DIAMOND BEACH, LLC VS. MARCH ASSOCIATES, INC. (L-0203-08, MONMOUTH COUNTY AND STATEWIDE) ( 2018 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-1704-17T1
DIAMOND BEACH, LLC,
Plaintiff,
APPROVED FOR PUBLICATION
v. December 24, 2018
APPELLATE DIVISION
MARCH ASSOCIATES, INC.,
LOUIS MARCH, SR. and JEWEL
CONTRACTING CO., INC., and
V.A. SPATZ & SONS, INC.,
Defendants.
________________________________
MARCH ASSOCIATES, INC., and
LOUIS MARCH, SR.,
Third-Party Plaintiffs,
v.
STEWART KLEINER, EDWARD
KLEINER, LEON KLEINER, TKG
MANAGEMENT, LLC, THE KLEINER
GROUP, LLC, KNS BUILDING
RESTORATION, INC., ENVIROSCAPE,
INC., CITY/NEWARK GLASS
COMPANY, DORANT/TATROW
ASSOCIATES, INC., SEALTITE SYSTEMS,
INC., BRIAN TREMATORE PLUMBING
& HEATING, INC., ALLAN BRITEWAY
ELECTRICAL CONTRACTORS, INC.,
SLOAN & COMPANY, INC., C.A.W., LLC,
S.A. COMUNALE CO., INC., SPARTA
STEEL CORPORATION, K.F.
MECHANICAL, LLC, ADVANTAGE
SUPPLY CORPORATION, GRAFAS
PAINTING CONTRACTORS, INC.,
GIACOMELLI TILE, INC., and
INNOVATIVE CLOSET DESIGNS,
INC.,
Third-Party Defendants.
___________________________________
SLOAN & COMPANY, INC.,
Fourth-Party Plaintiff-Appellant,
v.
DIAMOND BEACH, LLC and
FIRST INDEMNITY OF AMERICA
INSURANCE COMPANY,
Fourth-Party Defendants-Respondents.
_____________________________________
Argued telephonically November 29, 2018 –
Decided December 24, 2018
Before Judges Fasciale, Gooden Brown and Rose.
On appeal from Superior Court of New Jersey, Law
Division, Monmouth County, Docket No. L-0203-08.
Anthony J. Davis argued the cause for appellant
(Nicoll Davis & Spinella, LLP, attorneys; Anthony J.
Davis and Steven C. DePalma, on the briefs).
Bruce D. Meller argued the cause for respondents
(Peckar & Abramson, PC, attorneys; Bruce D. Meller
and Patrick T. Murray, on the brief).
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The opinion of the court was delivered by
FASCIALE, J.A.D.
In 2011, the Legislature substantially amended multiple sections of the
Construction Lien Law, N.J.S.A. 2A:44A-1 to -38 (the 2011 amended CLL).
This appeal requires us to decide whether N.J.S.A. 2A:44A-6(a)(1) and
N.J.S.A. 2A:44A-8 (the signatory-requirement amendments) apply
retroactively. We limit our holding to the retroactive effect of that part of the
signatory-requirement amendments that replaced the previous mandate that a
"duly authorized officer" sign a corporate construction lien. We do so because
the signatory-requirement amendments, and the 2011 amended CLL in general,
contain other significant changes, which potential retroactive effect are not at
issue in this appeal.
Sloan & Company, Inc. (Sloan) appeals from five orders entered after
Sloan filed its construction lien claim in 2008. 1 At that time, a corporate
claimant – like Sloan – had to show that it "duly authorized" an officer to sign
1
Sloan appealed from an October 25, 2013 order granting partial summary
judgment to Diamond Beach, LLC (Diamond Beach) and First Indemnity of
America Insurance Company (FIA) (collectively defendants). Sloan also
appealed from a June 6, 2014 judgment discharging Sloan's construction lien; a
September 26, 2014 revised order correcting clerical errors; a December 4,
2015 order awarding costs and counsel fees to Diamond Beach under N.J.S.A.
2A:44A-15; and a January 13, 2017 order denying Sloan's motion to vacate the
interlocutory orders. In November 2017, Diamond Beach dismissed its
remaining claim, which brought finality to the lawsuit.
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its lien-claim form. After conducting a plenary hearing in 2014, the judge
found that the individual who signed Sloan's lien-claim form – Robert Luderer
– was not a "duly authorized officer." Instead, he was an "Accounting &
Information Systems Manager," a position that Sloan maintains satisfies the
signatory requirements of the new law.
