NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court ."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.
SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A-4058-18
ENCLAVE CONDOMINIUM ASSOCIATION,
Plaintiff-Appellant,
v.
LIME CONTRACTING, INC., and KEMPER INSURANCE COMPANY, a Corporation, as successor in interest to Universal Bonding Insurance Company,
Defendants-Respondents,
and
KANALSTEIN DANTON ASSOCIATES, P.A., O'DONNELL & NACCARATO, INC., and STRONGWALL INDUSTRIES, INC.,
Defendants,
LIME CONTRACTING, INC., Defendant-Respondent/ Third Party Plaintiff,
STRONGWALL INDUSTRIES, INC., DURAN PAINT k/n/a SHERWIN WILLIAMS, SIKA CORP., TRACO WINDOWS, and O'DONNELL & NACCARATO,
Third-Party Defendants.
KANALSTEIN DANTON ASSOCIATES, P.A.,
Defendant/ Third-Party Plaintiff,
O'DONNELL & NACCARATO,
Third-Party Defendant. _____________________________
Argued May 19, 2021 – Decided July 23, 2021
Before Judges Sumners and Geiger.
On appeal from the Superior Court of New Jersey, Law Division, Atlantic County, Docket No. L-4523-10.
R.C. Westmoreland argued the cause for appellant (Westmoreland Vesper Quattrone & Beers, PA, attorneys; R.C. Westmoreland, on the briefs).
A-4058-18 2 Kevin J. Russell argued the cause for respondent, Lumbermens Casualty Insurance Company. 1
David P. Lonski argued the cause for respondent, Lime Contracting, Inc. (Shamy, Shipers & Lonski, PC, attorneys; David P. Lonski, on the brief).
Sharon K. Galpern argued the cause for respondent, Lime Contracting, Inc. as to Count 6 of the Amended Complaint (Stahl & DeLaurentis, PC, attorneys, join in the brief of respondent Lumbermens Casualty Insurance Company).
PER CURIAM
Plaintiff Enclave Condominium Association (Enclave) appeals from a
June 30, 2017 order that: (1) barred the testimony of Enclave's liability expert,
Andrew G. Scheerer, P.E.; (2) granted summary judgment to defendants Lime
Contracting, Inc. (Lime) and Lumbermens Casualty Insurance Company
(Lumbermens); and (3) dismissed plaintiff's second amended complaint with
prejudice. We affirm substantially for the reasons expressed by Judge James P.
Savio in his comprehensive written decision.
This case stems from a project to restore the exterior of a high-rise
condominium building that was experiencing water infiltration. Several parties
were involved in the project. This appeal is limited to issues involving Lime,
1 Improperly pled as Kemper Insurance Company. A-4058-18 3 the contractor for the project, and Lumbermens, the bond surety. Enclave
alleged Lime breached the contract and was negligent. Enclave raises three
principal issues, claiming the trial court erred by: (1) barring Scheerer's report
and expert testimony as inadmissible net opinions; (2) concluding backer rods
and backer board tape were not required by the plans and specifications; and (3)
not conducting a N.J.R.E. 104 hearing.
We derive the following facts from the record. Enclave retained
Kanalstein Danton Associates, P.A. (KDA), a licensed architectural firm, and
O'Donnell & Naccarator, Inc. (O&N), a licensed engineering firm, to investigate
water leakage conditions at its high-rise condominium building located along
the Atlantic City boardwalk. Following two years of investigation by KDA and
O&N, a construction contract for the restoration of the exterior of the building
was prepared by KDA, O&N, and Enclave's attorney. In February 2002,
Enclave contracted with Lime to perform the exterior restoration work. The
Agreement between the parties, which was frequently revised as the work
progressed, ultimately consisted of several hundred pages of documents,
drawings, meeting notes, and revisions. Lime's scope of work and the
specifications for the project constantly changed as the work progressed.
A-4058-18 4 On August 18, 2010, Enclave filed a complaint alleging breach of
contract, negligence, and consumer fraud claims against Lime, Lumbermens,
and KDA, the project architect. In an amended complaint, Enclave named O&N
and Strongwall Industries, Inc. (Strongwall) as additional direct defendants. 2 In
April 2015, Enclave filed a second amended complaint that named Lime, KDA,
O&N, Strongwall, and Lumbermens as defendants.3 Pertinent to this appeal,
count five alleged Lime breached its contractual duties by "failing to comply
with the plans and specifications set forth in the Agreement or otherwise failing
to do the job in a workmanlike manner . . . ."
