New Jersey Court Allows Developer to Sue for Damages for Bad Faith Appeals by Competitor
In a landmark decision issued July 25, 2017, the New Jersey Superior Court, Appellate Division reversed the dismissal of an action by a shopping center developer seeking damages against a Shop-Rite supermarket owner (Ammons Supermarket, Inc.) and its attorneys (R.S. Gasiorowski, Esquire and Gasiorowski & Holobinko) based on Ammons and Gasiorowski’s filing of a pattern of sham litigation intended solely to prevent competition with Shop-Rite supermarkets within the State of New Jersey. The lower court had dismissed the shopping center developer’s claims for malicious abuse of process, tortious interference with prospective contracts and civil conspiracy, finding that Ammons and Gasiorowski’s conduct constituted protected first amendment speech under the Noerr-Pennington doctrine.
Kaplin Stewart, representing the shopping center developer, successfully convinced the New Jersey Appellate Court that the defendants’ conduct fell within the “sham” exception to the Noerr-Pennington doctrine because the developer alleged that the defendants filed a series of objectively baseless land use appeals from the developer’s project, as well as baseless appeals of other development projects involving supermarkets, intended solely to prevent competition with Shop Rite supermarkets.
By reversing the lower court, and allowing the developer’s case to proceed, the Appellate Court has opened the door for developers to sue third party objectors when they file baseless appeals for the improper purpose of preventing competition.
The New Jersey Appellate Court’s decision in Main Street at Woolwich, et al v. Ammons Supermarket, et al. has been approved for publication but has not yet been published. For a copy of this decision, please contact Marc. B. Kaplin, Esquire and Daniel R. Utain, Esquire at Kaplin Stewart Meloff Reiter & Stein, P.C. at (610) 260-6000 or email@example.com and firstname.lastname@example.org.
Authored by Wendi R. Kapustin (email@example.com). Ms. Kapustin is an American Institute Certified Planner. Ms. Kapustin works in the firm’s Land Use, Zoning and Development Department.
Ringing in the New Year with Changes to the Lien and the New Pennsylvania Mechanic’s Lien Directory
The Pennsylvania Mechanics’ Lien Law (“Lien Law”) was amended to establish a searchable construction project and mechanic’s lien directory which can affect the mechanic’s lien rights of Owners, Contractors, and Subcontractors. The amendments apply to projects having a cost estimate of $1.5 million or more, and they become operable on December 31, 2016.
Finding and Using the Directory
Under the Lien Law amendments, the Commonwealth Department of General Services (“DGS”) is required to set up and operate the searchable directory. This directory (the “State Construction Notices Directory”) is to be a standalone internet website that is linked through the DGS webpage (http://www.dgs.pa.gov). The link to the directory can be found at http://apps.pa.gov/scnd. This link provides an instructional video explaining how the directory functions and allows a user to create an account to file notices. DGS is required to inform the public about the directory and instructions on its use within 120 days of operation by publishing information about it in the Pennsylvania Bulletin.
The Function of the Notices
So, what are the notice requirements under the amended Lien Law? There are four types of notices referenced in the amendments, two of which can be filed by or on behalf of a searchable project Owner, and two by a Subcontractor (as defined in the Lien Law, a subcontractor has a contract to supply labor or material to a prime contractor, or to another subcontractor). The Owner notices are: (1) Notice of Commencement and (2) Notice of Completion. They are entirely discretionary. The purpose of filing a Notice of Commencement is to then require a Subcontractor to file a Notice of Furnishing in order to preserve its lien rights. If a Notice of Commencement is not filed, there is no need for a subcontractor to file a Notice of Furnishing. However, if a Notice of Commencement is timely and properly filed, a subcontractor must timely and properly file a Notice of Furnishing to preserve its lien rights.
The Subcontractor notices are: (1) a Notice of Furnishing and (2) a Notice of Nonpayment. The purpose of filing a Notice of Furnishing is to give the Owner, and others, public notice that a subcontractor has commenced furnishing labor and/or material to the project. The Notice of Furnishing must be filed in the directory within 45 days of the commencement of work by the subcontractor. If a subcontractor fails to timely and properly file a Notice of Furnishing, where a Notice of Commencement has been timely and properly filed, it forfeits its right to file a lien against the project.
