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Township of Parsippany-Troy Hills v. Lisbon Contractors, Inc.

303 N.J. Super. 362, 696 A.2d 1129 (App. Div. 1997)

MUNICIPALITIES; LIENS—Who is a proper protected party under the New Jersey Municipal Mechanics’ Lien Act?

The issue on appeal was whether a township which disposes of sludge from a sewage treatment facility of another municipality was entitled to assert a lien pursuant to the Municipal Mechanics’ Lien Law when it was not paid for the work performed.

The Township of Phillipsburg awarded a contract to a contractor to expand and upgrade its wastewater treatment plant. Part of the work included removal of sludge in order to renovate some of the existing equipment. The contractor hired a subcontractor to empty and dispose of the sludge and to clean the existing equipment. The subcontractor made arrangements with the Township of Parsippany-Troy Hills to accept and process the sludge removed from the Phillipsburg facility. Parsippany issued monthly invoices to the subcontractor for the work it performed and was paid in November, 1990. In January, 1992, Parsippany claimed it was still owed over $100,000.00 from the subcontractor, and filed a Notice of Lien Claim against funds Phillipsburg owed to the contractor, and sought judgment against Phillipsburg to enforce its lien. Parsippany also filed a complaint against the contractor and the subcontractor to collect this money. Without any oral or written opinion, the motion judge granted Parsippany’s motion for summary judgment against the contractor. On appeal, the contractor argued that Parsippany is not a proper lien claimant.

The Appellate Division held that Municipal Mechanics’ Lien Law should be strictly construed, and a lien claimant’s relationship to the project should be scrutinized to assure that the statute’s protection is accorded only to those contemplated by the legislature. In its one sentence decision, the motion judge determined that Parsippany was either a subcontractor or materialman. However, the Appellate Court stated that these are very different classifications, and sought to discern which one, if either, best categorized Parsippany. The Court stated that in making its determination it looked not to the contractual status of the parties, but at the nature of the work performed. The Court found that the work to be performed by Parsippany would have been performed regardless of the contract, since Parsippany had received and treated sludge from Phillipsburg in the past. The Court found no reason to grant Parsippany enhanced protection for collection of its debt simply because the sludge treatment in this instance was due to renovations of a facility rather than ordinary plant operations. The Court then interpreted the term “materialman” to be one who provides a product which becomes part of the whole, and held that Parsippany was not a materialman, because they simply provided a service which allowed the renovation to proceed. The Court concluded that Parsippany was not a subcontractor or materialman for purposes of the Municipal Mechanics’ Lien Law, and reversed the grant of summary judgment by the motion judge. The Appellate Division also addressed the lack of an opinion from the motion judge. The Court stated that rendering an opinion with a decision is a primary function of a motion judge, and failure to do so not only deprives the parties and the appeals court of legal analysis, but smacks of capriciousness, which does little to foster confidence in the judicial system.


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