More specifically, Enclave alleged that Lime: (1) "removed outer facade,
cleaned and prepared the surface for installation of a new outer facade in a
defective and unworkmanlike manner"; (2) "caulked the windows in a defective
and unworkmanlike manner contrary to the specifications and industry
standards"; (3) "failed to properly and in [a] . . . workmanlike manner apply the
coating to the balconies and . . . properly caulk the transition from the coating
to the glass doors"; (4) "failed to supervise . . . its workmen, permitting defective
work to be performed by them on the facade, the balconies, and the garage
2 Enclave's first amended complaint is not part of the record on appeal. 3 Enclave settled and dismissed its claims against O&N, KDA, and Strongwall. A-4058-18 5 floors"; (5) "failed to correct the building's leaks as required by their contract";
(6) "on the advice of [Lime, KDA, and O&N], [Enclave] replaced the windows
on the ocean side of the building, which did not stop the leaking because it was
later discovered that the leaks were being caused by the negligently-installed
facade, making clear that the window replacement was an unnecessary act and
cost"; and (7) convinced Enclave, KDA, and O&N "to change the original
specifications" by allowing it to use an inadequate acrylic coating on the
balconies, then and applied the acrylic coating "in a defective manner . . . ."
Enclave allegedly notified Lime of these issues in April 2008, but Lime
"refuse[d] to remedy the situation by making reparations to the building without
further cost to [Enclave]." Enclave claimed that "[r]estorations to bring the
building into compliance with the plans [would] be costly, damaging [Enclave]
in the amount of $2.3 million."
In count six, Enclave claimed Lime was liable for negligently performing
its contractual duties. Enclave alleged that Lime breached its duty of care by:
(1) "failing to exercise reasonable and ordinary care in building, constructing,
and developing [Enclave's] property in a good and workmanlike manner and of
sufficient quality"; (2) "failing to adequately and properly retain, superintend
and supervise all employees and subcontractors on the work of improvement";
A-4058-18 6 and (3) "failing to refrain from actions which would damage the property in
areas inside and outside the intended scope of work." Enclave claimed that
Lime's negligence caused damage to the exterior and interior of the property,
which required Enclave to hire other contractors to perform repairs.
Count seven alleged Lumbermens issued a $2,126,000 contract bond to
indemnify Enclave and "hold it harmless from any pecuniary loss resulting from
a breach of any of the terms, conditions[,] or covenants of the construction
contract by its principal, [Lime]." To secure "performance of the contract and
the completion of the improvements, [Lime and Lumbermens] executed and
delivered to [Enclave] . . . their bond in the sum of $1,653,479." Lumbermens
agreed "to complete the contact or fund the completion" in the event Lime
breached the contract. On July 28, 2008, Enclave gave Lumbermens "[n]otice
to perform under the [b]ond" and alleged Lumbermens "failed to honor its
obligations" under the bond.
Enclave retained Scheerer as a liability and damage expert and Mark
Harris Berman, AIA, PP (Berman), a principal of Berman & Wright
Architecture, Engineering & Planning, LLC, as a damage expert. Scheerer
issued four reports and was deposed over the course of six days. Discovery
ended on July 1, 2016.
A-4058-18 7 In April 2016, Lime moved to bar Scheerer's and Berman's expert reports
and testimony as inadmissible net opinions and for summary judgment. In May
2016, Lumbermens moved for summary judgment and joined in Lime's motion
to bar the testimony of Enclave's experts.
Following oral argument, Judge Savio was informed that Scheerer was
Enclave's sole liability expert on its breach of contract claim against Lime.
Enclave confirmed that Berman would testify against Lime only as to damages.
During a telephonic conference in November 2016, counsel for Enclave,
Lime, and Lumbermens advised Judge Savio that they agreed that a N.J.R.E
104(a) hearing was not necessary. Counsel further agreed that the court could
decide the motions to bar Scheerer's testimony without oral argument, based on
Scheerer's deposition testimony and the briefs submitted.
On June 30, 2017, Judge Savio issued an order and accompanying sixty-
two-page memorandum of decision barring Scheerer's expert testimony,
granting summary judgment to Lime and Lumbermens, and dismissing Enclave's
second amended complaint with prejudice.
Before addressing the arguments, the judge considered the deposition
testimony and summarized the relevant documents. First, he looked to
Scheerer's April 10, 2012 report titled "Restoration & Cost Report For Fa çade
A-4058-18 8 & Balconies." Second, the judge considered the certification of Paul Perrina,
the president of Lime. Third, he considered the deposition testimony of O&N's
project manager, Steven L. Eliker. Last, the judge considered Scheerer's
deposition testimony.
The judge noted that Scheerer conducted multiple site visits from 2007 to
2012 to observe and prepare building restoration documents to address the
façade and balcony leaks. Scheerer's report noted Structural Design Associates
(SDA) performed multiple "swing stage inspections and prepared façade and
balconies repair documents during the period of 2007 to 2012." The opinions
expressed in Scheerer's April 10, 2012 report were based upon information
provided by SDA and visually accessible conditions observed during SDA's
investigations. The report stated that "during the window water testing, SDA
discovered that the Duran waterproofing façade coating [applied] by Lime was
delaminating from the concrete substrate." The report contained the following
list of building deficiencies and damages observed by SDA.
1. Adhesive or cohesive failure of sealant[.] 2. Sealants improperly applied over sealant and/or waterproofing coatings. 3. Sealants improperly applied without backer rod or bond breaker tape. 4. Unsealed joint or gaps in sealant application. 5. Dissimilar materials in contact without required sealant joint.
