TAAS CONTRACTING, L.L.C. v. STALCO CONSTRUCTION, INC. et al

Filing 43

OPINION. Signed by Judge William H. Walls on 6/8/2016. (nr, )

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

TAA$ CONTRACTING, LL.C.,
Plaintiff,

OPINION

V.

Civ. No. 12-7489 (WHW) (CLW)
STALCO CONSTRUCTION, INC. and ABC INC. I
V, fictitious designations of unknown corporations,
partnerships, sole proprietorships or other entities,
Defendants.

Walls, Senior District Judge

This case arises out of a dispute between a contractor and a subcontractor engaged in a
construction project for the State University of New York (“SUNY”). Defendant moves for
summary judgment on Plaintiffs claims for breach of contract and unjust enrichment. The Court
finds that genuine issues of material fact remain in this case, and Defendant’s motion is denied.
FACTUAL AND PROCEDURAL BACKGROUND

Plaintiff TAAS Contracting, a New Jersey corporation with its principal place of business
in New Jersey, brought this action against Defendant Stalco Construction, a New York
corporation with its principal place of business in New York, invoking this Court’s diversity
jurisdiction. Compl. ECF No. 1

¶J 1-4; Aff of Dean Theodorou, ECF No.

35-2

¶ 2.

Stalco

served as the general contractor for the construction of the SUNY Downstate Medical Center in
Brooklyn. Defs Statement of Material Facts (“SMF”), ECF No. 30-1
No. 35-1

¶ 1.

¶ 1; P1’s Resp.

SMF, ECF

On November 22, 2010, Stalco subcontracted with TAA$ for the performance of

certain construction services. Defs SMF

¶ 2; P1’s Resp.

SMF ¶ 2; Decl. of Joseph Serpe, ECF

No. 30-3, Ex. B. During the course of the project, the parties agreed to various “change orders”

NOT FOR PUBLICATION

that called for TAAS to provide other construction services in exchange for additional payments
from $talco. Serpe Deci.

¶ 4, Ex.

C.

TAAS contends that the parties’ contract was also orally modified during the project. It
has submitted an affidavit of its managing member, Dean Theodorou. Theodorou Aff. ¶6.
Theodorou certifies that he “attended a meeting with Stalco and other subcontractors in January
2012” where Stalco representative Kevin Hamey made certain promises to the subcontractors
working on the project. Id.

¶J 15-18. Theodorou asserts that Hamey informed the subcontractors

that their work needed to be completed by May 2012 and promised that they would be paid every
two weeks. Id. Stalco denies that this meeting and oral modification ever took place. Dfs
Response to Counter Statement of Material Facts, ECF No. 38-1

¶ 19.

The parties’ dispute began after Stalco provided TAA$ with a deficiency list on March
13, 2012, notifying it of items that were allegedly not in compliance with the project’s
specifications. Dfs $MF ¶5. TAAS asserts that these deficiencies were caused by actions of
“Stalco or other contractors at the jobsite that damaged work already completed by TAAS.” P1’s
Counter SMF

¶ 5. TAAS

also contends that the deficiency list was made up of “standard punch-

list items which are routine in all commercial construction projects” and states that it continued
to perform services and receive payment from Stalco after the deficiency list was issued. Id.
According to Stalco, on June 18, 2012, it sent TAAS another list of items that needed to
be repaired between June 20 and June 27, 2012. Di’s SMF ¶ 6. TAAS denies that it was
obligated to complete these services and asserts that it had not been paid by Stalco since March
31, 2012. P1’s SMF ¶J 6-7. $talco asserts that it notified TAAS on June 18, 2012 that it could not
release any further funds to TAAS until all work on the deficiency list had been completed. Di’s
SMFJ7.

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TAA$ did not appear at the worksite on June 20, 2012. SMF ¶ 9. TAAS asserts that it
concluded its services due to Stalco’s continuing nonpayment. P1’s SMF ¶ 10. Stalco sent TAAS
a letter on June 25, 2012 stating that TAAS had been terminated due to its alleged “decision to
walk off the Project.” Drs SMF ¶ 10.
TAAS also claims that, after the termination of its work on the SUNY project, it
attempted to retrieve certain specialty materials that it had purchased from a company called
Kuiken Brothers. Theodorou Aff.

