HANOVER ARCHITECTURAL SERVICE, P.A. v. CHRISTIAN TESTIMONY-MORRIS, N.P. et al

Filing 143

OPINION. Signed by Judge Dickinson R. Debevoise on 3/6/14. (jd, )

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

HANOVER ARCHITECTURE SERVICE,
P.A.,
Plaintiff,

v.

Civ. No. 10-5455 (KM)

OPINION

CHRISTIAN TESTIMONY-MORRIS, N.P.,
et al.,
Defendants.

Appearances by:
MARSHALL, DENNEHEY, WARNER, COLEMAN, & GOGGIN
By:
John G. O’Brien, Esq.
Wendy H. Smith, Esq.
425 Eagle Rock Avenue, Suite 302
Roseland, New Jersey 07068
Attorneys for Plaintiff
FOLEY & LARDNER LLP
By:
Jonathan E. Moskin, Esq.
Anne B. Sekel, Esq.
Alicia Pitts, Esq.
90 Park Avenue
New York, New York 10016
Attorneys for Defendants
DEBEVOISE, Senior District Judge

This matter arises out of a breakdown in the business relationship between Plaintiff
Hanover Architecture Service, P.A. (“Hanover”) and Defendant Christian Testimony-Morris,
N.P. (“Christian Testimony”), where Hanover was providing architectural design services to
Christian Testimony for the purposes of obtaining a variance and construction permit from the
Township of Parsippany Building & Construction Office (“the Township”) to construct a new
church facility (“the Conversion Project”). On October 21, 2010, Hanover filed a Complaint
against Defendants Christian Testimony; Visbeen Construction Co. D.P.; Peter Raymond Wells,
Architect, LLC; Reiner Group, Inc.; Energy Saving and Electrical Corp., Inc.; James Chang;
Kenneth Visbeen; Peter Raymond Wells; and Jinfar Liu, setting forth causes of action for
copyright infringement and conspiracy to commit copyright infringement under 17 U.S.C. § 101
et seq.; removal/alternation of copyright management information and conspiracy to commit
removal/alteration of copyright management information under 17 U.S.C. § 1202(b) et seq.;
providing false copyright management information and conspiracy to provide false copyright
management information under 17 U.S.C. § 1202(a) et seq.; fraudulent inducement of
contractual relations; negligent misrepresentation; and unfair competition under N.J.S.A. 46:1-4.
The Complaint seeks declaratory judgment, an accounting of profits, injunctive relief, statutory
damages, actual damages, compensatory damages, punitive damages, treble damages, interest,
costs, and attorneys’ fees.
On January 18, 2011, Defendants moved to dismiss the Complaint. Hanover opposed the
motion. On March 28, 2011, Hanover filed an Amended Complaint setting forth the same causes
of action as those in the original Complaint. On November 29, 2011, this Court issued an
Opinion and Order, on the Amended Complaint, granting Defendants’ Motion to Dismiss with
respect to Hanover’s fraud claim, but denying the motion with respect to Hanover’s other claims.

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On December 28, 2011, Defendants filed an answer to the Amended Complaint, along
with counterclaims for breach of contract, declaratory judgment, and cancellation of certain
copyright registrations. On October 3, 2012, Hanover filed a Motion for Summary Judgment on
Christian Testimony’s counterclaim for breach of contract, which Christian Testimony opposed.
On January 24, 2014, this Court issued an Opinion and Order granting Hanover’s motion on
Christian Testimony’s counterclaim for breach of contract, as it relates to Christian Testimony’s
allegations that Hanover (1) provided designs that required several revisions before meeting the
Township’s requirements; and (2) misclassified the building to house the Conversion Project and
refused to reclassify it. The Court denied the motion in all other respects.
Christian Testimony now moves for reconsideration and/or clarification of the portion of
the Court’s January 24, 2014 Opinion and Order granting Hanover’s Motion for Summary
Judgment on Christian Testimony’s counterclaim for breach of contract, as it relates to Christian
Testimony’s allegations that Hanover (1) provided designs that required several revisions before
meeting the Township’s requirements; and (2) misclassified the building to house the Conversion
Project and refused to reclassify it. For the reasons set forth below, that motion is GRANTED.
I.

