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

Filing 97

OPINION. Signed by Judge Dickinson R. Debevoise on 1/24/14. (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NOT FOR PUBLICATION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 construction of a church facility. 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/alteration 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 Plaintiff’s fraud claim, but denying the motion with respect to Plaintiff’s other claims.
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

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copyright registrations. Hanover now moves for summary judgment against Christian Testimony
on its counterclaim for breach of contract. For the reasons set forth below, Hanover’s motion is
GRANTED in part and DENIED in part.
I.

BACKGROUND

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 be
reconstructed into a church (“the Conversion Project”). On March 13, 2005, after multiple
telephone and in-person 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 of Parsippany Building & Construction Office (“the Township”).
The parties understood that the Conversion Project would include a main entrance, a vestibule
and lobby, Chinese and English sanctuaries, a cry room and audiovisual room next to the
Chinese Sanctuary, a cafeteria and kitchenette, classrooms, fellowship rooms, a children’s
worship room, five existing offices, a library, and restrooms meeting plumbing code
requirements. In addition, prior to entering into the First Agreement, Christian Testimony made
clear to Hanover, and Hanover acknowledged, that Christian Testimony’s total budget for the
Conversion Project, including construction, was $1 million.
According to Hanover, between March 13, 2005 and September 20, 2005, Mr. Chang
informed Hanover on multiple occasions that Christian Testimony planned on retaining Hanover
as the construction administrator for the Conversion Project, subject to the successful outcome of
the aforementioned variance application. Mr. Chang further informed Hanover that Christian

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Testimony was, at the time, experiencing financial hardship. Hanover told Christian Testimony
that the church was not obligated to hire Hanover as the construction administrator.
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”). Specifically, under the Second
Agreement, Hanover was required “to prepare architectural and construction drawings that
would include electrical design, plumbing design, fire protection layout, meetings to finalize the
designs, ten blueprints for construction and two for building permits, as well as modifications
required by the building department to comply with building code requirements during the
permit application.” (Defs’ Compl. ¶ 273.) According to Hanover, at this time, Mr. Chang again
informed Mr. Liou that Christian Testimony intended to retain Hanover as the construction
administrator of the Conversion Project, subject to the successful outcome of the variance
application.
Christian Testimony maintains that Hanover breached the Second Agreement because
Hanover “only provided the basic building design of lighting fixtures (not the entire electrical
system design). As a result, Christian Testimony was required to retain and pay other
professionals for their design services for 1) the electrical design (other than the switches and the
receptacles); 2) the plumbing design (other than the plumbing fixtures and riser diagram); and 3)
the fire protection and automatic sprinkler system (other than some modifications to the sprinkler
system layout).” (Id. ¶ 275.) Christian Testimony nonetheless paid in full for all services
rendered under 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

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provide additional architectural drawings meeting building code requirements during the permit
application process (“the Third Agreement”). However, according to Christian Testimony,
Hanover did not provide “the electrical design and plumbing design and sprinkler system and fire
alarm systems.” (Id. ¶ 285.) Moreover, “Hanover failed to carry out its duties under the
agreement in a professional manner.” (Id. ¶ 286.)
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.”
(Id. ¶ 286a.) Moreover, when Christian Testimony discovered that “no firewall should have
been required, Hanover refused to cooperate with the Parsippany Building Department 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 Parsippany Building Department, as a result of which,
progress on the project was delayed for many months and at considerable additional cost.” (Id. ¶
286b.)
And, “[d]espite having agreed upon a budget before entering the agreements with
Hanover, Hanover included in its design drawings certain features (in particular a large
decorative arch and clerestory) that would have added to the budget in excess of $3.5 million.”
(Id. ¶ 286c.) “When Christian Testimony explained that such features were beyond its budget
and requested that Hanover cut back on the design, Hanover refused to modify the drawings it
had prepared and refused to continue performing under the agreements.” (Id.) Finally,
“[d]espite the fact that the parties’ agreements never provided for Hanover to be construction

