- The legal name and business address of the seller, including the legal name and business address of the sales representative or agent who solicited or negotiated the contract for the seller;
- The contractor’s Division of Consumer Affairs registration number and the DCA’s toll free telephone number must be prominently displayed on the first page of the contract;
- A copy of the Certificate of Commercial General Liability Insurance required of a contractor under the Act and the telephone number of the insurance company issuing the Certificate;
- A description of the work to be done and the principal products and materials to be used or installed in performance of the contract;
- The total price, including all finance charges and, where applicable, the hourly rate for labor;
- The start date and completion date;
- A description of any mortgage or security interest to be taken in connection with the financing or sale of the home improvement;
- A statement of any guarantee or warranty with respect to any products, materials, labor or services made by the contractor; and
- A precise and conspicuous notice of cancellation provision informing the customer of his or her right to cancel the contract by the end of the third business day after having received a copy of the contract.
I was reading Scott Wolfe’s (@scottwolfejr) post on whether or not builders are getting a free pass on Chinese Drywall claims and I began to think about how a class action lawsuit will help homeowners remedy the problems with their homes today.
Based on the uptick in traffic coming to this blog and my firm’s website from defective Chinese Drywall searches it is obvious that homeowners and condominium associations are following the recently filed lawsuits alleging class action claims against the manufacturers and distributors of Chinese Drywall. The main question that people are trying to answer is “how does a class action suit help me get the defective material out of my home?” Assuming class certification is even possible (and that is a subject for another blog), it will take many years for the class actions to be adjudicated. It may be more practical and cost effective to just file individual lawsuits against the manufacturer and distributors of the Chinese Drywall for violation of product liability statutes and state consumer fraud statutes, and against builders and contractors for negligence and breach of express and implied warranties. There may be many other claims that can be asserted against these defendants depending upon the law of the state governing the litigation. Since the manufacturer of the product is a Chinese company owned by a German parent company, collectability from these entities is open to question. Builders and subcontractors typically have commercial general liability insurance that may well provide an easier, quicker and much less expensive means for counsel to obtain relief for innocent victims who are stuck with homes containing hazardous Chinese Drywall. Filing individual suits has many potential advantages over waiting for class action suits to be adjudicated.
The question of whether the class action will be certified is often an expensive and very protracted battle because the plaintiff in a class action has to satisfy many onerous requirements including showing that they are representative of the entire class damaged by Chinese Drywall. Proving “commonality” among class members and “typicality” of claims may be very difficult. The manufacturer and distributors may make many creative arguments to challenge class certification. Among those that come most readily to mind are that the homes in the purported class are: (1) made of different materials which interface with the drywall differently; (2) designed by different architects using different design schemes; (3) located in different climates with different moisture conditions which affect the drywall and related materials differently; (4) were built using different subcontractors who installed the drywall and other building components in different ways in different homes; and (5) that there are other unrelated materials contributing to or serving as independent or intervening causes of the damages being attributed to the Chinese Drywall. The argument will be that these differences and many others prevent the plaintiffs in the class from satisfying the requirements for class certification. This battle will take years and will cost a fortune. Even if the battle is won, all that means is that the class is certified. The litigation of the liability and damages issues will then need to be fully litigated on the merits and tried if it cannot be settled.
The bottom line is that homeowners and condominium associations may want to consider why they should bother with this when individual suits against insured defendants may be sufficient to get you what you really want–money to pay to fix your homes. You should seek counsel from a qualified, experienced construction litigation attorney before deciding the best way for you to handle your individual claims.
If you suspect your home may be built with defective Chinese drywall, contact us here for a free no obligation case review.
The Appellate Division recently denied a landscaping contractor’s suit to collect amounts due for extra work in addition to that called for in his contract for complete landscaping of the defendants’ home. Online Contracting, Inc. v. Tripucka, No. A-2622-06 (App. Div., December 6, 2007). The defendants counterclaimed for treble damages and attorneys’ fees under the Consumer Fraud Act (N.J.S.A. 56:8-1 to 116). The court concluded that the contractor’s failure to secure a written agreement for extras totaling $32,994 violated N.J.A.C. 13:45A-16.2(a)(12), which requires all home improvement contracts exceeding $500 to be memorialized by a writing signed by the parties, specifying the work to be performed and the materials to be used, and identifying the start and end date.