The amended Lien Law requires that the contract include a written notice stating that the subcontractor will forfeit its lien rights if it fails to file a required Notice of Furnishing. The form and content of this written notice is found in the amended Lien Law. However, the amended Lien Law is silent as to whether this written notice is to be provided in the contract between project owner and prime contractor or in the subcontract between contractor and subcontractor, or both. It is recommended that project owners should provide this written notice both in its prime contract with the contractor and require the prime contractor to include the written notice in subcontracts and sub-subcontracts.
Content of the Notices
The notice requirements under the amended Lien Law are summarized below. It is important to emphasize that the notice requirements under the amended Lien Law only apply to projects having a cost estimate of $1.5 million or more. They do not apply to projects having a cost estimate of less than $1.5 million. If a project cost estimate is close to the $1.5 Million amount, it would be prudent for an Owner to treat the project as if a Notice of Commencement should be filed.
Notice of Commencement
- A fee (in an amount that has yet to be determined) will be applied to each filing.
- The notice must be filed prior to the commencement of any physical labor or work or furnishing of materials to the project.
- The notice must include: (i) the full name, property address and email address of contractor; (ii) the full name and location of the project site; (iii) the county where the project site is located; (iv) the legal description and tax identification number of the project site; (v) the full name, property address and email address of the record owner of the project site; (vi) the full name, property address and email address of the surety, if a bond is furnished for the project; and (vii) the identification number assigned to the filed notice.
- The notice must be conspicuously posted at the project site prior to the commencement of any physical labor or work or furnishing of materials to the project, and the project owner must make reasonable efforts to ensure that the notice stays posted until completion of the project.
- Project owner must make reasonable efforts to ensure that the notice is made part of the contract documents provided to all subcontractors performing work on the project.
Notice of Furnishing
- The notice must be filed within 45 days after the filing subcontractor first performs work or services at the project site or first furnishes material for the project.
- The notice must include: (i) a general description of the labor or materials furnished; (ii) the full name and address of the person supplying the materials or services; (iii) the full name and address of the person that contracted for those materials or services; and (iv) a description of the project, which is based on the description in the Notice of Commencement.
- The notice must be in the form identified in the amended Lien Law.
- A subcontractor that fails to follow the above procedures forfeits its right to file a lien claim.
- It should be noted that the amendments strictly prohibit a project owner (or anyone acting in its interest) to “suggest, request, encourage or require” a subcontractor to refrain from filing a Notice of Furnishing. Taking such action would subject that person to a misdemeanor criminal charge of the second degree, and a private cause of action by the subcontractor.
Notice of Completion
- Within 45 days of “actual completion of work” for the project, the project owner may file a Notice of Completion to be indexed with the Notice of Commencement.
- The notice is to be transmitted via the directory to all subcontractors that filed a Notice of Furnishing.
- The filing of the notice is “purely precatory and is not dispositive of any relationship among the parties.”
Notice of Nonpayment
- Subcontractors that have not received full payment may file a Notice of Nonpayment.
- The failure to file this notice by the subcontractor “shall not be construed to affect or limit their rights [to file a lien].”
- Filing this notice does not relieve the subcontractor from complying with other written notice requirements under the Lien Law.
As with any change in the law which requires new procedures, there are sure to be some interpretational and perhaps procedural problems with the directory. Yet, Project Owners and Subcontractors each have something to gain from the amended Lien Law notice provisions. An owner that files a Notice of Commencement will benefit from (1) learning which subcontractors are performing work on the project, and which have preserved their lien rights by filing a Notice of Furnishing and (2) possibly avoiding a lien if a Subcontractor fails to properly file a Notice of Furnishing. For a subcontractor, if the notice requirements function to better inform an owner as to the identity of subcontractors on a project, it could encourage an owner to take steps to ensure that its prime contractor timely pays those subcontractors. Still, a clear downside of the notice requirements for a subcontractor is that they create another procedural pitfall to filing and enforcing its lien rights, in addition to those which already exist under the lien statute.
