689 A.2d 852 | N.J. Super. Ct. App. Div. | 1997
The opinion of the court was delivered by
This is a contract case arising out of the renovation of an apartment and office building in Montclair, New Jersey, owned by a corporation. After a bench trial, the judge entered judgment in favor of Plaintiff Alberto Marascio, doing business as A.M. Electric (Marascio), against defendant Nicholas Campanella, holding him personally liable for the sum of $7,208 as the amount due for certain “extra” repairs to the corporation’s property.
Campanella, one of two shareholders of S & N Realty (S & N), the corporation that owns the subject property, appeals. He argues that (1) the Consumer Fraud Act (the Act) bars any recovery by Marascio; (2) the purported oral contract is unenforceable because Marascio and Campanella did not agree to an essential term; (3) Marascio presented insufficient evidence to support a claim for quantum meruit; (4) Marascio’s claims were against S & N, and therefore, the trial judge erred by entering judgment against Campanella personally; and (5) the trial judge’s findings are manifestly wrong, requiring reversal.
Campanella and his partner, Sidney Wilchens, each own a 50% interest in S & N. The property contains a three-story building with an office on the first floor and apartments on the second and third floors. On October 1,1991, S & N contracted in writing with Judd Latona of Latona Construction Company, a general contractor, to renovate the building. Marascio, an electrician, was hired by Latona as a subcontractor to complete the necessary electrical work associated with the renovation under Latona’s contract with
Marascio claims that because of mistakes or omissions on the blueprints (which were not allowed into evidence), extra electrical work was necessary. According to Marascio, Campanella visited the property every day to check the progress of the work and that during these visits Campanella routinely instructed Marascio to complete the “extra” work. Campanella denied this. Marascio claimed that this extra work included putting missing washers in the kitchens, better lighting in the apartments, additional switches, running cable T.V. and telephone wires, additional lighting in the office, exterior lighting, and an intercom system.
Marascio asserted that Campanella was to pay him directly, based, in part, upon claimed past dealings when Campanella supposedly paid Marascio for similar work at another location. At the 1996 trial Marascio presented three hand-written invoice slips, all dated April 15,1992, containing defendant’s name and that of S 6 N, totaling $7,208, and purporting to describe the extra work he performed. Marascio also testified that when he presented these invoices to Campanella, Campanella told him that he would get paid some time in the future because he was having problems with the general contractor. Marascio claims he went to Campanella’s office two or three times, and finally Campanella told him not to come back and to contact his lawyer if he had questions about getting paid. Marascio asserted that when he contacted Campanella’s attorney he was told to wait and he would get paid eventually.
Campanella testified that he was not sure whether Marascio ever did work for him at any other location, presumably to rebut Marascio’s claim that he knew he was to pay Marascio directly based on their prior dealings. According to Campanella’s testimony, Latona did not complete the agreed work, and Campanella and his partner had to pay an additional $80,000 to other contractors to complete the work Latona failed to perform. He also said that an architect was supervising the work who would certify that the
Campanella testified he never asked Marascio to do extra work and that the telephone wires and cable television wires Marascio claims to have installed were actually installed by Arrow Communications and the cable company, and that he had invoices to prove it. Campanella further testified that the majority of the work that was not completed by Latona was electrical in nature and that a second contractor, AMF Contracting, was hired to complete much of the work Marascio claims he performed as extras. Specifically, Campanella claimed that the receptacles for the washers and dryers in the basement were part of the original contract with Latona, yet Marascio was claiming he performed that work as extras. However, the judge erroneously precluded defendant from introducing proof as to that fact through the actual invoices which Campanella said he had in fact paid. Campanella also testified that he paid AMF Contracting to install the intercom system and the exterior lighting and that Arrow Communications installed the phone lines. The trial judge sustained Marascio’s objection to Campanella’s attempt to admit into evidence the plans and specifications from the original contract with Latona, apparently believing that they were irrelevant to Marascio’s claim that he contracted with Campanella for extra work. The court also excluded from evidence, even prior to any objection, invoices showing that Campanella contracted with others to complete some of the work Marascio claims he performed, concluding that it was all inadmissible hearsay.
Campanella testified that Latona was paid through either S & N checks or through his personal funds advanced on behalf of the corporation as loans. During cross-examination Campanella said that the money always came from S & N, but that it had no income, so he and his partner would lend it money to pay its bills.
I.
We are hampered in our review of this appeal by a meager record and some overly restrictive evidentiary rulings made without consideration of relevant exceptions to the hearsay rule. Assuming the existence of sufficient evidence of an oral contract between Campanella and Marascio, the judge’s holding that the Consumer Fraud Act, N.J.S.A. 56:8-1 et seq., does not apply to that contract was nonetheless erroneous. We conclude, for reasons hereinafter stated, that the Act precludes enforcement of the oral home improvement contract.
