The Appellate Division has upheld an arbitration award of $552,202 in favor of a general contractor who was not paid in full after completing a five-million dollar contract to construct a medical facility in Paterson.  After the contractor's success at arbitration, the owner petitioned the Superior Court to vacate the arbitration award, while the contractor cross-moved to confirm the award.  At the trial level, the trial court judge read the award and stated, "quite frankly, I can't follow it," and found that the arbitrator did not give a well-reasoned decision.  Therefore the trial court vacated the award and ordered re-arbitration, prompting the contractor's appeal.  On appeal, the three-judge panel cited N.J.S.A. 2A:23B-22 for the proposition that an arbitration award can only be vacated in six specific situations, and found that none of the six were present in this matter.  Consequently, whether or not the court thought the arbitrator's decision was well-reasoned, it was not fraudulent, corrupt, or in line with any of the other grounds for vacating an arbitration award, and the $552,202 award in favor of the contractor was updheld.  (Paterson Medical Plaza LLC v. Litana Development, Inc.)

In a split bench (4-3), the NJ Supreme Court has established that an aggrieved property owner need to show a diminution of property value prior to being entitled to restoration damages when a neighbor illicitly cuts down generic foliage (trees, shrubs or bamboo) on another's property. This game changer of a case flies in the face of property rights.
 
At issue in this case was a lot of bamboo. As one may know, bamboo is not easily contained once planted. It easily spreads and does not adhere to drawn property lines. In this case, Neighbor planted bamboo years ago which ultimately spread across his property and onto that of Next-door Neighbor's. Neighbor did not claim this bamboo held a "peculiar value" to him but rather referred to this bamboo as a "fence" used for privacy. One day Next-door Neighbor's landscapers came and removed all the bamboo from both properties. Neighbor sued seeking damages to replace the torn down bamboo.
 
The Supreme Court held that although a trespass occurred and foliage was undisputedly removed, without showing the property's value had been diminished, Neighbor was out of luck in seeking restoration damages. The Majority suggests that Neighbor should have shown either the bamboo was near and dear to him or that the value of his property was reduced by the removal. This holding seems very wrong when viewed through the lens of property rights and the dissent took this position. The evidence here established Next-door Neighbor's landscapers removed all of the bamboo from Neighbor's property without permission. Damages should be the cost to replace what was removed regardless of a personal attachment and regardless if the property value was diminished.  (Kornbleuth v. Westover)

In a recently-published opinion from the Appellate Division, the court found that the plain language of the County Improvement Authorities Law exempts county improvement authorities from the provisions of the Municipal Mechanics’ Lien Law which permit liens to be filed for unpaid work on public projects.  Relying upon the definitions of a “public agency” in the lien law, as well as language in the statute permitting county improvement authorities and stating that they are not, “a county or municipality or agency or component of a municipality for the purposes of any other law,” the Court found that the plain language of the applicable laws exempted county improvement authorities from being subject to the lien law.  Consequently, contractors and sub-contractors should be aware that there is no ability to file a lien on any projects funded by a county improvement authority. (Mastec Renewables Construction Co. Inc. v. Sunlight General Mercer Solar LLC)

In a case of first impression in New Jersey, the Appellate Division held that an employer can be ordered to reimburse an injured worker for the costs of purchasing medicinal marijuana in conformity with the workers' compensation act and the medical marijuana act (the "MMA"). In this case the employer argued it could not be ordered to purchase pot for a patient because that would amount to aiding and abetting a crime. However the Appellate Division disagreed and ordered the employer to buy the marijuana for the former employee.
 
The facts of the matter involved a former construction worker who was injured on the job and suffered some severe spinal injuries. The injuries caused great pain and over the course of a decade and a half, the injured worker had several surgeries to no avail. Eventually the worker was using opioids as the sole form of pain relief. In trying to prevent a cycle of drug abuse, the injured worker sought the assistance of a doctor that specialized in prescribing medical marijuana and received a prescription for same.
 
Part of the issue is that under Federal Law, marijuana is a Class 1 drug (meaning there is no inherent medicinal benefit through use) and opioids are Class 2 drugs (meaning there is a medicinal benefit with use). New Jersey's MMA creates an affirmative defense to a patient if caught in the State with marijuana. However, the Federal government does not recognize such a defense.  In addition, this case turned away a pre-emption challenge (State law vs. Federal law) by the former employer. In doing so the Court weakly pointed to the mere words of this State's Legislature when that body declared that, "compliance with this act does not put the State of New Jersey in violation of federal law."  (Vincent Hager v. M & K Construction )

New Jersey's Public bidding laws were enacted to protect the taxpayer by providing an even playing field for public construction projects (such as school construction), and mandating the project be awarded to the lowest responsible bidder.  Taken from a recent opinion, a plaintiff submitted the lowest bid for work to be performed at a public school and the defendant submitted the third-lowest bid for the project.  However, the school board decided to "review" the bids after bidding closed and subsequently disqualified plaintiff (and the second-lowest bidder) because those bid submissions included certifications from subcontractors which were used in a prior round of bidding for the same project, three weeks prior.  Thus the board awarded the defendant the construction project.
 
