Gibbons Law Alert

Gibbons Law Alert

Tagged: Construction Litigation

Recent Construction Law Decision Holds That Contract Payment Terms Control Over New Jersey’s Prompt Payment Act

by and

Posted in Construction

On August 21, 2024

In JJD Electric, LLC v. SunPower Corporation, Systems, et al., the District Court of New Jersey dismissed multiple counts of plaintiff JJD Electric’s amended complaint, holding that the terms of the plaintiff’s subcontract control over its ancillary theories of liability. However, the court allowed the plaintiff’s fraudulent misrepresentation and unjust enrichment claims to proceed insofar as they challenged the very validity of the subcontract, as the Magistrate Judge held previously in granting the plaintiff leave to file the amended complaint. Defendant SunPower subcontracted JJD Electric to provide electrical contracting services in connection with the installation of power equipment at various project locations. JJD Electric asserted claims against SunPower for breach of contract, fraudulent misrepresentation, and unjust enrichment, as well as a claim under New Jersey’s Prompt Payment Act (PPA), seeking approximately $2 million for the alleged unpaid balance of work performed and another approximately $4 million for alleged delay damages. Importantly, as to the PPA claim, the court recognized the scarcity of case law addressing the elements of an action under subsection (b) of the PPA dealing with timing of payments between prime contractors and subcontractors. Based on the plain language of the PPA and guidance from other courts, the court adopted the following elements: The subcontractor has performed contractual work for the prime contractor....

Appellate Division Affirms: Binding Dispute Resolution Provisions in Standard AIA Construction Contracts Are Enforceable

by

Posted in Construction

On May 10, 2023

In a recent unpublished opinion, the New Jersey Appellate Division held that an agreement to arbitrate set forth in the binding dispute resolution provision in a standard form American Institute of Architects (AIA) construction contract between a condominium association and contractor was enforceable. The binding dispute resolution provision appears in the AIA standard form as a series of checkboxes in which the parties may select arbitration, litigation, or another dispute mechanism by placing an “X” in one of the boxes. The AIA standard form also contains language that applies if the parties have selected arbitration as the method of binding dispute resolution, including the rules for conducting that arbitration and finalizing an award. Arbor Green Condo. Ass’n, Inc. v. Start 2 Finish Restoration & Bldg. Servs., LLC et al. arose out of Start 2’s alleged deficient workmanship under a construction contract to restore two buildings damaged by a storm, which resulted in Arbor Green terminating the contract. Start 2 subsequently filed two construction liens and two demands for arbitration (one for each building) in accordance with the selected dispute resolution method in the parties’ AIA form agreement. Arbor Green failed to answer the demands for arbitration, resulting in awards in Start 2’s favor. Start 2 then filed two orders to show cause and verified complaints that...

Beyond Force Majeure: Government Quarantine Orders May Themselves Excuse Contract Non-Performance

by and

Posted in General Litigation

On April 27, 2020

The coronavirus pandemic is reverberating throughout commercial sectors, and countless contract obligations are going unperformed—shipments are not being made or accepted, payments are being missed, and contract milestone dates are lapsing every week that the pandemic and business shutdown continues. Those typically rare force majeure provisions are now being scrutinized. (For more on those topics, see previous entries in our COVID-19 “The Coronavirus Pandemic and Your Business: How We Can Help” client alert series, including “Litigation Issues That May Arise.”) And, in New Jersey, the precise language of such a clause is key, as courts in this state have held that they should be “narrowly interpreted as contemplating only events or things of the same general nature or class as those specifically enumerated.” Seitz v. Mark-O-Lite Sign Contractors, Inc., 210 N.J. Super. 646 (N.J. Sup. Ct. Law Div. 1986). With only some force majeure clauses including explicit references to pandemics, or broadly-worded “catch-alls,” the success of a force majeure defense is not necessarily certain. But before (or in addition to) attempting to invoke that force majeure provision, consider whether a court would ultimately determine that contractual non-performance is due to an “Act of God” or rather is being caused by the governmental orders quarantining segments of the population and/or shutting down whole swaths of the...

New Jersey Appellate Division Agrees: EIFS is EIFS (Even If Technically It Isn’t)

by

Posted in Insurance

On June 27, 2016

EIFS litigation is no stranger to New Jersey. EIFS (or “exterior insulation and finish system”) – a popular, post-World War II building system that resembles stucco while simultaneously providing watertight exterior insulation – originated in Europe and migrated to American homes in the late 1960s and early 1970s. According to The New York Times, it was utilized in the construction of “countless homes built in New Jersey,” which meant that the state was deeply affected when it became evident that, installed in a certain way, EIFS trapped water behind its siding and led to crumbling wall sheathing and rampant mold. Nationwide lawsuits ensued and, while a class action settlement was eventually reached with the largest EIFS manufacturer in 2003, New Jersey courts – at every level – returned to EIFS litigation again and again.

Connect:

About Gibbons

With 200 attorneys, Gibbons is a leading law firm in New Jersey, New York, Pennsylvania, Delaware, Washington, DC, and Florida, ranked among the nation’s top 200 by The American Lawyer. More…

Subscribe

Archived Blog Posts

Categories