Archive:January 2007

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.
 

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.
 

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.
 

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.
 

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.