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administrator, Hanover further refused to continue performing under the agreements unless
Christian Testimony acceded to its demands to be appointed construction administrator.” (Id. ¶
286d.)
According to Christian Testimony, “Hanover’s refusal to modify its designs to come
within the scope of the budget originally contemplated was in violation of AIA Rule B141-1997,
which provides (as part of the standard form agreement between owner and architect) that ‘if the
lowest bid or negotiated proposal exceeds the Owner’s adjusted budget for the Cost of the Work,
the Architect is obligated to modify the documents to comply with the owner’s budget at no cost
to the Owner.’” (Id. ¶ 287.) And “[d]espite Hanover’s refusal to perform as required under the
agreements it created, Christian Testimony paid Hanover in full in the amount of $10,200 for its
services rendered under the October 19, 2006 agreement, plus additional costs for overtime.”
(Id. ¶ 288.)
On December 12, 2006, Hanover completed the variance design work under the First
Agreement. On June 7, 2007, Hanover delivered preliminary designs to Christian Testimony as
part of the building permit application to be filed with the Township. Shortly thereafter, Mr.
Chang informed Hanover that Christian Testimony “had overturned its decision to retain
Hanover to administer the building of the Conversion Project.” (Amend. Compl. ¶ 39.)
According to Mr. Chang, Christian Testimony decided to request bids from general contractors
because it was concerned about rising costs in working with Hanover. (Chang Decl. ¶ 6.)
Hanover was invited to submit its own bid, but ultimately refused to do so. See (id. ¶¶ 6, 7.)
On August 15, 2007, Hanover sent Christian Testimony an email stating that “[a]fter the
construction contract is awarded, no services will be provided unless a signed construction
contract is in place. The fee for construction administration is 5% of general contractor’s

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contract sum plus additional and change orders. No services based on the hourly charge are to be
provided after the construction contract is awarded. Note that the service of construction
administration is optional.” (Defs’ Compl. ¶ 296.)
On September 5, 2007, Hanover sent a letter to Mr. Chang stating, among other things,
that its architectural designs in furtherance of the Conversion Project were protected by
copyright and may not be used or modified without permission and payment of a licensing fee.
Two days after this letter, Hanover filed three copyright applications, each entitled “Proposed
Reconstruction Project of Christian Testimony Morris.” (Id. ¶ 307.) Each application “identified
Chiming Liou as the sole author of the Proposed Reconstruction Project of Christian Testimony
Morris.” (Id. ¶¶308-310.) According to Christian Testimony, Hanover’s “failure to identify
Christian Testimony as the creator of the original drawing or as a contributor or collaborator in
the creation of the drawings was done deliberately to mislead the Copyright Office and claim
exclusive rights in the works that were derived from the drawings of Christian Testimony and
created jointly with the collaboration of Christian Testimony.” (Id. ¶ 312.) Christian Testimony
further claims that Hanover’s three copyright applications were “filed deliberately to
manufacture evidence to support a claim against Christian Testimony.” (Id. ¶ 314.)
On September 19, 2007, Hanover sent a letter to Christian Testimony expressing, among
other things, dismay at the state of their relationship. According to the letter, since 2005,
Hanover had been informed many times that Christian Testimony formally decided to hire the
firm to “perform the management services during construction” of the Conversion Project.
(Amend. Compl., Ex. 14.) Relying on this information, Hanover “turned down some projects
before June in order to focus on the coming church construction.” (Id.)

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And even after Christian Testimony’s reversal of its decision to retain Hanover as a
construction administrator, Hanover was told that Christian Testimony “had not made any
decision whether to hire [a] P.M. or G.C. to deliver the construction” even though it had been
looking for a general contractor since June. (Id.) Hanover found this statement “misleading”
and “led [the] firm in the wrong direction.”1 (Id.) Therefore, “in order to prevent further
damages,” Hanover decided not to provide any further services to Christian Testimony, except
those related to building code compliance during the permit application for the Conversion
Project. (Id.)
The letter further states that Hanover was having difficulty honoring Christian
Testimony’s request to make modifications to the main sanctuary in order to reduce costs.
Hanover felt that the design modifications requested by the general contractor “will transform
the main sanctuary into a space without any meanings. I don’t want such a design created by a
G.C. and some of you to bear my name and damage my reputation of creativity. This is the
reason that I won’t provide service for the design revisions related to cost reduction.” (Id.)
Finally, the letter reiterates that Hanover’s “design and drawings are protected by Federal
Copyright law. When your church hires other architect and engineers including the two in-house
engineers of your G.C., please remind them to contact me to obtain my written permissions to
use my design and drawings. This will prevent any unnecessary lawsuits of copyright
infringement.” (Id.)
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

