N.J. Manufacturers Ins. Co. v. Lallygone Liab. Co.
| Docket Number | A-2607-22 |
| Decision Date | 25 January 2024 |
| Parties | NEW JERSEY MANUFACTURERS INSURANCE COMPANY, Plaintiff-Appellant, v. LALLYGONE LIMITED LIABILITY COMPANY, Defendant-Respondent. |
| Court | New Jersey Superior Court — Appellate Division |
This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the internet this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
Argued January 17, 2024
On appeal from the Superior Court of New Jersey, Law Division Bergen County, Docket No. L-0775-23.
Lawrence F. Walker argued the cause for appellant (Cozen O'Connor, PC, attorneys; Lawrence F. Walker, on the briefs).
Neal A. Thakkar argued the cause for respondent (Sweeney &Sheehan, PC, attorneys; Denise M. Montgomery, of counsel; Peter P. Sanchez, on the brief).
Before Judges Haas and Gooden Brown.
Plaintiff New Jersey Manufacturers Insurance Company (NJM) appeals from the Law Division's April 21, 2023 order granting defendant Lallygone Limited Liability Company's (Lallygone's) motion to dismiss NJM's complaint seeking to recover monies NJM previously paid to its insured Efmorfopo Panagiotou (the Insured). We affirm.
The facts are not in dispute. The Insured owned a home in Montvale and obtained a homeowners insurance policy from NJM. In February 2022, he and Lallygone entered into a contract under which Lallygone agreed to make alterations to the detached garage on the property. The Insured paid Lallygone a $22,250 deposit, which represented 50% of the $44,500 contract price. The Insured made these payments through PayPal.
Lallygone purchased materials and paid subcontractors before beginning work on the project on March 21, 2022. Nine days later, the garage collapsed while one of the subcontractors was removing the existing concrete slab inside the garage.
The Insured thereafter filed a claim with NJM, which investigated the matter. "[A]s subrogee of" the Insured, NJM sent a letter to Lallygone "relative to a fire loss[1] that occurred" at the property. The letter informed Lallygone that its purpose was to "place [Lallygone] on notice of the potential for a subrogation lawsuit" and the letter "should be immediately forwarded to [Lallygone's] liability insurance carrier/attorney for review. "
On May 19, 2022, the Insured disputed the $22,500 deposit payment through PayPal and represented that the "item" he purchased was "defective or not as described." As a result, PayPal withdrew the funds from Lallygone's account and returned them to the Insured's account.
Thereafter, NJM "paid more than $187,000 in damages" to the Insured as a result of the garage collapse.[2]
On October 6, 2022, Lallygone filed a complaint against the Insured in the Special Civil Part. Count one alleged breach of contract. Count two alleged unjust enrichment and asserted the Insured had not paid for any of the work done by Lallygone. Lallygone's complaint stated that "[a]fter the collapse of the garage, [the Insured] filed an insurance claim with his homeowner's insurance carrier, who subrogated and/or resolved the claim with the insurance carriers for the respective contractors." The complaint certified pursuant to Rule 4:5-1 that "the claims raised herein are not the subject of any other action or arbitration inasmuch as the parties here are not parties in any other action involving the claims herein."
On November 19, 2022, the Insured, who was represented by an attorney, answered Lallygone's complaint and filed a counterclaim. In the answer, the Insured admitted that he withdrew the funds in PayPal following the collapse of the garage. Count one of the Insured's counterclaim alleged breach of contract, and stated that Lallygone "failed to properly engineer the garage"; failed to shore up the garage prior to beginning any renovations; and otherwise failed to perform the contracted work substantially free from defects in workmanship and in a good workmanlike manner.
Count two alleged violations of the Consumer Fraud Act, N.J.S.A. 56:8-1 to -2.13, and stated that Lallygone misrepresented the quality of the work to be performed, the timeline for completion of the work, and that Lallygone and/or its agents caused the garage to collapse, all of which resulted in damages to the Insured. Finally, count three of the counterclaim alleged fraud, and stated that Lallygone knowingly or recklessly concealed the condition of the garage "in order to induce [the Insured] to retain their services."
