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Hi-Tech Steel Erectors, Inc. v. TLC Drywall Construction

January 5, 2010

HI-TECH STEEL ERECTORS, INC., A NEW JERSEY CORPORATION, PLAINTIFF-APPELLANT,
v.
TLC DRYWALL CONSTRUCTION, DEFENDANT, AND XL SPECIALTY INSURANCE COMPANY AND XL INSURANCE COMPANY, DEFENDANTS-RESPONDENTS.



On appeal from the Superior Court of New Jersey, Law Division, Essex County, Docket No. L-7233-06.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted December 9, 2009

Before Judges Sabatino, Lyons, and J. N. Harris

This appeal arises out of unpaid work performed by plaintiff Hi-Tech Steel Erectors, Inc. ("Hi-Tech"), on the construction of a police station. Plaintiff filed suit against two sureties that had issued bonds for the project. The Law Division dismissed plaintiff's complaint for failure to comply with the requirements of the Public Works Bond Act, N.J.S.A. 2A:44-143 to -147 (the "Bond Act"). The court also denied plaintiff's late request to amend its complaint to name the project's general contractor as a defendant in the surety action, and to reinstate another subcontractor as a defendant. Reconsideration was denied.

Plaintiff now appeals the trial court's various orders denying it relief. We affirm.

I.

These are the pertinent facts, and the relevant procedural events. On March 30, 2004, the City of East Orange entered into a contract with a general contractor, Imperial Construction Group, Inc. ("Imperial"), to build a new police station. On that same day, defendants XL Specialty Insurance Company and XL Insurance Company ("the Sureties") issued both a performance bond and a payment bond for the project in the amount of $11,615,314, for which they were listed as the "Surety." Imperial was the "Contractor" named on the bonds and the City of East Orange was identified as the "Owner" and named as obligee for the bonds.

The payment bond allowed claimants who had not been paid by Imperial within ninety days of completion of work on the project to "sue on this bond for the use of such claimant, prosecute the suit to final judgment for each sum or sums as may be justly due claimant, and have execution thereon." Such claimants were defined in the bond as "one having a direct contract, with a subcontractor for labor, material, or both, used or reasonably required for use in the performance of the contract . . . [.]" However, suit under the bond was prohibited unless certain criteria were met by the claimant. Specifically, any such lawsuit was required to be brought in a "court of competent jurisdiction in and for the county or other political subdivision of the state in which the project, or any part thereof, is situated, or in the United States District Court for the district in which the project, or any part thereof, is situated[.]" Such an action was also required to be brought prior to: the expiration of one (1) year following the date on which Contractor ceased work on said contract, it being understood, however, that if any limitation embodied in this bond is prohibited by law controlling the construction hereof, such limitation shall be deemed to be amended so as to be equal to the minimum period of limitation permitted by such law. [(Emphasis added).]

Moreover, the payment bond prohibited suit by a claimant against the Surety:

Unless claimant, other than one having a direct contract with the Contractor, shall have given written notice to any of the following: the Contractor, the Owner or the Surety above named, within ninety (90) days after such claimant did or performed the last of the work or labor, or furnished the last of the materials for which said claim is name[d], stating with substantial accuracy the amount claimed and the name of the party to whom the materials were furnished, or for whom the work or labor was done or performed. [(Emphasis added).]

In May 2004, Imperial entered into a subcontract with defendant TLC Drywall ("TLC") to provide various types of construction and carpentry work on the project, in return for payment of $928,000. TLC's work was to include "[e]xterior soffits framing and sheathing" and "[i]nterior soffits[.]" Under its agreement with Imperial, TLC was permitted to subcontract out its work, with the understanding that it "shall not subcontract any portion of the labor or materials involved in the work under this Subcontract without first obtaining written approval of its prospective subcontractor or supplier by the Contractor."

Five months after Imperial's subcontract with TLC was executed, on October 22, 2004, Imperial entered into a subcontract with plaintiff ("the Imperial/Hi-Tech contract") to perform other steel work on the project.*fn1 Plaintiff alleges that it commenced work on the project immediately.

According to plaintiff, in January 2005 its site supervisor, Pat Cianicullo, was approached by a representative from Imperial at the project site. The representative, Joseph Richardi, a supervisor for Imperial, allegedly "requested [plaintiff's] assistance in constructing a steel soffit for the [project]." Richardi explained to Cianicullo that TLC "did not have the expertise to construct and install the soffit and [that he] wanted [p]laintiff to do the job but bill TLC Drywall for payment." According to Cianicullo, Richardi further stated that "[p]laintiff would be paid when Imperial was paid by East Orange, through [TLC]."

On January 15, 2005, plaintiff and TLC entered into a written contract for the soffit work to be performed by plaintiff instead of TLC ("the TLC/Hi-Tech Contract").*fn2 Pursuant to that agreement, plaintiff completed this particular soffit work on February 5, 2005. However, plaintiff continued its other work on the site under its subcontract with Imperial.

In November 2005, after TLC had failed to pay plaintiff the $26,200 that plaintiff claimed was due under the TLC/Hi-Tech Contract, plaintiff filed a notice of an unpaid balance and an asserted ...


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