In early 2016, Sloan unsuccessfully attempted to vacate all the orders,
arguing for the first time that the signatory-requirement amendments applied
retroactively. Sloan contended that in so amending the CLL, the Legislature
was "clarifying" the meaning of "duly authorized officer." But in 2011, the
Legislature did not "clarify" what it meant by "duly authorized officer"; it
deleted the phrase altogether from the original text of N.J.S.A. 2A:44A-6, and
required compliance with a new claim form identified in N.J.S.A. 2A:44A-8
(the Section 8 claim form).
The Section 8 claim form changed who can now sign a corporate lien
claim. Under paragraph one, the signatory must be an "officer/member" of the
corporate entity. And under a section entitled "Suggested Notarial for
Corporate . . . Claimant," a notary must be satisfied that the signatory is a
"Secretary (or other officer/manager/agent) of the Corporation." The signatory
must now swear or affirm – unlike before – that he or she possesses authority
A-1704-17T1
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to act on behalf of the corporate claimant by "virtue of its By[-]laws, or
Resolution of its Board of Directors."
We conclude that the signatory-requirement amendments at issue are not
"curative" for purposes of retroactivity analysis. There is no basis to conclude
that the Legislature eliminated the phrase "duly authorized officer" to cure
defects, inadvertence, or error in the CLL or in its administration; or did so to
explain the intent of that part of the CLL; or to clarify, rather than change, the
signatory requirement. Instead, it deleted "duly authorized officer" from the
text, and created new requirements for signing corporate construction lien
claims.2
2
In addition to removing the phrase "duly authorized officer," the Legislature
created the Section 8 claim form – which is substantially different than before
– by deleting the entirety of N.J.S.A. 2A:44A-6, which had read as follows:
A lien claim shall be signed, acknowledged and
verified by oath of the claimant or, in the case of a
partnership or corporation, a partner or duly
authorized officer thereof, and filed with the county
clerk not later than 90 days following the date the last
work, services, material or equipment was provided
for which payment is claimed. No lien shall attach,
or be enforceable under the provisions of this act and,
in the case of a residential construction contract,
compliance with sections 20 and 21 of this act, unless
the lien claim is filed in the form, manner and within
the time provided by this section and section 8 of this
act, and a copy thereof served on the owner and, if
any, the contractor and the subcontractor, against
(continued)
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We therefore reject Sloan's retroactivity argument, and hold that the
signatory section of the 2011 signatory-requirement amendments applies
prospectively. We defer to the judge's factual findings at the plenary hearing,
which are supported by substantial evidence in the record, and conclude that
the judge correctly applied the governing law. Accordingly, we affirm the
orders under review.
I.
Diamond Beach originally owned several acres of vacant land (the
Property). It developed the Property as a condominium community, generally
consisting of almost 100 residential units, a nine-story building, and
recreational and parking facilities (the Project). Diamond Beach retained
March Associates, Inc. (March) as the general contractor, who subcontracted
carpentry work to Sloan. March filed a Chapter 11 Bankruptcy Petition and
did not pay Sloan for the work Sloan allegedly performed on the Project. First
Indemnity of America Insurance Company issued bonds to secure Sloan's lien.
When Luderer signed Sloan's lien-claim form in 2008, he did not
identify himself as Sloan's "duly authorized officer." Rather, in three separate
sections of the form, he referred to himself as an "Accounting & I[nformation]
(continued)
whom the claim is asserted, pursuant to section 7 of
this act.
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S[ystems] Manager." Defendants filed a motion for summary judgment and
argued that in 2008, N.J.S.A. 2A:44A-6 required a "duly authorized officer" to
sign a corporate lien claim. Defendants contended that Luderer was a
manager, not a "duly authorized officer," and therefore sought to discharge the
lien because he lacked authority to sign it.
In opposition to the motion, Sloan submitted a certification from Scott
Casabona, Sloan's President as of 2002. He certified that Luderer signed the
lien claim as Sloan's "duly authorized corporate officer." Casabona explained
further that
Mr. Luderer was acting in this capacity on behalf of
Sloan prior to the time I became President and a
member of the Board of Directors. Sloan had duly
authorized Mr. Luderer to act as an officer for
purposes of collecting monies owed to the company[,]
and [for] signing and filing construction liens on
behalf of the company prior to the time that I joined
Sloan.