A-4058-18 9 6. Insufficient slope of balcony topping or drainage impeded. 7. Insufficient bond [of] topping material to underlying concrete substrate. 8. Insufficient bond [of] concrete rail patch, grout, or repair material to underlying concrete. 9. Cracks in exterior façade and balcony not sealed. 10. Unfilled surface air voids in concrete façade (surface imperfections). 11. Waterproof coating not applied properly. 12. Conditions allowing water infiltration below repair materials and into interiors.
In addition, the section of the report titled "Documentation of Existing
Conditions," included Scheerer's opinions based upon the visually accessible
conditions observed during SDA's investigations. The court highlighted the
following sections from the report:
Concrete Façade and Rehabilitation
The existing Duran elastomeric coating installed by Lime was the proper product selection to coat the faced walls. The present failure of the facade coating was due to poor preparation of the concrete substrate and a lack of cohesive bond. Lime did not properly replace the building concrete sealant joints.
....
Balcony Railing Post Anchorage
The past requirement to remove balcony railings by Lime has caused railing post pocket failures. Water is actively entering the rails and post pockets . . . .
A-4058-18 10 The rail pocket failures are due to poor patching requirements by Lime and poor handrail specifications to patch and seal by the design professionals.
Balcony Waterproof Coating
The Strongwall balcony coating is an acrylic waterproofing coating that was improperly specified for the post tension concrete building structure. The Strongwall coating does not have the flexibility to bridge balcony slab cracks that are typical of post tension structures . . . The Strongwall balcony coating was the incorrect product to coat the Enclave balconies.
Next, the court discussed Perrina's certification, which revealed "Lime
first performed work for Enclave in 2000 when it, and other contractors, were
hired to apply balcony coating materials to test balconies. Enclave was not
satisfied with the products selected by" KDA and O&N. "Enclave requested
that the applicators advise of other products that they had used which did not
have any odor and had a smooth finish. Perrina provided the name of two (2) or
more products to Enclave and its professionals." Unbeknownst to Perrina,
Enclave completed the bid packages and awarded the contract to another
contractor. However, during the Fall of 2001, Enclave contacted Perrina for
Lime to submit a bid because the contractor had left the job. Enclave informed
Perrina that the previous "contractor was not careful and ruptured a structural
A-4058-18 11 cable running within the balcony floor." Perrina was warned to not penetrate
the existing balcony floors for any reason.
Lime bid on the work and a contract was prepared, which listed KDA and
O&N as Enclave's "representatives for purposes of the administration of the
contract." "The bid consisted of a series of unit prices for concrete repair work,
such as per linear foot for crack repairs and per square foot for spall repairs."
"According to Perrina, the work to be performed by Lime constantly
changed." Although the contract was dated February 1, 2002, the Agreement
consisted "of the following documents: the February 1, 2002 Agreement; the
General Conditions of the Contract; the Project Manual as amended; Addenda
'A' through 'E'; Construction Bulletins #1 through #5; eighteen (18)
Architectural Sheets; Numerous Field drawings by O&N; Specifications;
Change Orders; and Bi-Weekly Meetings memorialized in Written Minutes."
"Perrina certifie[d] that many of these documents were prepared after the
original contracts were executed in 2002."
"Perrina certifie[d] that . . . the pitch of the balconies varied greatly from
balcony-to-balcony and from the architectural drawings[,]" and "very few
balconies had enough pitch to create a slope as set forth in the drawings."
"Enclave and its professionals were alerted to this fact." As a result, the "scope
A-4058-18 12 of the work on the balconies varied from balcony-to-balcony and the work to be
performed was directed by the Enclave's representatives, KDA and O&N in the
field." Notably, Eliker's statements about "the revisions made to the original
specifications accurately reflect[ed] the revisions to the contract related to
Lime's scope of work."
The judge found that Perrina's certification demonstrated that the work
progressed in the following manner. First, "Lime would scarify and sound the
concrete to remove loose debris"; second, "Enclave's representatives would view
the building and identify those areas for which Lime would be paid to make
repairs to the concrete"; third, "Lime would make the requested repairs to the
concrete"; fourth, "Enclave's representatives would view Lime's work to satisfy
themselves that the repairs were in accordance with the specifications and to
measure the quantity of repairs for billing purposes"; and last, "Lime would
apply the top coating materials and Enclave's representative would again view
the work to confirm that the work was performed in accordance with the
specifications." Lime performed the work in phases over the course of several
years.
After Lime completed the west elevation of the building in 2002, Enclave
received complaints that water continued to penetrate the condominium units.
A-4058-18 13 Lime was advised that Enclave hired a contractor named Quinn "to inject foam
into the base of the window walls and sliding glass doors. The project was [a]
complete failure." "[T]he project created holes in the window frames, which
allowed water to enter into the units." "Perrina certifie[d] that Lime was
instructed not to address these holes or the window wall threshold issues."
By 2006, Lime had completed its work. Enclave and its professional representatives developed a punch list. Lime protested that much of the requested punch list was a matter of maintenance, since new cracks had developed after Lime completed its work in accordance with the contract documents, as revised. Enclave agreed and Addendum "E" was executed in early 2007, in which Lime would be paid extra to complete all of the items on the punch list. Each item on the punch list was inspected by . . . Enclave's design professional and certified as completed in accordance with the contract. Lime received its final payment in . . . 2007.