The contractor argued that the following language, included within the underlying agreement for landscaping purposes, authorized verbal change orders:
Any alteration or deviation from the description of the work listed above will be executed upon a written change order issued by the contractor and signed by the owner. The change order, whether it be verbal or in writing, will become an extra and will be billed to the owner at the daily rate provided in the [attached] equipment and labor price list.
Because the work was performed pursuant to the equipment and materials price list attached to the underlying contract, the contractor maintained that the contract clause did not violate the Consumer Fraud Act. Further, argued the contractor, the defendants should be estopped by their own conduct in verbally requesting the extras (a putting green and associated structures).
The court disagreed. Citing Scibek v. Longette, 339 N.J. Super. 72 (App. Div. 2001), an auto repair case, it pointed out that since the defendants had not induced the contractor to proceed with the extras without a writing, estoppel did not apply. “Defendants’ verbal directions to [plaintiff] to get the extras ‘done’ cannot be fairly characterized as ‘the intentional relinquishment of a known right,’ or a clear unequivocal ‘act from which an intention to relinquish’ a right can be drawn.” Online Contracting, Inc., supra, No. A-2622-06 at 4, citing Scibek, supra, 339 N.J. Super. at 82. In the absence of the required written agreement for the extras, the defendants could not be said to have intentionally relinquished their right to a written contract by a clear, unequivocal and decisive act.
The court added that the contractor could have preserved its right to collect for the extras simply by providing a written estimate and securing the defendants’ written authorizations. Accordingly, it affirmed the trial court’s grant of attorneys’ fees in accordance with the Consumer Fraud Act ( N.J.S.A. 56:8-19).
The New Jersey Supreme Court Appellate Division recently upheld a judgment against a stucco/masonry contractor under the New Jersey Consumer Fraud Act in Briggs v. Luisi, et al.. The case involved allegations by the owners of a single family home that the stucco/masonry contractor negligently performed repair work on the exterior of the house and on cracks in the home’s foundation, and that the contractor violated the Consumer Fraud Act through affirmative misrepresentations and knowing omissions in connection with a five year warranty issued covering the work.
After performing only a portion of the scope of work he was retained to complete, the contractor gave the homeowner a guarantee on the exterior stucco surface and the foundation of the entire house against cracks and defects for a period of five years. In discovery, however, the contractor admitted that he did not complete all of the work that was described in the warranty. He also acknowledged that the plaintiff and the plaintiff’s lending institution relied on the warranty. Based on this evidence, the Appellate Court affirmed the $89,485 judgment against the contractor and in favor of plaintiff, as well as affirming the jury verdict apportioning twenty percent of the total damages against the contractor as attributable to the contractor’s violation of the Consumer Fraud Act, which portion was then trebled by the Court and was the basis for an award of counsel fees.
The New Jersey Appellate Division recently upheld an award of $105,000 by a Burlington County jury against a contractor hired to perform improvements on the Plaintiff’s home. in Carboni v. Massimo, BUR-L-0369-04, the jury found in favor of the Plaintiffs on a consumer fraud claim against a contractor they paid almost $35,000 to make improvements to their home. The jury found that the contractor had improperly used metal connectors, had inserted nails that were not engaged in the wood, had impermissibly cut prefabricated framing connectors and that he committed additional building code violations. Moreover, the contractor attempted to deceive the Plaintiffs by covering up the improper work with Sheetrock. The jury awarded the full amount of the damages, which was trebled by the trial court pursuant to the New Jersey Consumer Fraud Act. The Appellate Division rejected the Defendant’s argument that the Consumer Fraud Act did not apply because the Plaintiffs acted as their own general contractor and upheld the jury’s determination.
