New Jersey Lawyer & Attorney : Stark & Stark Law Firm : New Jersey Law Blog

In today’s harsh economic climate, a general contractor or subcontractor is often faced with non-payment from a project owner.  The question then becomes what is the best fashion in order to collect the unpaid balance which is due the general contractor or subcontractor.  As a general contractor, you have a few options.  The first option is to attempt to negotiate a resolution with the owner.  Another option is to file a lawsuit.  If a lawsuit is the preferred option, it is suggested that a Lien Claim be filed within ninety-days of the last date of materials or services were provided pursuant to N.J.S.A. 2A:44(A)-3.  This secures the general contractor’s interest in the property and may provide it with leverage to facilitate a settlement.

For a subcontractor, the best process in which to collect an unpaid amount becomes more complex.  Pursuant to the relevant Lien Statute, N.J.S.A. 2A:44-126, a “subcontractor” is any person or party who has a contract to provide labor or materials with a contractor or with a subcontractor who has a contract with the general contractor.  The purpose of this definition is to limit who may file a Lien Claim against the property.  Like a general contractor, a subcontractor may attempt to resolve the dispute as to the unpaid balance with the general contractor or the subcontractor who hired them.  In the absence of a quick resolution, however, it is often suggested that a Lien Claim be filed by a subcontractor or sub-sub-contractor on the project.  Unfortunately for a lot of subcontractors, this is when a critical error is made with regard to filing a Lien Claim.

Pursuant to N.J.S.A. 2A:44(A)-3, the Lien Claimant shall file a Lien against the owner of the property, or the tenant of the property for whom the contract to perform services exists.  The critical point is that a Lien cannot be filed against the property owner if the tenant contracted to have the work done and the improvement was not authorized in writing by the owner of the property.  This is critical because if a contractor files a Lien Claim against the property owner and not the tenant as well and it is later determined that the improvement was not authorized by the owner, the Lien Claim is invalid and the subcontractor may be left without a claim against the tenant.  As such, the best practice is to always file a Lien Claim against the tenant who is occupying the leased property and for whom the work is being performed and against the property owner as well.  At any time, the contractor can withdraw the Lien Claim against the property owner, however, continue against the tenant if it is found that the improvement was not authorized in writing.  If this procedure is not followed and more than ninety days have passed since the last day materials and services were provided, the contractor may lose its right to bring a Lien Claim against the tenant.

As always, a lawsuit to foreclose upon the Lien must be commenced within thirty days upon request by the tenant or owner or within one year of the date of the Lien Claim was filed, otherwise it will expire.  A subcontractor or sub-subcontractor does not lose its rights to proceed against the party whom directly contracted with it, however, an action to foreclose upon the Lien Claim as well only gives the contractor further leverage.

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In the matter of Brolley Electrical v. Ernest Bock and Sons, Inc., the Court reviewed the validity and enforceability of a “paid when paid” provision within a construction contract.  The contract provided that payment by the owner to the general contractor being a condition precedent prior to the general contractor is obligated to pay the subcontractor. 

 

The contract further provided that should the general contractor not receive payment from the owner that the general contractor would not be obligated to pay the subcontractor for the work performed.  In validating the enforceability of the “paid when paid” provision, the Court explained that where the condition precedent to payment was clear and unambiguous, there is no room for interpretation and the Court must strictly construe the terms of the contract . 

 

The Court distinguished this decision from other opinions by stating that the condition precedent language within the present “paid when paid” clause rendered the clause wholly enforceable in nature and did not require payment until corresponding payment is received by the general contractor.  For these reasons, the Court ruled that the “paid when paid” clause and the conditioned precedent language was enforceable, and therefore, no payment was due to the subcontractor until and unless payment is received by the general contractor from the project owner.

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In Nunez v. Pachman, the Appellate Division recently discussed the section of the Expungement Statute which prohibits the disclosure of any information relative to the records, proceedings or any other related documents once an event is expunged.  In Nunez v. Pachman, the Appellate Division explained that the litigation privilege will not permit the disclosure of any expunged arrest or proceeding.  Moreover, the Court hinted that a private party may potentially possess a cause of action for damages should a disclosure cause harm to this party.  This reaffirms the section of the Expungement Statute which prohibits the disclosure of any expunged records once an expungement is granted.
 

