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J.R.H. Electrical-Mechanical Contracting Corp. v. Coast Lumber and Supply Co.

Decided: April 1, 1991.

J.R.H. ELECTRICAL-MECHANICAL CONTRACTING CORP., A NEW JERSEY CORPORATION, PLAINTIFF-APPELLANT,
v.
COAST LUMBER AND SUPPLY COMPANY, INC., A NEW JERSEY CORPORATION, DEFENDANT. TOMS RIVER WATER CO., A NEW JERSEY CORPORATION, DEFENDANT/THIRD-PARTY PLAINTIFF-RESPONDENT, V. C.L.S. CONSTRUCTION MANAGEMENT CO., THIRD-PARTY DEFENDANT



On appeal from the Superior Court, Law Division, Ocean County.

King, Long and R.s. Cohen. The opinion of the court was delivered by R.s. Cohen, J.A.D.

Cohen

This is an action on a mechanic's lien. Summary judgment was entered dismissing the action on the thesis that the lien was invalid because, contrary to N.J.S.A. 2A:44-71, the copy of the mechanic's notice of intention required to be served upon the owner was served more than 5 days after filing of the notice with the county clerk. Plaintiff appealed, and we reverse.

On October 7, 1988, plaintiff agreed to do electrical subcontracting for the general contractor on a construction project for defendant Toms River Water Company ("the owner"). On November 1, 1988, plaintiff filed in the county clerk's office a notice of intention to perform work and furnish materials, pursuant to N.J.S.A. 2A:44-71. The statute requires that a copy of the notice of intention shall be served on the owner within 5 days of filing, but plaintiff did not serve the owner until November 28, 1988. Plaintiff finished its work on the job

around February 20, 1989, but was paid only $22,000 of its total contract claim of some $51,000.

Plaintiff sued the general contractor on the contract and sued the owner to establish the mechanic's lien.*fn1 The owner denied the validity of plaintiff's lien. It also crossclaimed for indemnity from the general contractor, contending that it had fully paid the general contractor, which should have paid plaintiff.

The mechanic's lien law permits a subcontractor or material supplier to file and serve a notice of intention to perform labor or furnish materials to a construction job. The result is a lien on the real estate to secure payment for work and materials, which is enforced by prosecuting a timely suit for the unpaid contract amounts. N.J.S.A. 2A:44-91. The purpose is to assure that the subcontractor or material supplier is paid by the general contractor out of sums it receives from the owner. If a notice of intention is properly filed and served, an owner that pays the general contractor runs the risk that an unpaid subcontractor or material supplier will have a lien on the owner's property for work or materials supplied after the filing of the notice. An owner can avoid that danger. It can insist on release or discharge of the mechanic's lien as a condition of paying the general contractor. It might take a chance on payment certifications from the general contractor, or it might make payments directly and receive credit from a consenting general contractor.*fn2

The relevant parts of N.J.S.A. 2A:44-71 are:

Except as hereinafter in this section and in section 2A:44-75 of this Title provided, no one shall be entitled to a lien under the provisions of this article for

any labor performed or materials furnished prior to the filing, in the office of the proper county clerk, of a mechanic's notice of intention to perform such labor or furnish such materials.

A copy of the mechanic's notice of intention shall be served, within 5 days of such filing, upon the owner of the premises, of the land described therein, personally or by registered or certified mail, at his last known address, and unless such notice be so served upon the said owner, ...


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