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Aloia Construction Company, Inc. v. BFW/Howell Associates, LLC

A-0580-08T1 (N.J. Super. App. Div. 2010) (Unpublished)

CONTRACTORS; LIENS — When a corporation wishes to file a construction lien, the claim must be signed, acknowledged, and verified by a duly authorized officer, and not the corporation’s attorney, because the “substantial compliance doctrine” does not apply to the lien statute’s signature requirements.

A manufacturer agreed to provide steel and drawings to a shopping center owner. Since it believed the owner to be uncreditworthy, the manufacturer only agreed to provide the steel and drawings after a receiving a letter from the owner’s general contractor stating that the owner “will provide ‘assurances’ that [the steel manufacturer] has been paid in full for their portion of the work *** prior to the release of their final contract payment.” When the steel manufacturer was not paid, it filed a construction lien. Its attorney signed on its behalf without indicating in what capacity he was signing the claim. The manufacturer later claimed that one of its officers had appointed the attorney as a corporate officer for the purposes of executing the lien and that its bylaws permitted such action. The steel manufacturer sued to enforce the lien.

The lower court dismissed the steel manufacturer’s case, finding that the lien was invalid. It held that the steel manufacturer failed to produce any competent evidence that its bylaws permitted one officer to unilaterally appoint another individual as a corporate officer for the purposes of executing a construction lien. New Jersey’s Construction Lien Law expressly requires that a corporate officer sign each lien claim and include his or her title in the lien document. It also held that the general contractor’s letter was “to merely provide assurances,” without more, and there was no meeting of the minds between the parties. The steel manufacturer appealed.

On appeal, the Appellate Division affirmed, holding that mechanics and materialman’s liens are statutory in nature and, because they are in derogation of the common law, provisions creating liens are strictly construed. The law in New Jersey is clear that an attorney cannot sign a lien claim on behalf of a client when simply acting as the client’s attorney. In the case of a corporation, the lien claim must be signed, acknowledged, and verified by a duly authorized officer. To validly appoint an attorney to sign a lien claim, a corporation must comply with its certificate of incorporation and bylaws when appointing the attorney a corporate officer. Here, the corporation failed to provide a copy of its bylaws demonstrating that the attorney was a duly appointed corporate officer. Further, it failed to provide competent proof that an existing corporate officer could have appointed someone to be as a corporate officer without board approval. It also did not provide a copy of any board resolution approving the appointment.

The Court also rejected application of the “substantial compliance doctrine.” This doctrine is an equitable remedy based on justice and fairness and is designed to avoid technical rejection of legitimate claims. Not every non-complying act is salvageable under this doctrine and each case is fact specific. The Court cited D.D.B. Interior Contracting, Inc. v. Trends Urban Renewal Ass’n, Ltd., 176 N.J. 164 (2003) where the New Jersey Supreme Court held that “going-forward, a corporation [can] no longer satisfy the lien statute’s signature requirements merely by substantially complying.” D.D.B. Interior was decided in May 2003, and the steel manufacturer began shipping steel several months later. The lien claim was filed more than six months after the D.D.B. Interior decision was rendered. Thus, even though it believed that the lien appeared to substantially satisfy the technical requirements for filing, the Court held that the claim was subject to the D.D.B. Interior standard and it rejected the substantial compliance claim.

Finally, it agreed with the lower court that the obligations created under the general contractor’s letter did not establish a guaranty relationship as between the steel manufacturer and the general contractor. It noted that: (a) the letter did not specify the form that such assurances were to take; (b) did not require the general contractor to notify the steel manufacturer; and (c) did not require the general contractor to verify the owner’s assurances. Thus, it concluded that it could not be said that the owner and the general contractor intended to confer any particular benefit on the steel manufacturer beyond merely seeing the letter, being apprised of its terms, and presuming that the owner would “assure” the general contractor that the steel manufacturer had been paid before it made final payment to the owner.


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