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It is an eventuality that virtually all of us will face sometime during our lives, the loss of a loved one.  Whether this loved one is one of your parents, a sibling, a relative, or a friend, litigation may arise concerning the Probate of their Will in order to administer their Estate.  Estate litigation is often emotional, costly and is similar in the emotions it evokes to that of a divorce proceeding.  Often times, the Executor of the Estate may use the Estate’s assets to defend the Will.  On the other hand, a contestant of the Will must often pay their own counsel fees with only a possibility of being reimbursed by the Estate.  As such, a person challenging a Will should first evaluate the value of the Estate and their potential gain as compared to the expenses they may incur in seeking that relief .  In addition, a party should consider the emotional trauma which is very prevalent in Estate litigation.  An Executor of the Estate or beneficiary whose bequest is being challenged has no other alternative than to defend against the challenge being brought against their interest or a challenge against the Will itself. 
 

In the State of New Jersey, there are essentially two ways in which an individual may challenge a Will.  The first way is to allege that the decedent lacked the requisite capacity the date the Will was executed.  This is a fairly low standard to meet, as the decedent need only be aware that he/she possesses assets, and in addition, that he/she wishes to transfer these assets to certain other individuals.  In levying a challenge in this regard, the Court may review medical records and other information concerning the decedent’s physical and mental health in order to determine if this individual possessed the requisite mental capacity on the day the Will was executed.  The medical records are relevant as they may demonstrate physical or mental conditions which could suggest that the decedent may have lacked the capacity to execute a Will on the date the Will was executed.  This often involves the need for expert witnesses to review medical records, and thereafter, to render their opinion as to the capacity of the decedent on the date the Will was executed. 
 

The other way in which an individual may challenge a Will concerns an allegation of undue influence.  Simply put, undue influence means that the Will does not reflect the true intentions of the decedent, but instead, reflects the wishes of an individual who asserted their influence over the Testator, thereby rendering the Will inconsistent with the Testator’s true wishes.  In order to prove a claim of undue influence, the contestant must first establish that there existed a confidential relationship between the decedent and the party which is alleged to have unduly influenced the Testator.  A confidential relationship exists when the Testator and another individual shared a relationship where trust or confidence is naturally reposed by the decedent with this individual.  Another instance under which a confidential relationship arises is in an attorney/client relationship where there is a fiduciary relationship between the parties. 
 

Once the contestant of the Will has established the existence of  a confidential relationship, he/she must establish suspicious circumstances with regard to the creation and execution of the Will.  Once this has been achieved, the Court can shift the burden of proof upon the proponent of the Will to demonstrate the validity of this document. 
 

After a lawsuit has been commenced, the Court will often recommend that the parties consider mediation in an attempt to resolve the matter without the need for additional litigation.  Often, the parties are able to resolve the litigation through Mediation without the parties incurring additional expenses.  If a case cannot be resolved through mediation, the case will move forward through discovery, and thereafter, to Trial.  Once an Estate litigation matter is scheduled for Trial, the parties should be aware that the Trial will not be heard before a jury, but rather is decided by a Chancery Judge that hears probate matters.  Once the Judge renders his/her decision, either side may make an application for fees to the Estate. 
 

If the party prevails in contesting the Will, the Will could revert to a previous Will, if said document still exists, or the individual could be deemed as having died without a Will.  Thereafter, the Court may appoint an independent Executor if the named Executor is disqualified.  If the Will is not invalidated by the Court, then it will be probated in the manner which had been sought to be probated by the Executor originally.  Thereafter, the Estate litigation will conclude.

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This week's New Jersey Legal Update podcast will address federal legislation impacting sub-contractors. This podcast will discuss what defines a sub-contractor and how federal legislation, such as the Miller Act, can impact the construction industry.

This week's New Jersey Legal Update is presented by Paul W. Norris, member of Stark & Stark’s Litigation Group.

