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Morrow Equipment Company, LLC v. NOC VII Land Limited Liability Company

A-5144-08T2 (N.J. Super. App. Div. 2010) (Unpublished)

CONSTRUCTION LIENS — Where multiple leases, over time, are executed in connection with equipment rentals for a construction project, the leasing company may file a single construction lien with respect to all of the leases within 90 days following the end of the last lease provided that the multiple leases demonstrate a unity of purpose.

A property owner and its general contractor were involved in the construction of a high-rise building. The general contractor subcontracted with a steel erector, who in turn leased two series 500 cranes for the construction work. These were delivered to the work site. There were a series of problems with these cranes, and after four months the cranes were out of service. Two series 630 replacement cranes were delivered to the site. Two new leases were executed for these cranes. They were substantially equivalent to the earlier leases. The new cranes were in use for approximately seven months. One month later, the crane leasing company filed a construction lien against the real property. It covered rental payments under all four leases for all four cranes. It served a notice of lien, and then filed a complaint to foreclose on the lien. The complaint named the owner, the general contractor, and the subcontractor as defendants.

The litigation was stayed until an insurance action filed by the leasing company was resolved for damage to one of the original series 500 cranes. In a settlement of that insurance action, the leasing company agreed not to enforce its lien claim against the subcontractor. The lien litigation then proceeded.

The lower court disposed of the case on summary judgment. It concluded that the lien was timely filed and covered all four cranes. It held that the leasing company was not required to file separate lien claims for the 500 series and 600 series cranes. If that had been required, the filed lien for the series 500 cranes would have been out of time because they were removed from use eight months before the lien was filed. Rather, it held that the four leases were joined by a unity of purpose. The lower court also held that the leasing company’s lien claim did not have to be reduced by the amount of the insurance recovery, and that it did not first have to seek satisfaction from the subcontractor before proceeding against the owner or general contractor.

Both the owner and the general contractor appealed, but the Appellate Division affirmed, holding that under New Jersey’s Construction Lien Law, a lien claim has to be filed not later than 90 days following the last work, services, material or equipment was provided for which payment was claimed. The Court agreed with the lower court’s finding that the lien claim was timely as to all four cranes because the multiple leases demonstrated a unity of purpose. It further affirmed that the leasing company’s damage claim was unrelated to its claim for unpaid rentals, that no other party to the litigation had a claim to a credit for insurance proceeds, and that the leasing company satisfied its duty under the lien statute with respect to the subcontractor when it named the subcontractor as party to the litigation.


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