WERNER DECONSTRUCTION, LLC v. SITEWORKS SERVICES NY, INC. et al

Filing 30

MEMORANDUM OPINION filed. Signed by Magistrate Judge Tonianne J. Bongiovanni on 4/27/2017. (km)

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
WERNER DECONSTRUCTION, LLC,

Civil Action No. 15-7682 (MLC)

Plaintiff,
v.

MEMORANDUM OPINION

SITEWORKS SERVICES NY, INC., et al.,
Defendants.
BONGIOVANNI, Magistrate Judge
Currently pending before the Court is Plaintiff Werner Deconstruction, LLC’s (“Werner
Deconstruction”) motion to amend its Complaint in order to (1) add a veil piercing claim against
Defendant Thomas Garbett (“T. Garbett”) to hold him personally liable for Defendant Siteworks
Services NY, Inc.’s (“Siteworks”) obligations; (2) add Yvonne Garbett (“Y. Garbett”) and
Richard Harle (“Harle”) as defendants and assert claims for conversion and unjust enrichment
against them; and (3) add a claim for an accounting and the turnover of escrow funds against Y.
Garbett. [Docket Entry No. 25]. Siteworks and T. Garbett have opposed Werner
Deconstruction’s motion to amend on futility grounds. The Court has fully reviewed the
arguments made in support of and in opposition to Werner Deconstruction’s motion. The Court
considers Werner Deconstruction’s motion to amend without oral argument pursuant to L.Civ.R.
78.1(b). For the reasons set forth more fully below, Werner Deconstruction’s motion to amend is
GRANTED in part and DENIED in part.
I.

Background and Procedural History
This matter involves Werner Deconstruction’s claims against Siteworks and T. Garbett,

as well as certain unnamed John Doe Defendants, for (1) breach of contract based on Siteworks’
failure to (a) complete its work under the Debris Removal Services Agreement, (b) pay

subcontractors, (c) indemnify Werner Deconstruction for construction lien claims filed by
Siteworks’ subcontractors, (d) refund pre-payments made by Werner Deconstruction and (e)
remove a contaminated tracking pad from the Project; (2) specific performance of contract; (3)
quantum meruit; (4) negligence; (5) accounting; (6) fraud; (7) negligent misrepresentation; (8)
conversion; and (9) New Jersey Consumer Fraud Act.1 The Court assumes the parties are
familiar with the nature and history of this litigation and will not recite all those details here.
Instead, the Court shall focus on the facts most relevant to this motion.
Broadly, this case arises out of the demolition of the Werner Generating Station in South
Amboy, New Jersey (the “Project”). Werner Deconstruction began entering into contracts
regarding same as early as April 5, 2012 when it entered into an agreement with GenOn REMA
LLC (“GenOn”) (the “Prime Contract”) to demolish Units 1, 2 and 3 at the Werner Generating
Station. (Proposed Am. Compl. ¶9; Ex. B to Cert. of Lauren F. Iannaccone; Docket Entry No.
25-2). Anticipating being able to salvage a substantial amount of copper, ferrous and nonferrous metal under the terms of the Prime Contract, Werner Deconstruction agreed to demolish
the three units at its own cost. (Id. ¶11). After entering into the Prime Contract with GenOn, in
April 2012, Werner Deconstruction entered into a subcontract with BTU Solutions DE, LLC
(“BTU DE”) (the “Subcontract”). (Id. ¶ 12). According to the Subcontract, BTU DE agreed to
perform the acts that Werner Deconstruction was responsible to GenOn for under the Prime
Contract. (Id.)
Pursuant to the terms of the Subcontract, Werner Deconstruction and BTU DE agreed
that revenue from the demolition of Units 1, 2 and 3 would be deposited into a Project Account
administered by Werner Deconstruction and that all expenses for the Project would be paid from
1

