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Konover Construction Corporation v. East Coast Construction Services Corporation

420 F. Supp.2d 366 (D. N.J. 2006) (Unpublished)

CONTRACTORS; INDEMNIFICATION — Although, at common law, a tortfeasor may be entitled to indemnification from another where the party’s negligence is merely constructive, technical, imputed, or vicarious, in a case where liability arises from contract-based claims, an action for breach of contract is appropriate and an action for indemnification is not.

A general contractor hired a subcontractor to perform some work on a hotel under construction. Disputes arose between the contractor and the subcontractor and the subcontractor either withdrew or abandoned its work.

The subcontractor claimed it was entitled to attorneys’ fees. The subcontract did not contain a fee-shifting provision. New Jersey Civil Practice Rules provide for fee shifting only in specific cases where the shifting is permitted by statute or the Civil Practice Rules. The Court found no such applicable rule in this case. In a contract dispute, without an express provision in a contract providing for fee-shifting, the general rule requires each party to pay its own counsel fees. Thus, the subcontractor’s motion for summary judgment for attorneys’ fees was dismissed. The subcontractor also sued the contractor for indemnification against claims made by the subcontractor’s own sub-subcontractors. The Court found the subcontract did not require the contractor to indemnify the subcontractor. At common law, a tortfeasor may be entitled to indemnification from another where the party’s negligence is merely constructive, technical, imputed or vicarious. In this case, the subcontractor’s liability arose from contract-based claims brought by its own sub-subcontractors. According to the Court, if the subcontractor had a claim against the contractor, it would be for breach of contract, and not for indemnification. Thus, the sub-contractor’s motion for summary judgment on its claim of indemnification was dismissed. The contractor sued claiming fraudulent and negligent misrepresentation. Both fraudulent and negligent misrepresentation require a claimant to sustain an injury caused by the other’s misrepresentations. Under a theory of negligent misrepresentation, a claimant must prove the defendant negligently made an incorrect statement upon which the claimant relied, resulting in economic loss. To sustain a claim of fraudulent misrepresentation, a claimant must prove: (1) a material misrepresentation of fact; (2) knowledge or belief by the defendant of its falsity; (3) the defendant’s intent that the plaintiff rely on the misstatement; (4) that the claimant did reasonably rely on the misstatement; and (5) resulting damages. Because the contractor offered no proof of damages, it could not sustain its motion for summary judgment on either its negligent or fraudulent misrepresentation claims.

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