¶ 31. Dean Theodorou declares that “Stalco’s representative,

Joe Fitzpatrick, refused to allow me access to the Medical Center in order to retrieve materials,
supplies and equipment provided by TAAS, including the specialty ceiling panels and other
Kuiken materials.” Id. Stalco disputes TAAS’s contention that it owned these materials and
claims that Stalco purchased the materials directly from Kuiken. Dfs Resp. Counter-SMf ¶ 28.
TAA$ brings one count for breach of contract, Compl.
enrichment against $talco. Id.

¶J 22-29.

¶J 18-21, and one count for unjust

It contends that it “performed all of the services.

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.

as

stated in Phase One of the contract, and as modified by the parties by the agreements thereafter,
without any protest, objection or complaint by [Stalco].” Id.

¶ 12. According to TAA$, Stalco

“paid $196,114.65 to TAA$ for the services which were performed at the premises, and
$40,916.27 to a third party in the State of New Jersey which had provided materials and
equipment,” leaving an unpaid balance of $131,809.95. Id.

¶J 14-15. TAAS “departed the

premises and concluded its services,” allegedly because of $talco’s failure to pay this unpaid
balance. Id.

¶ 16.

Stalco moved for summary judgment on January 1, 2016. Mot. Sum. Judg. Br.,

ECF No. 3 0-2. Stalco claims that it “paid TAA$ for all work it performed until TAA$ failed to
proceed in June 2012 following a request made by Stalco to address items that had to be
repaired, replaced or completed.” Id. at 2.

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STANDARD FOR SUMMARY JUDGMENT
Summary judgment is appropriate where “the movant shows that 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). A factual dispute between the parties must be both genuine and material to defeat a
motion for summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). A
disputed fact is material where it would affect the outcome of the suit under the relevant
substantive law. Scott v. Harris, 550 U.S. 372, 380 (2007). A dispute is genuine where a rational
trier of fact could return a verdict for the non-movant. Id.
The movant bears the initial burden to demonstrate the absence of a genuine issue of
material fact for trial. Beard v. Banks, 548 U.S. 521, 529 (2006). Once the movant has carried
this burden, the non-movant “must do more than simply show that there is some metaphysical
doubt as to the material facts” in question. Scott, 550 U.S. at 380 (citing Matsushita Elec. Indus.
Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986)). Each party must support its position by
“citing to particular parts of materials in the record.

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.

or showing that the materials cited do not

establish the absence or presence of a genuine dispute, or that an adverse party cannot produce
admissible evidence to support the fact.” Fed. R. Civ. P. 56(c)(1). Facts must be viewed in the
light most favorable to the nonmoving party only if there is a genuine dispute as to those facts.
Scott, 550 U.S. at 380. At this stage, the Court’s “function is not.. to weigh the evidence and
.

determine the truth of the matter,” Anderson, 477 U.S. at 249, and it is “inappropriate for a court
to.

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.

make credibility determinations.” Big Apple BMW, Inc. v. BMWoINorth Am., Inc., 974

F.2d 1358, 1363 (3d Cir. 1992).

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DISCUSSION
1. The Court will apply New York law to this dispute.

The Court must first determine whether New York or New Jersey law applies to this case.
“In evaluating whether a contractual choice-of-law clause is enforceable, federal courts sitting in
diversity apply the choice-of-law rules of the forum state, which in this case is New Jersey.”
See, e.g., Homa v. American Express Co., 558 F.3d 225, 227 (3d Cir. 2009) (citations omitted).
Under New Jersey law, courts look to the law with the most significant relationship to the parties
and issues. P. V. ex rel. T. V. v. Camp Jaycee, 197 N.J. 132, 142-43 (N.J. 200$); see also Keil v.
Nat ‘1 Westminster Bank, 311 N.J. Super. 473, 485 (App. Div. 1998). The first step in making this
decision is to determine whether an actual conflict exists by “examining the substance of the
potentially applicable laws to determine whether ‘there is a distinction’ between them.” P. V., 197
N.J. at 143 (quoting Lebegern v. Forman, 471 F.3d 424, 430 (3d Cir. 2006)). If no conflict exists,
the law of the forum state applies. Dzielak v. Whirlpool Corp., 26 F. Supp. 3d 304, 322 (D.N.J.
2014) (citation omitted).
Plaintiff contends that its subcontract with Stalco was modified by the oral promise made
by Kevin Hamey, and New York law conflicts with New Jersey law regarding the validity of
subsequent oral modification to written contracts. The subcontract between TAAS and Stalco
contains the following provision: “This Order Form of [sic] its conditions or provisions cannot
be changed, modified, terminated, canceled or rescinded or in any other way altered or negated,
except by an instrument signed in writing by both parties.” Serpe Decl. Ex. B at 6; Theodorou
Aff. Ex. A at 17. Under New Jersey law, in “certain circumstances, a court may conclude that the
parties to a contract have modified its terms by a subsequent oral agreement, even if the contract
purported to allow only written changes, and the parol evidence rule will not bar evidence of the