The Act and its implementing regulations require any home improvement contract exceeding $200
Maraseio, relying on Hambright v. Yglesias, 200 N.J.Super. 392, 395, 491 A.2d 768 (App.Div.1985), contends that we should consider the nature of the ownership as well as the use of the property when determining whether a particular property is residential or commercial. He reasons that an apartment building in which the owner does not reside, such as the property here, constitutes a commercial property. Maraseio contends that Blake Construction v. Pavlick, 236 N.J.Super. 73, 564 A.2d 130 (1989), overruled on other grounds by, R. Wilson Plumbing v. Wademan, 246 N.J.Super. 615, 588 A.2d 444 (App.Div.1991), upon which Campanella relies, only considered the building in that case as residential property because the defendants lived in the building.
Thus, the issue before us is whether a commercially owned, unoccupied, part residential, part commercial property qualifies as a residential, non-commercial property for purposes of the Act and its regulations. We conclude that it does. In enacting the Act the Legislature intended a broad and liberal reading of the statute and regulations to provide strict rules protecting consumers. Cox v. Sears Roebuck & Co., 138 N.J. 2, 14-15, 647 A.2d 454 (1994). In addition, the work performed by Maraseio constituted a service generally sold to the public at large. Those who purchase these services, whether commercial entities or individual citizens, are “consumers” in the ordinary as well as statutory meaning of that word. N.J.S.A. 56:8-1(c); Hundred East Credit Corp. v. Eric Schuster, 212 N.J.Super. 350, 355, 515 A.2d 246 (App.Div.), certif. denied, 107 N.J. 60, 526 A.2d 146 certif. denied, 107 N.J. 61, 526 A.2d 146 (1986).
In short, a consumer transaction occurs when the transaction involves the sale of consumer goods regardless of who purchases those goods and for what purpose. See N.J.S.A. 56:8-1(c) (defining merchandise for purposes of the Act as “any objects, wares, goods, commodities, services or anything offered, directly
The fact that Campanella’s corporation owned the subject property for investment purposes is not determinative. The Act protects corporate as well as private consumers. See Coastal Group v. Dryvit Systems, 274 N.J.Super. 171, 179, 643 A.2d 649 (App.Div.1994) (“[T]he protections of the Consumer Fraud Act extend to the purchase of merchandise for use in business operations ----”); Hundred East Credit Corp. v. Eric Schuster, supra, 212 N.J.Super. at 355, 515 A.2d 246 (“Nothing in [the] statutory language suggests that the Act is inapplicable to the sale of merchandise for use in business operations.... And a corporation or other business entity is a ‘person’ entitled to sue under the Act.”). The issue in this case is whether the Act, through the implementing regulations, applies to renovation contracts for unoccupied properties with both commercial and non-commercial uses. See N.J.A.C. 13:45A-16.2(12).
Marascio’s contention that the Court’s inquiry should focus upon the nature of the ownership and the owner’s use of the property is unpersuasive. Our ease law applies the Act to the sale of “ ‘merchandise’ without regard to its intended use or the nature of the buyer.” Hundred East Credit Corp. v. Eric Schuster, supra, 212 N.J.Super. at 355, 515 A.2d 246. Marascio’s reliance on Hambright v. Yglesias, supra, 200 N.J.Super. at 395, 491 A.2d 768, for the proposition that an apartment building in which the owner does not reside is a commercial property is misplaced. In Ham-bright the question was whether the disputed property was sufficiently commercial for purposes of imposing tort liability upon the property owner for failure to maintain abutting sidewalks. Potential liability existed for commercial landowners in Hambright, but not residential landowners, thus continuing the trend of sidewalk liability eases. Ibid, (citing Mirza v. Filmore Corp., 92 N.J. 390, 395, 456 A.2d 518 (1983); Stewart v. 104 Wallace St., Inc. 87 N.J. 146, 157, 432 A.2d 881 (1981)). Thus, the primary factor we considered for tort liability purposes in Hambright was the nature of the ownership, a distinction we deemed irrelevant to the Act’s application in Hundred East Credit Corp. v. Eric Schuster, supra, 212 N.J.Super. at 355, 515 A.2d 246. In addition, we do not construe the Law Division’s decision in Blake Construction v. Pavlick, supra, 236 N.J.Super. 73, 564 A.2d 130. to mean that the owner of the property must live in the structure for it to qualify as
Although it can be argued whether the Act should apply to that portion of an oral agreement for repairs to an office facility in an otherwise residential structure, case law indicates that the Act is to be liberally construed in favor of consumers. Cox v. Sears Roebuck & Co., supra, 138 N.J. at 14-15, 647 A.2d 454. Moreover, as noted, the regulations state that a residential property is one “used in whole or substantial part” as a residence. N.J.A.C. 13:45A-16.1. Thus, the regulations, on their face, accommodate contracts for renovations to property with multiple uses.
The property in question consisted of three floors, two residential and one commercial. Two-thirds of the property is residential in nature, thus satisfying the regulatory definition of “residential or non-commercial property.”
In summary, although the traditional or classic consumer transaction is the purchase of retail merchandise or services for private consumption, the Act is broader and applies here. The Act’s focus is to compel those who sell consumer goods and services to the public to develop practices that will minimize consumer fraud. Foremost among such practices is the requirement of written agreements.
