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February 2016

Gordon & Rees New Jersey Team Obtains Summary Judgment Dismissal for Construction Lien Clearinghouse Firm

Gordon & Rees New Jersey partner Peter G. Siachos and associate Matthew P. Gallo obtained complete dismissal of a professional negligence action filed against their client, a construction lien clearinghouse, on a motion for summary judgment. The plaintiff, a commercial contractor, installed the roof and performed masonry work on the Monroe Center for the Arts in Hoboken, NJ. When the developer of the Monroe Center failed to pay the plaintiff for the work performed, the plaintiff retained the construction lien clearinghouse to place a construction lien on the property. The plaintiff provided the address and owner of the property and allegedly relied on the client to place the lien on the proper lot and block number and to provide the correct metes and bounds description. However, as a major development, several LLCs with similar names owned different portions of the property, which is an amalgamation of numerous former industrial sites. The lien was placed on the wrong property, but the parties hotly disputed as to how this error occurred. A few weeks after the lien was placed, the plaintiff retained a co-defendant law firm, who attempted to foreclose on the lien and filed the foreclosure action on the wrong property as well. At this point, the plaintiff then was time-barred by statute from attempting to correct the lien and from foreclosing on the correct property.  

Gordon & Rees initially won summary judgment in early January 2016. The plaintiff brought a motion to vacate and for reconsideration, which the court granted, vacating summary judgment, and allowing reargument. After more than an hour of oral argument, the court again granted summary judgment for the client in a factually rich decision, accepting each of the client’s arguments in favor of dismissal. The Court found that despite being experts in the construction lien business, it was not the client’s duty to check whether the plaintiff provided the proper name and address for the subject property. Furthermore, despite the fact that the plaintiff did not fully complete the client’s written form for requesting the issuance of a lien, the Court found that the disclaimer and limitation of liability clause on the form applied to the plaintiff. Additionally, the Court accepted Gordon & Rees’ argument that the intervening negligence of the law firm that attempted to foreclose on the wrong property absolved the client of any wrongdoing, as the co-defendant law firm had the last chance to correct the error. Finally, the Court held that a $20,000,000 first lien on the property would have left no equity or funds available for the plaintiff even if the lien had been property filed, despite the fact that a substantially similar argument by the co-defendant law firm was rejected. Though the co-defendant also moved for summary judgment, the client was the only party that obtained summary judgment, and the case against the client was dismissed with prejudice.

Matthew P. Gallo
Peter G. Siachos