Plaintiff filed suit and the trial court judge reversed the school board's decision, and anointed the plaintiff the lowest responsible bidder. The trial judge found that the three-weeks old certifications were not a material defect but were rather a minor defect which did not cause the parties to be on unequal footing when submitting their respective bids.  Further, the plaintiff's bid would save the taxpayers nearly $190,000 verses the defendant.  An appeal was filed by the defendant seeking to be reinstated as the lowest responsible bidder but the Appellate Division rejected the attempt and adopted the trial judge's reasoning.
 
This highlights two important reminders to the bidders for public contracts: pay attention to the details in your submissions, and mere technical defects should not override the public policy of saving the taxpayer money.   (Thassian Mechanical Contracting, Inc. v. East Brunswick Board of Education and Hanna's Mechanical Contractors, Inc.)

In a recent unpublished decision of the Appellate Division, a construction management company was seeking to recover 50% of the profits from the construction of two new buildings in Montclair.  The Plaintiff claimed that he had brought the Defendant into the project because the Plaintiff did not have the bonding capacity or experience needed in order to be awarded the project, and also participated in some of the pre-construction services.  While there appears to have been some verbal discussions regarding a possible joint venture, nothing was ever put in writing and the Plaintiff did not actually participate in the construction of the buildings.

In finding that there was no joint venture created, the court found that the Plaintiff was, "unable to contribute money, property, effort, knowledge, skill or other asset to the common undertaking.  Plaintiff's contribution to the joint venture seems to have been simply connecting [the owner and the Defendant] to perform the necessary work."  The panel affirmed the trial court and found that the Plaintiff did not make any substantial contribution to the venture, and lacked the relevant construction experience and bonding capacity for the project.  Finally, the court cited Supreme Court authority for the proposition that there cannot be joint venture unless there is an agreement to share not just profits, but also losses, and that was not present here.  Consequently, the mere referral of a customer was found to be an insufficient basis to form a joint venture.  (The Holder Group, Inc. v. Pike Construction Co., LLC, et. al.)

New Jersey Residential home improvement contractors are required to provide clients with an estimated timeframe for the completion of the work.  In a recent unpublished case from the Appellate Division, a contractor provided the homeowner with a 45-day time period from the date of the contract to complete an addition.  However, due permit delays and other reasons, the work did not begin until months later.  Despite the contractual time-frame not being met, the court found that there was no violation of the CFA, stating that the homeowners, "were aware that ... [c]onstruction began approximately 120 days from the contract date, yet defendants did not cancel the contract or allege a breach at that time."  Furthermore, although a change order for additional work was never signed by the homeowner, a regulatory violation of the CFA, the court found that since there was no ascertainable loss suffered by the homeowner as a result of the regulatory violation, the contractor was not liable for damages under the CFA.  (MYCWHome, LLC v. White, et. al.)

A recent non-precedential Appellate Division case serves as a reminder that not all arbitration provisions are drafted equally. At issue in a residential construction suit was the defendant-contractor's arbitration provision which required an aggrieved homeowner to file a claim with the American Arbitration Association in lieu of filing an action in court. However, the provision at issue did not contain specific language which would have informed a reasonable homeowner that by going to arbitration they would be "waiving a right to seek relief in a court of law." (see Atalese v. U.S. Legal Servs. Grp., 219 N.J. 430 (2014)).  This proved fatal to the defendant-contractor's invocation of arbitration, and the defendant-contractor's motion to compel arbitration was reversed and the matter remanded to the trial court for (expensive) litigation. This serves as a reminder for all businesses and individuals with arbitration clauses in their contracts to have same reviewed by an attorney knowledgeable on the subject matter.  (Becker v. Ollie Slocum and Son, Inc.)

A group of homeowners joined together to sue the builder of their development for selling them homes with infiltrator septic systems instead of stone and pipe septic systems, which allegedly have a substantially-shorter useful life.  Since many of the homes were sold over ten years prior to the filing of the complaint, the Plaintiffs only filed Consumer Fraud Act ("CFA") claims and did not file faulty design or construction defect claims.  However, the Appellate Division affirmed the ruling of the trial judge that all claims must be dismissed based upon the statute of repose.  Noting the broad application of the statute of repose, that it covered all claims regardless of how a plaintiff couches the cause of action, citing the legislature's use of the language that no action could be brought after ten years, "whether in contract, in tort, or otherwise." (Allen, et. al. v. Beazer Homes Corporation)

The New Jersey Consumer Fraud Act ("CFA") places many responsibilities upon a home improvement contractor which, if violated, render the contract null and void.  However, if the CFA violations are only "technical" and "inadvertent" in nature, then the contractor can still recover monies for unpaid work performed under a theory of quantum meruit.  This was specifically the situation presented to the court in CB Construction, Inc. v. Jill Panico, which was decided on June 26th.  There, the Appellate Division affirmed an award in favor of a contractor despite three technical violations of the CFA.  Moreover, even though the technical CFA violations did entitle the homeowner to recover attorney fees, the trial court substantially reduced such fees to only 10% of what was requested by the homeowner defendant.  As stated by the trial judge, "The litigation could have been resolved in the Special Civil Part at minimal legal expense to the parties, but for Defendant's decision to utilize the CFA as a sword in an effort to win a large judgment and attorneys' fees award. Defendant made the decision to transform this case from a simple dispute over a book account, into, relatively speaking, a "high stakes" multi-count, multi issue dispute. That defendant failed on almost all of her factual defenses and legal theories must also weigh heavily on this court as it tries to determine a fair and proportionate counsel fee award."  The appellate court upheld this substantial reduction. (CB Construction, Inc. v. Jill Panico)