The first seven claims are only asserted against Siteworks. The last two are asserted against
Siteworks, Thomas Garbett, an officer of Siteworks, and the John Doe Defendants.
2

said account. (Id. ¶13). They further agreed that after the demolition work was complete,
Werner Deconstruction would receive 48% of any money remaining in the Project Account as a
net profit distribution. (Id. ¶14).
On January 21, 2014, BTU Solutions, LLC (“BTU Solutions”), an entity believed to be a
subsidiary of BTU DE, entered into a General Services Agreement (the “General Services
Agreement”) with Siteworks. (Id. ¶15). The General Services Agreement incorporated a
Statement of Work (“Statement of Work #01”) that called for Siteworks to demolish the building
containing Unites 1, 2 and 3 at the Werner Generating Station. (Id. ¶16). Pursuant to the
General Services Agreement, Siteworks would be compensated with the revenue from the sale of
the first $3.5 million worth of scrap material removed from the Project. (Id. ¶ 17). However,
Statement of Work #01 incorporated into the General Services Agreement included a provision
requiring “‘a $525,000 hold back of revenues from the sale of scrap to be billed at the
completion and acceptance of the work.’” (Id. ¶19). According to Statement of Work #01, said
revenues were to be held in escrow. (Id.) The Statement of Work designated Y. Garbett as the
escrow agent for the hold-back funds. (Id. ¶20). It also specified the conditions under which the
escrow funds could be released to Siteworks. (Id. ¶¶ 21-22).
In early 2015, it became apparent to Werner Deconstruction that BTU DE lacked the
financial capacity to continue working on the Project. Based on the terms of the Prime Contract
with GenOn, Werner Deconstruction was still responsible for completing the remaining
demolition work, which included the removal of a large demolition debris pile contaminated with
asbestos (the “Demolition Debris Pile”). (Id. ¶26).
On February 6, 2015, Werner Deconstruction entered into a Debris Removal Services
Agreement, (the “Debris Removal Contract”) with Siteworks, according to which Siteworks
3

would use its “‘best efforts’” to remove the Demolition Debris Pile within 10 weeks of the
effective date of the Debris Removal Contract, i.e. February 6, 2015, and would perform the
work outlined in the Debris Removal Project “‘to completion.’” (Id. ¶¶27-28, 32). According
to the Debris Removal Contract, Werner Deconstruction would pay Siteworks by wiring
payments into a specific account that Siteworks had opened (the “Pre-Payment Account’). (Id.
¶33). Based on Article 6 of the Debris Removal Contract, Werner Deconstruction wired an
initial $100,000.00 payment to the Pre-Payment Account on February 6, 2015. (Id. ¶34). Article
6 of the Debris Removal Contract required Siteworks to use the $100,000.00 payment
“'exclusively for prepayment by Contractor to the Landfill, Contractor for loads, and for services
as outlined in Exhibit ‘A’’” to the Debris Removal Contract. (Id. ¶35).
According to the terms of the Debris Removal Contract, between February 13, 2015 and
May 26, 2015, Werner Deconstruction wired an additional $2,314,904.96 into the Pre-Payment
Account. (Id. ¶40). These payments were made based on weekly invoices submitted by
Siteworks, which estimated, among other things, the amount of debris to be loaded and
transported, and Siteworks’ anticipated costs to remove and transport the debris. (Id. ¶ 37). As
with the initial 100,000.00 payment, the Debris Removal Contract required that these additional
payments “‘be used by Contractor solely and specifically for Contractor’s performance of the
Work as set forth in Exhibit ‘A’ [to the Debris Removal Contract], and for no other purpose.’”
(Id. ¶36). Werner Deconstruction alleges that Siteworks breached the terms of the Debris
Removal Contract by failing to remove the entirety of the Demolition Debris Pile and by
abandoning the Project on or about June 29, 2015.
Based on Siteworks alleged breach of the Debris Removal Contract, Werner
Deconstruction initiated this litigation, asserting claims against Siteworks, T. Garbett and certain
4