At the time of the September 19, 2007 letter, Hanover was still being told that Christian
Testimony “had not decided whether a CA service is necessary.” (Amend. Compl., Ex. 14.)
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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
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

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Testimony will not use your design for the renovation. Christian Testimony will retain an
architect to redesign the renovation project.”2 (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.)
According to Hanover, Christian Testimony completed the Conversion Project, between
March 21, 2008 and September 2009, pursuant to designs that “were substantially similar” to
those previously devised by Hanover. (Amend. Compl. ¶ 49.) Furthermore, according to
Hanover, on April 12, 2010, Mr. Liou called Mr. Chang to inquire about the aforementioned
permit process with the Township. During this conversation, Mr. Chang told Mr. Liou that
Christian Testimony “did not redesign the Conversion Project.” (Id. ¶ 53.)
II.

DISCUSSION

Hanover now moves for Summary Judgment, in its favor, on Christian Testimony’s claim
for breach of contract, pursuant to Federal Rule of Civil Procedure 56(a). In doing so, Hanover
argues that (1) Christian Testimony’s counterclaim for breach of contract should be dismissed
because Christian Testimony failed to file and serve an affidavit of merit, pursuant to N.J.S.A.
2A:53A-27; (2) Christian Testimony’s counterclaim for breach of contract is, in essence, one for

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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professional negligence and therefore must be dismissed for failure to file and serve an affidavit
of merit; and (3) dismissing Christian Testimony’s counterclaim for breach of contract would be
consistent with the public policy underlying the affidavit of merit statute.
Defendants counter that Hanover’s motion should be denied because (1) only contractrelated damages are alleged in support of Christian Testimony’s claim for breach of contract; (2)
no malpractice is at issue; and (3) Hanover defaulted on providing discovery on the factual issues
it raises, in accordance with Federal Rule of Civil Procedure 56(d).
A.

Standard of Review
Summary judgment is proper where “there is no genuine dispute as to any material fact

and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). For an issue to
be genuine, there must be “a sufficient evidentiary basis on which a reasonable jury could find
for the non-moving party.” Kaucher v. County of Bucks, 455 F.3d 418, 423 (3d Cir. 2006). For
a fact to be material, it must have the ability to “affect the outcome of the suit under governing
law.” Id. Disputes over irrelevant or unnecessary facts will not preclude granting summary
judgment.
The party moving for summary judgment has the burden of showing that no genuine
dispute of material fact exists. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). When the
moving party does not bear the burden of proof at trial, it may discharge its burden under the
summary judgment standard by showing that there is an absence of evidence to support the nonmoving party’s case. Id. at 325. If the moving party can make such a showing, then the burden
shifts to the non-moving party to present evidence that a genuine factual dispute exists and a trial
is necessary. Id. at 324. In meeting its burden, the non-moving party must offer specific facts

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that establish a material dispute, not simply create “some metaphysical doubt as to the material
facts.” Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986).
In deciding whether a dispute of material fact exists, the Court must consider all facts and their
reasonable inferences in the light most favorable to the non-moving party. See Pa. Coal Ass’n v.
Babbitt, 63 F.3d 231, 236 (3d Cir. 1995). The Court’s function, however, is not to weigh the
evidence and rule on the truth of the matter, but rather to determine whether there is a genuine
issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). If there are no issues
that require a trial, then judgment as a matter of law is appropriate. Id. at 251-52.
B.

