Tag: New Jersey

1
Statute of Repose Bars Government Enforcement Action
2
Deductive Changes Should Affect Contract Price Equitably
3
Architect and Interior Designer Liable for Tortious Interference with Contract Where General Contractor was Terminated on Their Recommendation
4
Sub-Subcontractor Has No Direct Cause of Action against General Contractor or Landowner
5
Termination Clauses that Provide Profit for Breaching Party Void as Against Public Policy
6
Lost Profits Recoverable as Consequential Damages if Foreseeable
7
Withholding Monies Owed on Unrelated Project Constitutes Material Breach
8
State Liable for Damages When Delay Results from State’s Failure to Disclose Material Facts
9
No-Damages-for-Delay Clause Precludes Recovery of Delay Damages
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Express Agreement to One-Year Claims Limitation Clause is Enforceable

Statute of Repose Bars Government Enforcement Action

Cyktor v. Aspen Manor Condo. Ass’n, 820 A.2d 129, 359 N.J. Super. 459 (N.J. Super. Ct. App. Div. 2003)

In this case, a condominium developer negotiated an agreement releasing it and its principals from all liability connected with the construction of the development at issue.  The agreement was reached in 1986, several years after construction was completed, and transferred control of the development to the condominium association.  Eleven years later, in 1997, the Department of Community Affairs (DCA) cited the development for certain violations regarding the structure of the facility.  In defense of the citation and the condominium association’s attempts to place liability with the developer, the defendants argued that the action was barred by the statute of repose.  The DCA argued that the statute of repose applied only to claims for damages and did not bar enforcement actions.  The court disagreed with the DCA and held that the statute of repose applies broadly to governmental action.

 

Deductive Changes Should Affect Contract Price Equitably

M.J. Paquet, Inc. v. N.J. Dep’t of Transportation, 794 A.2d 141, 171 N.J. 378 (2002)

In this case, a contractor submitted an unbalanced bid to the New Jersey Department of Transportation (“DOT”) for the rehabilitation of a bridge with the expense of painting over-estimated and other expenses underestimated.  Following the award of the project, OSHA released new paint safety requirements that the contractor claimed significantly raised the price of the project.  DOT decided that the increased price was too much and decided to excise the bridge painting from the contract.  The contractor then filed suit claiming that DOT was not authorized to delete the painting from the contract and alternatively, that DOT could not subtract the entire amount attributed to painting in the initial unbalanced bid from the contract price.  The Supreme Court concluded that while it was appropriate for the DOT to excise the painting component from the contract it was not proper to simply subtract the value of that item from the initial bid.  Rather, the contractor must have an equitable adjustment to the contract price.
 

Architect and Interior Designer Liable for Tortious Interference with Contract Where General Contractor was Terminated on Their Recommendation

DiMaria Constr., Inc. v. Interarch, 799 A.2d 555, 351 N.J. Super 558 (N.J. Super. Ct. App. Div. 2001)

In this case, the general architect and interior designer on a construction project recommended that the owner terminate the general contractor.  The owner, on this advice, terminated the contractor who subsequently filed suit against the architect and interior designer for tortious interference with contract.  In analyzing the claims, the court looked at the four elements of the tort of interference with a business relation or contract:  (1) a protected interest; (2) malice in the sense that the defendant interfered without justification; (3) a reasonable likelihood that the interference caused the loss of the prospective gain; and (4) resulting damages.  The court found that the architect and interior designer were liable for tortious interference.  The court also addressed whether they were acting as agents of the owner and therefore escaped liability.  The court found that question to be a factual issue that was implicitly answered in the affirmative in the jury’s finding of liability.
 

Sub-Subcontractor Has No Direct Cause of Action against General Contractor or Landowner

F. Bender, Inc. v. Jos. L. Muscarelle, Inc., 700 A.2d 374, 304 N.J. Super. 282 (N.J. Super. Ct. App. Div. 1997)

In this case, the plaintiff sub-subcontractor sued the general contractor and property owner seeking to recover in quantum meruit for construction work on a parking facility.  The general contractor hired a sub-contractor to perform all of the concrete work who in turn hired the plaintiff.  The sub-contractor was eventually terminated for failure to adequately perform its subcontract agreement with the general contractor.  Plaintiff had no contract with the general contractor or the property owner but sued them for his losses nonetheless.  The court held that where the plaintiff sub-subcontractor had no contractual agreement with the defendants, recovery based upon quantum meruit was precluded.

In so holding, the court pointed out that the plaintiff was not without protection but that he had “failed to protect his rights by filing an appropriate mechanic’s lien” as provided by the Mechanic’s Lien Law.  The court also noted that the result of this opinion did not render the plaintiff helpless to recover but that recovery would properly come from action against the subcontractor.
 