[Emphasis added.]
According to Casabona, "Luderer . . . was duly authorized by the prior
President, Peter Shanley, and the Board of Directors[,] when he was [first]
hired to . . . sign[] and fil[e] [Sloan's] construction lien[s] . . . ." Shanley did
not produce his own certification in opposition to the motion – although he
could have – and he did not have an opportunity to testify at the hearing
A-1704-17T1
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because he died three months after Sloan opposed the summary judgment
motion.
On the return date of the motion, the judge found that Casabona's
certification created a genuine issue of material fact about whether Luderer
was a "duly authorized officer," which precluded summary judgment. The
judge permitted the parties to engage in discovery on that issue. She then
conducted the plenary hearing.
At the plenary hearing, Casabona dealt head-on with the absence of any
written corroborative evidence that verified Luderer was a "duly authorized
officer." He explained that Sloan's Board of Directors did not issue written
resolutions or minutes memorializing its elections of officers. For example, he
testified that although Sloan "followed all of its corporate formalities in
holding [the] meeting [that elected Casabona as] [P]resident," there was no
written resolution reflecting that election. Likewise, when the Board first
elected Casabona as Vice President, there were no resolutions or minutes
confirming that election. He emphasized that this method of conducting
business was "just the way [Sloan] operated."
Casabona acknowledged that Sloan's by-laws required the Board to elect
officers. He testified that under Article 5, Section 1 of Sloan's by-laws – the
section relating to officers – Sloan's Board of Directors was required to "elect
A-1704-17T1
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a president, a treasurer and a secretary, and it may elect such other officers
including one or more vice presidents as it shall deem necessary." According
to the by-laws, the election was to occur at Sloan's "regular meeting following
the annual meeting of shareholders." He stated that Sloan's by-laws and
certificate of incorporation did not require that the Board of Directors
memorialize those elections in writing. Without any personal knowledge
about the actual election, he explained that the Board elected Luderer as an
officer in accordance with these practices and procedures.
Casabona then described Luderer's role at Sloan, particularly the alleged
authority that Sloan had given Luderer as an officer to file and sign
construction liens. Casabona said Luderer was part of Sloan's "executive
team," which entitled him to participate in management, executive, and Board
meetings by making presentations to shareholders and other directors.
Casabona testified that Luderer reported directly to him. Casabona said that he
observed Shanley interact with Luderer and watched them working together on
accounts receivables, which Casabona believed led to Luderer signing Sloan's
liens under Shanley's supervision. Casabona testified that when he was elected
President, Shanley told him to "manage the company in the same manner."
Consequently, Luderer still had weekly meetings about accounts receivables,
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except he met with Casabona, who said he continued the practice of Luderer
signing Sloan's construction liens allegedly as a "duly authorized officer."
Luderer also testified at the hearing. He stated that Shanley hired him in
1995 to be Sloan's credit and collections manager. Approximately three years
later, he became the accounting manager. At some point before 2000, Luderer
learned that Sloan's Board had allegedly elected him as a "duly authorized
officer for signing and executing and pursuing construction liens." He said
Shanley told him that the Board authorized him to sign its liens (although he
provided no details as to the alleged conversation). 3 Luderer identified Sloan's
corporate officers, but he did not identify himself as such.4 He produced no
written proof, however, that he was a corporate officer.
3
Defendants objected to what Luderer said Shanley told him, but the judge
overruled that objection relying on N.J.R.E. 804(b)(6) (providing a hearsay
exception for "a statement made by a person unavailable as a witness because
of death if the statement was made in good faith upon declarant's personal
knowledge in circumstances indicating that it is trustworthy"). On appeal,
defendants argued in their merits brief that the judge abused her discretion on
this ruling. The judge however, stated she would admit the statements by
Shanley and give them the weight that they deserved. Her ruling reflects she
gave little, if any, weight to the statements. So therefore, even if there was an
abuse of discretion, it was harmless.
4
Sloan's interrogatory answers identified Luderer as an "Accounting &
I[nformation] S[ystems] Manager," which Luderer certified as true. Sloan
produced him for a deposition as a corporate designee – not an officer – where
he listed the names of all corporate officers, except himself.