Christian Testimony’s Counterclaim for Breach of Contract
Hanover argues that Christian Testimony’s counterclaim for breach of contract is, as a

matter of law, one for professional malpractice. Therefore, according to Hanover, Christian
Testimony was required to file and serve an affidavit of merit in support of that claim. And
because it failed to do, Christian Testimony’s counterclaim for breach of contract should be
dismissed. Defendants argue that Christian Testimony’s counterclaim for breach of contract is
simply one for breach of contract and therefore does not require an affidavit of merit.
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.

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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).
i.

Nature of Injury

Defendants contend that Christian Testimony’s claim for breach of contract fails to
satisfy the nature of injury element because that claim does not allege damages for personal
injury, wrongful death, or property damage. Hanover counters that this position “has not been
accepted by the courts. It has been held that a claim for alleged professional malpractice is a
claim for property damage within the legislative intent and plain . . . meaning of the statute.”
(Pl.’s Rep. Br. 5. (citation omitted)).
The precise definition of property damage under the Affidavit of Merit Statute is
extremely difficult to discern under New Jersey case law. In Cornblatt v. Barow, the New Jersey

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Appellate Division found that “[m]alpractice or negligence committed by architects, engineers,
or attorneys may very well result in damage to real and personal property. Personal 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 Appellate Division further held, in Charles A. Manganaro Consulting Eng’rs,
Inc. v. Carneys Point Twp. Sewerage Authority, 344 N.J. Super. 343, 346-47 (App. Div. 2001),
that “[b]y its plain terms, N.J.S.A. 2A:53A-27 applies only to a ‘plaintiff’ who files an ‘action
for damages’ based on ‘an alleged act of malpractice or negligence’ by one of the categories of
professionals listed in N.J.S.A. 2A:53A-26.”
Shortly after Manganaro, the New Jersey Supreme Court addressed the applicability of
the affidavit of merit statute in Couri. In that case, the plaintiff retained a licensed psychiatrist as
a potential expert witness in connection with his divorce proceeding. 173 N.J. at 331. After the
psychiatrist disclosed his preliminary findings without the plaintiff's permission, the plaintiff
filed a breach of contract action alleging that the psychiatrist was retained to prepare a report
only for the plaintiff. Id.
Initially, the plaintiff requested compensatory and punitive damages. Id. at 334-35.
However, at oral argument, the plaintiff narrowed his request for damages to the $12,000 that he
paid to the defendant for the report and any incidental costs incurred in the matrimonial action
resulting from the necessity of filing motions based on the defendant’s dissemination of the
report. Id. at 335. According to the court, these “are neither damages for personal injuries,
wrongful death or property damage.” Id. at 335 (quotation marks omitted). The court therefore

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concluded that the alleged damages were outside the scope of the affidavit of merit statute. Id.
However, the court failed to define in any way the contours of property damage under the statute.
One year after Couri, the New Jersey Superior Court issued a decision in Nagim v. New
Jersey Transit, 369 N.J. Super. 103 (Law Div. 2003) that attempted to clarify Couri’s ruling on
the scope of property damage under the affidavit of merit statute. In doing so, the Nagim court
found that the damages alleged in Couri were “limited solely to the compensatory damage
associated with the costs that the plaintiff paid to the defendant for the furnishing of the report.”
Nagim, 369 N.J. Super. at 119. “That injury thus became a finite sum of money already paid by
the plaintiff to the defendant and for which recompense was sought.” Id. In contrast, injuries for
“yet unspecified” costs associated with one or more claims fall within the scope of property
damage under the affidavit of merit statute. Id.
The Court fails to understand how this distinction clarifies the meaning of property
damage under the Affidavit of Merit Statute. Indeed, the Court of Appeals encountered similar
confusion in Nuveen Mun. Trust ex rel. Nuveen High Yield Mun. Bond Fund v. WithumSmith
Brown, P.C., 692 F.3d 283, 311-12 (3d Cir. 2012), when attempting to discern the scope of
property damage under the statute. Thus, the Court of Appeals certified “to the New Jersey
Supreme Court a question regarding the scope of the ‘nature of the injuries’ element of the
Statute.” Id. Unfortunately, the New Jersey Supreme Court denied the Court of Appeals’
certification of that question, see Nuveen Municipal Trust v. Withumsmith Brown, P.C., 213 N.J.
527, 528 (2013), and the Court of Appeals has yet to address the issue since then.
Therefore, 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

