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Tropp v. Distinctive Pools, Inc.

A-5659-04T1 (N.J. Super. App. Div. 2006) (Unpublished)

CONTRACTORS; LIENS—A construction lien claimant is required to file a discharge of record when the claim has been paid, satisfied , settled or forfeited and failure to do so makes the claimant liable for court costs and attorneys fees.

A dispute arose about the quality of the work and the outstanding balance with respect to the construction of an in-ground swimming pool. The contractor filed a Notice of Unpaid Balance/Right to File Lien Form and a Construction Lien Claim Form with the County Clerk. Both the Notice and Construction Lien were filed too late. The homeowners became aware of the lien while refinancing a mortgage. An accord and satisfaction was reached between the parties and it was memorialized in a letter from the contractor. In full settlement of the outstanding bill, the homeowners, who were professional printers, agreed to pay a fixed sum of money and also print a four-page brochure. The pool contractor agreed to release its lien on the property “once the bill [was] paid.” The money was paid, but the lien was not discharged. When the homeowner again refinanced their mortgage, the lien still appeared of record. The homeowner’s attorney wrote to the contractor, “explaining that the lien was procedurally defective as untimely filed ... and not timely enforced.” The pool contractor’s response was that it would release the lien if the homeowners would agree in writing to print the brochure. The homeowners sued to have the lien discharged and for counsel fees. The lower court looked at the settlement agreement and, finding that no counsel fees had been provided in the settlement agreement, would not award such fees to the homeowners. The homeowners asked for reconsideration, arguing “they were statutorily entitled to counsel fees and costs because the notice and lien claim were filed more than ninety days after the date of last worked performed, ... because [the pool contractor] did not enforce its lien within a year of the last work, ... and because [the pool contractor] did not discharge the lien after the [money] was paid.” The Court again held that the settlement agreement superceded the pool contractor’s “statutory obligation to sue, and because it did not provide for counsel fees, [the homeowners were] not entitled to them.”

On appeal, the Court believed that even if it “were to construe the settlement agreement as a waiver by [the homeowners] of their right to challenge the defective nature of the notice and lien claim, [the homeowners were] still entitled to [statutory] counsel fees ... based on [the pool contractor’s] failure to discharge the construction lien after receipt of the settlement check.” It felt that if the pool contractor’s “president had considered the brochure to be an integral term of the settlement, she surely would have followed up with the more than two vague phone calls of unidentified dates and would have a submitted a brochure to the [homeowners] for printing. Her inaction undercut[] [the pool contractor’s] position and evidence[d] the minor role that [the pool contractor] considered the brochure to play in the context of the settlement.” A New Jersey statute “requires a lien claimant to file a discharge of record when the claim has been ‘paid, satisfied, or settled by the parties or forfeited by the claimant.’” Failure to do so rendered the lien claimant liable for court costs and counsel fees.

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