1) Sub-sub contractor that performed installation of exterior improvements to a home was sanctioned for suing to collect directly from a contractor with which he had no direct contract

Lanzi v. Bucci, et al.   -  Decided June 21, 2006

  This case involves a frivolous litigation claim brought by a sub-subcontractor (Lanzi) against a builder (Bucci).

  The subcontractor Lanzi attempted to collect money directly from the builder, Bucci, after a sub-contractor (who contracted with Lanzi) failed to pay him.  Defendant Bucci, denied responsibility for making payment to Lanzi and sought sanctions and counsel fees.  Originally, the Court denied Bucci’s motion for sanction and fees.

  Upon appeal, the Court found that there was no contractual privity between Lanzi and Bucci.  The Court held that the Plaintiff and his counsel were well aware of that fact.  As a result it was found that there was no factual or legal basis for the Plaintiff’s actions against Bucci.  The Appellate Division allowed Bucci to recover sanctions and attorney’s fees associated with their defense.

2) Damages against a home improvement contractor trebled to $2.25 million pursuant to the Consumer Fraud Act

St. Louis, L.L.C. v. Anthony and Sylvan Pools Corp., v. Aurora Contracting  - Decided June 12, 2006.

 Plaintiff, St. Louis, L.L.C. entered into a contract with Defendant, Anthony and Sylvan Pools Corp. to construct a swimming pool and spa in the home that they were building in Franklin Township.  Plaintiff brought suit against Defendant alleging negligence in construction of the pool, breach of contract, fraudulent representation to Plaintiff and consumer fraud.  The claims of negligence and fraudulent misrepresentation were dropped at trial. 

 The jury found in favor of the Plaintiff’s and awarded them damages in the amount of $35,000 on the breach of contract claim and $750,000 on the consumer fraud claim and that amount was trebled to $2.25 million dollars. The appellate division affirmed the awards with the exception of roughly $30,000 in ‘expert’s fee.’ 

3) Appellate Division reaffirms appropriate methods for measuring damages in construction defect cases.           

St. Louis, L.L.C. v. Final Touch Glass & Mirror, Inc., et al., etc.  -         Decided June 12, 2006.

   This case, which is directly related to St. Louis, L.L.C. v. Anthony and Sylvan Pools Corp., establishes the proper method(s) of measuring damages for construction defects.

  Here, the Court found that damages for a construction defect may be measured in one of two ways.  It may be measured by cost of repair or the decrease in market value to the property.  The determination of which method to be used is fact sensitive and the decision is made based on a case by case basis.

4) Appellate Division confirms that a plaintiff may sue and obtain an award of counsel fees for technical violations of the Consumer Fraud Act even where plaintiff has suffered no damage.  Holds no attorney’s fees should be awarded in this particular case because the jury made no finding that the Consumer Fraud Act was violated.

Singh, etc. v. I.D.J. Construction & Electric, Inc.  – Decided June 1, 2006.

 This case reversed the award of counsel fees to the Plaintiff for a “technical violation” of the Consumer Fraud Act – the contract contained no start or end date as required by the regulations relating to home improvement contracts.  The Appellate Division, citing the Supreme Court, found that The Consumer Fraud Act allows for the award of attorney’s fees even to a plaintiff that can not establish damages from the alleged violation, so long as a violation of the Act on some level is found.  The key is that a violation is in fact found.

5) Pool builder ordered to pay counsel fees for failing to discharge a residential lien claim after settlement of the underlying claim

Tropp v. Distinctive Pools, Inc.  – Decided May 22, 2006.

  In this case, the Tropp entered into a contract with the Distinctive Pools, Inc. for construction of a pool on their property.  Eventually a dispute arose concerning the quality of the work done and the outstanding balance owed by the Tropp.  As a result Distinctive Pools, Inc. filed a lien claim against the Tropp’s property. 

 A settlement was reached, by which Tropp was to pay $7,500.  Distinctive Pools, Inc. did not discharge the lien following receipt of the $7,500.

 The Appellate Division held that that following the payment of $7,500 by Tropp, Distinctive Pools, Inc. was obligated to discharge the lien.  Failure to do so entitled Tropp to recover counsel fees against Distinctive Pools, Inc. pursuant to New Jersey’s residential lien law statute.

6) Absent a provision in an LLC Operating Agreement to the contrary, each member of an LLC has the power to bind the LLC in contract

Teitlebaum,etc. v. Halleck St. Properties, L.L.C., et al.  – Decided May 22, 2006.

  Plaintiff claims he was a 50% shareholder in the Defendant L.L.C.  Without the Plaintiff’s consent, the LLC’s sole asset (a piece of property in Jersey City) was sold.  Plaintiff had attempted to prevent the sale of the property via the filing of a lis pendens, however the court denied his motion and the property was sold to a third party. 

 The Appellate Division held that in an LLC, all members have the ability to bind the LLC unless an agreement exists to the contrary.  The other 50% shareholder could fully and legally enter into a contract on behalf of the LLC in order to sell its asset.  Thus the sale of the property was held to be valid.

 Plaintiff also sought an equitable remedy, namely the rescission of the sale to the third party. This motion was denied by the Court, citing that the Plaintiff was not a party to the original contract and thus could not have it undone.  The Court instructed the Plaintiff that his cause of action lies with the other shareholder in the LLC for selling of the property and his subsequent failure to properly distribute the funds.