Kaplin Stewart’s Construction Group represents all of the participants in the construction process: Owner/Developer, Contractors, Subcontractors, Suppliers, Design Professionals, and Sureties. The lien law changes will no doubt result in questions or concerns about their effect on the lien rights of owners, contractors, and subcontractors. We invite you to contact one of the lawyers in our Construction Group to help guide you through this new process.
 “Actual completion of work” is defined under the amended Lien Law as one of the following: (i) the issuance of an occupancy permit, and the acceptance of such by the project owner, and accompanied by the cessation of all work on the project; or (ii) the cessation of all work on the project for 30 consecutive days, provided that work is not resumed under the same contract.
For more information, please contact William D. Auxer, Esquire at (610) 941-2519 or firstname.lastname@example.org.
New Philadelphia Wage Theft Law Takes Effect
A new Philadelphia ordinance, effective July 1, 2016, will have a significant effect on employers who fail to pay wages to their employees for work performed in Philadelphia. Titled Wage Theft Complaints, the ordinance provides for administrative and court remedies, and penalties for “wage theft”, defined by the ordinance as any violation of the Pennsylvania Wage, Payment and Collection Law, Minimum Wage Act, or any other federal or state law regulating the payment of wages, for work performed in Philadelphia.
The ordinance applies to unpaid wage claims in an amount between $100 and $10,000. It allows a “claimant” to file a claim with a “Wage Theft Coordinator”, a new administrative office to be administered by the City’s Managing Director’s Office. A claimant is defined as either an employee with an unpaid wage claim, or an “authorized organization” on behalf of the employee. An authorized organization can include a labor union or other organization or party acting on behalf of an employee. After the employer files an answer to the complaint, the Coordinator conducts an investigation and is to provide a written adjudication within 60 days, or 110 days after the complaint is filed, if no answer to the claim is filed.
The complainant’s burden of proof is merely to present “sufficient evidence” to show the amount of work performed and the amount of unpaid compensation due. It meets its burden if the employer is required to keep records of hours worked and compensation paid, but does not do so, or if the records are imprecise or inadequate. Subpoena power is granted to the wage theft coordinator to subpoena documents from any party to the complaint.
If an adjudication of wage theft is made, a written order requiring payment will be issued, which includes findings of fact and conclusions of law. The adjudication may be appealed by either party to a court of competent jurisdiction within 30 days by filing a “new lawsuit”. However, the ordinance provides that the investigative notes, documents, and complaint and answer will be provided to both parties on any appeal. Significantly, the ordinance also creates a private right of action, allowing a claimant to file an action directly in court to enforce rights under the ordinance, without first bringing a claim before a Wage Theft Coordinator.
If a violation of the ordinance is found, the complainant is entitled to recover its attorney’s fees. In addition, administrative penalties can be assessed, with each week of non-payment of wages being considered a separate violation. More significantly, the ordinance gives the City of Philadelphia the option to “deny, suspend, or revoke” any license or permit, issued or pending, to any employer which, during the prior 3 years, has been found to have violated the ordinance, the PA Wage, Payment, or Collection Law, or the PA Minimum Wage Law. Such suspensions are to last for one year, although they would be subject to appeal under the provisions of the Philadelphia Code.
The ordinance also prohibits “retaliation” by an employer for the filing of a complaint under the ordinance. It allows the wage theft coordinator to maintain the confidentiality of the identity of an employee claimant until the complaint is adjudicated, if the complainant alleges that there is a “substantial risk” of employer retaliation.
The Philadelphia Wage Theft Law poses significant additional risk and potential liability to Philadelphia employers who do not pay their employees as they are required to do either by law, or by contract. Apart from the unpaid wage liability, it exposes employers to additional attorney’s fees and penalties, a streamlined process for the litigation of wage claims, and the possibility of a suspension or revocation of their right to conduct business in Philadelphia for at least one year. For employees, the ordinance offers those who have been improperly denied payment for work performed in Philadelphia a much easier and quicker option to commence an official action to recover allegedly unpaid wages, without having to file a lawsuit. Please feel free to contact the author of this article or Kaplin Stewart if you have questions or concerns about this new law.