Home improvements can cause homeowners as many, and sometimes more, headaches as building a new home. Until recently, home improvement contractors were essentially unregulated, which led to many unskilled and sometimes dishonest contractors preying upon innocent homeowners. In response, the New Jersey Department of Community Affairs (“DCA”) required home improvement contractors to register with the State as of December 31, 2005. N.J.A.C. 13:45A-17.1, et seq. The registration includes the registration of the formal name and address of the company, including all trade names, as well as the disclosure of the name and address of the principals of the company and any criminal record of any of those principals.
The DCA also recently created regulations that were specific to home improvement contracts under the New Jersey Consumer Fraud Act. The regulations take into account almost any type of home improvement, from remodeling the kitchen to repairing the driveway to installing wall-to-wall carpeting. Specific actions are prohibited by the regulations including misrepresenting the types of material used in the home improvement, failing to begin or complete work on the date or within the time period specified, failing to give timely written notice to the buyer of reasons beyond the seller’s control for any delay in performance, and when the work will begin or be completed and failing to obtain the proper building permits or inspections.
Also, any home improvement contract for a purchase price in excess of $500.00 must be in writing, must be signed by both the buyer and seller and must clearly set forth the terms of the contract. The legal name and business address of the seller, including the legal name and business address of the sales representative or agent who solicited or negotiated the contract for the seller must also be included in the contract. The contract must also include a description of the work to be done and the principal products and materials to be used or installed in performance of the contract, the total price to be paid by the buyer, the dates or time period on or within which the work is to begin and be completed and a statement of any guarantee or warranty to be provided. Violations of these regulations could result in the award of triple damages and reimbursement of counsel fees, if those violations result in damage to the homeowner.
Therefore, in addition to obtaining several bids for the work, asking for and following up with references, it may also be beneficial to homeowners who are thinking about making improvements to their home to obtain the registration information from the DCA and to make sure that the regulations provided by the DCA are followed to protect themselves from future problems.
This blog is the second in a series of blogs discussing the New Jersey Home Warranty and Builders’ Registration Act. This blog will provide an overview remedy preclusion under the New Jersey Home Warranty and Builder’s Registration Act. You can access previous installments of this series online here.
Nevertheless, as innocuous as the claims process sounds, the Act contains what can only be described as a death knell for homeowners who choose to proceed through the warranty program. Section 46:3B-9, known as the “election of remedies” provision provides as follows:
Availability of any legal remedy to owner; election of remedy. Nothing herein shall affect the other rights and remedies available to the owner. The owner shall have the opportunity to pursue any remedy legally available to the owner. However, initiation of procedures to enforce a remedy shall constitute an election which shall bar the owner from all other remedies. Nothing herein shall be deemed to limit the owner’s right of appeal as applicable to the remedy elected.
The significance of this provision cannot be under-emphasized. Should a homeowner decide to pursue a claim for defects under the warranty, he or she is thereafter statutorily barred and precluded from bringing a lawsuit against the builder. This means that the homeowner must pick at the outset whether to proceed under the Act i.e. mediation and arbitration, or pursue a legal remedy through the court system. It is either or and never both. See Marchak v. Claridge Commons, Inc., 134 N.J. 275, 280 (1993) (a new home buyer may seek recovery through one of two mutually exclusive mechanisms, “either (1) conciliation or arbitration, or (2) filing a lawsuit . . . . but not both”).
As the Appellate Division explained, once a homeowner opts for binding arbitration pursuant to the Act, all of the homeowner’s potential claims for damages against the builder, including common law fraud and alleged violations of the Consumer Fraud Act, are subsumed by the homeowner’s election of remedies under the Act. Konieczny v. Micciche, 305 N.J. Super. 375, 381 (App. Div. 1997). The Appellate Division emphasized that even initiation of the claims process is enough to trigger the election of remedies provision and bar the homeowner from all other remedies.
