New York Amends “Prompt Payment Act” Capping Retainage at 5% on Private Construction Projects

February 27, 2024
Posted by Timothy DeHaut

Co-authored by Anthony J. Recchia

Under a new law, effective November 17, 2023, an owner’s ability to withhold retainage on private construction projects in New York is now limited to five percent (5%).  The new law applies to private construction contracts with contract sums greater than $150,000.00.  This marks a significant change to the retainage laws in New York.  Under previous law, an owner was able to withhold “a reasonable amount” of the contract sum as retainage.  Under the new law, the parties are not permitted to negotiate or “contract around” the new 5% retainage limit but are permitted to agree to a retainage amount of less than 5%.

The bill (Bill 3539), signed into law by Governor Kathy Hochul on November 17, 2023, amending Sections 756-a and 756-c of the Prompt Payment Act (N.Y. Gen. Bus. Law § 756), also provides that retainage shall be released by the owner to the contractor no later than 30 days following final approval of the work under the construction contract. Read more

Labor Commissioner Rules in Favor of Trucking Company on Owner Operator Issue

December 18, 2017
Posted by Michael Canning

On December 11, 2017 the Commissioner of the New Jersey Department of Labor and Workforce Development (the “Commissioner”) issued a Final Administrative Action Determination in the matter of Big Daddy Drayage, Inc. v. New Jersey Department of Labor, OAL Docket No. LID 17680-16, Agency Docket No. DOL 15-006.  The determination is very favorable to trucking companies which utilize owner operators as the Commissioner found that the trucking company was not liable for unpaid contributions to the unemployment compensation fund and the State disability benefit fund for the audit period from 2006-2009.  The Department of Labor had assessed the petitioner trucking company $258,689.79 in unreported and/or unreported wages for the audit period.  The trucking company appealed this decision and the administrative law judge (“ALJ”) reversed, finding that the trucking company satisfied the ABC test for independent contractor status found at N.J.S.A. 43:21-19(i)(6)(A), (B) and (C).  Because the ALJ found the owner operators were not employees, she determined the trucking company was not liable for the assessment made by the Department of Labor. Read more

Appellate Division Affirms Discharge of Improperly Served Construction Lien

October 31, 2017
Posted by Adam Garcia

In a recent decision, Santander Condominium Association, Inc. v. AA Construction 1 Corp., A-0525-15T3 (App. Div. Oct. 13, 2017), the Appellate Division confirmed that construction liens that do not strictly comply with New Jersey’s Construction Lien Law (“Lien Law”), N.J.S.A., 2A:44A-1 to -38, are subject to discharge, and the lienor subject to owner(s)’ attorneys’ fees.

In Santander, the Santander Condominium Association (the “Association”) brought a suit seeking discharge of a construction lien filed by AA Construction 1 Corporation (“AA”), a subcontractor hired to perform certain facade work at the Santander Condominiums in Asbury Park, New Jersey.  In its suit, the Association also sought an award for its counsel fees under section 30(e) of the Lien Law, N.J.S.A. 2A:44A-30(e).  The central contention of the Association was that AA did not serve its lien claim on the Association, resulting in the Association’s remission of payment to its general contractor.  It was undisputed that the AA’s lien claim had been sent by certified mail and regular mail to the condominium property, but that it had not been sent to the Association’s registered address, which was at an unrelated off-site location.  AA opposed discharge, asserting that the mailing of the lien claim to the condominium property accorded with the Lien Law requirement that service of a lien claim be made by personal service or by mailing to the “last known business address or residence of the owner.” N.J.S.A. 2A:44A-7. Read more

New Jersey Supreme Court Clarifies Statute of Limitations in Construction Defect Cases

September 27, 2017
Posted by Catherine Bick

Co-authored by Timothy DeHaut

In The Palisades at Fort Lee Condominium Association, Inc. v. 100 Old Palisade, LLC, ___ N.J. ___ (2017), the plaintiff was the Condominium Association that brought suit based upon defects in the condominium building after the Association took over control from the Sponsor and after the Association obtained its own engineering report.  Summary judgment on statute of limitations grounds was obtained by the defendants in the trial court; the Appellate Division reversed.  The New Jersey Supreme Court held that a cause of action for construction defects, for statute of limitations purposes, accrues when any owner in the chain of title “first knows or reasonably should know of the actionable claim against an identifiable party.”  A plaintiff’s case must be commenced within six years after a claim “accrues.”  The general rule is that accrual begins upon substantial completion of the project.  However, under the “discovery rule” the statute begins to run from when a plaintiff “knows or reasonably should know of an actionable claim against an identifiable defendant.”  The Court has now made it clear that if an “earlier owner knew or should have known of a cause of action against an identifiable defendant, then the accrual clock starts then.”  “The statute of limitations clock is not reset every time property changes hands.”