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The judge rendered an oral opinion after the testimony concluded. To
determine whether Luderer was a "duly authorized officer," the judge relied in
part on D.D.B. Interior Contracting, Inc. v. Trends Urban Renewal Ass'n, Ltd.,
176 N.J. 164 (2003). Recognizing that D.D.B. was not directly on point, the
judge stated that
[a]lthough the Court permitted the exception of
validating the lien claim [in D.D.B.], it made it
explicitly clear that going forward, corporations must
comply with their certificates of incorporation and
by[-]laws to [e]nsure that the person executing the
duty of filing a construction lien must be a corporate
officer.
Here, again there is a dearth of supporting
evidence [that] this appointment or election, . . . took
place or was memorialized.
[Emphasis added.]
At the hearing, Sloan did not produce any Board member who participated in
the election of Luderer as a "duly authorized officer." Concluding that there
was "no [written] proof" and no "direct [credible] testimony" that an election
had been held giving Luderer "some sort of designation as a corporate officer,"
the judge granted summary judgment to defendants and discharged the lien. 5
5
Luderer testified that he remembered Shanley had written a letter to another
contractor in 1998, in which Shanley had stated that Luderer had authority to
sign lien waivers (not file lien claims). Although Sloan could not locate the
letter, Luderer said he remembered its contents, sixteen years later. The judge
(continued)
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In September 2014, the judge entered the order discharging the lien, and in
December 2015, she awarded costs, expenses, and counsel fees to Diamond
Beach.
Sloan did not file a timely motion for reconsideration under Rule 4:49-2.
Rather, three and one-half months later, Sloan filed a motion under Rule 4:42-
2, which permits the judge to certify interlocutory orders as final under certain
circumstances. Sloan's counsel certified that as of March 16, 2016, the orders
granting summary judgment to defendants, discharging the lien, and awarding
fees to defendants were interlocutory. But Sloan did not ask the judge to
certify the orders as final (for purposes of an appeal as Rule 4:42-2
contemplates).6 Instead, Sloan sought to vacate the orders by raising for the
first time its retroactivity argument.
Sloan argued the signatory-requirement amendments applied
retroactively because the Legislature purportedly clarified N.J.S.A. 2A:44A-6
by requiring the person signing the lien to be an "officer/member" of the
corporate claimant, instead of a "duly authorized officer." Sloan asserted that
(continued)
disbelieved Luderer's testimony about the letter and the purported authority
Sloan had granted under it.
6
We had already denied leave to appeal before Sloan had filed its Rule 4:42-2
motion.
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the Legislature further clarified N.J.S.A. 2A:44A-6 by creating the Section 8
claim form, which Sloan asserted required a notary be satisfied that the
signatory be a "[s]ecretary (or other officer/manager/agent) of the
[c]orporation." (Emphasis added). This was a new requirement in the 2011
claim form. The judge concluded that the Legislature did not intend to clarify
the term "duly authorized officer," declined to apply the signatory-requirement
amendments retroactively, and denied Sloan's motion.
II.
We begin by addressing Sloan's argument that the signatory-requirement
amendments – specifically that part dealing with the signing of a corporate-
construction lien claim form – apply retroactively. We review this contention
de novo, as the question of whether an amended statute applies retroactively is
purely a legal one. Ardan v. Bd. of Review, 231 N.J. 589, 608 (2018).
"Settled rules of statutory construction favor prospective rather than
retroactive application of new legislation." Id. at 609. We favor prospective
application "based on our long-held notions of fairness and due process." Id.
at 610. As to the standard for determining whether to apply a statute
retroactively, Justice Patterson writing for the Court stated:
We consider (1) whether the Legislature intended to
give the statute retroactive application and (2) whether
retroactive application will result in either an
unconstitutional interference with vested rights or a
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manifest injustice. Applying the first prong of the
retroactivity standard, we recognize three
circumstances that justify affording a statute
retroactive effect: (1) when the Legislature expresses
its intent that the law apply retroactively, either
expressly or implicitly; (2) when an amendment is
curative; or (3) when the expectations of the parties so
warrant.
[Ibid. (citations omitted).]
Here, it is undisputed that the Legislature did not "express[] its intent that the
[signatory change] apply retroactively, either expressly or implicitly," and
there is no suggestion at all that the parties expected retroactive application.