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the statute. Here, the bulk of damages alleged by Christian Testimony, pursuant to its
counterclaim for breach of the Second and Third Agreements,3 falls outside the scope of
damages to personal property under the Affidavit of Merit Statute. These damage include (1) the
amounts paid to Hanover under those agreements; (2) retaining and paying other architects to
provide designs for certain aspects of the Conversion Project that Hanover was obligated to
provide under the Second and Third Agreements, but failed to do so; (3) leasing of alternative
space; and (4) retaining and paying another architect to create new designs to reduce construction
costs of the Conversion Project, which were still in excess of the original budget to which
Hanover and Christian Testimony agreed.
Like Couri, these damages include amounts paid to Hanover under the Second and Third
Agreements, and amounts paid as a result of Hanover’s breach of those agreements. Thus, these
damages fail to satisfy the nature of injury element of the Affidavit of Merit Statute. However,
unlike Couri, Christian Testimony also seeks damages for delay in the Conversion Project.
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, those damages satisfy the nature of
injury element.
ii.

Cause of Action and Standard of Care

Hanover argues that Christian Testimony’s counterclaim for breach of contract satisfies
the cause of action and standard of care elements because it contains allegations that suggest
professional malpractice and deviation from the professional standard of care applicable to
architects. Defendants argue that Hanover fails to satisfy these elements because there is no

There is no clear indication in Christian Testimony’s counterclaim for breach of contract
that Hanover breached the First Agreement.
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malpractice or deviation from a professional standard of care at issue in Christian Testimony’s
counterclaim for breach of contract.
To determine whether a claim asserted against a professional satisfies the cause of action
and standard of care elements, “rather than focusing on whether the claim is denominated as tort
or contract, attorneys and courts should determine if the claim's underlying factual allegations
require proof of a deviation from the professional standard of care applicable to that specific
profession.” Couri, 173 N.J. at 340.
Christian Testimony claims that Hanover breached the Second Agreement by providing
incomplete electrical, plumbing, and fire protection designs. This claim does not require proof
of a deviation of the professional standard of care applicable to architects. To the contrary, it
requires proof of (1) the terms of the Second Agreement to ascertain the electrical, plumbing,
and fire protection designs that Hanover promised to provide; and (2) the electrical, plumbing,
and fire protection designs that Hanover in fact provided. Consequently, Christian Testimony’s
claim for breach of contract, as it relates to the Second Agreement, does not satisfy the cause of
action or standard of care elements.
Christian Testimony alleges that Hanover breached the Third Agreement by (1) having to
revise its designs three times before they met the Township’s requirements; (2) exceeding the
budget that was agreed to and refusing to modify designs to reduce costs, in violation of AIA
Rule B141-1997; (3) misclassifying the building and refusing to reclassify it; (4) failing to
provide the electrical, fire, and plumbing designs; and (5) refusing to continue to provide
architectural services for the Conversion Project unless Christian Testimony designated Hanover
as the construction administrator.

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The second, fourth, and fifth allegations do not require proof of a deviation from the
professional standard of care applicable to architects. The second allegation requires proof (1) of
an agreement to a particular budget; (2) that that agreement was a part of the Third Agreement;
(3) that projected budget based on Hanover’s designs exceeded the budget that was agreed to;
and (4) that Hanover refused to provide architectural designs within the scope of the budget
agreement.4 The fourth allegation requires proof that (1) the Third Agreement required Hanover
to provide specific electrical, fire, and plumbing designs; and (2) Hanover failed to provide those
designs. And the fifth allegation requires proof that (1) the Third Agreement did not require
Christian Testimony to designate Hanover as the construction administrator for the Conversion
Project; and (2) Hanover refused to perform under the Third Agreement because it was not
designated as the construction administrator for the Conversion Project.
In contrast, the first and third allegations in support of Christian Testimony’s claim that
Hanover breached the Third Agreement are indicative of malpractice and require proof of a
deviation from the professional standard of care applicable to architects. With respect to the first
allegation—that Hanover was required to revise its designs three times before they met the
Township’s requirements—there is no indication that the Third Agreement required Hanover to
provide designs that meet the Township’s requirements, without revision. Therefore, that
allegation does not suggest a breach of a contractual duty, but rather a professional one.

