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River Park Business Center, Inc. v. Bedrock Stone, Inc.

A-1569-03T1 (N.J. Super. App. Div. 2005) (Unpublished)

CONSTRUCTION LIENS; BANKRUPTCY — A property owner’s bankruptcy filing does not justify or excuse a contractor from failing to enforce its construction lien within the one year statutory period.

Under the Construction Lien Law, a claimant must bring an action to enforce its claim “[w]ithin one year of the date of the last provision of work, services, material, or equipment, payment for which the lien claim was filed.” Certain suppliers of materials and services to a subcontractor on a construction project filed a construction lien for outstanding charges. The subcontractor filed for bankruptcy protection. Eighteen months after the subcontractor filed for bankruptcy, the property owner filed suit seeking to discharge the various construction liens the lower court granted relief and awarded attorney’s fees to the property owner. One lien claimant appealed, contending that the lower court allowed the one year limitation in New Jersey’s Construction Lien Law “to supersede the authority of a federal statute, namely the automatic stay provision of the Federal Bankruptcy Code.” Specifically, it contended that by reason of the bankruptcy filing, it was justified or excused from making its claim for failure to enforce its lien claim within the one year period. The Appellate Division rejected that contention. Among other things, it saw “no reason that the [lien claimants] could not have sought leave from the bankruptcy court for relief from the stay” and noted that the lien claimants could have commenced legal actions to recover damages from the property owner even though the subcontractor had filed for bankruptcy.

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