NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court."
Although it is posted on the internet, this opinion is binding only on the
parties in the case and its use in other cases is limited. R.1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-3220-15T3
WINKS/KRUG LANDSCAPING
SERVICES, LLC,
Plaintiff-Respondent,
v.
STONEBRIDGE AT WAYNE
HOMEOWNERS ASSOCIATION,
INC., improperly pled as
Stonebridge at Wayne Home
Owners Association, LLC,
Defendant-Appellant.
___________________________________
Argued May 31, 2017 – Decided August 23, 2017
Before Judges Rothstadt and Sumners.
On appeal from the Superior Court of New
Jersey, Law Division, Bergen County, Docket
No. L-10111-14.
Jessica A. Tracy argued the cause for
appellant (Curcio Mirzaian Sirot, LLC,
attorneys; Ms. Tracy and Daniel W. Heinkel,
on the briefs).
Harold P. Cook, III, argued the cause for
respondent (Harold P. Cook, III Esq. &
Associates, attorneys; Mr. Cook, on the
brief).
PER CURIAM
Defendant Stone Bridge at Wayne Homeowners Association, Inc.
appeals from the Law Division's March 10, 2016 order entering a
judgment against it in the amount of $50,000 plus interest and
costs, in favor of its former snowplowing contractor, plaintiff
Winks/Krug Landscaping Services LLC. After a bench trial, the
judge found that defendant breached its contract with plaintiff,
including its implied covenant of good faith and fair dealing, by
unilaterally and unjustifiably cancelling the contract. She
awarded damages to plaintiff in an amount equal to the base amount
payable to plaintiff annually under its contract with defendant.
On appeal, defendant contends that there was insufficient evidence
to support the court’s conclusion that defendant breached either
its contract or the implied covenant of good faith and fair
dealing. Moreover, defendant argues that the court’s calculation
of plaintiff’s damages was incorrect. We disagree as to liability
and affirm the trial judge's determination that defendant breached
its contract, but we are constrained to remand for reconsideration
of plaintiff's damages.
Plaintiff's two principals and defendant's property manager
testified on plaintiff's behalf at trial. Defendant's general
counsel and a representative from its board testified on behalf
of defendant. In addition to that testimony, various documents
were admitted into evidence, including the parties' agreement and
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various emails that were exchanged between them. The salient
facts as found by the trial judge are summarized as follows.
The parties entered into a three-year agreement on October
15, 2012, under which plaintiff agreed to provide plowing services
to defendant's townhouse development, as it had done for many
years. Under the contract, plaintiff was to remove snow and ice
from the roadways from curb to curb. Moreover, plaintiff was to
provide all necessary equipment. However, that equipment
expressly excluded a "bucket loader or trucks for loading"
accumulated piles of snow and removing them to designated sites
within the complex.
In exchange for plaintiff's services, defendant agreed to pay
plaintiff a rate of $50,000 per year for three years. According
to the contract, the base amount would include all charges needed
to remove up to a total of fifty-five inches of snow during each
snow season. The contract provided for additional charges for
removal of snow in excess of fifty-five inches.
The agreement also addressed each party's right to cancel.
In one paragraph, it provided that defendant could cancel the
contract if, after giving plaintiff twenty-four hours' notice of
its deficient performance, plaintiff failed to remedy a specific
problem brought to its attention. In another section of the
contract, defendant reserved the right to cancel the contract upon
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thirty days' notice if "performance by the [c]ontractor is not
satisfactory." Likewise, plaintiff had a right to cancel the
agreement upon thirty days' notice if it did not receive payment
as provided for in the agreement.
Pursuant to the parties' agreement, plaintiff provided
plowing services during the winters of 2012-13 and 2013-14 seasons,
the latter of which involved periods of very heavy snowfall.
According to plaintiff, it was the "seventh snowiest year on
record" and required plaintiff to use heavier equipment at
increased costs. In February, defendant's property manager wrote
an email to plaintiff requesting certain insurance information and
thanking plaintiff "for all [it had] done this year."