The judge next considered Eliker's deposition testimony. Eliker, O&N's
project manager, confirmed "that O&N was originally responsible for the walls
and then ultimately became responsible for the balconies." Eliker testified that
KDA "prepared drawings for the balconies" that "were not possible to achieve"
and "just couldn't work." Eliker explained that "after talking to KDA, . . .
Enclave directed O&N to do the best that it could on the balconies because
KDA's recommended alternative repairs were expensive . . . ." "[D]ue to the
balcony pitch limitations encountered in the field, O&N advised . . . Enclave
A-4058-18 14 that there [was] no solution without replacing window walls and that it [was]
too expensive to replace all of the windows and doors."
According to Eliker, "[t]he foam injection work by Quinn was an
experiment intended to prevent water from entering the Enclave building
through the wall thresholds . . . that did not work . . . ." As for the crack repairs,
Eliker explained it was mostly the manufacturer of the materials that specified
which cracks to repair at each balcony. When asked about the specifications for
the work on the balconies, Eliker believed that the project specifications
required the use of a Tamms product or some equivalent. When asked if he
knew whether the specifications allowed for the substitution of materials, Eliker
replied that similar materials were usually allowed. However, the specifications
required O&N to approve the substitution of materials.
In addition, Eliker explained that the work using Strongwall materials was
done in accordance with Strongwall specifications. In February 2002, Eliker
wrote to Perrina informing him that "Eliker reviewed Lime's coating and
patching material submittals and had no objections." The letter included an
attachment from Strongwall with detailed instructions for applying the product.
"Regarding the cracks, where cables met the end of the balconies, Eliker
confirmed that 'we seal those cracks the best we can.'" Eliker admitted that
A-4058-18 15 water infiltration persisted because the cracks still moved. He testified that even
if everything was done according to the specifications, it is possible that if there
was movement, there would still be water infiltration.
Eliker confirmed that there were many changes to the scope of Lime's
work compared to those originally set forth in the project manual. "[O]nce Lime
came into the picture, the manual was thrown out. Everything was different."
Eliker explained that the purpose of the project manual is to detail all the
specifications, including "how the contractor gets paid and submission for
payment, what he has to submit for approvals[,]" and "technical specification[s]"
identifying the required materials and their application. The contractor relies on
the specifications and details in the project manual to perform its work.
However, since the project manual was "thrown out" and different products were
being used, the parties employed "a process by which you would submit requests
for payment and change orders . . . ." Eliker's testimony and the construction
meeting minutes suggested that Lime's scope of the work was amended.
Next, the judge reviewed Scheerer's deposition testimony. Scheerer
explained that the sealant contained no backer rod. However, when asked
whether the specification required the use of a backer rod, Scheerer explained it
was standard practice in the industry for caulking control joints. When asked if
A-4058-18 16 they reviewed the product specifications to determine if it required use of a
backer rod, Scheerer answered, "No." Scheerer also "testified that although he
knew the name of Quinn Contracting, it did not mean anything to him with
relation to the Enclave project."
Scheerer testified that there was no coating on the weep holes. "When
asked if he knew if there was supposed to be coating in those weep holes,
Scheerer replied he wasn't around during construction." Scheerer "reviewed
some of O&N's plans, but when asked" whether the plans required use of
Elastomeric or Strongwall coating in the weep holes, Scheerer explained that
the drawings were not detailed or clear.
Scheerer's testimony revealed that he "did not know the manufacturer of
the original curtain wall sliding doors." When asked how he determined the life
expectancy of those doors, Scheerer testified that published standards generally
provided information about the life expectancy of products. Although Scheerer
explained that the American Architectural Manufacturing Association (AMMA)
published standards concerning aluminum products and curtain walls, windows,
and doors, Scheerer did not consult such standards when he informed the
Enclave's Board about the lifespan of the curtain wall doors. Instead, based on
his fifteen years of experience with designing window systems and curtain walls,
A-4058-18 17 he was confident that he could "give them a number that [he] felt good about."
In addition, when asked if he knew the life expectancy of the Strongwall
products used on the balcony doors, Scheerer testified that "cementitious
coatings, and that's what I will classify that product," would have a life
expectancy of ten to twelve years in the environment of Atlantic City.
Scheerer's testimony further revealed he did not conduct any tests to
determine why the Strongwall materials failed to bond to the underlying
concrete substrate. Scheerer did not know whether the Strongwall's instructions
required cracks to be treated before installation of the cementitious material.
Notably, Scheerer testified that he was not familiar with Lime's contract
and did not thoroughly review it. He admitted "he did not see the contract that
referenced the construction documents." Scheerer focused on the construction
documents from KDA and O&N.
When asked if he knew whether Lime made any repairs to the roof,
Scheerer said the ''penthouse structure was coated and caulked." Further
testimony from Scheerer revealed that he did not know whether Lime made
repairs to the penthouse roof. Additionally, "Scheerer was unaware of any
drawing or change order for the penthouse [and] unaware that Enclave
management asked Lime for boxes of caulk."