BACKGROUND

The facts of this case are fully set fort in Hanover Architecture Service, P.A. v. Christian
Testimony-Morris, N.P., 2014 WL 282698 (D.N.J. Jan. 24, 2014). Thus, for the sake of brevity,
the Court will repeat only those facts that are material to the instant motion.
Hanover is an architectural firm led by Chiming Liou. Christian Testimony is a bornagain Christian church. In January 2005, James Chang, the president of Christian-Testimony,
contacted Hanover to evaluate whether a certain warehouse in Boonton, New Jersey, could house
the Conversion Project. On March 13, 2005, after multiple telephone and in-person

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conversations, Hanover and Christian-Testimony entered into an agreement (“the First
Agreement”) under which Hanover would provide a review of the existing building plans and
architectural design services of the warehouse for the purpose of obtaining a variance from the
Township.
On September 20, 2005, the parties entered into a second agreement, under which
Hanover agreed to provide architectural drawings for the Conversion Project that complied with
building code requirements (“the Second Agreement”). On October 19, 2006, after the
Township granted a variance to Christian Testimony, Hanover and Christian Testimony entered
into a third agreement, under which Hanover would provide additional architectural drawings
meeting building code requirements during the permit application process (“the Third
Agreement”). Christian Testimony claims that Hanover breached the Third Agreement in
multiple respects.
Specifically, “Hanover incorrectly classified the building under relevant building codes,
thus requiring the addition of a firewall that was not included in the plans as originally prepared
by Hanover and which would have required substantial additional cost to Christian Testimony.”
(Answer and Counterclaims ¶ 286a.) Moreover, when Christian Testimony discovered that “no
firewall should have been required, Hanover refused to cooperate with the [Township] . . . to
correct its own mistake and insisted instead to Christian Testimony that it needed to build the
firewall, as a result of which progress on the project was delayed for many months and at
considerable additional cost.” (Id.) In addition, “Hanover was required to revise the plans three
times, because it failed to meet the requirements of the Township, as a result of which, progress
on the project was delayed for many months and at considerable additional cost.” (Id. ¶ 286b.)

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Christian Testimony maintains that Hanover’s refusal to modify the designs for the
Conversion Project amounts to a breach of contract, and, as a result, Christian Testimony had to
“hire a second architect to create new drawings to reduce the projected construction costs by
more than $1.0 million (from $3.5 to $2.4 million), which was still well in excess of the
originally agreed budget and required Christian Testimony to obtain substantial additional
mortgage financing.” (Id. ¶ 297.) In addition, the Conversion Project was “needlessly delayed,
and Christian Testimony was required to lease alternative space at a cost of more than
$135,000.” (Id. ¶ 298.)
On December 26, 2007, Hanover delivered a copy of its designs of the Conversion
Project to Christian Testimony. These copies incorporated changes requested by the Township
during its first-level review. On March 12, 2008, Hanover provided a copy of its designs of the
Conversion Project that incorporated changes requested by the Township during its second-level
review. On March 22, 2008, Hanover provided a copy of its designs of the Conversion Project
that incorporated changes requested by the Township during its third-level review.
On April 23, 2008, Paul E. Rusen, Esq., counsel to Christian Testimony, sent a letter to
Hanover stating that the Township issued construction permits for the Conversion Project, on
April 21, 2008, and that therefore Hanover’s “obligation to render architectural services to
Christian Testimony has concluded.” (Amend. Compl., Ex. 15.) The letter further states that
Christian Testimony intended to (1) employ Peter Raymond Wells as construction administrator;
and (2) use the plans prepared by Hanover and other architects, over which Christian Testimony
has exclusive rights to use in furtherance of the Conversion Project.
On June 20, 2008, Mr. Rusen sent another letter to Hanover. According to the letter,
Christian Testimony had recently learned that the April 21, 2008 construction permit issued by