unnamed John Doe Defendants. Werner Deconstruction now seeks to amend its Complaint to (1) add
a veil piercing claim against T. Garbett to hold him personally liable for Siteworks obligations;
(2) add Y. Garbett and Harle as defendants and assert claims for conversion and unjust
enrichment against them; and (3) add a claim for an accounting and the turnover of escrow funds
against Y. Garbett.2
As noted above, Siteworks and T. Garbett oppose Werner Deconstruction’s motion to
amend on futility grounds. With respect to the veil piercing claim, they argue that Werner
Deconstruction has not plead facts establishing that Siteworks is a sham entity or that it was used
to work a fraud or other injustice. Instead, Siteworks and T. Garbett maintain that the facts
alleged by Werner Deconstruction, if taken as true, at best, only establish a breach of contract,
which is insufficient to hold T. Garbett personally liable. Turning to Werner Deconstruction’s
proposed accounting, conversion and unjust enrichment claims against Y. Garbett and/or Harle,
Siteworks and T. Garbett contend that they are futile because they are improperly based on
Siteworks’ contract with non-party BTU Solution, a contract to which Werner Deconstruction
was not a party. They also argue that the proposed claims are futile because Werner
Deconstruction failed to plead jurisdiction over Y. Garbett or Harle.
As to the proposed accounting claim against Y. Garbett, Siteworks and T. Garbett also
argue that this claim is futile because Werner Deconstruction failed to allege that Y. Garbett
agreed to be the escrow agent or even received any escrow funds. Similarly, they allege that the
proposed conversion and unjust enrichment claims against Y. Garbett and Harle fail for another
2

Though not addressed either by Werner Deconstruction in its moving and reply briefs or
Siteworks and T. Garbett in their opposition brief, Werner Deconstruction, through its proposed
Amended Complaint, also seeks to add fictitious companies, i.e., XYZ Companies 1-10, as
defendants in the Amended Complaint. At this juncture, the addition of the fictitious companies
is not clearly futile. As such, their addition shall be allowed.
5

reason: namely Siteowkrs and T. Garbett argue that these claims are barred by the economic loss
doctrine. As a result, Siteworks and T. Garbett contend that Werner Deconstruction’s motion
must be denied in total because all of the proposed amendments are futile.
II.

Analysis
A. Standard of Review
Pursuant to Rule 15(a)(2), leave to amend the pleadings is generally granted freely. See

Foman v. Davis, 371 U.S. 178, 182 (1962); Alvin v. Suzuki, 227 F.3d 107, 121 (3d Cir. 2000).
Nevertheless, the Court may deny a motion to amend where there is “undue delay, bad faith or
dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments
previously allowed, undue prejudice to the opposing party by virtue of allowance of the
amendment, [or] futility of the amendment.” Id. However, where there is an absence of undue
delay, bad faith, prejudice or futility, a motion for leave to amend a pleading should be liberally
granted. Long v. Wilson, 393 F.3d 390, 400 (3d Cir. 2004). Here, the Court focuses on futility as
that is the basis for Siteworks and T. Garbett's objections.
An amendment is futile if it “is frivolous or advances a claim or defense that is legally
insufficient on its face.” Harrison Beverage Co. v. Dribeck Imp., Inc., 133 F.R.D. 463, 468
(D.N.J. 1990) (internal quotation marks and citations omitted). To determine if an amendment is
“insufficient on its face,” the Court utilizes the motion to dismiss standard under Rule 12(b)(6)
(see Alvin, 227 F.3d at 121) and considers only the pleading, exhibits attached to the pleading,
matters of public record, and undisputedly authentic documents if the party’s claims are based
upon same. See Pension Benefit Guar. Corp. v. White Consol. Indus., 998 F.2d 1192, 1196 (3d
Cir. 1993).