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oral agreement.” SPJ, Inc. v. W2005/Fargo Hotels (Pool C) Realty, L.P., 2010 WL 4237371 at
*9 (App. Div. Oct. 28, 2010) (citing Lewis v. Travelers Ins. Co., 51 N.J. 244, 253 (1968)). In
contrast, New York’s General Obligations Law

§ 15-301 states that a “written agreement..

which contains a provision to the effect that it cannot be changed orally, cannot be changed by an
executory agreement unless such executory agreement is in writing and signed by the party
against whom enforcement of the change is sought.

.

.

.“

See Delville v. Firmenich Inc., 920 F.

Supp. 2d 446, 472, n. 23 (S.D.N.Y. 2013) (distinguishing between New Jersey law and New
York law on subsequent oral modifications of written contracts). Because an actual conflict
exists between the substantive laws of New York and New Jersey, the Court must apply the
second step of New Jersey’s choice of law analysis.
“Under the second part of the inquiry, the court must determine which jurisdiction has the
‘most significant relationship’ to the claim.” Maniscatco v. Brother Int’l (USA) Corp., 709 F.3d
206, 207 (3d Cir. 2013) (quoting Camp Jaycee, 197 N.J. at 144). To make that determination,
courts look to the Second Restatement of Conflict of Laws, which “provides specific guidance
for resolving particular types of cases.” Camp Jaycee, 197 N.J. at 140; see also Montich v. Miele
USA, Inc., $49 F. $upp. 2d 439, 446 (D.N.J. 2012) (court “must weigh the factors set forth in the
Restatement section that corresponds to Plaintiffs cause of action”). “The Second Restatement
assessment takes place on an issue-by-issue basis. It is qualitative, not quantitative.” Camp
Jaycee, 197 N.J. at 143 (citations omitted). “[I]n balancing the relevant elements of the most
significant relationship test,” courts should “apply the law of the state that has the strongest
connection to the case.” Id. at 155.
When analyzing a contractual dispute under the Second Restatement, the “law of the state
chosen by the parties to govern their contractual rights and duties will be applied if the particular

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issue is one which the parties could have resolved by an explicit provision in their agreement
directed to that issue.” Restatement (Second) Conflict of Laws

§ 187. The general contract

between Stalco and SUNY included a New York choice-of-law clause and required Stalco to
bind its subcontractors to the terms of the general contract. Serpe Deci., Ex. A Agreement ¶
2.18(7); Standard Clauses ¶ 14. But there are no choice-of-law terms in the subcontract between
Stalco and TAAS that the parties have submitted to the Court. See generally, Serpe Decl. Ex. B;
Theodorou Aff. Ex. B. In the absence of an effective choice-of-law provision between the
parties, the Court must consider: “(a) the place of contracting, (b) the place of negotiation of the
contract, (c) the place of performance, (d) the location of the subject matter of the contract, and
(e) the domicil, residence, nationality, place of incorporation and place of business of the
parties.” Jackson v. Midland Funding LLC, 46$ F. App’x 123, 126-27 (3d Cir. 2012) (applying
Restatement (Second) Conflicts of Laws

§ 188 and 186).

Weighing in favor of New York are the place of performance and the location of the
subject matter of the contract, both of which were Brooklyn, New York. The places of
incorporation and principal places of business of the parties do not weigh in favor of either
jurisdiction, because Stalco is a New York company doing business in New York and TAAS is a
New Jersey company doing business in New Jersey. See Compl.

¶J 1-2. TAAS argues that:

Stalco understood that TAAS would be supplying workers and materials
originating from New Jersey, that TAAS provided labor, materials, supplies and
equipment which originated in New Jersey, and that Stalco sent payments for the
completed services to TAAS’[s] office in New Jersey. furthermore, the places of
negotiation and contract cannot easily be identified as being in New York. Stalco
sent the contract documents to TAAS in New Jersey, and TAAS signed the
contract documents in New Jersey.