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the Township “was a contingent construction permit which merely permitted demolition of the
premises.” (Id., Ex. 16.) Moreover, the Township “refused to issue the balance of the
construction permits based upon your design. As a result of the Township’s decision, Christian
Testimony will not use your design for the renovation. Christian Testimony will retain an
architect to redesign the renovation project.”1 (Id.)
On July 1, 2008, Mr. Rusen sent a third letter to Hanover. This letter stated that it had
come to Christian Testimony’s attention that Hanover had recently met with the Township
regarding the Conversion Project, and reminded Hanover that (1) it is no longer providing
architectural services to Christian Testimony; (2) Hanover is not allowed to discuss with or
contact the Township on behalf of Christian Testimony regarding the Conversion Project; and
(3) Christian Testimony had decided to terminate Hanover’s services, redesign the Conversion
Project, and paid Hanover in full for the services that it rendered. (Id., Ex. 17.)
In its prior Motion for Summary Judgment on Christian Testimony’s counterclaim for
breach of contract, Hanover argued that that claim is, as a matter of law, one for professional
malpractice, therefore requiring Christian Testimony to file an affidavit of merit in support
thereof. See Hanover, 2014 WL 282698, at *6. And because Christian Testimony failed to do
so, its counterclaim for breach of contract merits dismissal. Christian Testimony, on the other
hand, argued that no affidavit of merit was required in support of its counterclaim for breach of
contract because that claim does not fall within the scope of the Affidavit of Merit Statute.
The Court found that Christian Testimony’s counterclaim for breach of contract fell
outside the scope of the Affidavit of Merit Statute, except as it relates to Christian Testimony’s

According to Mr. Chang, the Township failed to issue a full construction permit, in part,
because Hanover misclassified the building, thus requiring the Conversion Project to incorporate
a fire wall. (Chang Decl. ¶ 17.)
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allegations that Hanover (1) provided designs that required several revisions before meeting the
Township’s requirements; and (2) misclassified the building to house the Conversion Project and
refused to reclassify it. In doing so, the Court found that those allegations (1) fell within the
scope of the Affidavit of Merit Statute because they strongly implied malpractice considerations,
such as deviation from a professional standard of care applicable to architects; and (2) supported
Christian Testimony’s claim for damages arising out the delay in the Conversion Project, which
also fell within the scope of the Affidavit of Merit Statute.
II.

DISCUSSION

Hanover now moves for reconsideration and/or clarification of the portion of the Court’s
January 24, 2014 Opinion and Order granting Hanover’s Motion for Summary Judgment on
Christian Testimony’s counterclaim for breach of contract, as it relates to Christian Testimony’s
allegations that Hanover (1) provided designs that required several revisions before meeting the
Township’s requirements; and (2) misclassified the building to house the Conversion Project and
refused to reclassify it. In doing so, Christian Testimony argues that these two acts of
malpractice are not tied to any identified property damage under the Affidavit of Merit Statute.2
A.

Standard of Review
“[I]t is well-established in this district that a motion for reconsideration is an extremely

limited procedural vehicle.” Resorts Int'l v. Greate Bay Hotel & Casino, 830 F. Supp. 826, 831
(D.N.J. 1992). As such, a party seeking reconsideration must satisfy a high burden, and must
“rely on one of three major grounds: (1) an intervening change in controlling law; (2) the

Christian Testimony also argues that Hanover’s breach of certain discovery rules merits
denial of Hanover’s prior Motion for Summary Judgment. The Court need not address these
arguments, because it will grant Christian Testimony’s Motion for Reconsideration based on the
argument that its counterclaim for breach of contract is not tied to any identified property
damage.
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availability of new evidence not available previously; or (3) the need to correct clear error of law
or prevent manifest injustice.” N. River Ins. Co. v. CIGNA Reins. Co., 52 F.3d 1194, 1218 (3d
Cir. 1995).
Since the evidence relied upon in seeking reconsideration must be “newly discovered,” a
motion for reconsideration may not be premised on legal theories that could have been
adjudicated or evidence which was available but not presented prior to the earlier ruling. See
id. Local Civil Rule 7.1(i), which governs such motions, provides that they shall be confined to
“matter[s] or controlling decisions which the party believes the Judge or Magistrate Judge has
‘overlooked.’ “ The word “overlooked” is the dominant term, meaning that except in cases where
there is a need to correct a clear error or manifest injustice, “[o]nly dispositive factual matters
and controlling decisions of law which were presented to the court but not considered on the
original motion may be the subject of a motion for reconsideration.” Resorts Int'l, 830 F. Supp.
at 831; see also Egloff v. N.J. Air Nat'l Guard, 684 F. Supp. 1275, 1279 (D.N.J. 1988); Pelham v.
United States, 661 F. Supp. 1063, 1065 (D.N.J. 1987).
A decision suffers from “clear error” only if the record cannot support the findings that
led to that ruling. United States v. Grape, 549 F.3d 591, 603–04 (3d Cir. 2008) (citations
omitted). Thus, a party must do more than allege that portions of a ruling were erroneous in
order to obtain reconsideration of that ruling; it must demonstrate that (1) the holdings on which
it bases its request were without support in the record, or (2) would result in “manifest injustice”
if not addressed. See Grape, 549 F.3d at 603–04; N. River Ins., 52 F.3d at 1218. Mere
“disagreement with the Court's decision” will not suffice. P. Schoenfeld Asset Mgmt ., LLC v.
Cendant Corp., 161 F. Supp. 2d 349, 353 (D.N.J. 2001).
B.