On March 11, 2008, in the matter of Camelot Condominium Association, Inc v. Dryvit Systems, Inc., pending before the Superior Court of New jersey, Docket No. BER-L-012457-04, a jury entered a verdict in favor of the Plaintiff and against Dryvit Systems, Inc (“Dryvit”) for violations of the New Jersey Consumer Fraud Act. Dryvit Systems is the largest manufacturer of Exterior Insulation and Finish Systems for residential and commercial construction in the United States.
With settlements the Plaintiff obtained before and during trial from other defendants, the total irecovery for the Plaintiff following the jury verdict was $5,046,000.
The case involved a joint repair project done in 1998 on what was then a 16 year old high rise building clad with roughly 300 panels coated with Dryvit’s EIFS. The jury returned a verdict that charged Dryvit with knowledge that the Dryvit EIFS finish coating on the buildng’s exterior panels softened when exposed to substantial water penetration. That softening caused cohesive failures at critical caulk joints, which resulted in openings for water to penetrate inside the building and cause catastrophic damage to the framing and sheathing on the building.
The jury found that Dryvit made knowing omissions and affirmative misrepresentations of material fact in connection with the repair of the Exterior Insulation and Finish System (EIFS) on the building located in Hackensack, New Jersey. This is the first time in New Jersey that an EIFS manufacturer has been subjected to a jury verdict for violations of the New Jersey Consumer Fraud Act. There will be no appeal.
The Appellate Division issued a decision today in PORT LIBERTE HOMEOWNERS ASSOCIATION, INC., et. al. v. SORDONI CONSTRUCTION COMPANY, et. al., which has be approved for publication.
The Plaintiffs in the PORT LIBERTE matter, the Port Liberte Homeowners Association, Inc. and the Port Liberte Condominium Association I, Inc., originally filed suit in June of 1992, in connection with various construction deficiencies at the Port Liberte Development located in Jersey City, New Jersey. The construction deficiencies included defects in the Exterior Insulation and Finish System (“EIFS”) installed as the exterior cladding on the buildings at Port Liberte. The EIFS products were manufactured by Defendant Dryvit Systems, Inc. (“Dryvit”). After approximately eleven years of litigation and eight years of non-binding arbitration, the Plaintiffs settled with all Defendants except Dryvit.
The Plaintiffs’ claims against Dryvit include allegations that Dryvit committed common law fraud and violations of the New Jersey Consumer Fraud Act through misrepresentations and omissions of material fact about its EIFS products during Dryvit’s interaction with the original Developer of Port Liberte, Port Liberte Partners, when that entity was selecting what EIFS products to use in constructing the Port Liberte Development.
Dryvit was granted summary judgment by the trial court in September of 2003. The trial court dismissed the Plaintiffs’ fraud and consumer fraud claims because it found that the Plaintiff Associations had no standing to assert such claims against Dryvit. The trial court reasoned that since Dryvit’s alleged misrepresentations and omissions about its EIFS products were made to Port Liberte Partners when it was choosing what products to use to construct the development, which was at a point in time when the Associations that would eventually govern the common property of the development had not yet been created as legal entities, then the Associations could not have standing to assert claims based on those misrepresentations and omissions by Dryvit to Port Liberte Partners.
The Plaintiffs appealed the trial court’s decision on January 5, 2005. They were represented by E. Richard Kennedy, Esquire and Dennis Drasco, Esquire. The Community Association Institute (“CAI”) was granted leave to appear as amicus curiae by the Appellate Division on July 6, 2005. The Appellate Court allowed CAI to be heard on the appeal due to the significant effect the trial court’s decision would have on the rights of community associations throughout New Jersey. Stark & Stark Construction Litigation Shareholder John Randy Sawyer, Esquire filed the brief and argued the cause for amicus curiae CAI.