You can download the New Jersey Legal Update Podcast # 57 here. (6.9 MB)

Technorati Tags:  New Jersey : Podcast :  Litigation : Construction : Miller Act

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This week's New Jersey Legal Update podcast will discuss the defamation law in New Jersey, focusing on defamation through the use of the Internet. This podcast will also address the issues of libel, slander and the rights and restrictions of free speech.

This week's New Jersey Legal Update is presented by Paul Norris, a member of the Firm's Litigation group.

You can download the New Jersey Legal Update Podcast # 44 here. (7 MB)

Technorati Tags: New Jersey : Podcast : Defamation Law

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This week's New Jersey Legal Update podcast will discuss the Miller Act and what it means to both general and sub-contractors.

This week's New Jersey Legal Update is presented by Paul Norris, a member of the Firm's Litigation group.

You can download the New Jersey Legal Update Podcast # 20 here.(21MB)

Technorati Tags: New Jersey : Podcast

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Peak Construction v. Melone, et al.

In the recent Appellate Division, Peak Construction v. Melone, the Court discussed a party's right to an award of counsel fees and the dismissal of a Lien Claim should it be found that the lien was wilfully overstated. In general, if a Lien Claim is wilfully overstated the lien is removed and the aggrieved party is entitled to counsel fees in any action brought under the overstated lien. Traditionally, the aggrieved party is entitled to any counsel fees it incurs in removing the unlawful and improper lien. The Peak Construction case is unique, however, as the Court considered whether an individual acting pro se may be entitled to an award of counsel fees. In ruling against Peak Construction in its application for $51,000.00 in pro se counsel fees, the Court explained that generally pro se litigants are not entitled to counsel fees for defending an action, and moreover, Defendant did not timely notify Plaintiff's counsel that they would be seeking counsel fees and a dismissal of the Lien Claim. As such, the practical application of this case suggests that it behooves an aggrieved party to get an attorney involved if a Construction Lien is wilfully overstated, as these fees would be recoverable. On the other hand, should a party attempt to handle this matter on their own then generally they would not be entitled to counsel fees.

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Freespan Structures, Inc. v. Wallace Bros., Inc.

This is a classic scenario that either a General Contractor or Subcontractor is routinely faced with when a governing body, such as a Municipality, changes the design plans which may increase the project costs to the General and/or Subcontractor. In this matter, the Plaintiff-Subcontractor failed to carefully document its increased costs and to issue a Change Order to Defendant-General Contractor prior to performing the work. As a result, the Plaintiff-Subcontractor was not awarded the additional $32,000.00 which it sought upon completion of the Project. As such, all General or Subcontractor(s) should be forewarned to carefully document any Change Orders in prosecuting contract work so that they may be properly compensated for it by either the Owner or the General Contractor. In the absence of an approved, signed Change Order, it is likely that the General/Subcontractor would be held to the original plans and specifications even though a Governing Body may have made changes to the original design and/or plans. The practical application of this case is that documentation of any changes and/or revisions is essential to preserving your rights to obtain increased compensation.

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JETCO Construction Inc. v. EA Engineering, Science & Technology, Inc.

In a recent Appellate Division case, the Appellant Division discussed the interplay between direct contract interpretation as compared to work performed by a Subcontractor without a written Change Order. As has occurred many times in the past, the Court once again ruled in favor of strict contract construction instead of allowing arguments of equity to carry the day for the Subcontractor. In this matter, the Subcontractor failed to obtain a Change Order for site conditions which it believed differed from those pursuant to the original plans and specifications and performed work without receiving authorization pursuant to a written Change Order, and thereafter, attempted to bill for the increased costs. This claim was denied by the General Contractor, and thereafter, the Subcontractor sued for these increased costs. In ruling in favor of the General Contractor, the Court stated that the Contract must be strictly construed and if a written Change Order is required than no work must be paid unless this process is followed. The practical application of this case is that either a General Contractor or Subcontractor should follow the Contract carefully and obtain prior approval for any additional work instead of relying upon a clause in the Contract which may authorize said work without a Change Order. In other words, it is best to document rather than to guess.

Technorati Tags: New Jersey

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