To the extent Christian Testimony wishes to set forth a violation of a provision,
pursuant to AIA model contract B-141-1997, requiring Hanover to modify its designs if those
designs indicate a budget in excess of that originally contemplated by Christian Testimony, there
must be proof (1) that the Third Agreement contained such a provision in accordance with AIA
model contract B-141-1997; (2) of the original budget contemplated; (3) that Hanover’s designs
indicated a budget in excess of what was originally contemplated; and (4) that Hanover refused
to modify those designs to accord with the original budget.
4

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Similarly, there is nothing in the Third Agreement requiring Hanover to classify the
building to house the Conversion Project according to Christian Testimony’s specifications.
Thus, the allegation that Hanover misclassified the building and refused to reclassify it at
Christian Testimony’s request does not serve as a basis for a claim for breach of contract, but
rather one for malpractice.
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 satisfy the cause of action and
standard of care elements. Moreover, the damages alleged to have resulted from these acts of
malpractice amount to delay in the Conversion Project, which the Court previously found to
satisfy the nature of injury element.5 Consequently, Christian Testimony’s claim for breach of
contract, as that claim relates to 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, required an affidavit of merit in
support.6 Because it is undisputed that Christian Testimony failed to provide an affidavit of

To be sure, the alleged damages of having to lease alternative space as a result of the
delay in the Conversion Project do not satisfy the nature of injury element.
5

In follow up submissions, Hanover points out that Christian Testimony retained an
expert in support of its counterclaim. Christian Testimony admits that it retained an expert for
the following three purposes. First, the expert will help prove that Hanover was not entitled to
disregard Christian Testimony’s request to make cost-saving alterations in its designs. In doing
so, the expert notes that (1) an architect is not free to disregard its client’s wishes; (2)
disregarding Christian Testimony’s request amounted to denial of “an essential service;” and (3)
engaging in “extractive maneuvers” to “quit the project” in violation of the American Institute of
Architect’s Code of Ethics and Professional Conduct. (ECF No. 94.) Second, the expert will
show that “it is customary for an architect to establish an initial budget in the preliminary design
phase and the architect is obligated to adjust the budget as need be in the construction document
design phase.” (Id.) Third, the expert will help respond to Hanover’s theory that it need only
have performed under the Agreements at a certain standard rate charged by architects by
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6

merit in support of its claim for breach of contract, that claim, as it relates to those allegations, is
dismissed with prejudice.
III. CONCLUSION
For the foregoing reasons, Hanover’s Motion for Summary Judgment is GRANTED 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, but DENIED in all other respects. Christian Testimony’s counterclaim
for breach of contract, only as it relates to those allegations, is dismissed with prejudice.
The Court will enter an order implementing this opinion.

_/s/ Dickinson R. Debevoise__________
DICKINSON R. DEBEVOISE, U.S.S.D.J.
Dated: January 24, 2014

showing that (1) it is unlawful for architects to share rate information; and (2) there is no
industry standard of compensation for architectural services.
The first two purposes directly support Christian Testimony’s allegation that Hanover
breached the Third Agreement by exceeding the budget that was agreed to and refusing to
modify designs to reduce costs. To the extent this allegation is not based on the terms of the
Third Agreement, but rather on professional standards requiring architects to (1) not disregard a
client’s wishes or deny a client an essential service; (2) not engage in unethical behavior to get
out of a project; or (3) establish a budget and adjust it as needed, it is a claim for malpractice that
would require an affidavit of merit if it used to support Christian Testimony’s claim for damages
from the delay in the Conversion Project. The third purpose, however, does not create a
malpractice issue because the evidence will be used only to rebut Hanover’s theory that it was
not bound by the Agreements with Christian Testimony.
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