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Hirsch v. H & D Prime Construction

April 13, 2009

LINDA M. HIRSCH, AS TRUSTEE OF THE LINDA M. HIRSCH FAMILY TRUST DATED OCTOBER 21, 2005, LINDA M. HIRSCH, SETTLER & TRUSTEE, PLAINTIFF-APPELLANT,
v.
H & D PRIME CONSTRUCTION, INC., DEFENDANT-RESPONDENT.



On appeal from the Superior Court of New Jersey, Chancery Division, Monmouth County, Docket No. C-343-06.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued December 15, 2008

Before Judges Carchman and Simonelli.

Plaintiff Linda M. Hirsch, as Trustee of the Linda M. Hirsch Family Trust dated October 21, 2005, Linda M. Hirsch, Settler & Trustee, appeals from the Chancery Division order granting summary judgment to defendant H & D Prime Construction, Inc., fixing and establishing it's entire $146,323 construction lien claim against her property pursuant to the Construction Lien Law (CLL), N.J.S.A. 2A:44A-1 to -38. We reverse and remand for a proof hearing to fix and establish that amount of the lien claim attributable to the labor and materials defendant provided to plaintiff's home.

The facts are undisputed. Kara at the Tradewinds, L.L.C. (Tradewinds) owned property in Sea Bright on which it developed twenty upscale, single-family homes. Tradewinds offered potential purchasers several model homes from which to choose, with varying price ranges.

On or about July 1, 2003, Tradewinds entered into a contract with plaintiff and Kevin Hirsch for the purchase of property described as Job #1016, Block 4, Lot 7.23 for $1.4 million. Plaintiff chose the "St. Simmons" model home. She paid a $210,000 deposit, which was not placed in escrow.

In April 2005, defendant entered into a Master Subcontractor Agreement -- Large Single Family (MSA) with Kara Homes, Inc. (Kara), the project's general contractor. Pursuant to the MSA, defendant agreed to provide labor and materials for the installation of siding and/or stucco on some of the homes in the project. The MSA required a set of plans for each home. It also required that a "siding plan meeting must be held at the start of each job to review the methods and means of how each home will be completed."

The MSA also provided that defendant would be paid in accordance with a price list for the siding or stucco it installed on each home. For example, for "The Avalon" model home, defendant would be paid $41,978 for siding or $16,980 for stucco work; for the "St. Simmons" model home, defendant would be paid $38,650 for siding or $13,035 for stucco work. To receive payment, the MSA required defendant to "bill each job on a separate invoice." Each invoice had to contain, among other things, a separate job and invoice number corresponding to each lot on which defendant worked. The MSA also contained other provisions permitting Kara to deduct payments or offset from any balance owed to defendant.

Defendant provided labor and materials for thirteen of the twenty homes in the project, but only received payment for four. As required by the MSA, defendant invoiced each job separately by job number corresponding to each property and by model type. Each invoice indicated the type of material installed, i.e. either siding or stucco, and the price, which corresponded to the model type on the price list. The invoice for plaintiff's home indicates that defendant installed stucco at a cost of $13,035.

Defendant last performed work on the project on August 19, 2006. By that time, Tradewinds had transferred title to all but three of the twenty properties in the project. Defendant had provided labor and materials for two of those remaining properties, which included plaintiff's property.

On September 12, 2006, defendant filed a Notice of Unpaid Balance and Right to File Lien (NUB) pursuant to the CLL, seeking to perfect a lien on the two remaining properties in the amount of $146,322.*fn1 On September 26, 2006, defendant filed a demand for arbitration.

Plaintiff proceeded to close title on October 2, 2006, with knowledge of defendant's NUB. Plaintiff also knew that there would be no proceeds available to satisfy defendant's lien and that the home was unfinished. She gave Tradewinds and Kara a release of, and indemnification for, defendant's lien. She also offered defendant $6500 to resolve the lien, which defendant rejected. Three days later, Tradewinds and Kara filed voluntary petitions under Chapter 11 of the Bankruptcy Code.*fn2

On October 26, 2006, an arbitrator issued an award finding defendant's lien claim valid in the amount of $146,323. On November 6, 2006, defendant filed a construction lien ...


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