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Eastern Concrete Materials, Inc. v. Tarragon Edgewater Associates, LLC

402 N.J. Super. 583, 955 A.2d 962 (App. Div. 2008)

CONSTRUCTION LIENS; SUB-SUBCONTRACTORS — A materials supplier seeking to file a lien under the Construction Lien Law must have a contractual relationship with either an owner, general contractor or subcontractor meaning that a relationship with a sub-subcontractor is not the proper basis for the filing of a construction lien claim against a project to which the sub-subcontractor provided materials.

A concrete supplier alleged it had supplied construction materials “in connection with ‘the improvement of a ... high-rise condominium building.’” Its bill was addressed to a sub-subcontractor, but went unpaid. The concrete supplier then “filed a lien against the property, citing the authority of the Construction Lien Law [CLL].” In support of its construction lien claim, the concrete supplier testified that the materials were “used in and incorporated by [the sub-subcontractor] in the performance of the cast-in-place foundation and slabs labor work for the construction of the ... building under a [] Purchase Order from the” sub-subcontractor who was the supplier of foundation and slabs to the project. The actual owner and developer of the project had contracted with a general contractor who hired a subcontractor who then hired the foundation and slab sub-subcontractor. Essentially, the concrete supplier had furnished concrete to a sub-subcontractor who had used the contract to produce pre-fabricated concrete parts which were then supplied to a subcontractor who was working pursuant to a contract with the owner’s general contractor.

Citing the CLL, the lower court rejected the construction lien. The Court pointed out that the CLL “limits the definition of a ‘supplier’ to a ‘supplier of materials ... having a direct privity of contract with an owner, contractor or subcontractor, in direct privity of contract with a contractor.’” Thus, “[t]he supplier must have a contractual relationship with either an owner, general contractor or subcontractor.” Here, the contract supplier’s purchase order “identifie[d] its contractual relationship [with] a sub-subcontractor.” The lower court, however, did not reject the lien. An arbitrator had reached the same conclusion after construing and applying the CLL.

On appeal, the Appellate Division agreed with the lower court as to the plain meaning of the statute. It further pointed out that “[i]n addition to the definition of a ‘supplier’ as recited in [the lower court’s] opinion, the three-tier orientation of the statutory scheme [was] fortified by the definition of ‘subcontractor’ as ‘any person providing work or services in connection with the improvement of real property pursuant to a contract with a contractor or pursuant to a contract with a subcontractor and direct privity of a contract with a contractor.” Basically, “the arbitrator expressly concluded that [the concrete supplier] did not have a contract with the contractor on this job. [It] supplied concrete to [a sub-subcontractor] and [the sub-subcontractor] was not in direct privity of contract with the contractor. Therefore, [the concrete supplier was] not a supplier pursuant to the [CLL] and [did] not have a right to file a lien claim on real property pursuant to the provisions of the [CLL].”

The Court, in rejecting the concrete supplier’s argument on appeal, said that if the statute should have included sub-subcontractors, it was for the Legislature to change the statutes.

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