New Jersey Appellate Court Holds 2011 Amendment of Construction Lien Law Regarding Authorized Signatory of Claim Forms Does Not Apply Retroactively

New Jersey’s Appellate Division recently held that the 2011 amendment to the Construction Lien Law (the “CLL”) regarding the proper signatory to a construction lien claim does not apply retroactively and that the amendment could not be used by a claimant to validate claims it filed in 2008.  See Diamond Beach, LLC v. Mar. Assocs., Inc., 2018 WL 6729724 (N.J. Super. Ct. App. Div. Dec. 24, 2018).  In the case, the defendant—a subcontractor on a condominium development—filed a construction lien claim in 2008 regarding work it had done on the development and for which it was not paid.  The claim form was signed by an individual who identified himself as an accounting and information systems manager.  Other parties later challenged the claim, arguing that a claim is only valid under the CLL if it is signed by a “duly authorized officer.”  N.J.S.A. 2A:44A-6.  After a plenary hearing, the trial court determined that the 2008 signatory was not a duly authorized officer because there was no evidence that he was given “some sort of designation as a corporate officer,” and the court discharged the lien.  Defendant then filed a motion to vacate the order, arguing for the first time that a 2011 amendment to the CLL—in which the “duly authorized officer” requirement was effectively replaced by a requirement that the signatory be a secretary/officer/manager/agent of the claimant—applied retroactively and validated the manager’s signature on the claim at issue.  The trial court disagreed and denied the motion.

On appeal, the Court affirmed the decision and held that the amendment did not apply retroactively because there was no evidence that the Legislature intended it as such.  After reviewing the legislative history, the Court held that “[t]here 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.”  Additionally, the Court found that the trial court did not err in determining that the 2008 signatory was not a duly authorized agent under the CLL.  “The Board of Directors did not identify [the signatory] in any resolution, by-law provision, or other written document as a corporate officer, or otherwise. [Defendant] did not memorialize in writing that it authorized [the signatory] to execute lien claims. . . . Additionally, [the signatory] is not listed as an officer in corporate meeting minutes, filing forms, consents of shareholders in lieu of meetings, [the signatory’s] personnel file, or any other corporate documentation.”  Accordingly, the Court affirmed that the lien should have been discharged. 

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com, Michael Crowley at mcrowley@riker.com, or Dylan Goetsch at dgoetsch@riker.com.