6

To determine if a complaint would survive a motion to dismiss under Rule 12(b)(6), the
Court must accept as true all the facts alleged in the pleading, draw all reasonable inferences in
favor of the plaintiff, and determine if “under any reasonable reading of the complaint, the
plaintiff may be entitled to relief[.]” Phillips v. County of Allegheny, 515 F.3d 224, 233 (3d Cir.
2008). “[D]ismissal is appropriate only if, accepting all of the facts alleged in the [pleading] as
true, the p[arty] has failed to plead ‘enough facts to state a claim to relief that is plausible on its
face[.]’” Duran v. Equifirst Corp., Civil Action No. 2:09-cv-03856, 2010 WL 918444, *2
(D.N.J. March 12, 2010) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955,
167 L.Ed.2d 929 (2007)). Put simply, the alleged facts must be sufficient to “allow[] the court to
draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v.
Iqbal, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009). Additionally, in assessing a motion to
dismiss, while the Court must view the factual allegations contained in the pleading at issue as
true, the Court is “not compelled to accept unwarranted inferences, unsupported conclusions or
legal conclusions disguised as factual allegations.” Baraka, 481 F.3d at 211.
B. Discussion
The Court first examines Werner Deconstruction’s proposed veil piercing claim. As this
District has noted:
In New Jersey and most other jurisdictions, there are two
overarching elements required to pierce the corporate veil: “First,
there must be such unity of interest and ownership that the separate
personalities of the corporation and the individual no longer exist.
Second, the circumstances must indicate that adherence to the
fiction of separate corporate existence would sanction a fraud or
promote injustice.”
The Mall at IV Group Prop.s, LLC v. Roberts, No. Civ.A. 02-4692 (WHW) 2005 WL 3338369,
*3 (D.N.J. Dec. 8, 2005) (quoting William Meade Fletcher et al., Fletcher Cyclopedia of the Law
7

of Private Corporations, § 41.30 (perm. ed., rev. vol. 1999). The Court considers a number of
facts in determining whether the first element has been satisfied. These include:
gross undercapitalization, failure to observe corporate formalities,
non-payment of dividends, the insolvency of the debtor
corporation at the time, siphoning of funds of the corporation by
the dominant stockholder, non-function of other officers or
directors, absence of corporate records, and the fact that the
corporation is merely a façade of the operations of the dominant
stockholder or stockholders.
Id. (citing Craig v. Lake Asbestos of Quebec, Ltd., 843 F.2d 145 (3d Cir. 1988) (applying New
Jersey law). With respect to the second element, “there must be some ‘wrong’ beyond simply a
judgment creditor’s inability to collect[.]” Id. However, a plaintiff “need not prove common law
fraud . . ., but rather must meet the less rigid standard of ‘fraud, injustice, or the like.’” Id.
(quoting Kuibyshevnefteorgsythez v. Model, civ. A. No. 93-4919, 1995 WL 66371, *15 (D.N.J.
Feb. 6, 1995) (citations omitted)). Importantly, “‘injustice or the like’ will suffice.”
Kuibyshevnefteogsynthez, 1995 WL 66371 at *15 (quoting Allied Corp. v. Frola, 701 F.Supp.
1084, 1088-89 (D.N.J. 1988)). The “over-arching principle [of veil piercing] is to prevent fraud,
illegality or injustice through the illegitimate use of the corporate form.” Id. at *13.
Here, Werner Deconstruction points to a myriad of transactions Siteworks made from the
Pre-Payment Account and three other accounts (Account Numbers XXXXXX3942,
XXXXXX9651 and XXXXXX9718) to establish that T. Garbett used Siteworks as his alter ego
and abused the corporate form to siphon money from Siteworks for his own personal benefit.
Indeed, it alleges:
¶ 141. Upon information and belief, Defendant T. Garbett is the
President of SSNY and, therefore, is responsible for every aspect
of SSNY's operations as aforesaid.