Christian Testimony’s Motion for Reconsideration

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The Affidavit of Merit Statute provides that:
In any action for damages for personal injuries, wrongful death or property damage
resulting from an alleged act of malpractice or negligence by a licensed person in
his profession or occupation, the plaintiff shall, within 60 days following the date
of filing of the answer to the complaint by the defendant, provide each defendant
with an affidavit of an appropriate licensed person that there exists a reasonable
probability that the care, skill or knowledge exercised or exhibited in the treatment,
practice or work that is the subject of the complaint, fell outside acceptable
professional or occupational standards or treatment practices. The court may grant
no more than one additional period, not to exceed 60 days, to file the affidavit
pursuant to this section, upon a finding of good cause.
N.J.S.A. 2A:53A-27.
A “licensed person” is defined as a licensed accountant, architect, attorney, dentist,
engineer, physician, podiatrist, chiropractor, registered nurse or health care facility. N.J.S.A.
2A:53A-26. In general, “failure to provide an affidavit results in dismissal of the complaint.”
Couri v. Gardner, 173 N.J. 328, 333 (2002). The “overall purpose of the statute is to require
plaintiffs in malpractice cases to make a threshold showing that their claim is meritorious, in
order that meritless lawsuits readily could be identified at an early stage of litigation.” Id.
(quotation omitted).
The New Jersey Supreme Court has held that “[t]here are three elements to consider
when analyzing whether the [Affidavit of Merit] statute applies to a particular claim: (1) whether
the action is for damages for personal injuries, wrongful death or property damage (nature of
injury); (2) whether the action is for malpractice or negligence (cause of action); and (3) whether
the care, skill or knowledge exercised or exhibited in the treatment, practice or work that is the
subject of the complaint [ ] fell outside acceptable professional or occupational standards or
treatment practices (standard of care).” Id. at 334 (quotations omitted).
In its prior Opinion, the Court noted that “[t]he precise definition of property damage
under the Affidavit of Merit Statute is extremely difficult to discern under New Jersey case law.”
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Hanover, 2014 WL 282698, at *7. The Court stated that, in Cornblatt v. Barow, the New Jersey
Appellate Division found that “[p]ersonal property embraces everything that may be tangible or
intangible such as a chose in action. The right or claim to money damages . . . is a property right
. . . beyond question.” 303 N.J. Super. 81, 86 (App. Div. 1997) (quotation omitted), rev’d on
other grounds by Cornblatt v. Barrow, 153 N.J. 218 (1998).
The Court then examined the New Jersey Supreme Court’s ruling, in Couri, that an
amount paid under a contract, and “incidental costs incurred . . . are neither damages for personal
injuries, wrongful death or property damage” under the Affidavit of Merit Statute. Id. at 335
(quotation marks omitted). Finally, the Court referenced the New Jersey Superior Court’s
decision in Nagim v. New Jersey Transit, which attempted to clarify Couri by distinguishing
between claims for “a finite sum of money already paid by the plaintiff to the defendant and for
which recompense was sought,” which are not encompassed by the Affidavit of Merit Statute,
with those for “yet unspecified” costs, which are encompassed by the statute. 369 N.J. Super.
103, 119 (Law Div. 2003)
Based on this case law, the Court found that “while the definition of damages to personal
property contemplated in the Affidavit of Merit Statute remains nebulous, Couri makes clear that
amounts paid under a contract, or amounts paid as a result of the breach of the contract, do not
fall within the ambit of the statute.” Hanover, 2014 WL 282698, at *8. The Court therefore
concluded that the bulk of damages alleged by Christian Testimony in support of its
counterclaim for breach of contract fell outside the scope of the Affidavit of Merit Statute,
because they included amounts paid to Hanover under the Second and Third Agreements, and
amounts paid as a result of Hanover’s breach of those agreements. Id. at *8-*9. However, the
Court held that the damages sought for delay in the Conversion Project fell within the scope of

