EIFS litigation is no stranger to New Jersey. EIFS (or “exterior insulation and finish system”) – a popular, post-World War II building system that resembles stucco while simultaneously providing watertight exterior insulation – originated in Europe and migrated to American homes in the late 1960s and early 1970s. According to The New York Times, it was utilized in the construction of “countless homes built in New Jersey,” which meant that the state was deeply affected when it became evident that, installed in a certain way, EIFS trapped water behind its siding and led to crumbling wall sheathing and rampant mold. Nationwide lawsuits ensued and, while a class action settlement was eventually reached with the largest EIFS manufacturer in 2003, New Jersey courts – at every level – returned to EIFS litigation again and again.
In a recent unpublished opinion, the Appellate Division ruled that, although an arbitrator may modify an award to fix technical errors, he cannot include relief for claims not addressed in the original award, even if the failure to address those claims was due to an oversight by the arbitrator. In Merion Construction Management, LLC v. Kemron Environmental Services, Inc., subcontractor Kemron commenced arbitration alleging that although Kemron had substantially performed its obligations, contractor Merion had not paid its invoices. The arbitrator agreed with Kemron and awarded $873,758.56.
The Limited “Refund” Remedy Under the New Jersey Consumer Fraud Act Does Not Apply to Violations of the Home Improvement Practices or Home Improvement Contractor Registration Regulations
The New Jersey Consumer Fraud Act (“CFA”) provides powerful remedies that can be used by aggrieved parties to a construction contract. While the treble damages and attorneys’ fees remedies have traditionally received greater attention by parties and the courts, the CFA also references a refund remedy in N.J.S.A. §§ 56:8-2.11, -2.12 that aggrieved consumers have relied upon to seek refunds of amounts paid under construction contracts that violated the CFA, particularly where they had not been able to demonstrate an ascertainable loss entitling them to treble damages. However, the recent Appellate Division decision in Logatto v. Lipsky effectively eliminates the availability of the refund remedy in virtually all CFA cases, including cases arising out of construction contracts, as well as those involving alleged violations of the Home Improvement Practices and Home Improvement Contractor Registration regulations.
Prejudgment Interest on Claims for Consequential Damages for Breach of Contract are not Recoverable as of Right Under Pennsylvania Law
Parties often specify in their construction contracts what amounts are recoverable for various events of breach. These provisions can impact not only the award of damages, but also whether amounts should be added to the award for recovery of prejudgment interest under Pennsylvania law. In Cresci Construction Services, Inc. v. James H. Martin, the Pennsylvania Superior Court considered the circumstances under which recovery of prejudgment interest is mandatory as opposed to discretionary. In that case, the plaintiff contractor brought suit against the defendant homeowner, and the homeowner counterclaimed for breach of contract.
New Jersey’s Prompt Payment Act (“PPA”) can be a valuable tool available to contractors, subcontractors, sub-subcontractors, and product suppliers that are owed money on New Jersey construction projects, as aggrieved parties can recover interest on unpaid amounts at prime plus one (1%) percent in the event payment is not made within the time period provided by the PPA and attorneys’ fees. N.J.S.A. § 2A:30A-2. In TBI Unlimited, LLC v. Clearcut Lawn Decisions, LLC, the United States District Court for the District of New Jersey considered the scope of the PPA, which is only the subject of a handful of written opinions.
New York’s mechanic’s lien law sets forth seven items that must be included in a claimant’s notice of lien. See New York Lien Law § 9. While the statute states that the lien notice “shall” include each of the seven items, a recent New York Supreme Court decision demonstrates that failure to include one or more of these seven items can have varying consequences depending upon whether the omission is considered a substantial or a technical defect. See Avon Contractors v. D.C.M. of New York, LLC, et al. In Avon, plaintiff-general contractor D.C.M. of New York, LLC (“DCM”) moved to discharge a mechanic’s lien filed by subcontractor J.E. Berkowitz, L.P. (“JEB”), claiming that the notice of lien violated subdivisions 1 and 1-a of New York Lien Law Section 9 (which provides that a lien notice must include “1. The name and residence of the lienor; and if the lienor is a partnership or corporation, the business address of such firm, or corporation, the names of partners and principal place of business, and if a foreign corporation, its principal place of business within the state; [and] 1-a. The name and address of the lienor’s attorney, if any”). Specifically, DCM claimed JEB’s lien...
Trade Secrets Litigation: DuPont Wins Property from U.S. Subsidiary as Part of its $920M Damages Award Against the Parent
Kolon USA, Inc., the U.S. subsidiary of South Korea-based Kolon Industries Inc. (“Kolon”), recently was ordered by New Jersey District Court Judge Esther Salas to turn over its property to DuPont as part of DuPont’s efforts to enforce the $920 million damages award that DuPont won against Kolon during a 2011 trade secrets litigation in the Eastern District of Virginia.
A Contractor’s Repair Estimate Provides Evidence of an Ascertainable Loss Under the New Jersey Consumer Fraud Act
The New Jersey Consumer Fraud Act (“CFA”) allows parties to recover damages if they have suffered an ascertainable loss. See N.J.S.A. 56:8-19. In the recent decision from the New Jersey Appellate Division, Pope v. Craftsman Builders, Inc., the court considered the type of evidence that can provide proof of an ascertainable loss in the context of a CFA claim involving a construction project.
Third Circuit Affirms Plaintiffs’ Zero-Damages Antitrust Victory, Restricting the Scope of What Constitutes “Reliable” Expert Damages Data
The Third Circuit’s 94-page opinion in antitrust case ZF Meritor, LLC v. Eaton Corp., issued on September 28, 2012, offers something for everyone in its smorgasbord of holdings concerning the law of exclusive dealing, proof of damages, and Article III standing. The opinion is most notable for rejecting the notion that above-cost prices can render an otherwise unlawful exclusive dealing agreement lawful, reinforcing the viability of de facto exclusive-dealing arrangements under Sections 1 and 2 of the Sherman Act, and ratcheting up the gatekeeper role courts play under Daubert.
Second Circuit Holds That a Post-Disclosure Stock Price Rebound Does Not Per Se Preclude Damages for Alleged Federal Securities Fraud
Recently, the Second Circuit vacated a District Court’s dismissal of a securities fraud action brought by Acticon AG, shareholder of China North East Petroleum Holdings Ltd. (“NEP”), for failure to plead economic loss—a necessary element to maintain a private damages action under § 10(b) of the Securities Exchange Act of 1934 (“§10(b)”). Acticon had multiple opportunities to, but did not, sell its NEP shares at a profit after NEP’s disclosure of the alleged fraud. The Court held that economic loss is not conclusively negated at the pleadings stage where the price of a security recovers shortly after a disclosure of alleged fraud. Significantly, in drawing all reasonable inferences in favor of the plaintiff under NEP’s 12(b)(6) motion, the Court explained that a rise in the price of a stock following a corrective disclosure requires an inquiry into whether the security rose for “reasons unrelated to [the] initial drop,” and thus introduces factual questions and competing theories of causation that would be inappropriate to resolve on a motion to dismiss.