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Strike Associates, LLC v. Art Semeraro Construction Company, Inc.

A-27-02T5 (N.J. Super. App. Div. 2003) (Unpublished)

ARBITRATION; CONSTRUCTION LIENS—Even in the context of resolving a construction lien dispute, an arbitrator’s decision will be honored absent fraud, corruption or undue influence and silence by an arbitrator as to whether there was a wilful misstatement of a contractor’s claim is to be taken as a finding that there was not.

A construction company filed a construction lien claim against a developer for the balance it was owed pursuant to a contract between them. After the construction company filed a lawsuit, the parties agreed to submit the matter to binding arbitration. The construction company and developer agreed that the arbitrator was not required to issue findings of fact or conclusions of law when rendering his decision. The arbitrator awarded damages to the construction company and directed the construction company to pay a portion of its award to a subcontractor in payment of its bill.

The developer sued to have the arbitration award modified or vacated. The lower court rejected the claim, on summary judgment, in favor of the contractor. It noted that since the arbitrator was not required to issue findings or fact or conclusions of law, the court’s review of the award was limited. Voluntary arbitration awards may only be vacated for fraud, corruption or other wrongdoing and the developer did not prove any fraud, corruption or undue influence by the arbitrator. The Appellate Division affirmed.

The developer also claimed that the arbitration award should have been vacated because the construction company’s lien claim was illegal. The Construction Lien Law requires a contractor to file a lien claim for the amount owed under a contract, but limited to the amount owed for work actually performed. A lien claim may be forfeited if a contractor, in bad faith, submits an inflated lien claim. However, if the contractor had a good faith basis and the amount of the lien claim was roughly equivalent to the amount the contractor was entitled to collect, a lien will not be vacated. The arbitrator did not expressly state that there was no willful overstatement, but the Appellate Division assumed that by not addressing it, the arbitrator determined there was none. The developer also claimed that the arbitrator exceeded his authority by awarding damages to the subcontractor. The Court noted that the subcontractor was being paid from the money awarded to the construction company and it was not an additional cost to the developer.

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