In September 2014, in anticipation of the upcoming snow
season, plaintiff's principals attended a meeting with members of
the defendant's board, its attorney, and property manager. At the
September 3, 2014 meeting, the parties discussed issues that were
caused by the past year's heavy snowfall. There was no discussion,
however, of either party wanting to cancel the agreement.
Addressing the issue of accumulated snow during the heavy
snowfall, plaintiff's representatives proposed that plaintiff
purchase, at defendant's expense of approximately $10,000, a
"Bobcat" front loader so large piles of snow could be removed from
street intersections, allowing plaintiff to provide defendant with
4 A-3220-15T3
"curb-to-curb" clearing of the snow and ice during the heavy
snowfalls. The equipment would be used by plaintiff and stored
on defendant's property. According to plaintiff’s
representatives, all indications were that defendant had agreed
to accept the proposal for the additional equipment. Subsequent
emails exchanged between the parties, however, did not confirm or
dispute plaintiff's understanding of defendant’s acceptance of the
proposal to purchase the additional equipment. Rather, they
addressed the additional work that plaintiff proposed to perform
with the front-loader once purchased. Plaintiff, in reliance upon
its principal's understanding of what had occurred at the meeting,
purchased the Bobcat front loader for defendant.
Approximately thirty days after the meeting, defendant’s
attorney sent plaintiff a letter cancelling the parties'
agreement. The letter stated, "I am writing to advise that the
Board has voted to cancel the snow removal agreement with this 30
day notice." No reason was communicated to plaintiff as to why
the board took the action as alleged by counsel.1 According to
defendant's attorney, the cancellation was based upon complaints
received from homeowners about plaintiff’s performance during the
1
There were no minutes of any meetings or resolutions issued by
defendant's board admitted into evidence that confirmed counsel's
representations.
5 A-3220-15T3
prior year and defendant's concern about plaintiff being able to
handle the snowfall during the upcoming season. It was undisputed,
however, that there were no documents giving notice to plaintiff
of any unsatisfactory performance or defendant's intention to
cancel the contract or proving the board authorized its counsel
to cancel the contract for any reason.
Plaintiff’s representatives testified as to its damages
arising from plaintiff's cancellation of the contract. According
to one of its principal's calculations, plaintiff was entitled to
gross damages of $98,900, based upon its prior years' billings to
defendant, as adjusted for extraordinary snowfall, and upon its
billing to similar townhouse developments in the area. After
plaintiff's loss, including deductions for savings on the cost of
materials and fuel for its trucks not expended due to the
cancellation, its estimated net profit would have been $78,529.
After considering the testimony and other evidence, the trial
judge issued an order entering judgment in favor of plaintiff and
a twenty-one page written decision setting forth her findings of
facts and conclusions of law. In her decision, the judge found
that defendant breached its contract because there was no prior
notice of any kind at any time that there were problems with
plaintiff's performance or that defendant wanted to cancel the
contract. Rather, the judge found from the emails sent in February
6 A-3220-15T3
and September 2014 that defendant intended to continue using
plaintiff for snowplowing during the upcoming season. The judge
rejected defendant's reliance on its contractual right to cancel,
finding that it was a "pretext [and] a fiction," as demonstrated
by the fact that there were no complaints about plaintiff's
performance during the 2013-14 season or afterward that proved
"the performance was not satisfactory to the point of
cancellation."
Citing to the testimony of defendant's board member, the
judge observed that what came out of the September 3 meeting was
that the board wanted a proposal for the additional costs and
needed time "to think about it." She further noted that contrary
to the cancellation letter, there was no corroborating evidence
that defendant's board voted to cancel the contract because it was
dissatisfied with plaintiff's performance or otherwise.
Similarly, the judge cited to defendant's counsel's testimony that
the "board reached no agreement at that meeting" and there was no
"evidence at all of any official board decision to terminate."
Relying upon the Court's opinion in Brunswick Hills Racquet
Club, Inc. v. Route 18 Shopping Center Assoc., 182 N.J. 210, 230-
31 (2005), the judge concluded that the meeting exemplified the
"collaborative" relationship that existed before the meeting and
continued after, the ensuing cancellation was without any
7 A-3220-15T3
"legitimate purpose," and therefore breached plaintiff's implied
covenant of good faith and fair dealing. The judge rejected,
however, plaintiff's additional claim that defendant acted
fraudulently as she found that defendant did not misrepresent any
intention to authorize the purchase of the Bobcat or otherwise
induced plaintiff to make the purchase.
