A ten-year battle over a subcontractor lien claim was decided by the Appellate Division recently, and provided guidance regarding interpretation of the New Jersey Construction Lien Law ("CLL"). This case centered around a 100-unit residential development where the general contractor filed for bankruptcy, leaving its subcontractors unpaid. The subcontractor at issue in this lawsuit filed a lien claim in hopes of getting paid from the owner directly for its work performed in conjunction with the development. The lien was signed by the subcontractor's "Accounting and Information Systems Manager," and the issue before the court was whether or not this person was the appropriate signatory on the lien.
Prior to 2011, the CLL required that a lien claim be signed by a "duly authorized officer" of the company filing the lien. In 2011 the legislature revised the CLL and instead prescribed that a lien claim be signed by an “officer/member”, and included with the statute a revised lien claim form that indicated signature by, "the Secretary (or other officer/manager/agent) of the Corporation (partnership or limited liability company)”. In this matter, the Appellate Division held that this change in language was a new requirement that should be applied prospectively only, and was not a clarification of prior term of "duly authorized officer". Despite winning on this issue, the subcontractor ultimately failed to establish that its "Accounting and Information Systems Manager" was a duly authorized officer. The Court noted that: the subcontractor's Board of Directors did not identify the signer in any resolution, by-law provision, or other written document as a corporate officer; the subcontractor did not memorialize in writing that it authorized that person to execute lien claims; and on the subcontractor's requests for classification forms (which are needed for classification by the Division of Property and Management), the signatory was not identified as a corporate officer. As a result of having the wrong individual at the company sign the lien claim, the lien was dismissed and the subcontractor was left with no ability to recover the monies owed. (Diamond Beach LLC v. March Associates, Inc., et. al.)
Peter J. Vazquez, Jr.