One of the most important considerations for construction contractors and subcontractors is getting paid for the work they perform. A recent construction law opinion examined some of the issues which contractors and subcontractors face under New Jersey construction law when
seeking to get paid for their work.
Construction Arbitration
Complex New Jersey construction law cases can be extremely expensive to litigate in court because of the amount of documents involved, the number of witnesses, and the need for experts. Therefore, many construction contracts contain arbitration provisions. The view is that arbitration can save money in the 
litigation process, but still provide an enforceable dispute resolution process.
However, it would not be accurate to call construction arbitration “cheap” or “inexpensive.” Essentially, arbitration is a private litigation process with limited discovery and appeal rights. By limiting discovery, particularly depositions, a significant source of expense is eliminated, and by limiting appeal rights, arbitration can provide more finality. However, there is still discovery. Documents are generally exchanged before the hearing, so there is still expense, but costs are saved because arbitration rarely involves depositions. Likewise, while experts are not normally deposed, they are still required and must prepare pre-hearing reports about their expected testimony. All of this entails significant expense. In addition, while there are minimal filing fees and the services of courts are generally free, the use of an arbitration forum in construction law disputes entails significant fees, and in addition the parties have to pay the arbitrator for all his or her time.
Under New Jersey construction law, each county must establish a construction board of appeals. A construction board of appeals hears the applications of any “person who is aggrieved by any ruling, action, notice, order or decision of a local enforcing agency that enforces either the New Jersey Uniform Construction Code or the New Jersey Uniform Fire Code, including, without limitation, any refusal to grant an application or any failure or refusal to act upon an application, 
but not including any order requiring the taking of emergency measures….” This is an important tool under New Jersey construction law to challenge wrongful denials by local authorities of building and construction applications.
Most county construction boards of appeals have websites with information about their locations, hours and local procedures. For example, the Passaic County Board of Construction Appeals can be found here. The Essex County Board of Construction Appeals can be found here. The Bergen County Board of Construction Appeals can be found here. The Monmouth County Board of Construction Appeals can be found here. The Morris County Board of Construction Appeals can be found here.
Appeals must be filed and received by the local county construction board of appeals within 15 days of receipt of the written notice of the action, ruling, notice or order which is to be appealed. While the law states 15 days from receipt, we recommend that appeals be received by the construction board of appeals within 15 days from the date on the notice to avoid any later dispute over the date of receipt and the possible rejection of the appeal as untimely.
Contractors’ Problems With Getting Paid
Our construction attorneys represent New Jersey contractors and subcontractors in construction litigation, arbitration and mediation. One of the things we see over and over again, is that one of construction companies’ biggest worries is that they will perform all the work they 
agreed to and then not get paid, despite the fact that they met all the project’s specifications and did a great job. It is a well-founded worry. Companies or people who don’t want to pay devise many different schemes, sometimes claiming defects with the work, delay damages, failure to do proper paperwork, the excuses are as varied as is human imagination. To be clear, sometimes these claims are legitimate, but sometimes they are not, and good contractors need to get paid to do the work and to stay in business.
Fortunately, however, New Jersey construction law provides remedies for these schemes. Recently, the Appellate Division of the Superior Court of New Jersey issued a decision on these construction law remedies in the case of Petric & Associates, Inc. v. CCA Civil, Inc. Although the decision was unpublished, it is important because it explores many of these remedies and lays out a roadmap for subcontractors’ remedies against unscrupulous contractors which don’t want to pay them, particularly some of the trickier issues under New Jersey’s Prompt Payment Act.
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:
Disputes 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.
The New Jersey Supreme Court recently issued an important decision in the case of Palisades At Fort Lee Condominium Association, Inc. v. 100 Old Palisade, LLC, defining when the statute of limitation will begin to run in construction defect litigation. This decision is now the defining law on the timeliness of construction lawsuits.
Background
The devil is in the details, especially in construction law. These are the facts in this one.
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