In his pleading, the Insured admitted that the insurance claim with NJM "has been resolved." The Insured's counsel similarly certified under Rule 4:5-1 that there were no other pending matters and that there were no other parties who should be joined "because of potential liability to any party on the basis of the same transactional facts."[3]
The Special Civil Part conducted a two-day bench trial, which began on January 12, 2023. George Nader, identified as "the Principal of Lallygone," testified on Lallygone's behalf about the terms of the contract between Lallygone and the Insured as well as the expenses that Lallygone incurred because of taking the job and performing the necessary work prior to the collapse of the garage. Nader testified on cross-examination that Lallygone used all the supplies it bought prior to the collapse of the garage. Nader also testified as to the sequence at which the work was performed.
The Insured testified on his own behalf and corroborated Nader's testimony as to the scope of the work Lallygone performed. The Insured testified that he was not present when the garage collapsed and was not sure what caused it to collapse at the time. When asked about his counterclaims, the Insured offered little evidence in support, and instead relied on his own observations and his limited experience as a contractor. The Insured did not offer expert testimony as to why the garage collapsed, and instead relied solely on the fact that it collapsed as evidence that Lallygone committed consumer fraud.
On January 13, 2023, the trial court found for Lallygone and awarded damages of $9,151.76 because the Insured failed to compensate Lallygone for the cost of the materials and workmanship prior to the collapse of the garage. In an oral decision on the record, the court found that Lallygone did not commit a violation of the Consumer Fraud Act as alleged in the Insured's counterclaim. In part, the court did not find "ascertainable loss" because at that point the Insured had not yet "paid a penny to Lallygone." Specifically, the court noted that it did not have "a scintilla of evidence of damages other than storage and . . . I do not have any unlawful conduct or any unlawful conduct that resulted in the ascertainable loss." Accordingly, the court dismissed the Insured's Consumer Fraud Act claim.
The court also found there was no competent evidence in the record as to what caused the garage to collapse, finding that it was "a dilapidated structure that needed a lot of work and the mere fact that that was not successful does not mean that [Lallygone] did anything wrong," particularly in the absence of any expert testimony from the Insured as to the potential cause. Therefore, the court dismissed the Insured's counterclaim in its entirety.
On February 8, 2023, NJM filed a complaint in the Law Division as subrogee of the Insured against Lallygone and sought to recover all of the money it previously paid the Insured on his claim. The complaint consisted of three counts: count one for negligence, count two for violation of the Contractor's Registration Act, N.J.S.A. 56:8-136 to -167, and the Consumer Fraud Act, and count three for breach of contract, specifically, breach of the implied warranty to perform services in a workmanlike manner. In response, Lallygone filed a motion to dismiss the complaint under the principle of res judicata and the entire controversy doctrine based on the Special Civil Part's determination in its favor in the prior action between it and the Insured.
Following oral argument, the trial court granted Lallygone's motion and dismissed NJM's complaint with prejudice. In its thorough oral decision rendered on April 21, 2023, the court found that the Insured presented no evidence in the prior action "to substantiate that Lallygone failed to complete its work or that the fact that the garage collapsed was indicative of Lallygone failing to have completed its work pursuant to appropriate standards and practices." As a result, the Insured did not meet his burden of proof to sustain his claim that Lallygone violated the Consumer Fraud Act, or to sustain a cause of action against Lallygone for breach of contract or for fraud in connection to the work it completed. Thus, the court found the Insured "prosecuted and lost the claims for breach of contract, consumer fraud and common law fraud, all of which stem from the same factual nexus of events related to the collapse of the garage."
The court also acknowledged that NJM brought a claim for negligence, which was not part of the Insured's counterclaim in the Special Civil Part, but found the addition of that claim was "not relevant to th[e] court's decision, as that negligence claim is all stemming from the same factual nexus and the same written contract between [the Insured] and Lallygone." Finally, as to NJM's claims that it never received notice of the Special Civil Part action, the trial court highlighted that "it is the counterclaim which generated [the Special Civil Part's] decisions relating to contract, consumer fraud, common law fraud and theories of unjust enrichment and that counterclaim was instituted by [N]M]'s insured."
The trial court further found that the entire...
To continue reading
Request your trial