Articles Posted in Construction Law

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New Home, Construction, For Sale, Buy
In October 2019, the Appellate Division of the Superior Court of New Jersey issued an opinion in the case of Becker v. Ollie Solcum & Son, Inc., examining the enforceability of an arbitration clause in a construction project.  The decision continued the trend in New Jersey of limiting enforcement of arbitration agreements, particularly where one party is a customer.

The case arose from a dispute over a residential construction project. Robert and Catherine Becker entered into a contract with Ollie Slocum & Son, Inc. (“Slocum”) to build a new home for them for $1,850,000.  Under the contract, the project was to be completed in no more than 52 weeks after excavation work started.  Substantial completion was actually about one and a half years late.  The Beckers sued Slocum in the Law Division of the Superior Court of New Jersey over the delay and alleged construction defects including water penetration and deterioration of the outdoor decking, siding, and finishing.

The contract, which contained a clause requiring arbitration of disputes, stated:

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Willful Violations Under The Fair Labor Standards Act

352099_construction_3-002-300x225The Federal Fair Labor Standards Act establishes rates of minimum wage and overtime pay which employers must pay to their employees.  Employees successfully suing their employers for violations of these requirements can recover their lost wages, and their employers will be required to pay their attorneys fees and litigation costs.  The Fair Labor Standards Act provides that willful violations of these requirements will result in double damages – ie., the employer will be required pay the employee twice the amount of wages or overtime it did not pay.  A willful violation also extends the statute of limitations for suing from two years to three.

Willfulness: The Question Facing the Third Circuit

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The Appellate Division of New Jersey’s Superior Court recently issued an important construction law decision examining the effect of New Jersey’s Consumer Fraud Act in cases also involving the breach of a construction contract or negligent construction.

By way of background, coverage under New Jersey’s Consumer Fraud Act was expressly extended to include contractors engaging in home improvements and home repair.  The New Jersey Department of Community Affairs issued regulations requiring specific items in contracts between home improvement contractors and homeowners.  Violation of these technical requirements are “per se” violations of the Consumer Fraud Act, entitling the homeowner to triple damages and reimbursement of their attorneys fees by the contractor.

Under these regulations, the  specific requirements which home improvement contracts must contain include the following.

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construction-machine-3412240__340-300x202The Appellate Division of New Jersey’s Superior Court recently reviewed the signature requirements for filing a construction lien claim prior to and after the 2011 amendments to New Jersey’s Construction Lien Law.  Our construction attorneys represent contractors in construction law matters including but not limited to filing and/or defending against construction lien claims under New Jersey’s Construction Lien Law, N.J.S.A. 2A:44a-1, et seq.

The Court’s review was in Diamond Beach, LLC v. March Associates, Inc., decided in December 2018.  The Court was required to review the signatory requirements “pre” and “post” Construction Lien Law amendments, and determine whether the amendments should retroactively apply to previously filed construction liens.  Prior to the 2011 Construction Lien Law amendments, N.J.S.A. 2A:44A-6 required that a lien claim be signed, acknowledged, and verified by “a partner or duly authorized officer” of the partnership or organization.  The 2011 Construction Lien Law amendments dropped the requirement that the lien claim be signed by a “duly authorized officer” and instead required that the lien claim comply with the N.J.S.A. 2A:44A-8 claim form which requires that a “officer/member” sign the form.

While the amendment may have lowered the filing requirements, the Court found that the 2011 changes to the signatory requirements do not retroactively apply to the lien at issue, which was filed prior to the 2011 amendments, because the amendments did not expressly state that they were retroactive.  Further, the Court found that the amendments were not “curative” because there was no evidence that they were made to “cure” a previous misinterpretation of the law.  Diamond Beach, LLC v. March Associates, Inc., 457 N.J. Super. 265, 277–78 (App. Div. 2018).

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construction-645465__340-300x200A recent decision in the case of Jacobs v. Mark Lindsay and Son Plumbing & Heating, Inc., by the Appellate Division of New Jersey’s Superior Court examined the interplay between two very important laws – New Jersey’s Consumer Fraud Act and the criminal “theft of services statute” in the context of a dispute between a contractor which wanted to get paid, and a homeowner who didn’t believe the contractor had earned his fee. It contains important lessons for residential construction contractors.

The Consumer Fraud Act and Theft of Services

New Jersey’s Consumer Fraud Act prohibits merchants from engaging in “unconscionable commercial practices.” The Consumer Fraud Act applies to “home improvement contractors,” and regulations issued by the Division of Community Affairs extend the Consumer Fraud Act’s protections to specific requirements for contracts for “home improvement” work, including having a signed, written contract in the first place. The New Jersey Criminal Code makes theft of services a criminal offense.