The parties focused – as we do – on whether that part of the signatory-
requirement amendments dealing with the signing of a corporate lien claim
were "curative." 7
A statutory provision is curative if it is "designed to remedy a perceived
imperfection in or misapplication of a statute." Id. at 611. "[A]n amendment
is curative if it does not alter the act in any substantial way, but merely
clarifie[s] the legislative intent behind the [previous] act." Ibid. (alterations in
original).
7
Because we have concluded that the Legislature did not intend to apply that
part of the signatory-requirement amendments under review retroactively, we
need not reach the question of whether retroactive application would give rise
to "either an unconstitutional interference with vested rights or a manifest
injustice."
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A curative act is a statute passed to cure defects
in prior law . . . . Generally, curative acts are made
necessary by inadvertence or error in the original
enactment of a statute or in its administration. . . .
Under the "curative" exception to the general rule
against retroactive application of statutes, an
amendment to a statute can be given retroactive effect
if it is designed merely to carry out or explain the
intent of the original legislation.
. . . [A]n amendment may be applied
retroactively if it is curative and it is intended to
clarify rather than change the law, and as long as there
is no interference with vested rights or contractual
obligations.
[2 Sutherland, Statutory Construction, § 41:11 at 503-
08 (7th ed. 2009) (emphasis added).]
Moreover, "a legislative amendment is not considered 'curative' merely
because the Legislature has altered a statute so that it better serves public
policy objectives." Ardan, 231 N.J. at 612.
We have previously stated "there is a clear and significant difference
between an amendment intended to correct a judicial misinterpretation of an
existing legislative act and one that simply improves upon an existing statutory
scheme, as a matter of public policy." Olkusz v. Brown, 401 N.J. Super. 496,
505 (App. Div. 2008).tute it acts in good faith and seeks, by the amendment, to
improve the scheme. If this was all that was required in order to meet the
curative exception, every amendment would automatically be subject to
retroactive application and the exception would engulf the rule of
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prospectivity. This cannot be countenanced. As we have observed, there are
reasons based on considerations of fairness for the rule of prospectivity. This
is why the exceptions to the rule have been carefully circumscribed. To
consider an enactment which 'improves' the statutory scheme (in itself a
painfully subjective determination) as meeting the curative exception is at odds
with the fundamental principal of fairness that new laws should not affect
situations which predated them."
[Ibid. (quoting Kendall v. Snedeker, 219 N.J. Super.
283, 289 (App. Div. 1987)).]
Defendants maintain that the sections of the signatory-requirement
amendments at issue do not cure a misinterpretation of the law. They argue
that the legislative history does not mention the courts have misinterpreted the
meaning of "duly authorized officer." Defendants contend that if there was
any confusion – which they say did not exist – five years before Luderer had
signed the lien, D.D.B. addressed, at least implicitly, the need to ensure
corporations elect officers following their by-laws and certificates of
incorporation. Sloan argues, however, that the signatory amendments were in
response to D.D.B. and Gallo v. Sphere Construction Corp., 293 N.J. Super.
558, 566 (Ch. Div. 1996) (invalidating a lien signed by a lawyer without a
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power of attorney (POA)), but there is nothing in the legislative history of the
2011 amended CLL to support Sloan's contention.
Determining retroactivity requires us to summarize briefly the evolution
of the CLL and the 2011 amended CLL. In 1993, the Legislature repealed the
Mechanics Lien Law, N.J.S.A. 2A:44-64 to -124, and replaced it with the CLL,
effective 1994. As part of the 2011 amended CLL – not just that part of the
signatory amendments at issue – the New Jersey Assembly Financial
Institutions and Insurance Committee and the Senate Commerce Committee
explained that the bill amending the CLL embodied the text of a 2009 New
Jersey Law Revision Commission Final Report on the CLL (the NJLRC
Report). Indeed, the 2011 amended CLL generally followed the substantial
recommendations contained in the NJLRC Report. See NRG REMA LLC v.
Creative Envtl. Sols. Corp., 454 N.J. Super. 578, 600-01 (App. Div. 2018)
(acknowledging that the 2011 amended CLL generally followed the
recommendations of the NJLRC Report, which did not address the reason for
dropping "duly authorized officer" from the text of Section 6). 8
The NJLRC Report thoroughly explained the overriding need for the
2011 amended CLL. The primary focus of the 2011 amended CLL was to
8
Whether the Legislature clarified other sections of the comprehensive 2011
amended CLL – beyond that part of the signatory amendments under review –
is not before us.