8

¶ 142. Between February 6, 2015 and May 26, 2015, Werner
Deconstruction entrusted SSNY with $2,414,904.96 via wire
transfer into the Pre-Payment Account that had been designated by
SSNY.
¶ 143. Before Werner Deconstruction made its first wire transfer
to the Pre-Payment Account on February 6, 2015, that account had
a balance of $7,081.95.
¶ 144. In addition to the Pre-Payment Account, Defendant T.
Garbett controlled at least 3 other checking accounts with T.D.
Bank N.A. that identified "Siteworks Service Corp." as the account
holder, to wit: XXXXX8340 (i.e., the Pre-Payment Account),
XXXXXX3942, XXXXXX9651, and XXXXX9718. On February
6, 2015, those three accounts had a collective balance of
$849,931.0l.
¶ 145. Defendants T. Garbett, John Does 1-10, and XYZ
Companies 1-10 misused SSNY to accomplish unlawful purposes,
including, without limitation, absconding with Werner
Deconstruction's money.
¶ 146. Among other things, SSNY failed to pay Minerva
Enterprises $240,704.97 and failed to pay Ani & Joe Abatement
$19,008.00. SSNY failed to pay Minerva Enterprises and Ani &
Joe Abatement even though Werner Deconstruction had
entrusted SSNY with $2,414,904.96 to be used solely for the
removal of the Demolition Debris Pile and Account Numbers
XXXXXX3942, XXXXXX9651, and XXXXX9718 had a
collective balance of $849,931.01 as of February 6, 2015.
¶ 147. Between February 6, 2015 and June 30, 2015, Defendant
T. Garbett advanced his own personal interests by withdrawing
$1,331,404.00 in cash from the Pre-Payment Account.
¶ 148. Statements from T.D. Bank N.A. reveal a myriad of
transactions from the Pre- Payment Account that had no legitimate
connection to the removal of Demolition Debris Pile from the
Werner Generating Station. Examples of improper transactions
from the Pre-Payment Account where Defendant T. Garbett
advanced his own personal interests include but are not limited to:


A debit card purchase at PC Richard & Son on February 9,
2015 in the amount of $2,642.86;
9



A debit card purchase for "City of Newark Tax" on
February 23, 2015 in the amount of $1,509.18;



A debit card purchase from the "New York State DMV"
on April 28, 2015 in the amount of $4,871.25;



A debit card purchase from "WPY Affinity Health Plan"
on May 4, 2015 in the amount of $1,213.56; and



Miscellaneous debit card purchases between February
2015 and June 2015 at "Lowes," "The River Palm
Terrace," "The Rhodes North Tavern," "Advance Auto
Parts," "The Orange Top Diner," "Massage Envy," "Auto
Zone," "McDonalds," "Dunkin Donuts," "Apple Store,"
"Warwick Car Wash," "Somerset Tire Service,"
"Restaurant Depot," "The Home Depot."

¶ 149. Defendants T. Garbett, John Does 1-10, and XYZ
Companies 1-10 failed to observe the corporate form of SSNY as a
regular and distinct entity, failed to observe corporate formalities,
commingled and transferred funds of the company, and failed to
hold the company out as a separate entity in terms of its business
operations from their own personal interests.
¶ 150. By way of example, on February 6, 2015 and February 13,
2015, Werner Deconstruction wired $100,000.00 and $314,904.96
to the Pre-Payment Account. On February 6, 2015 and February
13, 2015, $100,000.00 and $110,000.00 was transferred to Account
No. XXXXX9718 by, upon information and belief, Defendant T.
Garbett. On February 13, 2015 and February 17, 2015, Defendant
T. Garbett advanced his personal interests by withdrawing
$400,000.00 in cash from the Pre-Payment Account and Account
No. XXXXX9718.
¶ 151. In addition to the $1.3 million in cash that was withdrawn
from the Pre-Payment Account, Defendant T. Garbett advanced his
personal interests by withdrawing approximately $1.8 million in
cash from Account Numbers XXXXXX3942, XXXXXX9651, and
XXXXX9718 between February 2015 and August 2015.
¶ 152. Statements from T.D. Bank N.A. for Account Numbers
XXXXXX3942, XXXXXX9651, and XXXXX9718 reveal a
myriad of transactions that had no legitimate business purpose.
Examples of improper transactions which advanced the personal
interests of Defendant T. Garbett include but are not limited to:
10



A check written on February 11, 2015 in the amount of
$9,995.68 made payable to "NYS Child Support
Processing Center"



A debit levy of $57,145 on July 21, 2015 for child support;



A debit levy of $26,065.70 on October 16, 2015 for child
support;



A debit of $1,069.22 on February 9, 2016 for a "O&R
Utilities Bill Pymt;"



A debit of $3,832.31 for "City of Newark Tax;"



"Amex e-payments" of $13,394, $21,260.88, and
$7,483.83 on February 11, 2015, February 26, 2015, and
March 24, 2015.



