68th St. Apts., Inc. v. Lauricella

• Decision Date: 13 May 1976
• Citation: 362 A.2d 78,142 N.J.Super. 546
• Parties: 68TH STREET APTS., INC., a New Jersey corporation, et al., Plaintiffs, v. Casimiro LAURICELLA, d/b/a Cass Electric Co., Defendant. Casimiro LAURICELLA, d/b/a Cass Electric Co., Plaintiff, v. INTROCASO CONSTRUCTION CO., INC., and Ralph L. Introcaso, Defendants.
• Court: New Jersey Superior Court

Page 546

142 N.J.Super. 546

362 A.2d 78

68TH STREET APTS., INC., a New Jersey corporation, et al., Plaintiffs, v. Casimiro LAURICELLA, d/b/a Cass Electric Co., Defendant.

Casimiro LAURICELLA, d/b/a Cass Electric Co., Plaintiff, v. INTROCASO CONSTRUCTION CO., INC., and Ralph L. Introcaso, Defendants.

Superior Court of New Jersey Law Division.

May 13, 1976.

Gigante & Aslanian, Fort Lee, for Casimiro Lauricella, d/b/a Cass Elec. Co. (Antranig Aslanian, Jr., Fort Lee, appearing).

Platoff, Heftler, Harker & Nashel, Union City, for Introcaso Const. Co., Inc. and Ralph L. Introcaso (Howard M. Nashel, Union City, appearing).

GAULKIN, J.S.C.

These consolidated actions arise out of a complex of business relationships entered into by Casimiro Lauricella and Ralph L. Introcaso with respect to two properties known as 6818 Park Avenue and 138--142 68th Street, both in Guttenberg, New Jersey.

I. 6818 Park Avenue

In early 1972 Lauricella, an electrical contractor, learned that 6818 Park Avenue was available for purchase and contacted Introcaso, a building contractor known to him from other projects, who expressed interest in their jointly purchasing and developing the property. After determining that an apartment building of approximately 30 units could be accommodated on the site, Lauricella and Introcaso negotiated with the then owner and reached agreement on a purchase at $70,000.

Lauricella and Introcaso then orally agreed that they would participate equally in the purchase and ownership; that they would use Mario M. Polcari, Esq. as their attorney; that they would hold the property in corporate form; that Introcaso's company, Introcaso Construction Co., Inc. (ICC) would be the general contractor for the contemplated construction, and that Lauricella, who was a major stockholder of certain banks, would arrange the necessary financing.

Pursuant to that agreement Lauricella and Introcaso formed 6818 Park Avenue Corporation (6818), a New Jersey corporation; each was issued five shares of common capital stock, the only corporate stock then or thereafter issued. The minutes of the initial corporate meeting recite that Lauricella was elected president and Introcaso secretary and treasurer; they do not indicate any election of directors, and neither the by-laws nor the certificate of incorporation fix the number of directors authorized. Lauricella contributed $35,000 to the capital of the corporation and Introcaso contributed $34,134, which funds were used for the purchase of the title.

Construction commenced in October 1972 but, as more fully discussed below, the project aborted and on April 16, 1973 Introcaso filed an action in the Chancery Division (Docket C--2943--72) to dissolve 6818 under N.J.S.A. 14A:12--7 by reason of deadlock. By order there entered on August 31, 1973, 6818 was dissolved; Thomas M. Venino, Esq. was appointed as receiver; and the process of making distribution to creditors and winding up the corporate affairs was initiated. Following extensive hearings conducted by him pursuant to N.J.S. 14A:14--16, the receiver filed his findings concerning the creditors' claims. His determinations were upheld by order entered September 19, 1975. In light of those findings in the Chancery Division action (which was consolidated with this proceeding until its disposition), this court determined, by order entered December 19, 1975, that the parties here are collaterally estopped from litigating the following factual determinations:

1. That there was a verbal agreement between ICC and 6818, the terms of which are set forth in the opinion of the receiver dated November 1, 1974;

2. That 6818 breached that agreement;

3. That as a result of that breach, ICC sustained damages of $88,494.41.

The terms of the agreement between 6818 and ICC incorporated by reference in the December 19, 1975 order and thus deemed to be a finding of fact herein, were found in the Chancery Division to be as follows:

They (I.e., Introcaso and Lauricella) further agreed, orally, that ICC would act as the general contractor and would deliver to the owner corporation a 'turnkey' 30 family apartment building at cost plus 8% For ICC's services and efforts. ICC was to have the option of performing any of the subtrades at cost plus 15% Overhead plus 10% Profit so long as that gross cost did not exceed a competitive price. Similarly, (Lauricella), an experienced electrical contractor, could elect to perform the electrical work on the project at cost plus 15% Overhead plus 10% Profit so long as that gross cost did not exceed a competitive price. I find that the parties understood that so long as the costs were reasonable and competitive, ICC would perform the masonry portion of the project since it was an experienced mason contractor and that (Lauricella) would perform the electrical portion for the same reason. Although there was a conflict as to whether ICC would be entitled to an 8% Overwrite on the masonry work performed by it or on the electrical work performed by (Lauricella), I find from all the evidence that the intention of the parties was to compensate ICC at the rate of 8% On subcontracted work for its services as general contractor, and also on the work it performed as masonry contractor and on the electrical portion of the project whether performed by (Lauricella) or others.

In winding up the corporate affairs the receiver sold the real estate for $110,000 and, after deducting fees and expenses of the receivership, paid out all of the corporate funds to creditors, each creditor receiving approximately 84.51 cents on each dollar of claim. The major claimant was ICC, which received $74,785.90 on its allowed claim of $88,494.41. No return of capital was therefore available to Lauricella or Intracaso as stockholders.

The parties now assert the following claims:

1. Intracaso claims that Lauricella wrongfully and maliciously caused 6818 to breach its contract with ICC and thereby caused the project to abort. He seeks recovery for his losses as a stockholder and claims, derivatively, on behalf of 6818, the losses sustained by the corporation.

2. Lauricella contends that it was Introcaso himself who caused the breach of the ICC contract and the failure of the project; he claims against Introcaso the same losses as are urged by Introcaso.

3. ICC claims against Lauricella for wrongful and malicious interference with the contract between ICC and 6818; it claims compensatory damages arising therefrom in the sum of $13,708.51, being the difference between the damages for the breach of that contract as found by the receiver and the sum received by it in the liquidation.

Both claimants also seek punitive damages, interest and costs and, in connection with the derivative claims on behalf of 6818, the award of counsel fees.

A. Findings of Fact

After taking title in March 1972, 6818 prepared plans and demolished the buildings then on the site. Lauricella arranged for construction and permanent financing through United Jersey Mortgage Company, which issued its $360,000 mortgage commitment on August 16, 1972; Lauricella and Introcaso accepted the commitment on behalf of 6818 on September 21, 1972. Introcaso, acting for ICC, solicited bids from and entered into oral agreements with subcontractors, and in late October 1972 commenced construction with excavation, placement of footings and foundations, and installation of sewer, water and electrical connections. The foundation was then backfilled and levelled in preparation for the pouring of the concrete slab.

To this point the only significant difficulty encountered was that, because of an error in the plans which ICC failed to note, certain anchor bolts had been wrongly placed. Although there was testimony from the plumbing subcontractor that this error necessitated breaking up and relocating footings, the greater weight of the evidence is that no on-site correction was required; rather, ICC instructed the structural steel subcontractor to revise in relatively minor ways the structural steel which had been fabricated and was awaiting delivery to the job site. There was some dispute at trial as to when that instruction was given; I find that the instruction was given before December 19, 1972, but that the precise date is not material because the error delayed the completion of the structural steel by only one to two weeks at most, and in any event the job never progressed to the point that delivery of the steel to the job site was required.

Other minor disputes aired at trial as to the adequacy of the excavation or backfill are similarly without significance. In short, up to the time of the pour of the concrete slab on December 19, 1972 the construction had gone substantially according to its anticipated course; both Lauricella and Introcaso acknowledged that no difficulties or disputes had arisen between them to that time.

At the purt of the slab on December 19, 1972, ICC concededly deviated from the plan and specifications in at least two respects. If failed to cover the underlying ground with a polyurethane sheet, known as Visqueen, intended to prevent permeation of the slab by ground moisture; and it failed to use steel reinforcing rods in the slab. Although not claimed to be in violation of specific plan requirements, ICC concededly used sand rather than crushed stone as a base, and failed to provide expansion joints in the concrete. And, while the outside temperature on the day of the pour was disputed, I find, as contended by Lauricella and confirmed by the building inspectors present, that the ground was frozen to some degree.

Although Introcaso testified that Lauricella had authorized him to deviate from plans in order to economize during construction, that general authorization is not inconsistent with Lauricella's testimony that he was disturbed about the slab. The undisputed fact is that at the pour both the local and the state building inspectors advised Introcaso that...