Andrew B. Cohn, Esq.
Andrew B. Cohn, Esquire
Kaplin Stewart Meloff Reiter & Stein, P.C.
Union Meeting Corporate Center
910 Harvest Drive
P.O Box 3037
Blue Bell, PA 19422-0765
Kimberly L. Russell, Esquire
Kaplin Stewart Meloff Reiter & Stein, P.C.
Union Meeting Corporate Center
910 Harvest Drive
P.O. Box 3037
Blue Bell, PA 19422-0765
(610) 684-2026 (fax)
New Act 91 Notice in Effect Now – REQUIRED by September 1, 2016
The new form may be used now, and MUST BE USED starting September 1, 2016.
There are new, additional requirements for use of the revised form:
Material changes to the standard Act 91 Notice include the following:
- The notice must be sent in English with a Spanish translation on the reverse side. PHFA has also made the notice available in other languages. While only English and Spanish versions of the Notice are required, the agency encourages lenders, when appropriate, to use other versions in addition to English and Spanish.
- The Notice may not be printed on company letterhead.
- The specific cells in the form may not be added to or deleted. If a particular field is not applicable it is to be marked as “N/A.”
- Except for the entry of the date at the top of each page, and the information relevant to the particular homeowner’s account, no other changes to the content of the notice are permitted. If the necessary information will not fit in the cells provided, the cells may be enlarged, or the form may be generated by the lender, but only in a format identical to the official version.
- Other changes to the form’s fonts and formats are NOT permitted.
The “fact sheet” can also be downloaded via the link below and may be (but need not be) provided to homeowners before, or with, the Act 91 notice.
William J. Levant, Esquire
KAPLIN STEWART MELOFF REITER & STEIN, P.C.
Post Office Box 3037
910 Harvest Drive, 2nd Floor (for overnight delivery)
Blue Bell, PA 19422
Phone +1 610-941-2474
Direct Fax +1 610-684-2020
Check out my blog at www.philadelphiacommerciallitigationlawyerblog.com
UNITED STATES SUPREME COURT CLEARS THE WAY FOR LANDOWNERS AND DEVELOPERS TO APPEAL WETLANDS DECISIONS DIRECTLY TO COURT
In a May 31, 2016 unanimous decision, the Supreme Court gave a helping hand to landowners and developers who have received a determination from the Army Corps. of Engineers that a property contains wetlands. These “jurisdictional determinations” often created a quandary for developers. The previous alternatives were not good. Either go through the permit process, typically with significant costs and delays, or develop without the permit and risk potential fines and litigation.
However, in United States Army Corps of Engineers v. Hawkes Co., Inc., Justice Roberts, writing for the Court, presented a much better alternative, i.e., obtain a “prompt judicial review” of jurisdictional determinations without being required to apply for a permit. Therefore, a developer who wishes to challenge a jurisdictional determination may now proceed directly to federal court. The decision is a companion to the court’s 2012 decision in Sackett v. Environmental Protection Agency, which granted a couple the right to sue over a compliance order the EPA slapped on their vacation property in Idaho.
In Hawkes, a Minnesota company that wanted to mine a peat bog on its land which lies 120 miles from the Red River of the North, the nearest navigable river. Nonetheless, the Army Corps determined this land was part of the “navigable waters” of the United States and subject to federal control because water could drain from there to the river. The company was then left with the choice of either seeking a federal permit to begin mining the peat, which would cost more than $100,000 and take years to complete, or go ahead with the development and risk fines of up $37,000 a day and perhaps criminal prosecution for illegally discharging pollutants into protected waters. Instead, the Justices permitted the company to proceed directly to court and to challenge the government’s claim that the peat bogs are connected to navigable waters. They “need not assume such risks [of huge fines] while waiting for EPA to drop the hammer in order to have their day in court,” said Chief Justice Roberts.
Justice Anthony M. Kennedy hinted he and others may go further if the judicial review proves ineffective. In a concurring opinion joined by Justices Alito and Thomas, Kennedy said he remained concerned about the “ominous reach” of environmental regulators. This authority “continues to raise troubling questions regarding the government’s power to cast doubt on the full use and enjoyment of private property throughout the nation,” he said.
