Articles Tagged with New Jersey Construction Law

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New Jersey construction law incorporates the damages provisions of the Consumer Fraud Act in residential home improvement construction projects.  A New Jersey appeals court recently analyzed the recovery of triple damages and attorneys fees in construction projects under the Consumer Fraud Act, and personal liability for contractors, in two construction law decisions.

Background

Philip Dattolo hired EMC Squared, LLC to construct a new single-family home in Boonton, New Jersey.  They signed a written contract.  Toward the end of the project, Dattolo selected severalhouse-225x300 additional items to be included.  A written change order to the original signed contract was drafted, but the change order was never signed.  In January 2020 the home passed final inspections, and EMC’s owner, Edward Morgan, advised Dattolo that he could not continue working on the project.  Dattolo refused to pay “one additional cent,” and complained that there were numerous construction defects which would cost him thousands of dollars to remediate.

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At McLaughlin & Nardi, LLC, our New Jersey construction lawyers represent contractors, subcontractors, suppliers, project managers, owners, architects and engineers in all areas of construction law. Here are some frequently asked questions about New Jersey constructionus-1978465__340-300x200 law.

  • What is construction law?

    Construction law refers to the laws, regulations and case law that guide the construction industry. It encompasses a wide range of issues including contract law, construction liens, construction defects, breach of construction contracts, litigation, arbitration, mediation, appeals, bonds and bonding, collection, guarantees and sureties, construction claims, and related consultancy contracts.

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New Jersey construction litigation often involves claims against contractors for improper construction or delay.  Contractors, in turn, often argue as a defense, counterclaim or cross-claim that any delay or improper construction was the fault of the licensed professional on6-300x225 the project, such as the engineer or the architect.  Owners may also make these claims against architects and engineers directly.  A trial judge in the Superior Court of New Jersey in Morris County recently addressed what is required to maintain such a claim in the case of Township of Parsippany-Troy Hills vs. Thomas Controls, Inc.

Background: The Lawsuit

The Township of Parsippany-Troy Hills sued Thomas Controls, Inc. over its work on construction improvements to the Township’s wastewater management treatment plan project.  The Township had separately contracted with Keystone Engineering Group to act as engineers on the project.  Thomas filed counterclaims against the Township and filed a third-party complaint against Keystone, suing it for alleged negligence, delay and professional malpractice.  Keystone filed a motion to dismiss Thomas’s third-party complaint, arguing that the New Jersey Affidavit of Merit Statute requires that an affidavit of merit must be filed within 120 days of a defendant filing an answer when the defendant is a licensed professional and the claims are for negligence or professional malpractice.  As a licensed engineer, Keystone argued that this law protected it because Keystone did not file an affidavit of merit within the required time frame.

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An appellate court recently examined the covenant of good faith and fair dealing in New Jersey construction contracts in the case of Konopka vs. Brown’s Heating, Cooling, Plumbing.

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Background

Konopka hired Brown’s as a contractor to install a Carrier gas furnace in his home.  Brown was to supply labor and materials in exchange for the homeowner paying $19,800. The contract provided that change orders had to be in writing.  One-third of the contract price was payable on signing, one-third when work started, and one-third upon completion.  The homeowner paid the first installment.  The job started on August 26, 2015.  The homeowner had not yet paid the second installment, but the contractor wanted to work with him.  However, on September 9, 2023, Brown’s sent an email which terminated the contract.  The Court explained that:

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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 352099_construction_3-002-300x225litigation 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.

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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, building-home-construction-contractor-blueprint-architecture-300x200but 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.

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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 pulaski-skyway-300x201agreed 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.

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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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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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