Berel Co. v. Sencit F/G McKinley Associates
| Decision Date | 03 March 1989 |
| Docket Number | Civ. A. No. 86-3285. |
| Citation | 710 F. Supp. 530 |
| Parties | BEREL COMPANY, Plaintiff, v. SENCIT F/G McKINLEY ASSOCIATES, Defendant, Third Party Plaintiff, v. SULLIVAN ARFAA, P.C., Third Party Defendant, Fourth Party Plaintiff, v. PENNONI ASSOCIATES, Donald Nardy, John Gamble and the New Jersey Housing and Mortgage Finance Agency, Fourth Party Defendants. |
| Court | U.S. District Court — District of New Jersey |
COPYRIGHT MATERIAL OMITTED
Mesirov, Gelman, Jaffe, Cramer & Jamieson by Anthony Creato, Jeffrey A. Mintz, Cherry Hill, N.J., for plaintiff, Berel Co.
Konray & Kerekes by Roy J. Konray, Clark, N.J., for defendant-third party plaintiff, Sencit F/G McKinley Associates.
James S. Kilpatrick, Jr., Ocean City, N.J., for third party defendant-fourth party plaintiff, Sullivan Arfaa, P.C.
W. Cary Edwards, Atty. Gen. of New Jersey by Joseph B. Reilly, Deputy Atty. Gen., Trenton, N.J., for fourth party defendant, New Jersey Housing & Mortg. Finance Agency.
Finnegan & Barth by John J. Finnegan, III, Cherry Hill, N.J. and Byron R. Lavan, Lafayette Hill, for fourth party defendant, Donald Nardy.
Brennan and Bernardin, P.C. by Michael J. Brennan, Collingswood, N.J., for fourth party defendant, John Gamble.
Fourth party defendant, The New Jersey Housing and Mortgage Finance Agency ("Agency") has filed a motion to dismiss all claims against it asserted by plaintiff, Berel Company ("Berel") and fourth party plaintiff, Sullivan Arfaa P.C. ("Sullivan"). Plaintiff, Berel, moves for partial summary judgment against defendant, Sencit F/G McKinley Associates ("Sencit"). Both motions were argued before the Court orally on the same day, and will be disposed of consecutively below.
This controversy emanates from the construction of a residential housing apartment complex known as the McKinley Apartments in Atlantic City, New Jersey ("the complex"). The complex, which is also known as the Garden Court Apartments, consists of approximately twenty buildings comprising 177 units, twenty-seven of which were designated for low and moderate income rental, and is substantially complete. It is a low rise complex, that is, no building is more than three stories high.
Defendant Sencit is a limited dividend partnership which owns the complex. On May 1, 1984, Sencit entered into a written agreement with Berel whereby Berel agreed to serve as general contractor and construct the complex ("Berel-Sencit Agreement"). In the Berel-Sencit Agreement, both Berel and Sencit agreed to be bound by Agency law. See Berel-Sencit Agreement, Article 3, at 8. Sencit then executed five contemporaneous agreements with the fourth party defendant, Agency, on June 7, 1984, borrowing $9,877,000 to assist in the development of the complex: 1) "Mortgage Agreement"; 2) "Mortgage Note"; 3) "Deed Restriction and Regulatory Agreement" ("Deed Agreement"); 4) "Loan Agreement"; and 5) "Fee Mortgage".1 Of the $9,877,000 loaned, $7,130,000 was allocated for costs of construction of the complex. Sencit also contracted with defendant Sullivan, an architectural design firm, to provide the design for the complex and provide inspection during construction. ("Sullivan-Sencit Agreement"). Sullivan in turn contracted with fourth party defendants Donald Nardy ("Nardy"), John Gamble ("Gamble") and Pennoni Associates ("Pennoni")2 to provide engineering consulting services.
After doing certain extra work and changing certain work already completed upon inspection, Berel substantially completed construction of the complex. Berel submitted change order proposals for the excess and redone work, which were required to be approved by Sencit, Sullivan and the Agency, as a condition precedent to payment under the Berel-Sencit Agreement. Certain change orders were approved by all parties at a meeting held on May 21, 1986; however, various other change orders, including Numbers 30, 35 and 36 were not approved by Sencit and Sullivan at that time and remain at issue. Berel alleges that in many instances, change orders which received the requisite approval have still not been paid.
Separate and apart from the submitted change order proposals and approved change orders controversy, the Agency alleges that certain work was done incorrectly and needs to be cured before it will authorize any further payments on the project. The Agency has designated these items on a separate "punch list," which the Agency estimates will cost approximately $118,388 to complete.
On August 20, 1986, Berel filed suit in this Court against defendant Sencit for breach of contract, alleging damages in excess of $2,000,000. In response thereto, on September 26, 1986, Sencit brought a third party action against Sullivan for breach of contract, negligent performance, and indemnification. In turn, Sullivan brought a fourth party action against some of the engineering consultants it had retained, (Nardy, Gamble and Pennoni) for indemnification. Sullivan also joined the Agency as a fourth party defendant in its request for indemnification. Approximately one year later, Berel filed claims directly against the Agency in tort and breach of contract. So that what we have here is each party playing the role — so to speak — of both a plaintiff and a defendant, except the Agency which is just a defendant.