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McLaughlin & Nardi’s New Jersey construction attorneys represent owners, contrhouse-construction-3370969__340-300x197actors and building suppliers in the prosecution and defense of construction lien claims.

As discussed in McLaughlin & Nardi’s overview of construction liens, they can be powerful tools for construction contractors, subcontractors, and suppliers who are experiencing difficulties in getting paid for the work that they have performed.

However, when considering whether to proceed with filing a construction lien for either a commercial or residential project, it is important to know that the contractor (“claimant”) act promptly once it starts to experience payment issues.

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brick-2952711__340-1-300x200Disputes over construction projects can be costly, time-consuming, complex and unpredictable endeavors.  Arbitration is a mechanism often used to avoid these pitfalls by many in New Jersey construction law.  Attorneys from our firm have significant experience in litigating and arbitrating construction disputes.  One of the most contentious areas is whether a dispute is subject to arbitration or whether it may be litigated in court.  Even more complex is trying to figure out which parts, if any, are covered by an arbitration in multi-issue disputes.  New Jersey’s courts recently faced just this problem and issued an important precedential decision.

Construction Arbitration

Arbitration is an alternative dispute resolution process which is popular in the construction industry.  It is voluntary, so it can only occur when the parties agree to use arbitration.  In New Jersey’s  construction industry this generally occurs in the contract for the construction project.  Agreements to arbitrate are favored under New Jersey construction law, and courts normally enforce them.

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The New Jersey Department of Environmental Protection (“NJDEP”) regulates, monitors, and enforces a wide range of environmental protection and conservation laws throughout the State of New Jersey.  The NJDEP is a cohesive government organization which is involved in various programs and areas of environmental protection including recycling, clean water, air quality and pollution, open spaces, wildlife protection, business regulations, waste transportation and disposal, and other environmental areas.

Waste transportation and disposal is one of the major areas which the NJDEP monitors with  the important goals of: eliminating illegal dumping (and thus land and water pollution), eradicating criminal activity from the waste removal industry due to a historic connection between the industry and illegal conduct, and educating waste handlers of relevant rules and environmental impacts.

To achieve these goals, the New Jersey State Legislature and the NJDEP have enacted numerous laws, rules, regulations, and reporting requirements for waste transporters.  To start, most waste transporters are required to obtain a New Jersey A-901 license.  The process for obtaining an A-901 license is not a quick or easy one.  Before ever engaging in any waste transportation, the business must provide a great deal of information to the NJDEP, including the source of funding for the business, business locations, lease and lessor information, identification of owners and key employees, etc.  On top of that each key employee, owner, partner, officer, director, and managing member must complete a disclosure form which requires a great deal of specific and detailed information such as information regarding family members, employment history, and other personal details.  Moreover, each of these people need to be fingerprinted and have background checks conducted.

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McLaughlin & Nardi’s New Jersey construction attorneys recently completed a construction arbitration in the American Arbitration Association.  After hearing the evidence, the arbitrator awarded our clients $289,918.  Maurice McLaughlin was the lead trial attorney.  He was assisted throughout by Pauline Young and Robert Chewning, who second chaired the hearings.

Background

The case involved Essex County homeowners who had contracted for extensive renovations to their kitchen.  The total cost of the kitchen renovations was $152,725.  The homeowners paid $126,362.50.  However, the contractor never completed the job.

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invoice-pad-blank-order-form-salesmen-34309007.jpgRetainage in New Jersey Construction Law

One of the areas which our construction lawyers often address is retainage.

The Use Retainage in New Jersey Construction Law

Retainage is an important device in construction law. Our attorneys have helped New Jersey contractors, subcontractors, owners and construction suppliers with issues related to retainage.

Retainage is an amount intentionally withheld from payment. It may be withheld by an owner from payment to a contractor, from a general contractor, to a subcontractor, or from a subcontractor to a lower tier subsubcontractor.

Retainage in Construction Contracts & Drafting Effective Retainage Provisions

Retainage is a creature of contract law. It is governed by the provisions of the contract or subcontract between the parties. Whatever the contract says about retainage will control; and if retainage is not provided for in the contract, it is not allowed.

Since the terms of the retainage are governed by the terms of the contract or subcontract, drafting the contract is extremely important. It is essential to have an experienced attorney on your side. Our construction attorneys negotiate and draft contracts, subcontracts and supplier contracts. We review construction contracts for our clients and advise them on their rights and responsibilities.

Litigation Over Construction Disputes

Disputes are common, as retainage is typically required to be paid when the work is “subtanitially complete.” Parties often disagree on what that term means. When these disputes arise, our attorneys fight aggressively for our clients’ rights in negotiations, mediation, arbitration and litigation. However, we first attempt to avoid these disputes by drafting clear language in contracts which protect our clients’ rights.
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