So you’ve managed to successfully file a construction lien claim in New Jersey.  Well, don’t then kick back and relax for too long, because if you fail to take action to enforce that lien claim within the limited time required by statute, the lien will be rendered unenforceable.  Under the New Jersey Construction Lien Law (“CLL”), a lien claimant must file a lawsuit seeking to enforce its lien within one year of the date of its last provision of work, services, material, or equipment.  This is a strict statutory deadline, which cannot be extended based on equitable circumstances.  It is important to note that the deadline is not one year from the date of the filing of the lien claim itself.  It is also important to ensure that the work, services, material or equipment, on which you are basing your last date of provision, was actually required to be provided by your contract, as the following case illustrates.

In the recent unpublished decision, WJV Materials, LLC v. Erin Contracting, Inc. (Docket No. A-2453-14T1, August 12, 2016), the New Jersey Appellate Division affirmed the trial court’s dismissal with prejudice of the claim in a supplier’s complaint seeking to enforce its construction lien claim.  The supplier had filed its complaint on May 2, 2014, which was more than one year after it provided its last delivery of materials on April 3, 2013.   The supplier attempted to argue that its actual last date of work was May 16, 2013, the date its quality control expert visited the site to review and approve the subcontractor’s work product.  The court rejected that argument, as the supplier had been hired solely to provide concrete to the subcontractor at the worksite, which it last did on April 3, and not to unilaterally inspect the work performed with the materials by the subcontractor.  There was no evidence in the record that the subcontractor contracted with the supplier to provide any such inspection services.  Note that this same issue may arise in connection with your initial filing of a construction lien claim, which, on a commercial project, must be filed within 90 days of your last provision of contracted-for work, services, material or equipment.

Many times after filing and serving a construction lien, the property owner or contractor for whom you worked will seek to immediately resolve your lien claim – or will file its own action to discharge the lien if it believes you filed a defective lien.  Often, however, a claimant will file a lien and no immediate action is taken by any party (or the lien is bonded, which still requires you to take timely enforcement action).   Filing a timely and valid construction lien claim is difficult enough.  Once you do so, it is critical that you not fall asleep at the switch and that you file your enforcement action within the time required by the CLL – that is, within one year of the last date of work, services or materials provided pursuant to your contract.

The right to file a mechanic’s lien is established by state statute, allowing those providing work, services, materials or equipment to a construction project with additional valuable security in the event of non-payment of amounts due under a contract for such work, services, materials or equipment.  As a pair of recent unpublished New Jersey Appellate Division decisions illustrate, the proper exercise of those rights can make a significant difference in attempting to obtain payment.

The Construction Lien Law (“CLL”), N.J.S.A. 2A:44A-1, et seq. sets forth the requirements for qualifying for and filing a lien claim against a private commercial or a residential property in New Jersey.   The Municipal Mechanics’ Lien Law (“MMLL”), N.J.S.A. 2A:44-125, et seq. sets forth the requirements for qualifying for and filing a lien against the funds of a project contracted by a New Jersey public agency (though not projects contracted by the State of New Jersey).  In the two recent cases discussed below, a subcontractor on a public project succeeded in obtaining a remedy after filing a lien under the MMLL, while a subcontractor on a private project deprived itself of a potential remedy by failing to file a lien under the CLL.

In Vincent Pools, Inc. v. APS Contractors, Inc. (Docket Nos. A-2670-13T3, A-2688-13T3, Decided March 18, 2016), a subcontractor, Vincent Pools, Inc. (“VP”), was retained by a general contractor, APS Contractors, Inc. (“APS”), to install the plaster work for two swimming pools that were part of a larger municipal pool complex project that Jersey City had contracted with APS to construct.  Upon the completion of VP’s work, a dispute arose over the quality of that work.   Jersey City demanded that the pools be re-plastered, while APS offered, instead, to acid wash the pool.   Jersey City terminated APS’s contract and claimed that it had paid APS in full for the work completed on the pools prior to the termination, though it admittedly did not pay APS for certain outstanding change order work.  APS, in turn, withheld $162,468.92 from VP.  VP then filed a municipal mechanics’ lien claiming a lien on the project funds due and owing from Jersey City to APS, and filed suit seeking, among other things, the enforcement of its lien against Jersey City.  At trial, a jury rendered a verdict in favor of VP on its lien claim in the amount of $150,498.92, as well as substantially more in favor of ABS in connection with ABS’s contract claims against Jersey City.

