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Eastern Concrete Materials, Inc v. Raritan Town Center

July 7, 2011

EASTERN CONCRETE MATERIALS, INC., PLAINTIFF,
v.
RARITAN TOWN CENTER, LLC, AND SHARP MANAGEMENT, LLC, DEFENDANTS-APPELLANTS, AND J.M. AHLE COMPANY, INC., DEFENDANT-RESPONDENT, AND RARITAN TOWN CENTER II, LLC, WACHOVIA BANK, N.A., CONTEK INTERNATIONAL, INC., TITAN FORMWORK SYSTEMS, LLC, ULMA FORM WORKS, INC., AND THE DYNAMIC COMPACTION COMPANY, INC., DEFENDANTS.
J.M. AHLE COMPANY, INC., THIRD-PARTY PLAINTIFF/RESPONDENT,
v.
LIBERTY MUTUAL INSURANCE COMPANY, THIRD-PARTY DEFENDANT/APPELLANT.



On appeal from the Superior Court of New Jersey, Law Division, Somerset County, Docket No. L-623-06.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued October 20, 2010

Before Judges Fuentes, Gilroy and Nugent.

This action involves the enforcement of a non-residential construction lien pursuant to the New Jersey Construction Lien Law (CLL or the Act), N.J.S.A. 2A:44A-1 to -38.*fn1 Defendant Raritan Town Center, LLC (RTC), defendant Sharp Management, LLC (Sharp), and third-party defendant Liberty Mutual Insurance Company (Liberty Mutual) (collectively, the appellants) appeal from the May 29, 2009 order that entered judgment against them in the amount of $305,724.88. We affirm in part, reverse in part, and remand for further proceedings consistent with this opinion.

I.

RTC is the owner of a tract of property in the Township of Raritan (the property). RTC constructed a large apartment building and garage upon the property (the project). RTC engaged Sharp as the general contractor for the project; Sharp engaged Contek International, Inc. (Contek) to perform certain concrete work on the project; and Contek, in turn, engaged J.M. Ahle Company, Inc. (JMA) to provide rebar (steel reinforcement supports) for the project.

On April 26, 2006, Eastern Concrete Materials, Inc. (Eastern), the supplier of ready-mixed concrete construction materials for the project, filed a complaint seeking to enforce its construction lien claim against RTC, Sharp, JMA, Contek, and other parties possessing a possible interest in the property. On July 18, 2006, JMA filed an answer and counterclaim, together with a cross-claim against RTC, Sharp, and other defendants, seeking to recover under the construction lien it filed on December 2, 2005 (first count); and under the principles of unjust enrichment and breach of contract (counts two and three, respectively). Because Sharp had filed a lien discharge bond issued by Liberty Mutual as surety, JMA filed a third-party complaint against Liberty Mutual seeking to recover under the bond. During the course of the action, all other claims of the parties, except JMA's construction lien claim, including the claim under the bond, were either settled or dismissed by summary judgment. Following a multi-day bench trial, the court entered the order appealed from, supported by a written decision of March 31, 2009.

II.

On October 28, 2004, RTC entered into a contract with Sharp for Sharp to serve as the general contractor of the project. Under the contract, RTC agreed to pay Sharp $35,543,755, plus the costs of any changes to the project requested by RTC.

The contract obligated RTC to make progress payments to Sharp during the course of the construction. To receive a progress payment, Sharp had to submit a payment application specifying the amount of construction completed during that period. Significantly, Sharp was required to state on the application "the percentage of completion of each portion of the [construction] work as of the end of the period covered" by the application. Thus, to obtain a progress payment from RTC, Sharp's project manager needed to certify the percentage of work completed by the various subcontractors to RTC.

On October 18, 2004, Sharp sent a letter agreement to Contek selecting Contek to perform certain concrete work on the project "in accordance with the General Contract Documents between Contractor and Owner and the subcontract agreement provided by the Contractor." Kianoush Rasekhi, who owned 50% of Contek, executed the letter agreement on October 29, 2004. The contract provided that Contek would perform the concrete work for $2,700,000, plus the costs of any additional work requested by Sharp. Subsequently, between December 2004 and October 2005, Sharp approved several change orders affecting the cost of the concrete work. Those additional changes totaled $65,073.46, increasing the contract amount to $2,765,073.46.

JMA, a supplier of materials to the construction industry, fabricates reinforcing steel and sells concrete related products. In January 2005, Contek engaged JMA to provide rebar needed to reinforce the concrete for the project. JMA had previously supplied material to Contek on several other construction projects. During 2005, at the same time JMA provided material to Contek for this project, it also supplied Contek with material to use on four other unrelated construction projects.

JMA manufactured and supplied the steel rebar and other related materials needed for the project. According to John E.Ahle, JMA's President, JMA did not enter into a formal contract with Contek because the project was not a "lump sum job," where the amount of reinforced concrete required could be accurately determined beforehand. Rather, Ahle "looked at all [JMA's] invoicing" for the material that JMA had supplied to Contek for the project.

JMA's involvement with Contek on the project followed an established pattern of conduct between the two companies. Contek would present RTC's construction plans to JMA, and JMA would send the plans to a "detailer," who estimated the amount and shape of the rebar required for the project. The detailer's estimates were then sent to RTC and Sharp for approval, following which Contek would confirm the order, and JMA would manufacture the rebar. JMA did not manufacture the rebar all at once, but instead did so in stages at Contek's request.

After its manufacture, JMA delivered the rebar to the property by truck, where Contek's employees unloaded it. At that time, a Contek employee would sign a delivery slip for the load, verifying receipt of the material. This delivery slip contained an order number, delivery date, specification of the material ordered, quantity of material, name of party to whom the materials were delivered, and name of construction project; however, the slip did not contain unit costs or a total pricebecause, according to Ahle, most customers did not want the prices known to third parties on a job site. After delivery, JMA's driver would return the signed delivery slip to JMA, and JMA would then ...


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