NRG REMA LLC, and BTU SOLUTIONS GROUP, LLC, Plaintiffs-Appellants,
CREATIVE ENVIRONMENTAL SOLUTIONS CORP., and SITE ENTERPRISES, INC., Defendants-Respondents, and SIMS METAL EAST LLC, d/b/a SIMS METAL MANAGEMENT, WESTERN OIL FIELDS SUPPLY COMPANY, d/b/a RAIN FOR RENT, ACCREDITED ENVIRONMENTAL TECHNOLOGIES, INC., MINERVA ENTERPRISES, LLC, and ANI & JOE ABATEMENT DEMOLITION, LLC, Defendants. CREATIVE ENVIRONMENTAL SOLUTIONS CORP., Plaintiff-Respondent/ Cross-Appellant,
NRG REMA LLC, a/k/a NRG ENERGY and BTU ENVIRONMENTAL SOLUTIONS LLC, a/k/a BTU SOLUTIONS GROUP, BTU SOLUTIONS DE, LLC, BTU STATE LINE, LLC, BTU PROJECT MANAGEMENT, LLC, BTU ENVIRONMENTAL SERVICES, LLC, and BTU SOLUTIONS GROUP, LLC, Defendants-Appellants/ Cross-Respondents, and SITE ENTERPRISES, INC., Defendant-Respondent, and SIMS METAL EAST LLC, d/b/a SIMS METAL MANAGEMENT, ACCREDITED ENVIRONMENTAL TECHNOLOGIES, INC., ATLANTIC COAST DISMANTLING, LLC, and JARED ROSSI, Defendants.
January 8, 2018
appeal from Superior Court of New Jersey, Law Division,
Middlesex County, Docket Nos. L-3587-15 and L-0344-15.
J. O'Leary argued the cause for appellants in A-5432-15
and appellants/ cross-respondents in A-0567-16 (Connell Foley
LLP, attorneys; Thomas J. O'Leary, of counsel and on the
briefs; Mitchell W. Taraschi and Lauren F. Iannaccone, on the
S. Perlman of the New York bar, admitted pro hac vice, argued
the cause for respondent Creative Environmental Solutions
Corp. in A-5432-15 and respondent/cross-appellant in
A-0567-16 (Cutolo Barros LLC and Daniel S. Perlman,
attorneys; Gregg S. Sodini, of counsel; Daniel S. Perlman and
Greg S. Sodini, on the briefs).
Mitchell J. Malzberg argued the cause for respondent Site
Enterprises, Inc. in A-5432-15 and A-0567-16 (Law Offices of
Mitchell J. Malzberg, LLC, attorneys; Mitchell J. Malzberg
and Jodelyn S. Malzberg, on the briefs) .
Judges Sabatino, Ostrer and Whipple.
related appeals, consolidated for our opinion, raise a novel
issue under the Construction Lien Law (CLL), N.J.S.A.
2A:44A-1 to -38, pertaining to the demolition, not the
construction, of a structure. In particular, we must decide
whether the value of salvage recovered by the demolition
contractor enlarges the lien fund available to unpaid
subcontractors who file lien claims.
contract at issue did not require the property owner to pay a
fixed price to the prime contractor for the demolition.
Instead, the contractor paid the owner for the right to
demolish the building and to salvage materials. We conclude
the ultimate market value of the salvage materials,
transferred to the contractor in return for its demolition
work, constitutes an element of the "contract price,
" N.J.S.A. 2A:44A-2, and enhances the size of the
"lien fund" available to lien claimants, N.J.S.A.
