Tagged: Breach of Contract

Third Circuit Affirms the Dismissal of a Putative Class Action against TD Bank for Failure to Meet Pleading Requirements

Last month, the Third Circuit upheld the dismissal of a putative class action against TD Bank, finding that plaintiffs’ conclusory allegations lacked sufficient evidence and failed to satisfy Rule 9(b)’s heightened pleading standard for claims that sound in fraud. In MZL Capital Holdings, Inc. et al. v. TD Bank, N.A. et al., two account holders with TD Bank filed a proposed class action accusing the Bank of obscuring its exchange rates and improperly charging an embedded fee for converting foreign currency, thereby defrauding its customers in violation of the New Jersey Consumer Fraud Act. Shortly thereafter, plaintiffs amended their complaint to add claims for breach of contract, breach of the implied covenant of good faith and fair dealing, and violation of numerous other state consumer-protection laws. TD Bank moved to dismiss plaintiffs’ claims for failure to state a claim, and the District Court granted TD Bank’s motion, dismissing all of plaintiffs’ claims. On appeal, the Third Circuit affirmed the district court’s decision, concluding that plaintiffs’ claims were inadequately pled. At the outset, the Court re-affirmed the basic principle that claims brought under the Consumer Fraud Act sound in fraud and therefore must comply with Rule 9(b)’s particularity requirement. The Third Circuit held that plaintiffs’ general allegations, which failed to identify any provision in their agreement...

Supreme Court Declines to Hear Challenge to New Jersey’s Requirement of Express Waiver Language for Enforcement of Arbitration Provision in Consumer Contracts

The Supreme Court of the United States declined to review the New Jersey Supreme Court decision in U.S. Legal Services Group v. Atalese, holding that an arbitration provision in a consumer contract was not enforceable because the contract’s language waiving the consumer’s right to sue was not clear and unambiguous. The New Jersey Supreme Court’s decision, which affects the enforceability of arbitration provisions interpreted under New Jersey law, directs that such provisions must clearly notify the parties of their waiver of the right to bring a lawsuit.

Agreements to Arbitrate Will Be Enforced Against Unit Owners Even Where the Claims of the Condominium Association Will Be Litigated

Purchasers of units in planned real estate developments, such as condominium complexes, often enter into purchase agreements with the developer that contain arbitration provisions requiring the purchasers to arbitrate any claims they may have arising out of the construction and sale of the unit. In Hudson Tea Buildings Condo Assoc. v Block 268 LLC, the New Jersey Appellate Division recently considered questions over the enforceability of such provisions in a lawsuit involving some claims that were subject to the arbitration provision and some that were not.

Contractor’s Violation of Pennsylvania’s HICPA Registration Requirement Does Not Bar Quantum Meruit or Mechanics Lien Claims

The Pennsylvania Home Improvement Consumer Protection Act, 73 P.S. § 517.1, et. seq. (“HICPA”), became effective on July 1, 2009. The HICPA is designed to protect purchasers of home improvement services from contractors engaging in fraudulent business practices. It requires contractors who perform more than $5,000 of work per year, and whose company is worth less than $50,000,000, to register with the Pennsylvania Office of the Attorney General (“OAG”), and comply with HICPA’s substantive requirements. The HICPA requires contractors to enter into written contracts for performance of improvements, specifies provisions which must be included in the written contract (§ 517.7(a)), and identifies other provisions the inclusion of which makes the contract voidable by the owner (§ 517.7(e)). Finally, certain acts on the part of contractors, including failure to register with the OAG (id. § 517.9) are prohibited by the HICPA, which sets forth criminal penalties for fraud (§ 517.8). Significantly, a violation of the Act is also deemed to be a violation of the Unfair Trade Practices and Consumer Protection Law, 73 P.S. § 201-1 et. seq.

Prejudgment Interest on Claims for Consequential Damages for Breach of Contract are not Recoverable as of Right Under Pennsylvania Law

Parties often specify in their construction contracts what amounts are recoverable for various events of breach. These provisions can impact not only the award of damages, but also whether amounts should be added to the award for recovery of prejudgment interest under Pennsylvania law. In Cresci Construction Services, Inc. v. James H. Martin, the Pennsylvania Superior Court considered the circumstances under which recovery of prejudgment interest is mandatory as opposed to discretionary. In that case, the plaintiff contractor brought suit against the defendant homeowner, and the homeowner counterclaimed for breach of contract.

New Jersey’s Prompt Payment Act Does Not Apply to Contracts for the Upkeep and Maintenance of Land

New Jersey’s Prompt Payment Act (“PPA”) can be a valuable tool available to contractors, subcontractors, sub-subcontractors, and product suppliers that are owed money on New Jersey construction projects, as aggrieved parties can recover interest on unpaid amounts at prime plus one (1%) percent in the event payment is not made within the time period provided by the PPA and attorneys’ fees. N.J.S.A. § 2A:30A-2. In TBI Unlimited, LLC v. Clearcut Lawn Decisions, LLC, the United States District Court for the District of New Jersey considered the scope of the PPA, which is only the subject of a handful of written opinions.

Performance of Corrective Work Does Not Extend the Deadline to File Mechanics’ Lien Claims in Pennsylvania

Mechanics’ liens are powerful remedies for contractors involved in payment disputes with owners of construction projects in Pennsylvania, but the six month deadline under the Mechanics’ Lien Law is strictly construed and contractors who delay filing them may lose their rights. In Neelu Enterprises, Inc. v. Agarwal, the Pennsylvania Superior Court considered the deadline for a contractor to file lien claims “within six months after the completion of his work” set forth in Section 502 of the Pennsylvania’s Mechanics’ Lien Law. Specifically, the two issues in the case were whether the deadline begins to run after a contractor is terminated and whether the deadline can be extended by the subsequent performance of corrective or remedial work.

Contracting Around the Discovery Rule: The Oregon Court of Appeals Enforces a Clause in a Construction Contract That Defined the Date of Accrual

Parties to construction contracts often include provisions that set forth time frames to file actions arising out of the contract that are different than the applicable statute of limitations. In the absence of any statutory prohibition, contract provisions limiting the time to file an action to less than the applicable statute of limitations are generally enforceable provided the time frame is reasonable. Although perhaps less common, some construction contracts include provisions that attempt to define when the applicable limitations period begins to run (i.e. when causes of action arising out of the contract accrue).

BMW Alleged Battery Defect Putative Class Action Holds a Charge

In Morano v. BMW of N. America, LLC, the Court refused to dismiss warranty and tort claims in a putative class action alleging a known defect in a BMW vehicle’s battery. The plaintiff alleged that the battery in his vehicle would not hold a charge and that his local dealer would not replace it because it was excluded from the BMW’s warranty and maintenance program. The plaintiff alleged that Defendant failed to disclose the battery coverage exclusion, and he sought to represent a Florida class of purchasers or leasees.

A Contractor’s Repair Estimate Provides Evidence of an Ascertainable Loss Under the New Jersey Consumer Fraud Act

The New Jersey Consumer Fraud Act (“CFA”) allows parties to recover damages if they have suffered an ascertainable loss. See N.J.S.A. 56:8-19. In the recent decision from the New Jersey Appellate Division, Pope v. Craftsman Builders, Inc., the court considered the type of evidence that can provide proof of an ascertainable loss in the context of a CFA claim involving a construction project.