Termination Clauses that Provide Profit for Breaching Party Void as Against Public Policy

Saxon Constr. & Mgmt. Co. v. Masterclean of N.C., Inc., 641 A.2d 1056, 273 N.J. Super. 231 (N.J. Super. Ct. App. Div. 2004)

In this case, the court found a termination clause void as against public policy.  The plaintiff, Saxon, a general contractor was awarded a contract to renovate a building owned by the Veterans Administration.  Saxon entered a subcontract with defendant, Masterclean, for asbestos abatement and removal.  Masterclean defaulted and Saxon terminated the contract. The termination clause of the contract provided that if the subcontractor defaulted and the unpaid contract value was less than the expense of finishing the project, then the subcontractor was entitled to the difference.  Saxon was able to procure a substitute contractor at a price lower than Masterclean’s initial contract price.  Masterclean, therefore, invoked the clause to claim the difference between its contract price and the amount paid to the new contractor.  The court found that that type of termination clause violated public policy because it permitted a defaulting party to profit by its breach and discouraged the non-breaching party to minimize its losses.
 

Lost Profits Recoverable as Consequential Damages if Foreseeable

Perini Corp. v. Greate Bay Hotel & Casino, Inc., 610 A.2d 364, 129 N.J. 479 (1992)

In this case, a casino owner sought judicial enforcement of an arbitration award of lost profits against the general contractor hired to manage the casino renovation project.  The project took longer to complete than anticipated and the casino was not fully operational for its peak summer season.  The court held that lost profits may fall under the category of consequential damages and are therefore recoverable as long as they are foreseeable at the time of contract.
 

Withholding Monies Owed on Unrelated Project Constitutes Material Breach

Vinen Corp. v. Alan W. Nau Contracting, Inc., 557 A.2d 1056, 232 N.J. Super. 589 (N.J. Super. Ct. App. Div. 1989)

In this case, the court looked at an action by a contractor against the construction manager for breach of contract for withholding monies from payment that were owed on an unrelated project.  The defendant entered into a contract with the property owner to act as construction manager on a shopping center construction job.  Subsequently, the defendant entered into a subcontract with the plaintiff to act as the site contractor for the project.  During the course of construction, the plaintiff discontinued performance because the defendant withheld $11,000.00 from payment to the plaintiff for monies owed by the plaintiff to the defendant on a different project.  The defendant also insisted that the plaintiff sign a release of lien and threatened that failure to do so would result in defendant’s refusal to pay plaintiff any of the money it was owed for work up to that time.  The plaintiff filed suit for breach and defendant filed a counterclaim.  The court found that the withholding of money constituted a material breach and that the plaintiff was entitled to discontinue performance and was not liable for breach.
 

State Liable for Damages When Delay Results from State’s Failure to Disclose Material Facts

P.T. & L. Constr. Co. v. N.J. Dep’t of Transportation, 531 A.2d 1330, 108 N.J. 539 (1987)

In this case, P.T. & L. Construction Co. was awarded a contract to perform work on a portion of Route 78.  Due to extremely poor working conditions, the project, which was contracted to end on November 15, 1974, was not completed until June of 1976.  P.T. & L. filed suit to recover damages, attributing the delay to the State’s failure to inform them of the actual conditions of the land.  Specifically, where P.T. & L. expected to work in normal or dry conditions, they instead faced wet conditions, including flooding of the work area.  The court, looking at the issue of whether an owner can be liable for damages where it fails to disclose certain critical information regarding the project to bidders, found that a sufficient factual basis existed to warrant recovery for nondisclosure of material facts.
 

No-Damages-for-Delay Clause Precludes Recovery of Delay Damages

Edwin J. Dobson, Inc. v. State, 526 A.2d 1150, 218 N.J. Super. 123 (N.J. Super. App. Div. 1987)

In this case, a contractor brought suit against the state for delay damages arising out of the construction of a public project.  The delays were caused by a variety of reasons primarily stemming from the state’s requirement that the contractor use a specific manufacturer for supplies.  The contract included a “no damage for delay” clause which provided an extension of time for completion, but no additional payment, for damages, in the event of any hindrance or delay in the progress of the work, even if caused by the state.  The court found that the clause was legal and that it precludeed recovery by the plaintiff.

Express Agreement to One-Year Claims Limitation Clause is Enforceable

A.J. Tenwood v. Orange Senior Citizens Hous. Co., 491 A.2d 1280, 200 N.J. Super. 515 (N.J. Super. Ct. App. Div. 1985)

In this case, a construction contractor brought a claim for breach of contract against the owner of a housing project.  The contract between the parties included a one-year claims limitation clause.  The court upheld that one-year limitation relying on precedent that the statutory limitation on contract actions could be waived by the express agreement of both parties.  Therefore, as long as the period is reasonable and does not violate public policy, shortened statutes of limitation clauses are valid.
 

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