On August 6, 1987 we denied the Agency's motion to dismiss for lack of jurisdiction predicated upon the Eleventh Amendment. On December 18, 1987 we denied Sencit's and the Agency's motions to add the surety on the performance bond, United States Fidelity and Guaranty Company, as a fifth party defendant. Neither decision was appealed.
Finally, Judge Simandle, United States Magistrate, recently granted Berel's motion to amend its complaint to include a counterclaim against Sullivan directly, in an Opinion and Order filed January 25, 1989. We affirmed that ruling in our own Opinion and Order dated February 24, 1989. 125 F.R.D. 100.
Berel's direct claims against the Agency were apparently asserted in both tort for negligence and contract for breach of implied agreement. We will first resolve whether an agreement exists upon which the Agency could be liable to Berel in contract and then determine the applicability of the New Jersey Tort Claims Act, N.J.S. A. 59:1-1, et seq. ("Tort Claims Act").
In its supporting brief, the Agency suggested that Berel's direct claims against it in Berel's Complaint filed August 31, 1987, were grounded solely in tort.3 Berel's opposition memorandum argued that its claims were grounded not only in tort, but also "arise, in part, out of two separate contracts." Id. at 5. Berel then asserted two different theories for breach of contract;4 first, the existence of an agreement between Berel and the Agency, not memorialized in and of itself, but allegedly indicated by a reference in the Berel-Sencit Agreement, Article 48; and second, a third-party beneficiary theory.5
Berel claims that an agreement between it and the Agency exists, which, if it were in writing which it is not, would simply read: "The Agency will not withhold approval of Berel's change order proposals (and other things) unreasonably." See Affidavit of David Altman. As evidence of this alleged "agreement", Berel points to a provision in the Berel-Sencit Agreement6 at Article 48, which states:
To overcome the Statute of Frauds defense raised by the Agency to Berel's assertion of an Agreement, merely evidenced by this provision, Berel reminds us that summary judgment is improper where there is a genuine issue of material fact, citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).7 We agree with Berel's statement of the proposition of law, but do not concur in their belief that the facts herein present a genuine issue of material fact.
We do not agree with Berel that the Berel-Agency agreement exists in writing. Article 48 makes the Agency a quasi-arbitrator, not a party to the agreement between Berel and Sencit. Further, in characterizing the Agency as quasi-arbitrator the intent of Berel could not as a matter of law have been to make it contractually bound to that language, because arbitrators are afforded generous immunity from liability for the consequences of their decisions. Cahn v. International Ladies' Garment Union, 311 F.2d 113, 114 (3d Cir.1962). See also Arroyo v. Crown Air/Dorado Wings, 672 F.Supp. 50, 53 (D.Puerto Rico 1987).
Thus, in its role as arbitrator, the Agency would be afforded immunity comparable to that bestowed upon judges who also make decisions of great importance with potentially considerable detrimental financial impact. We believe that this provision most likely provides a standard for review of an Agency decision, reasonableness, but is clearly not embodiment of or evidence of a separate contractual agreement between Berel and the Agency.
In any event, the explicit terms of Article 3 of the Berel-Sencit Agreement clearly exclude the Agency from being designated a party to that Agreement:
Any inspection, approval, review of the work, direction or supervision by the Agency or its representatives exercised pursuant to the Contract is performed in accordance with its responsibility as Lender and as an instrumentality of the State of New Jersey pursuant to the Agency law and shall not make the Agency a party to this Contract and in no way is intended to relieve the Owner...
To continue reading
Request your trial
-
Board of Educ. of City of Clifton v. W.R. Grace Corp.
...discretionary acts N.J.S.A.59:2-3. Cf., Kolitch v. Lindedahl, 100 N.J. 485, 490, 497 A.2d 183 (1985); Berel Co. v. Sencit F/G McKinley Associates, 710 F.Supp. 530, 541-544 (D.C.N.J.1989). But since Clifton is not a third-party suing an independent contractor, the label of defense of the imm......
- Morris v. United States
-
Nardi v. Stevens Institute of Technology, Civil Action No. 96-CV-4508(DGT).
...third party beneficiaries: donee beneficiaries, creditor beneficiaries, and incidental beneficiaries. See Berel Co. v. Sencit F/G McKinley Assoc., 710 F.Supp. 530, 537 (D.N.J.1989) (interpreting New Jersey law); Broadway Maint. Corp. v. Rutgers, 180 350, 356, 434 A.2d 1125 (1981), aff'd 90 ......
-
Advanced Exports, LLC v. Seabrook Wallcoverings, Inc., CIVIL ACTION NO. 18-830
...so now. See, e.g., Picture Lake Campground v. Holiday Inns, Inc., 497 F. Supp. 858, 862 (E.D. Va. 1980); Berel Co. v. Sencit F/G McKinley Assocs., 710 F. Supp. 530, 534 (D.N.J. 1989); Hauer v. Bankers Tr. New York Corp., 425 F. Supp. 796, 800 (E.D. Wisc. 1977); Angleton v. Pierce, 574 F. Su......