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address "the statute's residential construction provisions." NJLRC Report at 2.
Our case has nothing to do with residential construction provisions. The 2011
amended CLL provided much needed definitions for important terms that were
absent or problematic, such as "lien claim," "lien fund," "contract," and
"filing." Id. at 3. And it explained that the CLL omitted other provisions that
would have "improve[d] [the] application of the [CLL];" and the CLL
conflicted with "industry practice and [was] not workable or desirable." Ibid.
The 2011 amended CLL, therefore, added definitions; rearranged and
amplified provisions; adopted court pronouncements as to "concepts of
contract price, lien fund[,] and lien claim;" defined the role of arbitrators; and
modified time limits for residential construction lien claims. Id. at 4. As
reflected in the NJLRC Report, the 2011 amended CLL made "it easier for
participants in the construction industry to use the law." Ibid.
There is no basis to conclude that the Legislature clarified its intent as to
the meaning of the phrase "duly authorized officer." The Legislature did not
declare explicitly or implicitly that it intended to clarify that term. The
NJLRC Report recommendations – which relate to the need to amend N.J.S.A.
2A:44A-6 and N.J.S.A. 2A:44A-8 – pertain solely to recommendations
unrelated to signatory requirements for corporate construction lien claims.
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For example, as to N.J.S.A. 2A:44A-6, the NJLRC Report states that the
2011 amended CLL modified the definition of "filing" in N.J.S.A. 2A:44A -2 to
address "practical concerns, distinguishing 'lodging for record,' and making a
distinction, in [N.J.S.A.] 2A:44A-6, for purposes of enforcement of [a] lien
claim . . . ." Id. at 4. Along those lines, the revisions to N.J.S.A. 2A:44A-6
made "the lien claim filing procedure easier to understand [as to] [t]he
distinction between 'filing' and 'lodging for record' for purposes of
enforceability of the lien," and by extending the deadline for residential
construction lien claims. Id. at 5.
And the Legislature substantially revised the Section 8 claim form.
Under N.J.S.A. 2A:44A-6(a)(1), "[t]he lien claim form as provided by section
8 of P.L.1993, c.318 ([N.J.S.A] 2A:44A-8) shall be signed, acknowledged and
verified by oath of the claimant . . . ." The Legislature dropped "duly
authorized officer" from Section 6 and instead required compliance with the
new Section 8 claim form, which requires corporate authorization through by-
laws or board resolution. Under paragraph one of Section 8, the new form now
requires an "officer/member" to sign the form. In addition, the Section 8 form
now prescribes a new requirement.
The notary must be satisfied that the signatory is "the
Secretary (or other officer/manager/agent) of the
Corporation (partnership or limited liability
company)." N.J.S.A. 2A:44A-8 (Suggested Notarial
A-1704-17T1
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for Corporate or Limited Liability Claimant). The
signatory must swear or affirm before a notary that he
or she possessed "authority to act on behalf of the
Corporation (partnership or limited liability company)
. . . ." Ibid. The signatory "by virtue of its By[-]laws,
or Resolution of its Board of Directors (or partnership
or operating agreement)" must have "executed" the
lien claim.[9] Ibid.
[NRG REMA LLC, 454 N.J. Super. at 599 (emphasis
added).]
Like our conclusion as to N.J.S.A. 2A:44A-6(a)(1), there is no basis to
conclude that the Legislature eliminated the phrase "duly authorized officer"
9
The prescribed notary's statement states in full:
SUGGESTED NOTARIAL FOR CORPORATE OR
LIMITED LIABILITY CLAIMANT:
On this ___ day of ____ 20__, before me, the
subscriber, personally appeared (person signing on
behalf of claimant(s)) who, I am satisfied is the
Secretary (or other officer/manager/agent) of the
Corporation (partnership or limited liability company)
named herein and who by me duly sworn/affirmed,
asserted authority to act on behalf of the Corporation
(partnership or limited liability company) and who, by
virtue of its By[-]laws, or Resolution of its Board of
Directors (or partnership or operating agreement)
executed the within instrument on its behalf, and
thereupon acknowledged that claimant signed, sealed
and delivered same as claimant's act and deed, for the
purposes herein expressed.
[N.J.S.A. 2A:44A-8 (emphasis added).]