Thus, the plaintiff Association in The Palisades took title subject to the rights of the prior two owners – the entity that operated the building as apartments and the second entity which converted the units to condominiums.  The second owner had obtained an engineering report during its ownership.  Based on the facts before it, the Court remanded the case for a so-called Lopez hearing, in order to determine when the Association’s claims accrued.  The Court made it clear that it is the plaintiff’s burden, for the purposes of the Lopez hearing, to prove that its claims accrued sometime later than substantial completion. Read more

Recent Developments in Flak Jacket Protection Issues

September 27, 2017
Posted by Timothy DeHaut

Co-authored by Catherine Bick

Developers and builders who build homes with structural joists manufactured by the Weyerhaeuser Company need be aware of certain issues with Weyerhaeuser’s TJI® Joists with Flak Jacket® Protection.  Weyerhaeuser has recently announced that due to a recent formula change, the Flak Jacket coating is defective and emits, or “off-gases”, formaldehyde, a chemical that is hazardous at certain levels.  The issue, Weyerhaeuser stated, was isolated to Flak Jacket products manufactured after December 1, 2016.

These joists have been installed in homes across the country.  According to the New Jersey Department of Community Affairs (“DCA”), Weyerhaeuser has indicated that there are 320 homes in New Jersey that are affected; all are in various stages of construction.  Anectodal evidence suggests there may be more. Read more


December 15, 2016
Posted by Paul Schneider

Developers who bring builder’s remedy lawsuits under New Jersey’s Mount Laurel doctrine often cite the so-called “time of filing” rule.  The contention is that in determining whether a municipality is compliant with its affordable housing obligations, the court must base its decision on the zoning ordinances in effect at the time the developer initially filed its lawsuit, and disregard actions the municipality may have taken to achieve compliance after the lawsuit was filed.  The time of filing rule finds support in earlier cases such as Toll Brothers, Inc. vs. Township of West Windsor, and Mt. Olive Complex v. Township of Mt. Olive.

In a December 14, 2016 decision, the Appellate Division of Superior Court rejected the automatic application of the time of filing rule.  In Hollyview Development Corporation I vs. Township of Upper Deerfield, the developer filed its lawsuit in 1998.  For several years, Hollyview did little to actively pursue the case.  In 2013, Hollyview filed a motion for summary judgment, relying, in part, on the claim that the Township was not compliant with its affordable housing obligations back in 1998, when the case was filed.  The Township claimed that in deciding the motion, the court should consider what the Township had done in the interim to provide affordable housing.  Hollyview was unable to show that the Township had taken these actions as a result of Hollyview’s lawsuit. Read more

Employee Theft

October 6, 2016
Posted by Sean Regan

If your employee steals customers’ checks received for payment, what do you do? Fire her. Call the police. Then call your insurer. You should have employee fidelity coverage. After that, call your lawyer. Someone may have to pay you back other than the fired employee and your insurer.

That someone is the bank that cashed the checks for the employee that stole the customers’ payments. Recently, Sean E. Regan, Esq. of Giordano, Halleran & Ciesla, P.C. was able to recover over $300,000 from the depository bank when an employee stole customer payments from her employer, fraudulently endorsed the employer’s name, and deposited them into her personal bank account. Another $100,000 was recovered from the CGL insurer based upon the rider insuring against employee theft. Read more

Three’s A Crowd: Dissociation Under New Jersey’s RULLCA

February 3, 2016
Posted by Matthew Fiorovanti

Friends get together to discuss a business idea.  The concept sounds great, and everyone anticipates a smooth ride to a successful business and lasting partnership.  The friends decide to form an LLC, but do not engage counsel or enter into a specific, detailed operating agreement, instead choosing a “template” after a Google search.    The partners do not consider what happens if things do not go as planned, since they are convinced that this will not be the case.  Unfortunately, while the business may become successful, the relationship among the partners may change for a host of unanticipated reasons.  When things go bad and disputes arise among members of an LLC, the members – quite often friends or even family members – are faced with how to resolve the dispute without destroying the business. Read more

GH&C Obtains Bench Trial Verdict In Favor Of Client In Dishonored Bank Drafts Litigation

January 22, 2016
Posted by Justin M. English

Justin M. English recently obtained a bench trial verdict in favor of a GH&C client (the “Client”) following a trial in Superior Court in Middlesex County, New Jersey. The Client was a major New Jersey provider of senior housing and supportive services who was sued by Robert J. Triffin (“Triffin”), a litigant who has filed thousands of lawsuits arising out of the practice of buying dishonored checks, becoming a holder in due course, and then commencing litigation in order to collect the proceeds of the check. In fact, since 2004 Triffin has filed more than 15,000 lawsuits as an assignee of dishonored checks in New Jersey courts alone. See Triffin v. Am. Intern. Grp., Inc., 372 N.J. Super. 517, 521 n.2 (Super. Ct. App. Div. 2004) (At oral argument on appeal, Triffin indicated having filed over 15,000 lawsuits as assignee of dishonored checks.).

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GH&C Obtains Dismissal Of Claim For Specific Performance Of Claimed $45 Million Contract

December 24, 2015
Posted by Michael Canning

Michael J. Canning, Esq. and Christopher J. Marino, Esq. recently obtained the dismissal of a claim for specific performance of an alleged contract for the sale of real property for the amount of $45 million.

For the full article, click here.