On appeal, as it related to the verdict in favor of VP on its lien claim, Jersey City argued that it would be double paying if it paid VP any funds on account of VP’s lien, because it had already paid APS in full from the funds appropriated for the pool project.  The Appellate Division recognized that a lien filed under the MMLL is limited to the amount owed by the public agency to the general contractor at the time of the filing of the lien or what thereafter becomes due under the prime contract.  A public agency, therefore, cannot be liable for more than the amount of the public contract if it pays the general contractor pursuant to the contract terms and withholds amounts sufficient to cover any liens filed.  The court determined that the MMLL refers to the full amount of the public contract as the amount to which a lien may attach, and not just the amount that may be allocated to a specific portion of the contract.  Thus, although Jersey City claimed to have paid APS in full for the particular work performed by VP, because Jersey City still owed money to APS on the contract as a whole, plus change orders, VP’s lien attached to those funds.   In fact, to ensure Jersey City was not double paying for VP’s work, the trial court reduced APS’s award to offset amounts previously paid to APS for Jersey City’s prior payment on account of VP’s work, which had not yet been paid to VP.   The Appellate Division further noted that because the MMLL, and New Jersey’s Bond Act and Trust Fund Act are to be read cumulatively, VP’s ability to recover under any one of those acts does not preclude recovery under any of the others.  Thus, the Appellate Division affirmed the verdict in favor of VP on its lien claim.

The unpaid subcontractor in Exterior Walls Systems, LLC v. 3D Contracting of Central Jersey, Inc. (Docket No. A-0383-14T4, Decided February 18, 2016), was not so fortunate.   There, Exterior Wall Systems, LLC (“EWS”) subcontracted with 3D Contracting of Central Jersey, Inc. (“3D”) on a private construction project for JSN Deli Corp. (“JSN”).  EWS claimed that 3D failed to pay it in full for its work. EWS brought suit against 3D, ultimately obtaining a default judgment against it in the amount of $48,000.  As the Appellate Division aptly noted, “[i]mportantly, EWS did not file a lien, pursuant to the provisions of the [CLL] for its work done.”  That is critical, because instead of having a lien on JSN’s interest in the real property on which EWS’s work was performed, and perhaps having had JSN withhold payment to 3D to satisfy EWS’s lien, EWS was left with a potentially uncollectable judgment against 3D.

EWS attempted to levy on any and all of 3D’s assets, to the extent there were any, including any amounts claimed due by 3D from JSN under 3D’s contract with JSN.  JSN, however, had earlier won a dismissal of a lawsuit 3D had filed against it for amounts allegedly due under that contract, based on the statute of limitations.  EWS, thereafter, filed a motion seeking an order compelling JSN to turn over to EWS funds allegedly owed by JSN to 3D, which the trial court denied.    EWS appealed, and the Appellate Division determined as a matter of law that, based on the facts before it, there was no “debt” from JSN to 3D that would be subject to EWS’s execution or garnishment under the relevant New Jersey statutes.  The Appellate Division, therefore, affirmed the trial court’s denial of EWS’s turnover motion, leaving EWS without a remedy against the owner and, instead, attempting to collect the debt directly from 3D, which may or may not have assets sufficient to satisfy EWS’s judgment.

While, in the above cases, VP still may have been able to recover from APS even if it had not filed a lien, and EWS still may not have been able to recover on its claim even if it had filed a lien, there is no question that the filing of a valid lien claim provides subcontractors and others contributing to a public or private project in New Jersey with substantial valuable additional protections and rights when attempting to collect a debt.  All potential beneficiaries of the CLL and the MMLL should understand when and whether they are entitled to assert a lien claim under these laws, and the deadlines and any other conditions precedent to filing a lien, so that their rights under these laws are not inadvertently lost, waived or otherwise diminished.

On April 14, 2016, the New Jersey Appellate Division, in a precedential decision, determined that injured parties are not obligated to serve pre-suit tort claims notices under the New Jersey Tort Claims Act (“TCA”) on private government contractors.

In Gomes v. County of Monmouth, et al. (A-1679-14T4, approved for publication), plaintiff filed a lawsuit against, among others, Correct Care Solutions, Inc. (“CCS”), alleging that she had been injured after being unlawfully denied access to her prescribed antibiotic medication during her incarceration at the Monmouth County Correctional Institution (“MCCI”).  CCS is a private company that, during the relevant time, provided medical services to inmates housed at the MCCI pursuant to a contract with the County of Monmouth.   The trial court ruled that plaintiff’s claims were barred as against CCS because she had failed to serve CCS with notice of her claim within ninety days of the accrual of the claim, as the trial court determined was required by the TCA under N.J.S.A. 59:8-8.  On appeal, the Appellate Division reversed, holding that there was no obligation, “either in the language of the Tort Claims Act or one logically compelled by the policies underlying the statutory scheme[,]” requiring a plaintiff to provide a tort claims notice to a public entity’s private contractor.