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and required compliance with the Section 8 claim form as a means to cure
defects, inadvertence, or error in the CLL, or in the administration of the
signatory requirement. There exists no evidence that the Legislature did so to
carry out or explain its intent as to that part of the CLL.
III.
Sloan argues alternatively – for the first time – that the judge used the
wrong test to determine whether Luderer was a "duly authorized officer."
Sloan contends that the judge placed too much emphasis on the holding in
D.D.B. by focusing on whether the Board of Directors complied with its
certificate of incorporation or by-laws when it allegedly elected Luderer as a
"duly authorized officer." According to Sloan, the judge should have
considered the totality of the evidence rather than focusing on compliance with
the by-laws or certificate of incorporation.
The judge's findings are binding on appeal if they are supported by
"adequate, substantial and credible evidence." Rova Farms Resort, Inc. v.
Inv'rs Ins. Co. of Am., 65 N.J. 474, 484 (1974). We review a "trial [judge]'s
interpretation of the law and the legal consequences that flow from established
facts" de novo. Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140
N.J. 366, 378 (1995). Applying this standard, we see no error, let alone error
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that is "clearly capable of producing an unjust result." See R. 2:10-2 (applying
the plain error standard to arguments not raised before the trial court).
The judge correctly applied the CLL as it existed in 2008. She
recognized that N.J.S.A. 2A:44A-6 required Luderer to sign Sloan's lien as a
"duly authorized officer." Acknowledging that the parties disputed whether
Sloan "duly authorized" Luderer to sign the lien as an officer, the judge and
parties focused the plenary hearing on whether he was such an officer,
especially and importantly, because of the specific language of the Sloan lien
form that he signed.
Sloan's construction lien-claim form consists of five pages. On page
five, Luderer signed an "Acknowledgment of Corporation" certifying that he
signed the lien as the "Accounting & I[nformation] S[ystems] Manager" (not
"duly authorized officer") of Sloan, and that Sloan authorized him to do so "by
a proper resolution of [Sloan's] Board of Directors." The judge focused,
although not exclusively, on the nature of that purported Board resolution.
In doing so, she recognized that D.D.B. was not directly on point. In
D.D.B., the Court held – under the unique facts of that case – that D.D.B.
satisfied the signatory requirements of N.J.S.A. 2A:44A-6 because its sole
owner executed a POA intending to confer authority to an attorney to sign its
construction lien. 176 N.J. at 169-70. Here, the disputed question of fact was
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whether Luderer was a "duly authorized officer," not whether Sloan signed a
POA giving Luderer authority to sign the lien. Regardless, the claim form that
Luderer signed necessitated consideration of whether the Board of Directors
issued a Resolution conferring the requisite authority to act as a corporate
officer.10
We reject Sloan's argument, raised for the first time on appeal, that the
judge should have concentrated more on whether Sloan conferred authority on
Luderer the way D.D.B. intended to confer authority on the attorney who
signed D.D.B.'s lien. Sloan contends that the judge placed too much emphasis
on its by-laws and certificate of incorporation by misinterpreting the following
language in the D.D.B. opinion, which the Court issued five years before
Luderer signed Sloan's lien:
Nonetheless, we recognize that harm to a corporation
or its shareholders or prejudice to interested parties
may result when an individual who signs a lien claim
form on behalf of a corporation is not an officer of
that corporation. Accordingly, in the future when a
corporation intends to appoint an attorney to sign,
acknowledge and verify a lien claim, that corporation
must comply with its certificate of incorporation and
by[-]laws to ensure that the attorney executing those
10
We note that even if the signatory requirement applied retroactively – which
is not the case – Sloan would still have to demonstrate that he acted "by virtue
of its By[-]laws, or Resolution of its Board of Directors." There exists
sufficient credible evidence in the record to support the judge's finding that
Luderer did not act accordingly.
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duties is a corporate officer. Execution of a power of
attorney will be deemed inadequate to vest an
attorney-in-fact with the authority of a "duly
authorized officer" pursuant to N.J.S.A. 2A:44A-6.
[Id. at 170.]
The judge considered Sloan's purported "resolution" not because of this
language (although she certainly considered it), but rather, because of the
reference to the resolution on page five of the lien itself. And she considered
all the other evidence to resolve whether the Board of Directors otherwise
elected Luderer as an officer and "duly authorized" him to sign the lien.