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the Affidavit of Merit Statute because “the damages for the delay itself are separate and apart
from amounts paid arising out of Hanover's breach of the Second and Third Agreements.” Id. at
*9. In turn, the Court held that damages for delay in the Conversion Project satisfied the nature
of injury element of the Affidavit of Merit Statute. Id.
The Court also held that Christian Testimony’s allegations that Hanover (1) provided
designs that required several revisions before meeting the Township’s requirements; and (2)
misclassified the building to house the Conversion Project and refused to reclassify it, which
supported Christian Testimony’s claim for damages arising out of the delay in the Conversion
Project, were “indicative of malpractice and require proof of a deviation from the professional
standard of care applicable to architects.” Id. at *10. Thus, the Court held that those allegations
satisfied the second and third elements of the Affidavit of Merit Statute. Id.
Christian Testimony now seeks reconsideration of the Court’s ruling that the damages for
delay in the Conversion Project fall within the scope of property damage under the Affidavit of
Merit Statute. In doing so, Christian Testimony argues that there is no indication that the delay
in the Conversion Project affected any property interest in the Conversion Project or damaged
any aspect of the building itself. Christian Testimony is correct.
“Misfeasance or negligent affirmative conduct in the performance of a promise generally
subjects an actor to tort liability as well as contract liability for physical harm to persons and
tangible things.” Saltiel v. GSI Consultants Inc., 170 N.J. 297, 310 (2002) (quotation omitted).
However, “[r]ecovery of intangible economic loss is generally determined by contract.” Id.
Here, the damages for delay in the Conversion Project amount to intangible economic
loss. Indeed, there is no dispute that there was no physical damage or alteration to the
Conversion Project as a result of the delay in its construction. And while Cornblatt makes clear

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that personal property need not be tangible, there is no indication whatsoever of any property
interest in the delay in the Conversion Project. Thus, damages for the delay in the Conversion
Project are not cognizable under the Affidavit of Merit Statute.
Giving further heft to this conclusion is the economic loss doctrine, which “helps to
maintain the ‘critical’ ‘distinctions between tort and contract actions’ by precluding a party's
‘negligence action, in addition to a contract action, unless the plaintiff can establish an
independent duty of care.’” SRC Constr. Corp. of Monroe v. Atlantic City Housing Authority,
935 F. Supp. 2d 796, 798 (D.N.J. 2013) (quoting Saltiel v. GSI Consultants Inc., 170 N.J. 297,
310, 314 (2002)). The economic loss doctrine operates to bar tort claims that “simply [seek] to
enhance the benefit of the bargain [that was] contracted for.” Saltiel, 170 N.J. at 315. Indeed,
the “desire to enjoy the benefit of [a] bargain [under a contract] is not an interest that tort law
traditionally protects.” Id. at 311.
Thus, “[w]hether a tort claim can be asserted alongside a breach of contract claim
depends on whether the tortious conduct is extrinsic to the contract between the parties.” Arcand
v. Brother Intern Corp., 673 F. Supp. 2d 282, 308 (D.N.J. 2009) (citations omitted). Here,
Christian Testimony’s allegations that Hanover (1) provided designs that required several
revisions before meeting the Township’s requirements; and (2) misclassified the building to
house the Conversion Project and refused to reclassify it, while tortious in nature, are wholly
intrinsic to Hanover’s performance under the Third Agreement. Indeed, Hanover’s duty to (1)
provide designs that met the Township’s requirements; and (2) correctly classify the building to
house the Conversion Project stems directly from Hanover’s contractual obligation under the
Third Agreement to provide architectural designs to for submission to the Township in
furtherance of a construction permit for the Conversion Project.

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Thus, Christian Testimony’s allegations—that Hanover (1) provided designs that required
several revisions before meeting the Township’s requirements; and (2) misclassified the building
to house the Conversion Project and refused to reclassify it—seek merely to enhance the benefit
of Christian Testimony’s bargain with Hanover under the Third Agreement, and therefore may
only support a claim for breach of contract, not malpractice. As such, they do not, as a matter of
law, fall within the scope of the Affidavit of Merit Statute.
III. CONCLUSION
For the foregoing reasons, Christian Testimony’s Motion for Reconsideration is
GRANTED. Christian Testimony’s counterclaim for breach of contract may move forward in its
entirety.
The Court will enter an order implementing this opinion.

_/s/ Dickinson R. Debevoise__________
DICKINSON R. DEBEVOISE, U.S.S.D.J.
Dated: March 6, 2014

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