WINKS/KRUG LANDSCAPING SERVICES, LLC VS. STONEBRIDGE AT WAYNE HOMEOWNERS ASSOCIATION, INC.(L-10111-14, BERGEN COUNTY AND STATEWIDE), A-3220-15T3

Background

Winks/Krug Landscaping (plaintiff) and Stonebridge at Wayne HOA (defendant) had a three-year snow‑plowing contract (signed Oct. 15, 2012) paying $50,000 per year for curb‑to‑curb clearing; contract excluded use of loader/truck removal costs and allowed termination by HOA for unsatisfactory performance (with notice).
Plaintiff performed 2012–13 and heavy 2013–14 seasons; plaintiff proposed at a Sept. 3, 2014 meeting that HOA purchase a Bobcat loader (approx. $10,000) to enable curb‑to‑curb clearing; plaintiff purchased the Bobcat believing HOA had accepted.
About 30 days after the meeting, HOA counsel sent a 30‑day cancellation letter; no meeting minutes, notice of deficiencies, or evidence of a board vote authorizing termination were produced.
Trial judge found HOA breached the contract (no proof of unsatisfactory performance or proper notice) and also found a breach of the implied covenant of good faith and fair dealing; judge awarded plaintiff $50,000 (the contract’s annual base amount) as damages.
On appeal, this court affirmed breach of contract (termination conditioned on unsatisfactory performance was unsupported) but reversed the good‑faith finding (plaintiff failed to prove HOA acted with bad motive) and remanded to recalculate lost‑profit damages net of costs avoided.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether HOA breached the written contract by cancelling without proper basis/notice	HOA cancelled without any prior complaints or authorized vote; termination was unjustified	HOA relied on contractual right to cancel for unsatisfactory performance based on homeowner complaints and concerns about future storms	Held: HOA breached the contract; contract conditioned cancellation on unsatisfactory performance and record lacked evidence of such or proper authorization/notice
Whether HOA breached the implied covenant of good faith and fair dealing	Termination was a pretext and defeated the collaborative relationship; bad motive shown by circumstances	Termination was within contractual rights and based on homeowner complaints; no evidence of bad motive	Held: Reversed — plaintiff failed to prove bad motive; no sufficient evidence of breach of implied covenant
Proper measure of damages for wrongful termination	Plaintiff entitled to lost profits; trial judge correctly awarded the $50,000 annual contract amount	If damages awarded, must deduct costs plaintiff did not incur (fuel, materials); trial judge erred by awarding gross contract amount	Held: Plaintiff entitled to lost profits but award must account for costs saved; remand for recalculation net of avoided costs
Whether plaintiff proved fraudulent inducement re: Bobcat purchase	Plaintiff relied on HOA acceptance at meeting to buy Bobcat	HOA did not misrepresent or induce purchase; no corroborating promise	Held: Trial court correctly rejected fraud claim; no misrepresentation established

Key Cases Cited

Brunswick Hills Racquet Club, Inc. v. Route 18 Shopping Ctr. Assoc., 182 N.J. 210 (2005) (bad motive is essential to a claim for breach of the implied covenant of good faith and fair dealing)
Sons of Thunder v. Borden, Inc., 148 N.J. 396 (1997) (every contract contains an implied covenant of good faith; termination rights may still be subject to that covenant)
Van Dusen Aircraft Supplies, Inc. v. Terminal Constr. Corp., 3 N.J. 321 (1949) (lost profits are recoverable where a plaintiff is prevented from completing a contract)
V.A.L. Floors, Inc. v. Westminster Cmtys., Inc., 355 N.J. Super. 416 (App. Div. 2002) (measure of recovery for a contractor prevented from performing is the profit that would have been realized; damages require netting costs)
Cromartie v. Carteret Sav. & Loan, 277 N.J. Super. 88 (App. Div. 1994) (proof of relevant costs is part of the lost‑profits damage case and not merely mitigation)