A check written on March 5, 2015 in the amount of
$59,708.00 made payable to "Biditup Auctions
Worldwide;" and



Miscellaneous debits for "BJs," "Target," "Key West
Marina," "Tuxedo Wine," "Tuxedo Motel," "Fairway
Market," "Lifetime Fitness," "Liberty Science Center,"
"Kiddie Komer," and "Massage Envy," "Rhodes North
Tavern," "Blackman Plumbing," "Life Time Fitness,"
"Overstock.com."

¶ 153. Through the aforesaid actions, Defendant T. Garbett
absconded with Werner Deconstruction's money by siphoning
funds from SSNY, stripping it of its assets, and rendering it
judgment proof. Statements from T.D. Bank, N.A. reveal that by
June 30, 2016 SSNY only maintained $2.81 in the Pre-Payment
Account and Account Numbers XXXXXX3942, XXXXXX9651,
and XXXXX9718.
¶ 154. The aforesaid actions of Defendants T. Garbett, John Does
1-10 and XYZ Companies 1-10 in misusing SSNY were not for
legitimate business purposes but so that SSNY could be used as a
mere agent or instrumentality of Defendants T. Garbett, John Does
1-10, and XYZ Companies 1-10.
(Proposed Am. Compl. ¶¶ 141-154).
11

Unlike Siteworks and T. Garbett, the Court finds that Werner Deconstruction has done
much more than simply contend that because “Siteworks breached the contract, that Thomas
Garbett should be liable.” (Def. Br. at 8; Docket Entry No. 28). Indeed, Werner
Deconstructions proposed Amended Complaint contains allegations addressing both elements
necessary to pierce the corporate veil. When taken as true, the aforementioned allegations
plausibly suggest that there was a failure to observe the corporate formalities at Siteworks; that
based on the paltry sums of money remaining in the Pre-Payment Account and three other
accounts, Siteworks may very well be insolvent; that T. Garbett, the President of Siteworks,
siphoned money from Siteworks; and that Siteworks, itself, is merely a front for T. Garbett’s
operations. Similarly, when taken as true, the aforementioned allegations indicate that it would
promote injustice to adhere to the fiction of a separate corporate existence for Siteworks. Indeed,
assuming, as the Court must, that T. Garbett in fact stripped Siteworks’ assets as pled by Werner
Deconstruction, it would certainly be unjust to allow T. Garbett to hide behind the corporate
form. As a result, the Court finds that Werner Deconstruction has set forth a plausible claim of
veil piercing and the Court shall permit it to make this non-futile amendment.
The Court turns next to Werner Deconstruction’s proposed claims against Y. Garbett and
Harle. While Werner Deconstruction is correct in asserting that Siteworks and T. Garbett do not
have standing to oppose its motion on futility grounds to the extent that it seeks to bring claims
for conversion and unjust enrichment against Y. Garbett and R. Harle because Siteworks is
unaffected by same, that does not mean that Werner Deconstruction’s proposed amendments
shall be automatically granted. See Custom Pak Brokerage, LLC v. Dandrea Produce, Inc., Civil
No. 13-5592 (NLH/AMD), 2014 U.S. Dist. LEXIS 31681, * (D.N.J. Feb. 27, 2014) (holding that
“current parties ‘unaffected by [the] proposed amendment’ do not have standing to assert claims
12

