted by this section shall not apply to
disputes concerning the bid solicitation or award
process, or to the formation of contracts or
subcontracts. In any civil action brought to collect
payments pursuant to this section, the action shall be
conducted inside of this State and the prevailing party
shall be awarded reasonable costs and attorney fees.
[(emphasis added).]
Plaintiff argues that enforcement of the forum selection clause in the
parties' agreement would violate the strong public policy underpinning the
NJPPA. In support of this argument, plaintiff cites an unpublished opinion from
this court. Rule 1:36-3 makes clear that absent certain exceptions not relevant
here, "[n]o unpublished opinion shall constitute precedent or be binding upon
any court." We thus will rely exclusively on published opinions from this court
that have addressed the enforceability of forum selection clauses.
Defendant argues the forum selection clause does not eviscerate the public
policy codified in the NJPPA because an Arizona court is just as capable of
enforcing the public policy protections in the statute as a New Jersey c ourt.
Stated differently, defendant argues that the agreed upon venue for this dispute
may consider the evidence on the issues raised by the parties and apply New
Jersey law to determine whether plaintiff has presented a cognizable claim under
the NJPPA.
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Defendant relies on our opinion in Wilfred, a case in which the plaintiff
sought relief under the Franchise Practices Act, N.J.S.A. 56:10-1 to -31. The
defendant moved to dismiss the plaintiff's Superior Court action and transfer
venue to Nebraska pursuant to the franchise agreement's forum selection clause.
256 N.J. Super. 61. Although the trial court recognized there were "substantial
questions as to the applicability" of the Franchise Practices Act, it restrained the
partial termination of the parties' contractual relationship to preserve the status
quo. Id. at 62.
In the context of this dispute, we were asked to consider whether
enforcement of the forum selection clause, which would result in the application
of the Franchise Practices Act by another state, would be contrary to our State's
public policy. We found no public policy impediment and upheld the forum
selection clause. We noted that "[u]nderlying [the plaintiff's] notion is the
premise that only New Jersey courts are equipped to properly interpret and apply
the [Franchise Practices] Act and that to allow other state courts to do so would
result in diverse and inconsistent applications." Id. 65. We rejected this
isolationist notion and held that the same way we presume that "our courts fairly
and competently analyze and apply other states' laws, courts in our sister states
are capable of construing and applying our State's laws." Id. at 66.
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We also rejected a similar argument predicated on a section of the
Franchise Practices Act which provides:
Any franchisee may bring an action against its
franchisor for violation of this act in the Superior Court
of the State of New Jersey to recover damages sustained
by reason of any violation of this act and, where
appropriate, shall be entitled to injunctive relief. Such
franchisee, if successful, shall also be entitled to the
costs of the action including but not limited to
reasonable attorney’s fees.
[N.J.S.A. 56:10-10.]
We held that unlike other statutes which expressly preclude foreign forum
selection clauses, N.J.S.A. 56:10-10 did not explicitly preclude enforcement of
a foreign forum selection in this context. Ibid. To conclude otherwise would
constitute what the United States Supreme Court characterized in M/S Bremen
v. Zapata Off-Shore Co., 407 U.S. 1, 12 (1972), as a "provincial" view.
In Hoffman v. Supplements Togo Management, LLC., we reaffirmed the
analytical paradigm for determining the enforceability of forum selection
clauses: "The courts of our State have generally enforced . . . forum selection
clauses, where: (1) they are not the product of fraud or undue bargaining power,
(2) they would not violate public policy, and (3) their enforcement would not
seriously inconvenience the parties at trial." 419 N.J. Super. 596, 606 (App.
Div. 2011), (citing Caspi v. Microsoft Network, L.L.C., 323 N.J. Super. 118,
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122 (App. Div. 1999); Wilfred, 256 N.J. Super. at 63-64). Applying this
approach to the facts of this case, we discern no legal grounds to overturn Judge
Militello's order enforcing the forum selection clause.
In Skuse v. Pfizer, Inc., our Supreme Court recently upheld an arbitration
agreement that was disseminated by the employer to the employees via e-mail
notice. The e-mail apprised the recipient that it contained a "mandatory review
of an agreement along with other relevant documents within a prescribed period,
and digital confirmation that the employee has reviewed the materials provided."
244 N.J. 30, 57 (2020). In upholding the validity of this electronic notice and
the enforceability of the arbitration provision transmitted therein, the Court
noted that
no principle of New Jersey contract law bars
enforcement of a contract because that contract is
communicated by e-mail, rather than by the transfer of
a hard-copy document. If we were to adopt such a rule,
it would invalidate contracts that have been negotiated
and transmitted electronically for decades. We decline
to do so here.
[Id. at 54.]
In the course of its analysis, the Court in Skuse also approvingly quoted
our opinion in Caspi, in which we upheld a duly negotiated forum selection
clause because there "was nothing about the style or mode of presentation, or
A-4654-18
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the placement of the provision, that can be taken as a basis for concluding that
the forum selection clause was proffered unfairly, or with a design to conceal or
de-emphasize its provisions." 244 N.J. at 55, (quoting Caspi, 323 N.J. Super. at
125-26).
Against this legal backdrop, we decline to construe the NJPPA to provide
an indiscriminate statutory injunction prohibiting the enforcement of a duly
negotiated and agreed upon forum selection clause. We are satisfied that had
the Legislature intended to adopt such a significant deviation from our State's
contract law jurisprudence, it would have done so using clear, unequivocal
language.
Affirmed.
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