A-4058-18 18 When asked about the various damages he observed during inspections
and his conclusions about what caused the damages, Scheerer admitted he
conducted no tests and instead used his engineering judgment and experience to
identify active leaks or signs of past leaks caused by the façade or the balconies.
Scheerer later "admitted that he did not look at the Strongwall documents prior
to issuing the reports."
Judge Savio concluded that the primary issue was whether Scheerer's
deposition testimony and reports regarding the breach of contract claim were
inadmissible net opinions. The judge rejected Enclave's contention that
Aronsohn v. Mandara, 98 N.J. 92, 98 (1984), stood for the proposition that "a
qualified expert, by observing the work, can opine to its failure to meet industry
standards which, if proven, constitutes a breach of the construction contract."
He found that the facts in Aronsohn were distinguishable. In Aronsohn "there
was no evidence regarding the contract, the exact scope of work or the manner
of installation; whereas in this present case, there was a written contract." In
addition, unlike here, there was no architect or engineer involved in Aronsohn.
The judge concluded Scheerer had "a general lack of knowledge of Lime's
contractual scope of work." He found "Scheerer had no knowledge of the
A-4058-18 19 contract and was unaware of many aspects as to [what] Lime's scope of work
and responsibilities were . . . ."
The judge found the "scope of work" consisted of various contract
documents defining the specific work Enclave contracted Lime to perform.
Article 1.1.3 of the Agreement referenced "contract documents" when defining
the "work" to be performed by Lime. In addition, "contract documents" are
defined in Article 1 as including "drawings, specifications and addenda and
other documents."
Lime's "performance must be measured against the contract." Therefore,
he "must compare the requirements of the contract against the actual
performance to determine if there was a breach[,]" which required "a thorough
review of the Enclave project record."
For Enclave to meet its burden of proof, it must (1) "clearly define the
scope of Lime's contractual obligations"; (2) "identify, through competent
testimony, how Lime specifically failed to fulfill its contractual obligations";
and (3) establish that Lime's breach caused loss to Enclave. Judge Savio
concluded that Scheerer's testimony and reports failed to raise a jury question
with respect to breach of contract because his deposition testimony clearly
indicated he had not reviewed, nor familiarized himself with the contract
A-4058-18 20 documents and did not know many aspects of Lime's original scope of work, or
subsequent changes to the scope of work. He further found that Scheerer's
conclusions about Lime's negligent work made no reference to any
specifications of the work to be performed. In many instances,
the alleged defect was an apparent omission by Lime in the performance of work (as adding a backer rod, filling bug holes, painting a primer coat) which were specifically addressed and eliminated from Lime's scope of work as demonstrated in the above-referenced certified statements and testimony.
Regarding the lack of a backer rod, the judge noted:
Scheerer opines that the sealants were improperly applied without backer rod or bond breaker tape. However, during Scheerer's deposition testimony, when asked "where in this specification did it call for a backer rod[,"] he responded that "it's standard practice in my industry for caulking control joints." Immediately thereafter, when asked "did you review the product specifications to see if backer rod was specified by the professionals there," Scheerer answered "No."
The judge concluded that Scheerer was unable to provide testimony to
show how Lime breached the terms of the contract regarding the backer rod issue
because he knew nothing about Lime's scope of work and responsibilities as to
the backer rod. He found that "aside from Scheerer' s personal opinion, he [did]
not offer any factual basis to support this opinion."
A-4058-18 21 As to the issue of using Strongwall materials on the balconies, the judge
found that Scheerer offered nothing more than: (1) "his personal and speculative
opinion that he would not have specified Strongwall as a balcony coating"; (2)
"visual inspections with no recorded or reproducible facts, measurements or
other data"; and (3) "a res ipsa argument that because he has observed material
delamination, damages must have occurred." He further found that Scheerer
failed to provide any authority in support of his conclusion that the Strongwall
material was inappropriate for a post tension building. Scheerer did not review
Strongwall documents prior to issuing his report. "Additionally, [Scheerer] did
not identify the actual Strongwall materials used at the project in his reports."
Although Lime changed the balcony coating from the Tamms product originally
specified to the Strongwall product, Scheerer testified that "the ultimate
approval of changes in material lie with the design professionals."
As to Enclave's remaining allegation in count five, the judge found that
Scheerer supplied "his observations and opinions" without identifying any
contractual obligation linking Lime's performance with the alleged defective
work. Judge Savio concluded that "Scheerer's opinion [was] purely speculative"
since he "does not have a factual basis for his opinions."
A-4058-18 22 In sum, Judge Savio determined that Schererer's testimony and reports
constituted inadmissible net opinions and barred their use at trial.
As to count six, the judge found that Enclave's negligence claims against
Lime were precluded by the economic loss doctrine. He explained that this
"complex litigation" case involved breach of contract and negligence claims by
Enclave against Lime for failing to complete the work in a workmanlike manner.
The judge found that Article 3.5 of the contract contained an express contractual
provision concerning workmanship. "Since there appears to be express
contractual provisions regarding Lime's workmanship, the issue of whether or
not there is an implied covenant that Lime will perform the contract in a
reasonable, good and workmanlike manner is immaterial and secondary."