The evidence adduced at the plenary hearing demonstrated that Luderer
was an Accounting & Information Systems Manager.11 The Board of Directors
did not identify Luderer in any resolution, by-law provision, or other written
document as a corporate officer, or otherwise. Sloan did not memorialize in
writing that it authorized Luderer to execute lien claims. Sloan's documents
that required identification of corporate officers omitted Luderer's name.
Although requests for classification forms (needed for classification by the
Division of Property and Management) mandated identification of corporate
11
Sloan belatedly raised its retroactivity argument, because the Notarial
mandate in the 2011 Section 8 claim form refers to "Secretary (or other
officer/manager/agent) of the Corporation." As such, Sloan argued that under
that language, Luderer could sign the lien claim as a manager. But Sloan
would still need to show, under paragraph one of the Section 8 claim form, that
he was also an "officer/member," which it cannot do.
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officers, Luderer's name was missing. Sloan produced no credible evidence to
prove that the Board of Directors, as the "Acknowledgment of Corporation"
form says, authorized Luderer's authority in a Board resolution. Additionally,
Luderer is not listed as an officer in corporate meeting minutes, filing forms,
consents of shareholders in lieu of meetings, Luderer's personnel file , or any
other corporate documentation.
The judge disbelieved the testimony of Casabona and Luderer that
Shanley told Luderer that the Board of Directors elected him as an officer.
She concluded that no credible corroborating evidence reflected that election.
The judge stated that there was no proof that "an election was ever held in
which Mr. Luderer was given some sort of designation as a corporate officer
authorized to bind the corporation" pursuant to Sloan's by-laws. She found
that Sloan failed to prove "that there was any election of Mr. Luderer as a
corporate officer in any designation or any form . . . ."
The Legislature intended the courts to stringently apply the CLL's
procedural requirements. NRG REMA LLC, 454 N.J. Super. at 600; see also
Craft v. Stevenson Lumber Yard, Inc., 179 N.J. 56, 67 (2004). The judge did
just that. She recognized that the purpose of the signatory requirement of
N.J.S.A. 2A:44A-6 protects a corporation and its shareholders "by restricting
to a select few individuals the authority to expose the corporation to potential
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25
liability" under the CLL. D.D.B., 176 N.J. at 169. Consequently, the CLL
required a "duly authorized officer" sign the corporate lien claim. We have no
reason to disturb the judge's findings that Luderer was not a "duly authorized
officer."
IV.
We review an award of attorney's fees under an abuse of discretion
standard. Garmeaux v. DNV Concepts, Inc., 448 N.J. Super. 148, 155 (App.
Div. 2016). The judge awarded Diamond Beach's attorney's fees, pursuant to
N.J.S.A. 2A:44A-15(a), which states:
If a lien claim is without basis, the amount of the lien
claim is willfully overstated, or the lien claim is not
lodged for record in substantially the form or in the
manner or at a time not in accordance with this act, the
claimant shall forfeit all claimed lien rights and rights
to file subsequent lien claims to the extent of the face
amount claimed in the lien claim. The claimant shall
also be liable for all court costs, and reasonable legal
expenses, including, but not limited to, attorneys' fees,
incurred by the owner, community association,
contractor or subcontractor, or any combination of
owner, community association in accordance with . . .
([N.J.S.A.] 2A:44A-3), contractor and subcontractor,
in defending or causing the discharge of the lien
claim. The court shall, in addition, enter judgment
against the claimant for damages to any of the parties
adversely affected by the lien claim.
[Emphasis added.]
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The judge rejected Sloan's main contention – that it filed the construction lien
"following the exact same form proscribed by statute" – and concluded that the
lien was not filed "in substantially the form" required by the CLL. The judge
said:
The [CLL] specifically speaks in terms of substantial
compliance with the form or in the manner, and it
seems to this [c]ourt to be illogical to suggest that an
invalid lien whose invalidity is based upon the failure
to comply with the prescribed criteria for filing of a
valid claim would not trigger the application of this
statute. It is not as narrow as counsel suggests, at
least in this [c]ourt's mind.
A lien does not attach or become enforceable "unless the lien claim is filed in
the form, manner and within the time provided by [N.J.S.A. 2A:44A-6] and
[N.J.S.A. 2A:44A-8] of [the] act." D.D.B., 176 N.J. at 167 (alterations in
original). Here, Sloan did not file its lien claim in accordance with the CLL,
and we therefore see no abuse of discretion by the judge.
Affirmed.
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