The decision, apart from being a victory for landowners and developers, brings some measure of equality to this specific property rights dispute. The Court recognized that an n “affirmative” JD, has legal consequences because it deprives property owners of the five-year safe harbor that “negative” JDs afford. This conclusion also takes a more pragmatic approach to the issue of when “final” agency action is reviewable by the courts. In any event, this decision also gives landowners and developers hope for a more restrained regulatory scheme under the Clean Water Act. “The reach and systemic consequences of the Clean Water Act remain a cause for concern,” Justice Kennedy wrote in a concurrence joined by Justices Clarence Thomas and Samuel Alito. Citing Alito’s opinion Sackett, Kennedy said “the Act’s reach is ‘notoriously unclear’ and the consequences to landowners even for inadvertent violations can be crushing.”
For more information, please contact Neil Andrew Stein, Esquire at (610) 941-2469 or email@example.com
SAY GOODBYE TO THE PENNSYLVANIA CAPITAL STOCK AND FOREIGN FRANCHISE TAX
Governor Tom Wolf recently confirmed that as of January 1, 2016, Pennsylvania’s Capital Stock and Foreign Franchise tax (the ” CST“) has been phased out. There have been several last minute resurrections of the CST, but it looks to have finally met its slow and painful end.
These taxes were imposed on corporations, limited liability companies (LLCs), business trusts, and other companies doing business within Pennsylvania. Domestic corporations were subject to the Capital Stock Tax, while foreign corporations were subject to the Foreign Franchise Tax on capital stock apportioned to Pennsylvania. These taxes were imposed in addition to any applicable taxes on net income.
The Pennsylvania Department of Revenue has also noted that the elimination of the CST means that many business types, such as S corporations, LLCs taxed as pass-through entities, and business trusts will be filing their final corporation tax returns for 2015. These returns should be marked as “final returns”.
As a result of the elimination of the CST, it is likely most real estate investments will be acquired in LLCs rather than Limited Partnerships. Historically, Limited Partnerships were the entity of choice for real estate because they were not subject to the CST. LLCs are considered a more efficient entity because, unlike limited partnerships, LLCs do not require the creation of a second entity to act as the general partner.
For more information, please contact Maury B. Reiter, Esquire at (610) 941-2476 or firstname.lastname@example.org.
NEW HIRING RESTRICTIONS ON PHILADELPHIA EMPLOYERS
Philadelphia Mayor Michael Nutter has signed into law an amendment to Philadelphia’s “Ban the Box” legislation that places significant additional restrictions on employers seeking to determine whether prospective employees have criminal records.
Under the prior Ban the Box law, employers could not ask about an applicant’s criminal history on an employment application or in an initial interview, but could conduct criminal background checks after the initial interview and before making a job offer. Under the amended Ban the Box law, employers can only conduct criminal background checks after the employer makes a conditional offer of employment to an applicant. The amended law applies to all public and private employers in the City of Philadelphia with one or more employees, as opposed to employers with ten or more employees under the prior law.
Employers conducting criminal background checks can only look back for the last seven years of an applicant’s criminal record, excluding periods of incarceration. Under the prior law, employers could review and consider the applicant’s prior criminal history as far back in time as the employer saw fit in its discretion. Employers now must consider guidelines when determining whether to disqualify an applicant on the basis of a criminal record and if an applicant is rejected due to a criminal record, the employer must so notify the applicant and send to the applicant a copy of the criminal history report. Applicants then have ten days to produce evidence that the report is inaccurate or to explain the criminal history. Applicants who are rejected for positions on the basis of a criminal background check have three hundred days to file a complaint with the Philadelphia Commission on Human Relations. The amended Ban the Box law takes effect 90 days from December 15, 2015.
The above changes are substantial and open another avenue for claims against employers. Employers need to amend their hiring practices and ensure that managers who interview applicants are aware of the new restrictions. For more information or to discuss how the amended “Ban the Box” law can affect your business, please contact Kimberly L. Russell, Esquire at (610) 941-2541 or email@example.com.