Turning to plaintiff's entitlement to damages, and citing to
Van Dusen Aircraft Supplies, Inc. v. Terminal Construction, Corp.,
3 N.J. 321 (1949) and Interchemical Corp. v. Uncas Printing &
Finishing Co., Inc., 39 N.J. Super. 318, 329 (App. Div. 1956), the
judge observed, "[p]laintiff is entitled to be awarded damages for
such loss of profits as is capable of determination with reasonable
certainty" and the fact that they cannot be precisely fixed did
not prevent her from awarding them. The judge then observed that
plaintiff's billings to defendant for the two prior years varied
greatly based upon undefined amounts of snowfall. As a result,
they could not be relied upon to determine damages except for the
purpose of establishing that plaintiff would have received in
2014-15 at the very least the base annual amount provided for in
the contract. She found there was no evidence that plaintiff
would have recovered more than that amount for additional snowfall
in accordance with the schedule for those charges in the contract.
8 A-3220-15T3
The scope of our review of a judgment entered in a non-jury
case is limited. Seidman v. Clifton Sav. Bank, S.L.A., 205 N.J.
150, 169 (2011). "[I]n reviewing the factual findings and
conclusions of a trial judge, we are obliged to accord deference
to the trial court's credibility determination[s] and the judge's
'feel of the case' based upon his or her opportunity to see and
hear the witnesses." N.J. Div. of Youth & Family Servs. v. R.L.,
388 N.J. Super. 81, 88 (App. Div. 2006) (quoting Cesare v. Cesare,
154 N.J. 394, 411-13 (1998)), certif. denied, 190 N.J. 257 (2007).
"Findings by the trial judge are considered binding on appeal when
supported by adequate, substantial and credible evidence," and
"should not be disturbed unless . . . they are so wholly
insupportable as to result in a denial of justice." Rova Farms
Resort, Inc. v. Inv'rs Ins. Co. of Am., 65 N.J. 474, 483-84 (1974)
(alteration in original). However, we owe no special deference
to the judge's legal conclusions. Manalapan Realty, L.P. v. Twp.
Comm. of Manalapan, 140 N.J. 366, 378 (1995). "When deciding a
purely legal issue, review is de novo." Kaye v. Rosefielde, 223
N.J. 218, 229 (2015) (quoting Fair Share Hous. Ctr., Inc. v. N.J.
State League of Municipalities, 207 N.J. 489, 493 n.1 (2011)).
Applying these guiding principles, we turn first to the trial
judge's finding that defendant breached its implied covenant of
good faith and fair dealing and conclude that it was unsupported
9 A-3220-15T3
by the evidence. "[W]e start from the premise that 'every contract
in New Jersey contains an implied covenant of good faith and fair
dealing.'" Kalogeras v. 239 Broad Ave., LLC, 202 N.J. 349, 366
(2010) (quoting Sons of Thunder v. Borden, Inc., 148 N.J. 396, 420
(1997)). "Good faith" entails adherence to "community standards
of decency, fairness or reasonableness." Iliadis v. Wal-Mart
Stores, Inc., 191 N.J. 88, 109-10 (2007) (quoting Wilson v. Amerada
Hess Corp., 168 N.J. 236, 245 (2001)). "[N]either party shall do
anything which will have the effect of destroying or injuring the
right of the other party to receive the fruits of the contract[.]"
Kalogeras, supra, 202 N.J. at 366 (second alteration in original)
(quoting Palisades Props., Inc. v. Brunetti, 44 N.J. 117, 130
(1965)).
"The obligation to perform in good faith exists in every
contract, including those contracts that contain express and
unambiguous provisions permitting either party to terminate the
contract without cause." Sons of Thunder, supra, 148 N.J. at 421.
"[A] party to a contract may breach the implied covenant of good
faith and fair dealing in performing its obligations even when it
exercises an express and unconditional right to terminate." Id.
at 422.