Opp. Br at 9. Although TAAS operated from New Jersey and signed contract documents there,
the parties’ contract called for services to be performed in New York for a project that took place

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entirely in New York and was being handled by a New York general contractor. The Court finds
that New York has the strongest and most significant connection to this dispute.
Further supporting this conclusion is Section 196 of the Second Restatement. Under
Section 196, a contract for the provision of services should be determined by the local law of the
state “where the contract requires that the services, or a major portion of the services, be
rendered.” Section 196 has not been explicitly adopted by the New Jersey Supreme Court, but
the District of New Jersey has applied it in an analogous case, finding that it “believes that the
New Jersey Supreme Court would, if presented with the proper action, adopt and apply it.”
TekDocServs., LLCv. 3i-Infotechlnc.,No. 9-cv-6573, 2013 WL21$2565 at *11 (D.N.J. May
20, 2013) (Cooper, I.). Were Section 196 to apply here, it would point to New York as the state
where TAAS’s services were to be performed.
Because the parties’ contract is governed by New York law, New York’s General
Obligations Law

§ 15-301 barred the alleged subsequent oral modification of the contract.

2. Summary judgment is not warranted.
a. Breach of Contract

Under New York law, a breach of contract claim is sufficiently pled if a claimant alleges
“(1) the existence of a contract, (2) performance by the party seeking recovery, (3) nonperformance by the other party, and (4) damages attributable to the breach.” RCN Telecom
$ervs., Inc. v. 202 Centre Street Realty LLC, 156 F. App’x 349, 350-51 (2d Cir. 2005). “In

interpreting a contract under New York law, words and phrases should be given their plain
meaning, and the contract should be construed so as to give full meaning and effect to all of its
provisions.” LaSatte Bank Nat ‘1 Ass ‘n v. Nomura Asset Capital Corp., 424 F.3d 195, 206 (2d
Cir. 2005) (quotations and alterations omitted).

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Stalco asserts that TAAS’s nonappearance on June 20, 2012 was a breach of the
subcontract. TAA$ contends that Stalco breached the subcontract before June 20 because
“TAAS was not paid by Stalco for services rendered and completed, and materials provided, at
the Medical Center.

.

.

despite repeated demands for payment.” Theodorou Aff.

¶J 24-25.

According to TASS, these services for which it was not paid were the subject of both the original
subcontract and written change orders. Id.

¶ 33.

Stalco responds that “there is no basis for

TAAS’s claims for any amount due by Stalco.” Reply at 9.
The subcontract specified conditions that had to be satisfied before Stalco was obligated
to make payments to its subcontractors:
The General contractor shall not be required, under the terms of this agreement, to
make any payments to the subcontractors without having received all of the
following: 1) Receipt of original lein waivers (all materials per each requisition)
1) [sic] Completion and acceptance of all work in place, for which is being
involved, relative to each specific pay period. 2) Active insurance requirements
completed. Insurance certificates are required PRIOR to commencement of work.
3) Receipt of payment from client 4) Timely internal processing of payment
received from client in accordance to Division One of Specifications. 5) Receipt
of Certified Payroll (if applicable).
Theodorou Aff. Ex. A at 27; Serpe Deci. Ex. B at 16. The subcontract also stated that “Change
Order payment will follow [the] same guidelines as payment of requisitions/invoices.” Serpe
Decl. Ex. B at 19

¶ 14; Theodorou Aff. Ex. A ¶ 14.

Stalco contends that it “made payments to

TAA$ for activities performed by TAAS on the project” and that “[p]rior to the termination,
Stalco paid TAAS in full in response to all properly submitted applications for payment in
accordance with the terms of Stalco’s purchase orders.” Serpe Decl.

¶J 5,

11. Serpe has attached

copies of the checks that Stalco did pay to TAAS and the corresponding receipts of payment. Id.
Exs. D, E.

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The evidence introduced by Stalco is sufficient to meet its initial burden. The Court next
turns to evidence submitted by TAA$, which must “do more than simply show that there is some
metaphysical doubt as to the material facts” in question. Scott, 550 U.S. at 380.
TAAS has submitted the following evidence to support its contention that it was not paid
for services despite demands for payment: Dean Theodorou has declared that Stalco
representative Joseph Solloch “personally informed [him] and TAAS’ [s] estimator, Argj ent
Mena, at the jobsite that TAAS was owed for the Services rendered and completed at the
[medical center], including the materials supplied to and installed by TAAS, that Stalco was
responsible for the payment of the Services, and that Stalco was unable to make such payments
to TAA$.” Theodorou Aff.