of futility on behalf of proposed defendants.” (quoting Clark v. Hamilton Mortg. Co., No. 07252, 2008 U.S. Dist. LEXIS 26511, *6 (W.D. Mich. April 2, 2008)). Instead, the Court has the
inherent authority to review a proposed amendment for futility and the Court exercises this
authority herein. See Worseter-Sims v. Tropicana Entm’t, Inc., 46 F.Supp.3d 513, 517 (D.N.J.
2014) (recognizing that courts have inherent authority to dismiss claims sua sponte for failure to
state claim upon which relief can be granted under Rule 12(b)(6)).
In the first instance, the Court finds that whether or not Werner Deconstruction
adequately pled facts supporting personal jurisdiction over Y. Garbett and Harle in its proposed
Amended Complaint does not impact the viability of same. Here, it is conceivable that the Court
has personal jurisdiction over Y. Garbett and Harle. Further, “[t]here is no requirement that a
plaintiff allege the facts that support a finding of personal jurisdiction in a complaint.” Mylan
Pharms., Inc. v. Kremers Urban Dev. Co., C.A. No. 02-1628 GMS, 2003 U.S. Dist. LEXIS
20665, *11-12 (D.Del. Nov. 14, 2003). As a result, the proposed Amended Complaint is not
futile because of any failure to do so.
Turning to the substance of Werner Deconstructions’ proposed conversion and unjust
enrichment claims against Y. Garbett and Harle, the Court finds that Werner Deconstruction has
adequately alleged facts supporting same to raise its right to relief above the speculative level. In
this regard, in order to set forth a claim for conversion, a plaintiff must show, “‘an unauthorized
assumption and exercise of the right of ownership over goods or personal chattels belonging to
another, to the alteration of their condition or the exclusion of an owner’s rights.’” Giercyk v.
National Union Fire Ins. Co. of Pittsburgh, Pa., civil Action No. 13-6272, 2015 U.S. Dist.
LEXIS 162628, *22, (D.N.J. Dec. 4, 2015) (quoting Barco Auto Leasing Corp. v. Holt, 228 N.J.
super. 77, 83 (App. Div. 1988). Further, “[w]hen money, as opposed to tangible property, is the
13

subject of a conversion claim, New Jersey courts require that a plaintiff show something more
than a contractual obligation on the part of a defendant to pay the plaintiff to establish
conversion.” Id. at 22-23. Similarly, to assert a viable claim for unjust enrichment, “‘a plaintiff
must show both that defendant received a benefit and that retention of that benefit without
payment would be unjust.’” Id. at 20 (quoting VRG Corp. v. GKN Realty Corp., 135 N.J. 539,
554 (1994)).
The Court finds that Werner Deconstruction’s allegations concerning Y. Garbett and R.
Harle’s use of its money contained in the Pre-Payment account to purchase real property in
Chittenden, Vermont are sufficient to set forth plausible claims of conversion and unjust
enrichment. In this regard, Werner Deconstruction alleges (1) that $55,000.00 was wired from
the Pre-Payment Account to Danile Ewald, Esq. (Mr. Ewald), an attorney at law in Killington,
Vermont; (2) that Mr. Ewald was Y. Garbett and R. Harle’s attorney in fact; (3) that Mr. Ewald,
as their attorney, used the aforementioned $55,000.00 to close a real estate transaction on Y.
Garbett and R. Harle’s behalf; and (4) that, at a minimum at least $9,852.18 of the $55,000.00
wired to Mr. Ewald from the Pre-Payment Account belonged to Werner Deconstruction. (See
Proposed Am. Compl. ¶¶ 159-168. In light of the fact that Werner Deconstruction did not
maintain a contractual relationship with either Y. Garbett or R. Harle, the Court finds Werner
Deconstruction's allegations to be sufficient at this stage of the proceedings to assert claims for
conversion and unjust enrichment. See SRC Constr. Corp. of Monroe v. Atl. City Hous. Auth.,
935 F.Supp.2d 796, 799 (D.N.J. 2013 (finding that absence of contract between parties precluded
application of economic loss doctrine).
Finally, the Court addresses, Werner Deconstruction’s proposed accounting claim against
Y. Garbett. Unlike Werner Deconstruction’s other proposed amendments, the Court finds that
14