Campanella argues that because S & N was the true owner of the property and he was merely an agent of the corporation, he is not liable personally. Campanella claims he is not a proper party by virtue of his agency status, a status he claims was fully disclosed and known to Marascio as evidenced by Marascio’s invoices addressed “Dr. Campanella C/O S/N Realty.” The trial judge concluded that Campanella was personally liable because he dealt with Marascio directly. The judge’s findings to support his ruling that Campanella was acting only in an individual capacity and thus should be personally liable are insufficient.
Generally, courts will not pierce the corporate veil absent fraud or injustice. Lyon v. Barrett, 89 N.J. 294, 300, 445 A.2d 1153 (1982). Personal liability may be imposed upon a controlling stockholder of a close corporation where the controlling stockholder disregards the corporate form and utilizes the corporation as a vehicle for committing equitable or legal fraud. Walensky v. Jonathan Royce Intern., 264 N.J.Super. 276, 283, 624 A.2d 613 (App.Div.), certif. denied, 134 N.J. 480, 634 A.2d 527 (1993). Although at one point during the trial the judge suggested that the corporation could be added to the suit (consent or process would be required), at no time did the judge make any findings to support the conclusion that Campanella improperly used the corporation as to justify piercing the corporate veil. The sole reason stated by the trial judge for imposing personal liability was that Campanella personally requested that the work be completed. This is not enough. The record indicates Marascio knew S & N owned the property and hired Latona. In addition, the fact that Campanella may have lent money to S & N to pay its debts does not provide a basis for piercing the corporate veil in this case.
It is hardly clear that Campanella may be held personally liable when the facts elicited were that the property was owned by a corporation, the corporation entered into a written agreement with the general contractor, who then hired Marascio. Indeed, under these circumstances there is a clear inference that Marascio knew
Under the circumstances of this case a remand is necessary here in the interest of justice so that neither party will be prejudiced. On remand Marascio may, if he elects to do so, seek to join S & N as a defendant by obtaining jurisdiction by process or consent. If defendant seeks to impose personal liability on Campanella, the judge should accept additional proofs regarding Campanella’s relationship to S & N and make specific findings regarding that relationship as well as his relationship with Marascio. The same conditions apply to Marascio’s relationship with Latona.
III.
Because a retrial is necessary we address briefly Campanella’s contention that the trial judge erred by enforcing Marascio’s alleged oral contract with him because Marascio failed to establish that the parties agreed to a price term. Campanella contends that the facts as alleged by Marascio do not establish that a price term was agreed upon, thus, Marascio’s alleged contract was unenforceable. Even if the evidence supported an oral contract, and that is not clear on this record, the oral contract is unenforceable under the Act and the regulations. See N.J.A.C. 13:45A-16.2(a)(12). Thus, Marascio is limited to quantum meruit, making irrelevant Campanella’s contention that Marascio failed to prove that an oral contract existed.
Nonetheless, a few brief comments are in order regarding certain of the lower court’s evidentiary rulings to guide the remand trial. Certain exclusionary rulings made by the judge during this Special Civil Part bench trial unduly constricted the
The evidence of what work was to be done under the contract between S & N and Latona, and the subcontract between Latona and Marascio, was relevant and potentially highly probative. It would be admissible as a business record to show the scope of work Marascio was hired to perform, or to contradict Marascio’s claims. In addition, the trial judge erroneously excluded invoices documenting payment by S & N to other contractors for completion of work Marascio claims he performed.
IV.
Campanella claims that Marascio cannot prove quantum meruit, which is the remedy available due to the application of the Act,
Because a remand is required quantum meruit may be asserted by Marascio to determine what services were actually provided and the reasonable value of those services. See generally Weichert Co. Realtors v. Ryan, 128 N.J. 427, 438, 608 A.2d 280 (1992). Adequate proofs were not adduced at trial regarding the nature and value of the services rendered and materials furnished by Marascio which were not included in his contract with Latona as the issue was never addressed at trial. Hackensack Hospital v. Tiajoloff, 85 N.J.Super. 417, 419, 204 A.2d 902 (App.Div.1964), certif. denied, 44 N.J. 396, 209 A.2d 137 (1965) (plaintiff may prove the reasonable value of the services rendered by its “books of account” only where the defendant has not challenged their value). Hence, this issue can be explored on retrial.
Reversed and remanded for a new trial.
At the time Marascio performed the work for Campanella the threshold amount under N.J.A.C. 13:45A-16.2(a)(12) was $100; however, a 1995 amendment raised the amount to $200. See 27 N.J.R. 3566(a) (September 18, 1995).
A violation of the Act occurs when a merchant commits an “unlawful practice" as defined by the Act itself, N.J.S.A. 56:8-2, or by the regulations enacted pursuant to N.J.S.A. 56:8-4. Cox v. Sears Roebuck & Co., supra, 138 N.J. at 15, 647 A.2d 454.
No one was living in the building at the time of the renovation. One interpretation of the regulation, apparently adopted by the trial judge, is that someone must be actually living in the structure for the property to be residential in nature. The regulations, however, do not require the property to be occupied at the time of repair.
Authentication did not seem to be an issue, but if it is, that can be addressed at trial.