¶ 19. Theodorou has also declared that when TAAS received Stalco’s

deficiency list, “Stalco had not made any payment to TAAS for the Services for over [two and a
half] months since.. March 31, 2012, and repeated demands for payment, and notifications of
.

its required cessation of any further services for non-payment, from TAAS in April 2012, May
2012, and early June 2012 were met with silence from Stalco.” Id.

¶ 23. Additionally, in a series

of emails between representatives of TAAS and Stalco, Stalco’s project manager Joseph Solloch
suggested that Stalco owed TAAS certain payments before June 20, 2012. Specifically, in March
of 2012, Solloch and Theodorou exchanged emails about the deficiency list. On March 13,
Theodorou wrote, “[o]nce again I ask that a payment be issued as we are behind payments.” Ex.
D at 14. Solloch responded, “The requisition that was received about a week ago is in process. I
have requested [Stalco employee] Bess to issue you payment ASAP.” Id. On March 20, TAAS
employee Argjent Mena also wrote to Solloch, asking “Joe, What is the status of payment?” and
Solloch wrote “I will be sitting down with Bess today to do the billing. I will work on getting
you a check as soon as possible.” Id. at 16. More than a month later, on May 30, Mena again

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wrote, “Joe, Anything with reissuing this check? We are going on 60-90 days for this.” Id. at 17.
Solloch responded that “Accounting said they should have the check ready tomorrow.” Id.
Theodorou’s declaration and the emails between TAAS employees and Solloch
establishes the existence of a genuine dispute as to whether $talco made the required payments
that it owed to TAAS. Although Stalco was only required to make payments under certain
circumstances that were enumerated in the subcontract, see Theodorou Aff. Ex. A at 27; $erpe
Deci. Ex. B at 16, Stalco has not conclusively shown that the payments referred to in TAAS’s
emails fell into one of the categories under which it was not required to make payments. On a
summary judgment motion, the Court is not permitted to weigh the credibility of competing
affidavits and declarations. Big Apple BMW, Inc., 974 f.2d at 1363 (3d Cir. 1992). This dispute
is also material. Whether Stalco made contractually-required payments to TAAS will determine
whether the parties performed their obligations under the contract and whether the subcontract
remained in effect on June 20, 2012, when TAAS did not appear at the construction site.
Defendant is not entitled to summary judgment on Plaintiff’s breach of contract claim.
b. Unjust Enrichment
Under New York law, the “basis of a claim for unjust enrichment is that the defendant
has obtained a benefit which in ‘equity and good conscience’ should be paid to the plaintiff.”
Corselto v. Verizon New York, Inc., 18 N.Y.3d 777, 790 (2012). Such a claim “is not available
where it simply duplicates, or replaces, a conventional contract.

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claim.” Id. Instead, it “is

available only in unusual situations when, though the defendant has not breached a contract or
committed a recognized tort, circumstances create an equitable obligation running from the
defendant to the plaintiff.” Id. Courts have allowed unjust enrichment claims to be brought as

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alternatives to a breach of contract claims. E.g. Kaur v. Royal Arcadia Palace, Inc., 643 F. Supp.
2d 276, 297 (E.D.N.Y. 2007).
A genuine issue of material fact that is potentially separate from the parties’ contract
dispute remains in this case. TAA$ claims that, after the termination of its services, it attempted
to retrieve from the construction site specialty materials that it had purchased from Kuiken, a
third-party company. Theodorou Aff.

¶ 31. Dean Theodorou has declared that “Stalco’s

representative, Joe Fitzpatrick, refused to allow me access to the Medical Center in order to
retrieve materials, supplies and equipment provided by TAA$, including the specialty ceiling
panels and other Kuiken materials.” Id. The parties dispute which company paid Kuiken for
these materials. P1’s Counter-SMf ¶ 28; Dfs Resp. Counter-$MF ¶ 28. Based on the record
before the Court, there remains a genuine dispute as to whether Stalco retained materials
belonging to TAAS after the parties’ relationship was terminated. This is separate from the
TAAS ‘s contractual claim for damages resulting from uncompensated services it allegedly
provided on the project. The unjust enrichment claim does more than merely duplicate the breach
of contract claim and will not be dismissed.
CONCLUSION
For the reasons discussed, the Court finds that there remain genuine disputes as to the
material facts in this case. Defendant’s motion for summary judgment is denied. An appropriate
order follows.

Date: June2016

tate

12

br District Judge