this proposed amendment would be futile. The General Services Agreement incorporating
Statement of Work #01, which included the provision requiring certain revenues to be held in
escrow and naming Y. Garbett as the escrow agent, was entered into between BTU Solutions and
Siteworks. Werner Deconstruction was not a party to said agreement. (Ex. E to Cert. of Lauren
F. Iannaccone at Werner-00505). Similarly, Werner Deconstruction was not a party to Statement
of Work #01. Instead, pursuant to its own terms Statement of Work #01 was “between BTU
SOLUTIONS ENVIRONMENTAL SERVICES, LLC (‘BTU’) and Sitework Services NY, Inc.”
(Id. at Werner-00514). While Statement of Work #01 contained a signature line for Werner
Deconstruction, it specifically indicated that “Werner Deconstruction will sign as an
acknowledgment of the contract and BTU’s ability to enter into the agreement.” (Id.)3
To support its proposed claim for an accounting and turnover of escrow funds as to Y.
Garbett, Werner Deconstruction relies on Article 2.1 of the Subcontract between it and BTU DE.
In its proposed Amended Complaint, Werner Deconstruction alleges that it and BTU DE “agreed
that revenues from the demolition of Units 1, 2, and 3 would be deposited into a Project Account
that would be administered by Werner Deconstruction” and that “all expenses from the Project
would be paid from the Project Account.” (Proposed Am. Compl. ¶ 179). Werner
Deconstruction alleges that BTU Solutions entered into the General Services Agreement with
Siteworks to further BTU DE’s work under the Subcontract and that pursuant to the General
Services Agreement and Statement of Work #01, Siteworks agreed to demolish the building
containing Units 1, 2, and 3 in furtherance of BTU DE’s obligations under the Subcontract (Id.
¶¶ 180-81). Werner Deconstruction further alleges that in order to provide security that
3

The Court notes that the copy of Statement of Work #01 Werner Deconstruction attached in
support of its motion to amend was not, in fact, signed by Werner Deconstruction. Instead, the
only signature that appears on Statement of Work #01 is T. Garbett’s signature on behalf of
Siteworks. (Id. at Werner-00515).
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Siteworks would perform all of its contractual obligations under the General Services Agreement
and Statement of Work #01, BTU Solutions and Siteworks agreed that certain revenues would be
held in escrow by Y. Garbett. (Id. ¶¶ 183-84). Werner Deconstruction then claims that “[a]s
administrator of the Project Account that was established pursuant to the subcontract between
Werner Deconstruction and [BTU DE], Werener Deconstruction is entitled to an accounting of
the escrow funds held by Defendant Y. Garbett.” (Id. ¶ 186). It further claims that since
Siteworks never completed its work under the General Services Agreement and Statement of
Work #01 with BTU Solutions, “Werner Deconstruction is entitled to the funds held in escrow
by Defendant Y. Garbett because Article 2.1 of the Subcontract requires all revenues generated
from the sale of scrap for the Project to be deposited into the Project Account and for all
expenses for the Project to be paid from the Project Account.” (Id. ¶¶ 186-87). Werner
Deconstruction’s claims, however, are not plausible on their face.
Werner Deconstruction has alleged no facts that would make it reasonable to infer that
the Subcontract entered between itself and BTU DE somehow entitles it to the funds held in
escrow according to the General Services Agreement and Statement of Work #01 entered into
between Siteworks and BTU Solutions. Neither Siteworks nor BTU Solutions was a party to the
Subcontract. The fact that BTU Solutions may be a subsidiary of BTU DE is an insufficient
basis to impute the acts of one company to the other. Werner Deconstruction certainly has
alleged no facts to support ignoring the corporate formalities between BTU DE and BTU
Solutions. Similarly, neither BTU DE nor Werner Deconstruction is a party to the General
Services Agreement or Statement of Work #01. While Werner Deconstruction may have signed
Statement of Work #01, it did so, not as a party to Statement of Work #01, but to acknowledge
the agreement between BTU Solutions and Siteworks as well as to acknowledge BTU Solutions’
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ability to enter into said agreement. Based on the facts alleged, there is simply no support for
Werner Deconstructions claims that the provisions contained in Article 2.1 of the Subcontract
(i.e., the agreement between Werner Deconstruction and BTU DE) somehow entitle it to an
accounting of and the turnover of funds being held in escrow pursuant to the General Services
Agreement and Statement of Work #01 (i.e., the agreement between BTU Solutions and
Siteworks). As a result, the Court finds this proposed amendment to be futile and denies Werner
Deconstruction’s request to assert same.
III.

Conclusion
For the reasons stated above, Werner Deconstruction’s motion to amend is GRANTED in

part and DENIED in part. An appropriate Order follows.
Dated: April 27, 2017

s/ Tonianne J. Bongiovanni
HONORABLE TONIANNE J. BONGIOVANNI
UNITED STATES MAGISTRATE JUDGE

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