As to Enclave's remaining claims of negligence, such as negligent
supervision of employees and subcontractors, the court found that those
"allegations by Enclave against Lime sound in contract, not tort." Accordingly,
he dismissed Enclave's negligence claims against Lime.
Judge Savio next addressed whether expert testimony was necessary to
establish Enclave's breach of contract claim against Lime. Applying Butler v.
Acme Markets, Inc., 89 N.J. 270 (1982), he found this case "involve[d] many
terms of art such as 'workmanlike manner' and 'construction industry standards'
A-4058-18 23 and the interpretation of "plans and specifications' that are beyond the common
knowledge of the average juror." The judge found that "most typical jurors of
common judgment and experience would have a very difficult time and would
more than likely be unable to form a valid judgment as to whether Lime's
conduct was reasonable." More specifically, the court found "that the terms and
standards involved in this action, the deviation from the standards, the casual
connection between the deviation and the physical damages, if any, and the
monetary amount of the alleged damages are matters beyond the common
knowledge and experience of the average juror." The judge, therefore,
determined "that expert testimony [was] required for Enclave to successfully
prove its breach of contract claims as to Lime." Accordingly, he concluded
Enclave would be unable to establish a breach of contract claim against Lime
and Lumbermens because the reports and testimony by Enclave's only liability
expert were inadmissible at trial. Judge Savio granted summary judgment
dismissing count five, concluding there was no "competent expert testimony that
there has been any contractual violation by Lime."
As to the sixth count, the judge reiterated that Enclave's negligence claims
against Lime were essentially a breach of contract cause of action—not a
negligence action. Since summary judgment was granted dismissing the breach
A-4058-18 24 of contract claims, summary judgment was also granted to Lime dismissing the
negligence claims.
As to Enclave's breach of contract claim against Lumbermens, the judge
found there was no basis for liability of the surety on the performance bond
because Enclave could not sustain its breach of contract claim against Lime, the
bond principal. Accordingly, the court granted summary judgment to
Lumbermens and dismissed count seven.
Since Lime and Lumbermens were the only remaining defendants, the
judge dismissed the second amended complaint in its entirety without reaching
the issue of whether Berman issued an inadmissible net opinion. The judge
issued subsequent orders dismissing Lime's counterclaims.
On appeal, plaintiff argues:
A. THE COURT ERRED BY FAILING TO APPLY THE SUPREME COURT'S STANDARD IN ARONSOHN v. MANDARA.
1. Trial Court Holdings Show Anti-Aronsohn Principles.
B. BACKER ROD ISSUE.
C. PROCEDURE LEADING TO MOTION TO BAR [AND] SUMMARY JUDGMENT.
A-4058-18 25 D. THE KEMP4 POLICY OF FAIRNESS [AND N.J.R.E.] 104 HEARING.
E. NEGLIGENCE COUNTS/DAMAGES.
We find no merit in any of these arguments and affirm substantially for
the reasons expressed by Judge Savio in his comprehensive and well-reasoned
written decision. Our careful review of the record convinces us that Judge
Savio's factual findings are amply supported by substantial evidence in the
record and his legal determinations are consonant with applicable legal
principles. We add the following comments.
Enclave argues that the trial court erred by failing to apply the principles
adopted in Aronsohn. We disagree.
In Aronsohn, homeowners contracted "to add a patio to the rear of their
home" in 1974. 98 N.J. at 95. The plaintiffs purchased the home in 1975. Id.
at 96. Three years later, "plaintiffs noticed that the patio was beginning to
separate from the wall of the house[,]" "some of the slate slabs . . . were
beginning to rise[,]" and "the outside patio wall was beginning to buckle." Ibid.
Plaintiffs sued the contractor "alleging strict liability, negligence, and breaches
of express and implied warranties." Ibid. The case proceeded to trial. The trial
4 Kemp ex rel. Wright v. State, 174 N.J. 412 (2002). A-4058-18 26 court granted the contractor's motion to dismiss based on lack of privity, the
economic loss doctrine, and because no implied warranty of habitability or strict
liability applied. Id. at 97. We affirmed.
The Supreme Court reversed, holding that when "there is no express
contractual provision concerning workmanship, the law implies a covenant that
the contract will be performed in a reasonably good and workmanlike manner."
Id. at 98. The Court also held that plaintiffs did not establish that the contractor
had violated any express provisions in the construction contract. Id. at 103.
The facts in Aronsohn were readily distinguishable. The Court's
reasoning in Aronsohn was based on the absence of an "express contractual
provision concerning workmanship . . . ." Id. at 98. Here, Article 3.5 of the
contract contains the following express warranty concerning workmanship:
The Contractor warrants to the Owner that materials and equipment furnished under the Contract will be of good quality, and new unless otherwise required or permitted by the Contract Documents, that the Work will be free from defects not inherent in the quality required or permitted and that the Work will conform with the requirements of the Contract Documents. Work not conforming to these requirements, including substitutions not properly approved and authorized, may be considered defective. The Contractor's warranty excludes remedy for damage or defect caused by abuse, modifications not executed by the Contractor, improper or insufficient maintenance, improper operation, or normal wear and tear under normal usage.