The Appellate Division held that under New Jersey’s legislative scheme for community developments, a condominium association is the intended beneficiary of a developer’s actions in developing a community project. Any subcontractor or product manufacturer, the Court reasoned, that enters into a contract with a developer or supplies it products for use in construction of the common elements of such a project “after the developer registers the condominium with the [Department of Community Affairs], pursuant to the Planned Real Estate Development Full Discosure Act, N.J.S.A. 45:22A- 21 to -56 (PREDFDA), specifically N.J.S.A. 45:22A-26, is on constructive notice that representations made to, and omissions withheld from, the developer will be deemed as if they were made to, or withheld from, the association, once the association assumes control of the condominium.” The Court went on to hold that a condominium association has standing to assert claims for common law fraud and consumer fraud against third-party contractors and material suppliers for defects in the construction of the common elements of the development, “regardless of whether the association formally existed at that particular point in time.”
The Appellate Division adopted the arguments made by Plaintiffs and amicus curiae CAI in its determination that a condominium association essentially “stands in the shoes” of the developer and is the intended beneficiary of all of the developer’s actions in connection with the common elements, including all of its interactions with contractors, subcontractors and material suppliers during the construction phase of the development. The Plaintiffs and amicus curiae CAI argued that, under PREDFDA and the New Jersey Condominium Act, a developer of a community project is required to register the project with the Department of Community Affairs and incorporate an Association that will be responsible for the maintenance and control of the development’s common elements. The legislative scheme, however, also requires the developer to control the Association until a certain number of units within the development have been sold, at which time control of the Association is turned over to the independent unit owners who decided to live within the development. That process, called transition, often does not occur until well after construction of the development is under way and all decisions regarding what contractors to use for the work and what material suppliers to purchase from have already been made by the developer. The Appellate Court agreed with Plaintiffs and amicus curiae CAI that preventing community associations from having standing to assert claims against product suppliers like Dryvit, simply because the suppliers only made misrepresentations or omissions to the developer prior to creation of the Association or prior to transition, would produce an “unjust result and is contrary to the legislative scheme permitting a condominium homeowners association to institute suit to recover damages to the common elements. N.J.S.A. 46:8B-14, -15(a), and -16(a).”
The dismissal of Plaintiffs’ common law fraud and consumer fraud act claims was reversed and remanded to the trial court for further proceedings.
John Randy Sawyer is available to discuss the arguments made to the Court by amicus curiae CAI and the impact the Court’s decision will have on community associations pursuing construction defect claims against developers, product manufacturers, contractors and sub-contractors.
He can be reached directly at 609.895.7349 or by email at email@example.com.
Stark & Stark recently handled a construction litigation case for a Condominium Association which owned 5 large buildings. The Association was concerned about a large number of upper -floor balconies which were noticeably bowing in the middle. We brought in an experienced structural engineer who conducted an extensive examination of the balconies.
Our discovery in the case and our expert’s investigation showed that the balconies were concrete filigree slabs beneath a cast- in- place concrete topping slab. That means that the filigree slabs were fabricated off-site and shipped to the condominium. They were lowered into place by a crane, supported by heavy scaffolding and attached to the concrete walls with rebar and steel framing. Once they were lowered into place, the topping slab of concrete was poured over the entire filigree slab. (The filigree slab itself had been fabricated off-site in a steel frame that had a 4 inch lip to accommodate the poured topping slab added at the site).
In deposition testimony, the contractor who had installed the filigree slabs and poured the topping slab admitted that he had “cracked the scaffolding” for 2 hours only 2 days after the topping slab was poured. In other words, he had released the scaffolding for 2 hours and let the balconies settle before re-installing half of the scaffolding. Although the contractor testified that he was told to do this by his consulting engineer, the contractor never joined the consulting engineer as a party. The American Concrete Institute required that concrete cure for 28 days before the scaffolding was released. As a result of the wrongful release of the scaffolding, the balconies suffered structural failure because some of the rebar separated from the framing of the buildings. That caused the center of the balconies to “droop.” There was also consequential damage because the balconies were attached to buildings clad with exterior insulation and finish system. As the balconies pulled away from the exterior walls, they caused compression folds and cracks in the EIFS which allowed water to penetrate into the sheathing and framing.
The Association sued the general contractor and the concrete subcontractor for negligence, breach of contract and violation of the NJ Consumer Fraud Act. The Association settled the claim in a confidential settlement in the high six-figures.