2A:44A-9. However, the net value of the fund is reduced by
the contractor's cash payment to the owner. We also hold
that the CLL requires a signatory of a corporation's lien
claim to demonstrate he or she is a corporate officer
pursuant to the corporation's bylaws or board resolution.
therefore modify the trial court order that the lien fund
here consisted of the value of the salvage ultimately
retrieved from the demolition site; and reverse the order
that an employee of one of the lien claimants informally
designated a "financial director" had sufficient
authority to file a lien claim on behalf of his employer. We
also affirm the trial court's denial of attorney's
fees to one of the lien claimants.
litigation arises out of the demolition of a power generating
station in South Amboy known as the Werner Generating
Station. NRG REMA, LLC (NRG) is the property owner.
sought bids from firms willing to undertake the demolition
project. Some bidders wanted NRG to pay them from $400, 000
to $6.6 million to demolish the generating station. Six
others were willing to pay for the right to demolish the
structure, offering $250, 000 to $1.4 million. Those bidders
counted on profiting from the resale of salvaged metals and
equipment. But that upside was fraught with risk. It was
difficult to estimate the amount of such material, and the
ease of extracting it. NRG made no promises on that score.
selected Werner Deconstruction, LLC (Werner), which agreed to
pay NRG $250, 000 and to demolish the generating station, in
return for the salvage. NRG claims it rejected more
remunerative bids than Werner's because of its
demonstrated capacity to finish the job on time. According to
their contract, title to "Salvage Materials" -
defined as "equipment, parts, components and materials .
. . to be salvaged during demolition, excavation or other
operations" - vested in Werner when it paid NRG, which
it evidently did on May 10, 2012. If NRG terminated the
contract for cause, title to all Salvage Materials remaining
on site would revert to NRG. NRG also retained a security
interest in the Salvage Materials, which NRG could exercise
if it terminated the contract while Werner was in bankruptcy.
Werner posted a $2 million letter of credit, upon which NRG
could draw if Werner defaulted. The prime contract imposed no
payment obligation on NRG after it conveyed title to the
value of the Salvage Materials was a factor in the
parties' respective rights and duties if NRG terminated
the contract for cause. Werner would be liable for NRG's
costs of completion, minus revenue NRG reasonably obtained
for the remaining Salvage Materials. Werner would also be
entitled to a credit for its pre-termination costs, minus
revenue it realized from the Salvage Materials.
days after executing the prime contract, Werner subcontracted
with BTU Solutions DE, LLC (BTU). Essentially, BTU stepped
into Werner's shoes to perform the prime contract. BTU
initially projected that costs of roughly $4.5 million would
generate $13 million in salvage-related revenue.
did not turn out that way. BTU overestimated the amount of
salvageable metal and equipment, and underestimated the cost
of recovery. Some copper cable that BTU expected to find
apparently already had been removed from the long-defunct
station. Other cable was encased in asbestos and more costly
than anticipated to salvage. Extraction of steel from the
site was also more complicated than anticipated. Shortfalls
in the revenue stream that BTU anticipated would fund its
expenses, required BTU to borrow working capital, incurring
Superstorm Sandy hit in October 2012. The site filled with
salt water, destroying otherwise salvageable equipment,
dispersing asbestos throughout the site, and further
complicating remediation. Several months thereafter, BTU
entered into its subcontract with Site Enterprises, Inc.
(Site), which agreed to perform demolition work after the
storm in return for $3.7 million.
struggled to pay its subcontractors, including Site. On
December 26, 2013, Site filed a lien claim for $450, 000,
asserting it had not been paid, and ceased
work. BTU did not begin selling significant
quantities of Salvage Materials until 2014.
March 2014, BTU contracted for environmental consulting
services from Creative Environmental Solutions Corp.
(Creative). Before a year passed, Creative filed its lien
claim on December 24, 2014 in the amount of $350, 000. It was
signed by Ross Sikarev. He was Creative's "financial
director, " a title he received at an informal dinner
meeting with Creative's president, Victoria Drozdov. No
formal meeting of Creative's board, amendment to its
by-laws, or corporate resolution confirmed Sikarev's
authority to sign a lien claim on Creative's behalf.