A-4058-18 27 The Architect/Engineer and/or Owner may require the Contractor to furnish satisfactory evidence as to the kind and quality of materials and equipment.
Aronsohn did not establish a new negligence standard to be applied to a
breach of contract claim. The implied warranty adopted in Aronsohn is based
on contract law, not negligence principles. See Saltiel v. GSI Consultants, Inc.,
170 N.J. 297, 316 (2002) (stating that "in commercial transactions the law may
recognize certain implied contractual obligations, such as a builder's obligation
to construct a building or structure in a workmanlike fashion" (citing Aronsohn,
98 N.J. at 107)). Failing to complete certain tasks is evidence of a breach of
contract, not negligence. Additionally, when there is an express warranty
regarding workmanship, negligently completing the tasks set forth in the
contract is also evidence of a breach of contract. See Aronsohn, 98 N.J. at 107.
We next address the net opinion issue. The doctrine barring the admission
at trial of net opinions is a "corollary of [N.J.R.E. 703] . . . which forbids the
admission into evidence of an expert's conclusions that are not supported by
factual evidence or other data." Townsend v. Pierre, 221 N.J. 36, 53-54 (2015)
(alteration in original) (quoting Polzo v. Cnty. of Essex, 196 N.J. 569, 583
(2008)). The net opinion doctrine requires experts to "give the why and
wherefore" supporting their opinions, "rather than . . . mere conclusion[s]." Id.
A-4058-18 28 at 54 (quoting Borough of Saddle River v. 66 E. Allendale, LLC, 216 N.J. 115,
144 (2013)).
Experts must "be able to identify the factual bases for their conclusions,
explain their methodology, and demonstrate that both the factual bases and the
methodology are reliable." Id. at 55 (quoting Landrigan v. Celotex Corp., 127
N.J. 404, 417 (1992)). "Given the weight that a jury may accord to expert
testimony, a trial court must ensure that an expert is not permitted to express
speculative opinions or personal views that are unfounded in the record." Ibid.
See also Davis v. Brickman Landscaping, Ltd., 219 N.J. 395, 401 (2014)
(holding the expert issued an inadmissible net opinion that represented only his
personal view and was not founded upon any objective support); Pomerantz
Paper Corp. v. New Cmty. Corp., 207 N.J. 344, 373 (2011) (same). An expert's
conclusion should be excluded "if it is based merely on unfounded speculation
and unquantified possibilities." Townsend, 221 N.J. at 55 (quoting Grzanka v.
Pfeifer, 301 N.J. Super. 563, 580 (App. Div. 1997)).
That said, experts may base their opinions upon unwritten industry
standards without violating the net opinion doctrine. See, e.g., Davis, 219 N.J.
at 413 (quoting Kaplan v. Skoloff & Wolfe, P.C., 339 N.J. Super. 97, 103 (App.
Div. 2001)) (recognizing that an expert's opinion may be based on an "unwritten
A-4058-18 29 custom or practice" of the industry); Satec, Inc. v. Hanover Ins. Grp., Inc., 450
N.J. Super. 319, 333 (App. Div. 2017) (noting that an expert's opinion may be
based on unwritten "generally accepted standards, practices, or customs of the
. . . industry"). The critical element is that the expert's opinion must be based
upon written or unwritten objective standards recognized in the field and cannot
be merely an expression of the expert's personal subjective view.
Enclave argues that the court erred by not holding an evidentiary hearing
even though none of the parties requested one. Relying on Kemp, Enclave
contends trial courts must independently exercise their discretion to hold Rule
104 hearings before barring expert testimony at the summary judgment stage.
N.J.R.E. 104(a)(1) provides that a judge "shall decide any preliminary
question about whether a witness is qualified, a privilege exists, or evidence is
admissible." The judge "may hear and determine such matters out of the
presence or hearing of the jury." N.J.R.E. 104(a)(2). The decision to conduct a
Rule 104 hearing rests within the sound discretion of the trial court. Kemp, 174
N.J. at 432. "Absent a clear abuse of discretion, an appellate court will not
interfere with the exercise of that discretion." Carey v. Lovett, 132 N.J. 44, 64
(1993) (citing Henningsen v. Bloomfield Motors, Inc., 32 N.J. 358, 411 (1960)).
A-4058-18 30 When "the court's ruling on admissibility may be dispositive of the merits,
the sounder practice is to afford the proponent of the expert's opinion an
opportunity to prove its admissibility at a Rule 104 hearing." Kemp, 174 N.J. at
432-33. Here, however, the parties expressly agreed that a Rule 104 hearing
was unnecessary and consented to the court ruling on the papers, based on
Scheerer's deposition testimony and the briefs submitted. Accordingly, the
concerns that prompted the Court in Kemp and Rubanick v. Witco Chem. Corp.,
125 N.J. 421 (1991), to require a Rule 104 hearing are simply not present here.
This case does not involve a unique causation theory involving the scientific
reliability of an expert's analysis and methodology. Nor did Scheerer's opinions
involve novel scientific principles. Instead, Lime and Lumbermens challenged
Scheerer's factual basis for concluding a breach of contract occurred because he
failed to identify and apply Lime's scope of work. Judge Savio determined
Scheerer's opinion was "unreliable because it was not supported by the facts"
and deficiencies he listed were not linked to contract terms or specifications.