The Gomes court, however, was careful to point out that its holding was limited to the TCA’s pre-suit notice provisions, and did not extend to any other possible protections offered by the TCA to government contractors.  For example, the court expressly “recognize[d] that, in appropriate circumstances, private contractors retained by State and local governments to perform some of their functions may be protected by the TCA’s immunities and special defenses under the concept of ‘derivative immunity.’”  One of the cases cited by the court where such immunity was found to have applied was Cobb v. Waddington, 154 N.J. Super. 11 (App. Div. 1977), certif. denied, 76 N.J. 235 (1978).  In Cobb, plaintiff was injured in an automobile accident, and sued, among others, a Department of Transportation (“DOT”) contractor that had been performing road construction work at the site of the accident and had set up barricades which plaintiff struck during the accident.  The barricades, however, had been specified in type and configuration by the DOT, and the contractor merely followed the DOT’s specifications in purchasing and setting up the barricades.  Because the DOT was found to be immune from liability under the TCA based, among other things, on its protected exercise of discretion, and because the contractor was merely acting pursuant to the DOT’s exercise of discretion, the DOT’s immunity was deemed extended to the contractor.

Contractors, including construction contractors, who perform work for any governmental entity in New Jersey, as well as their counsel, should be aware, in light of the Gomes decision, that they are not entitled to the protections of the TCA’s pre-suit tort claims notice provisions, although they still may be subject to other protections afforded by the TCA, such as derivative immunity.

Echoing down Main Street in Hackensack is the incessant and repetitive booming of the driving of piles into the ground on what was once the visitor parking lot next to the Courthouse and former jail.  The pile driving is part of Phase I of the most expensive public works project in Bergen County history that will include, among other things, the construction of a new Bergen County Justice Center and parking deck.  In response to the County’s request for bids earlier this year for the construction of those new buildings, Dobco Construction Services (“Dobco”) was low bidder out of seven bids by a substantial margin.  Dobco’s $65,925,000 bid was almost $6 million less than the second lowest bidder, Terminal Construction Corporation (“Terminal”).

Dobco’s bid, however, listed as its electrical subcontractor, Abco Electrical Company LLC (“Abco”), a company with the same ownership as Dobco and which admittedly did not have a licensed electrician as an officer, partner or employee.  As one might expect with so much money at stake, Terminal was not going down without a fight, and claimed that the listing of Abco as electrical subcontractor in Dobco’s bid was a material and non-waivable defect, which disqualified Dobco’s bid.  Terminal’s bid protest to the County, however, was denied.

Terminal then filed an action in lieu of prerogative writs in the Superior Court of New Jersey, Chancery Division (the “Trial Court”), challenging the County’s denial of Terminal’s bid protest and the County’s award of the contract to Dobco.  In a lengthy written decision issued on July 28, the Trial Court rejected Terminal’s claims and dismissed its action with prejudice, determining, among other things, that:  (1) Abco was fully credentialed and bonded, and thus “responsible,” and (2) the failure of Abco to have a licensed electrician as an officer, partner or employee at the time of bid opening would not prevent the County from awarding the contract to Abco, as long as the particular electrician that was listed in the bid document by license number becomes associated with Abco and is the electrician who actually performs the supervisory work pursuant to N.J.S.A. 45:5A-9(a).  Regarding that last point, the Trial Court, citing to the July 23, 2014 New Jersey Supreme Court decision in Mathew J. Barrick v. State of New Jersey (A-8/9-13 (072795), wrote: “the public bidding laws exist for the benefit of the taxpayers and are construed as nearly as possible with sole reference to the public good; their objects are to guard against favoritism, improvidence, extravagance and corruption;  their aim is to secure for the public the benefits of unfiltered competition.  …The public good is not served by rejecting Dobco’s bid.”

After the Trial Court denied Terminal’s motion to reconsider its decision and Terminal’s application for a stay of the contract pending an appeal, Terminal sought emergent relief from the Appellate Division.  Last Monday, August 4, the Appellate Division granted Terminal a slight reprieve, ordering a temporary stay of the performance of Dobco’s contract while it considers Terminal’s motion for its appeal of the Trial Court’s decision to be heard on an emergent basis.  The Appellate Division ordered Terminal to file its motion seeking the emergent relief and a notice of appeal no later than last Friday, August 8, and that opposition be filed by Dobco, the County and the County’s Board of Chosen Freeholders no later than Wednesday, August 13.  While the Appellate Division’s actions in granting a stay pending an emergent review is uncommon, it is understandable where there is a clear public interest at stake (ensuring that such a highly significant public works project was subject to a fair bid process) and if the appeal were heard in the normal course without a stay in place, the ultimate outcome of the appeal may be rendered moot by Dobco’s actual performance of the contract.   Similarly, the Appellate Division would be disinclined to stay the performance of Dobco’s contract pending an appeal in the normal course, as that would cause a substantial delay in the construction of such a critical public project.

