Update: New Jersey Supreme Court Refuses to Overturn Decision Allowing Salvaged Materials to Pay Lien Claimants

Update: New Jersey Supreme Court Refuses to Overturn Decision Allowing Salvaged Materials to Pay Lien Claimants

October 11, 2018

In late April we reported on a New Jersey Appellate Court decision holding that funds obtained from salvaged materials could be used to pay lien claimants.  Despite opposing arguments that non-monetary payments should not be considered as part of the contract payment, the New Jersey Appellate Court held that salvaged materials valued at over $2,000,000 from a demolition project were part of the lien fund used to pay unpaid subcontractors.  Subsequently, the property owner and subcontractor appealed to New Jersey’s highest court.  In a recent decision, the New Jersey Supreme Court refused to hear the appeal, and therefore refused to overturn the Appellate Court’s decision.  The ruling follows New Jersey’s legislative intent to prevent owners from enjoying the benefit of labor and materials without paying for them.  The Appellate Court previously reasoned that the salvaged materials increased the value to the property and thus were an essential component of the "payment" under the NRG contract even though those materials constituted non-monetary consideration.  

Please click here to read the previous blog post on the original New Jersey Appellate Court Decision.