"'[P]roof of bad motive or intention' is vital to an action
for breach of good faith." Badiali v. N.J. Mfrs. Ins. Grp., 220
10 A-3220-15T3
N.J. 544, 554 (2015) (quoting Brunswick Hills Racquet Club, Inc.,
supra, 182 N.J. at 225). A plaintiff must prove the defendant's
"bad motive or intention." Brunswick Hills Racquet Club, Inc.,
supra, 182 N.J. at 225.
Plaintiff here did not satisfy its burden of proof. It
offered no proof that defendant's decision to terminate the
contract was an act of a "bad motive or intention." There was no
finding by the trial judge based on the evidence that defendant
terminated the contract for any particular reason. She only found
that the purported reason – dissatisfaction with plaintiff's
performance – was unsupported by defendant's proofs.
We do find, however, that the trial judge's conclusion that
defendant breached the contract was supported by the evidence at
trial. Unlike a situation where a party to a contract has a right
to terminate a contract without cause, see Sons of Thunder, supra,
148 N.J. at 421; see also Karl's Sales & Serv. v. Gimbel Bros.,
249 N.J. Super. 487, 495 (App. Div.) ("where the right to terminate
a contract is absolute under the wording in an agreement, the
motive of a party in terminating such an agreement is irrelevant
to the question of whether the termination is effective"), certif.
denied, 127 N.J. 548 (1991), defendant's right to cancel was
conditioned upon plaintiff's unsatisfactory performance. The
trial judge found that there was no evidence that plaintiff
11 A-3220-15T3
performed unsatisfactorily to the point that defendant decided to
terminate the contract for that reason. We have no reason to
abandon our deference to those findings, as we do not find "they
are so wholly insupportable as to result in a denial of justice."
Rova Farms Resort, Inc., supra, 65 N.J. at 483-84.
Having concluded the trial judge properly determined that
defendant breached its contract with plaintiff, we turn to the
issue of damages. Defendant argues that the trial judge
incorrectly relied on the gross revenue plaintiff would have
received under the contract as the basis for her award without
deducting from that amount plaintiff's related costs that it did
not incur by not having to perform plowing services in 2014-15.
We agree.
The trial judge correctly determined that plaintiff was
entitled to recover its lost profits. See V.A.L. Floors, Inc. v.
Westminster Cmtys., Inc., 355 N.J. Super. 416, 422 (App. Div.
2002) ("where the plaintiff is a . . . contractor who has been
prevented by the defendant from completing his contract, the
plaintiff is entitled to the profit that would have been realized
if performance had been completed"). Similarly, the judge found
that the contract amount was the correct basis for determining the
gross amount plaintiff would be entitled to under the contract.
The judge omitted, however, the second step – calculating "the
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difference between the contract price and the cost of performance
or production." Ibid. (quoting J.L. Davis & Assocs. v. Heidler,
263 N.J. Super. 264, 276 (App. Div. 1993)); see also Cromartie v.
Carteret Sav. & Loan, 277 N.J. Super. 88, 103 (App. Div. 1994).
"Proof of the relevant costs or expenses is not a matter of
mitigation. It is part of the damage case of the party seeking
recovery for lost profits." Cromartie, supra, 277 N.J. Super. at
103. That said, we do not require specificity or exactness in
calculating lost profits. "Profits lost by reason of breach of
contract may be recovered 'if there are any criteria by which
probable profits can be estimated with reasonable certainty.'"
V.A.L. Floors, Inc., supra, 355 N.J. Super. at 425 (quoting Feldman
v. Jacob Branfman & Son, Inc., 111 N.J.L. 37, 42 (E & A 1933)).
For example, a plaintiff's historical profit margin in business,
rather than exact dollar amounts attributable to the specific
contract, can provide a suitable basis to calculate lost profits.
See id. at 425-26.
The judge incorrectly awarded plaintiff the full $50,000 even
though there was testimony adduced from plaintiff's witness that
there would have been costs associated with performance that would
not have been incurred, such as fuel charges and the cost of other
material. We are therefore constrained to remand the matter to
the trial judge for reconsideration of damages.
13 A-3220-15T3
Affirmed in part; reversed and remanded in part for further
proceedings consistent with our opinion. We do not retain
jurisdiction.
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