Category: Case Summaries

1
Lack of Written Document Does Not Preclude Contractor from Recovering in Quantum Meruit for Changes to Initial Plans
2
Factor May be Liable for Diversion of Lien Law Trust Funds
3
Waiver of Lien Rights Requires Clear, Certain and Unequivocal Evidence
4
Proper Measure of Damages from Defaulting Contractor is Cost of Completion or Necessary Repairs

Lack of Written Document Does Not Preclude Contractor from Recovering in Quantum Meruit for Changes to Initial Plans

Home Owners Const. Co. v. Borough of Glen Rock, 169 A.2d 129, 34 N.J. 305 (1961)

In this case, the court looked at whether a contractor could recover in quantum meruit for services and materials actually provided, even though the work was not authorized in writing.  During the course of construction, the Borough requested the contractor to perform certain extra services and provide additional materials.  Upon the Borough’s refusal to pay these additional expenses, the contractor sought to recover in quantum meruit.  The court found that the lack of writing authorizing these changes did not preclude the contractor from recovery.
 

Factor May be Liable for Diversion of Lien Law Trust Funds

Caristo Constr. Corp. v. Diners Fin. Corp., 21 N.Y.2d 507 (1968)

In Caristo Constr. Corp., a general contractor paid a subcontractor who then turned the money over to a factoring corporation.  The factor failed to file assignment of accounts or a “Notice of Lending” and failed to deposit the general contractor’s checks in depository in trust.  In so doing, the factor participated in diversion of statutory trust funds, despite having returned to the subcontractor simultaneously with the payments “advances” equal to the payments.  The general contractor, who was forced to make payment after the subcontractor became insolvent, prevailed in a suit as subrogee against the factor.

Waiver of Lien Rights Requires Clear, Certain and Unequivocal Evidence

Boise Cascade Corp. v. Distinctive Homes, Inc., 67 Wash. 2d 289, 407 P.2d 452 (1965)

This case involves actions to foreclose on materialmen’s liens by Boise for materials supplied to Distinctive, a building company owned by the landowners, for the construction of two homes.  Distinctive claimed that Boise agreed to waive its lien rights when it accepted two promissory notes.  Boise, however, claimed that the two notes were merely taken as additional security when it agreed to withhold filing the liens if certain timely payments were made.

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Proper Measure of Damages from Defaulting Contractor is Cost of Completion or Necessary Repairs

525 Main St. Corp. v. Eagle Roofing Co., 168 A.2d 33, 34 N.J. 251 (1961)

In this case, the plaintiff property owner, contracted with the defendant for repairs to his roof and a five-year guarantee against leaks with a promise to repair.  During the five years, the defendant disputed the scope of his responsibility and stopped performing repairs.  The trial court found in favor of the plaintiff, concluding that the defendant had breached, but awarded nominal damages.  The plaintiff appealed on the issue of damages.

The defendant argued that the damages should properly be calculated as the difference in value of the entire structure with the defective roof and the value of the building as if the contract had been fully performed.  The court disagreed and found that in the construction context, the cost of repairs or the cost of replacement is the appropriate measure of damages and not a measurement made with reference to the value of the building as whole.
 

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