Thus, the trial court did not abuse its discretion in not holding a Rule 104
hearing.
In addition, Enclave consented to a ruling on the papers and waived a Rule
104 hearing. If a party "does not object or otherwise preserve an issue for appeal
A-4058-18 31 at the trial court level, we review the issue for plain error." State v. Santamaria,
236 N.J. 390, 404 (2019) (citing R. 2:10-2). We will disregard any unchallenged
errors or omissions unless they were "clearly capable of producing an unjust
result." R. 2:10-2. The party who failed to raise the issue before the trial court
"bears the burden of establishing that the trial court's actions constituted plain
error . . . ." Santamaria, 236 N.J. at 404-05 (quoting State v. Ross, 229 N.J. 389,
407 (2017)). We find no such plain error.
We next address the trial court's decision to bar Scheerer's report and
testimony. "The admission or exclusion of expert testimony is committed to the
sound discretion of the trial court." Townsend, 221 N.J. at 52 (citing State v.
Berry, 140 N.J. 280, 293 (1995)). "As a discovery determination, a trial court's
grant or denial of a motion to strike expert testimony is entitled to deference on
appellate review." Ibid.
"When, as in this case, a trial court is 'confronted with an evidence
determination precedent to ruling on a summary judgment motion,' it 'squarely
must address the evidence decision first.'" Id. at 53 (2015) (quoting Estate of
Hanges v. Metro. Prop. & Cas. Ins., 202 N.J. 369, 384-85 (2010)). "Appellate
review of the trial court's decisions proceeds in the same sequence, with the
A-4058-18 32 evidentiary issue resolved first, followed by the summary judgment
determination of the trial court." Ibid. (citing Hanges, 202 N.J. at 384-85).
N.J.R.E. 702 and N.J.R.E. 703 govern the admissibility of expert
testimony. "If scientific, technical, or other specialized knowledge will assist
the trier of fact to understand the evidence or to determine a fact in issue, a
witness qualified as an expert by knowledge, skill, experience, training or
education may testify thereto in the form of an opinion or otherwise." N.J.R.E.
702. In order to be admissible, "the intended testimony must concern a subject
matter that is beyond the ken of the average juror . . . ." Townsend, 221 N.J. at
53 (quoting Creanga v. Jardal, 185 N.J. 345, 355 (2005)).
In this case, Scheerer's opinions regarding Lime's breach of contract lack
adequate objective support. The factual bases for his opinions do not reflect the
terms, conditions, and specifications of the contract initially or as modified over
time. Nor did he consider the decisions made by Enclave or the role of Enclave's
representatives, KDA and O&N. For example, Scheerer's opinions regarding
the backer rods and the alleged deficiencies were not linked to the contract terms
or specifications. Moreover, his deposition testimony demonstrates that he was
not familiar with the terms of the contract, the specifications, the contract
drawings, meeting minutes, or the numerous changes to the work to be
A-4058-18 33 performed by Lime as the work progressed. Put simply, Scheerer's factual bases
were not reliable.
For these reasons, we conclude that the opinions contained in Scheerer's
testimony and reports are inadmissible net opinion that lack adequate objective
support. The court did not misapply its discretion in excluding such an expert.
Hisenaj v. Kuehner, 194 N.J. 6, 12 (2008) (applying an abuse-of-discretion
scope of review to a trial court's ruling on the admissibility of exp ert opinion in
a civil case).
Our review of a ruling on summary judgment is de novo, applying the
same legal standard as the trial court. Green v. Monmouth Univ., 237 N.J. 516,
529 (2019) (citation omitted). We consider "whether the competent evidential
materials presented, when viewed in the light most favorable to the non-moving
party in consideration of the applicable evidentiary standard, are sufficient to
permit a rational factfinder to resolve the alleged disputed issue in favor of the
non-moving party." Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 523
(1995). We accord no deference to the trial judge's conclusions on issues of
law. Nicholas v. Mynster, 213 N.J. 463, 478 (2013).
Having upheld the exclusion of plaintiff's liability expert, we readily agree
that the court had a sound basis to grant summary judgment to defendants. Here,
A-4058-18 34 there is no viable argument that this is a "common knowledge" case that can go
to a jury without proper expert support. Indeed, Enclave acknowledges that
"[c]onstruction litigation relies on expert opinion because judges, jurors and
lawyers are unfamiliar with construction methods, terms, purposes and
standards . . . ." (Ab30). Hence, Lime and Lumbermens were entitled to
judgment as a matter of law. See Brill, 142 N.J. at 540.
Enclave's remaining arguments are without sufficient merit to warrant
discussion in a written opinion. R. 2:11-3(e)(1)(E).
Affirmed.
A-4058-18 35