NRG-Werner contract, and the Werner-BTU subcontract required
Werner and BTU to ensure the project was lien-free. However,
neither company paid Site's and Creative's lien
Site's lien filing, but before Creative's, BTU
removed over 8000 tons of ferrous metal, for which it
received $2, 093, 014. After Creative's lien claim, BTU
removed just 181 more tons of ferrous material. The record
indicates that BTU received $29, 418 in return.
in April 2 014, Werner submitted a change order for $52, 427
for removing oil from the project. NRG approved it over a
Creative filed an action to foreclose on its lien against
NRG's property (No. A-0567-16). Thereafter, NRG and BTU
filed a declaratory judgment action (No. A-5432-15) against
Creative, Site and others, to establish that the lien fund
was limited to $52, 427, the change order amount. The trial
court consolidated the two actions.
motion practice, the trial court concluded that the lien fund
was $2, 093, 014, rather than $52, 427 as NRG contended.
Furthermore, the judge rejected NRG's argument that
Creative's lien was invalid because an authorized officer
did not sign it. Consistent with those findings, the court
granted Creative summary judgment in its action against NRG
and BTU, entitling Creative to a lien of $350, 604 plus
interest, and entitling it to foreclose on NRG's
property. The court denied NRG's cross-motions for
summary judgment for a declaration that the lien fund was
limited to $52, 427. Although the court initially granted
Creative's request for counsel fees under N.J.S.A.
2A:44A-15(a), the court vacated the order upon NRG's
motion for reconsideration.
now jointly appeal the trial court's rulings concerning
the value of the lien fund as to Site and Creative. They also
appeal the trial court's ruling as to the propriety of
Creative's signatory on its lien claim. Creative
cross-appeals the denial of its motion for counsel fees. Site
is solely a co-respondent and has not sought any affirmative
relief on appeal.
exercise de novo review of the trial court's grant of
summary judgment, and apply the same standard as the trial
court. Henry v. N.J. Dep't of Human Servs., 204
N.J. 320, 330 (2010). Issues of statutory construction are
likewise subject to our plenary review. Cashin v.
Bello, 223 N.J. 328, 335 (2015).
interpret the CLL in a "nuanced way." See Craft
v. Stevenson Lumber Yard, Inc., 179 N.J. 56, 67 (2004).
It is "something of an overstatement" to simply say
we must strictly construe the statute because it is in
derogation of common law. Ibid. We must read the
statute "sensibly, " mindful of its underlying
goals and policies. Id. at 68; see also Thomas
Group, Inc. v. Wharton Senior Citizen Hous., Inc., 163
N.J. 507, 517 (2000).
also guided by more general principles of statutory
construction that require us to discern the Legislature's
intent by focusing first on the plain language of the
statute. If the meaning is plain, our job is done. In re
Kollman, 210 N.J. 557, 568 (2012). However, if it is
not, we may resort to extrinsic legislative materials for
guidance. Ibid. We may also consider such materials
if the plain meaning would lead to an absurd result,
State v. Harper, 229 N.J. 228, 237 (2017), or would
violate "the overall statutory scheme . . . ."
DiProspero v. Perm, 183 N.J. 477, 493 (2005).
are two, sometimes competing, goals of the CLL: to provide a
source of security to those who provide construction services
and materials, and to protect property owners who have met
The main purpose of the CLL - to help secure payment to
contractors, subcontractors, and suppliers who provide work,
services, material, or equipment pursuant to a written
contract - is achieved by empowering them to file lien claims
and thus protect the value of the work and materials they
have provided. A secondary goal of the Act is to ensure the
rights of property owners who have met their financial
obligations and to preclude imposing upon them the burden of
double payment for work and materials.
[Craft, 179 N.J. at 68 (citations
See also Legge Indus, v. Joseph Kushner Hebrew
Acad., 333 N.J.Super. 537, 555 (App. Div. 2000) (stating
that "[t]he Lien Law attempts to protect both the owner
and the supplier, " and a court must "balanc[e] the
competing interests in the light of the ...