In any event, the Appellate Division likely will take prompt action in rejecting or granting Terminal’s appeal, or issuing further orders in regard to its consideration of the appeal.  We will continue to monitor this bid dispute and provide an update when the dust has settled.

The Appellate Division recently affirmed a trial court’s granting of summary judgment in favor of the County of Union (the “County”) on a contractor’s extra work claim for $631,895.27 arising from an ambiguity in the contract specifications.  The Court found the ambiguity to be a patent ambiguity, which A. Juliano & Sons, Inc. (“Juliano”), the successful bidder to whom the contract was awarded, should have recognized and raised with the County prior to the submission of its bid.  Having failed to identify and raise that ambiguity with the County, Juliano was barred from seeking  payment for extra work that was based on its interpretation of the ambiguity in the contract specifications.

In Aspen Landscaping Contracting, Inc. v. A. Juliano & Sons Contractors, Inc., Docket No. A-5436-11T2 (Aug. 9, 2013) (the “Aspen Case”), plaintiff, a subcontractor of Juliano, the general contractor, sought recovery of certain amounts due from Juliano and the County relating to a project to establish a public park in Clark, New Jersey (the “Project”).  Juliano filed a cross-claim against the County asserting entitlement to payment for extra work.  Juliano’s claim related to amounts claimed due for the cost of borrow excavation material at the Project.  The trial court granted summary judgment to the County, concluding that because Juliano’s change order for the borrow material was based on Juliano’s resolution of a patent ambiguity in the bid documents not brought to the attention of the County as required by the specifications, the relief Juliano sought was barred by the “patent ambiguity doctrine.”  The Appellate Division affirmed that decision.

A patent ambiguity in a publicly bid contract is one that “either (1) would have been apparent to reasonable prospective bidders from the facts available, or (2) was in fact known to the contractor before submitting its bid.” D’Annunzio Bros., Inc. v. N.J. Transit Corp., 245 N.J. Super. 527, 534 (App. Div. 1991).  Where the ambiguity is patent, the bidder has a duty to inquire and the failure to do so bars a claim based on the contractor’s resolution of the ambiguity.

In the Aspen Case, the court considered the bid form, specifications, certifications, post-bid correspondence and deposition testimony to determine the extent of the ambiguity and concluded that there was a glaring ambiguity that a reasonable bidder would have recognized.  The specifications provided that the bidders were required to bring any apparent ambiguity, inconsistency, error, discrepancy or omission to the attention of the engineer at least seven (7) working days before the opening of bids.  Neither Juliano nor either of the other two bidders requested information or brought any problem with the bid documents to the attention of the engineer prior to submitting a bid.

The ambiguity in the bid documents arose because the documents sought a unit price for a specified quantity of only one type of borrow excavation material, namely “select” material, while, elsewhere, the specifications referenced two types of borrow excavation material – “select” material and “zone 3” material.  The specifications never noted a specific quantity of “zone 3” material and did not seek a unit price for the “zone 3” material.  The Court found the reference to two types of borrow material to be in direct conflict and inconsistent with other provisions of the bid documents.  The Court further noted that the failure to include an item on the bid form calling for a price for “zone 3” material to be blatant conflict, which was a glaring ambiguity.

The Court concluded that a reasonable contractor would have noted the glaring problem with the two types of borrow material and either declined to bid or requested a clarification from the County engineer as the bid specifications directed.  The Court found Juliano’s interpretation of the conflict in the bid documents, which led to the claims for extra work, not to be reasonable.  As a result, the Court affirmed the trial court’s conclusion that Juliano’s claim is barred by the patent ambiguity doctrine.

The Aspen Case emphasizes the importance of a contractor’s vigilance in reviewing the contract specifications prior to submitting a bid and bringing any ambiguities, discrepancies and/or inconsistencies to the attention of the public contracting entity prior to submitting a bid.  The failure to do so can have an adverse impact on any contractor claims relating to or arising from the claimed ambiguity, inconsistency and/or discrepancy.  Here, Juliano had sought payment of $631,895.27 for extra work, which is approximately 25% over and above its $2,518,030.75 contract amount. 

The Aspen Case is particularly harsh on the general contractor as the Court found a patent ambiguity despite the fact that none of the three bidders, including Juliano, identified the ambiguity prior to submitting their bids.  The failure of the other two bidders to also raise the so-called patent ambiguity did not impact the Appellate Division’s decision denying Juliano’s claim.