Legge Industries v. Joseph Kushner Hebrew Academy

In Legge Industries v. Joseph Kushner Hebrew Academy, 333 N.J. Super. 537, 756 A.2d 608 (App.Div.2000), the Court addressed the issue of a property owner's maximum liability under N.J.S.A. 2A:44A-10. In Legge, the masonry subcontractor, Pond, defaulted, and its suppliers, plaintiffs, filed a lien under the CLL. In challenging the lien fund available to plaintiffs, plaintiffs alleged, among other things, that the owner had made improper advance payments to Pond which thus depleted the lien fund. Plaintiffs also claimed an interest in the retainage provided for under the terms of the contract. The Court reversed the trial judge's grant of summary judgment to the owner, finding that there was a factual issue as to the nature of the payments and whether Pond had actual knowledge that plaintiffs had not been paid. The Court framed the issue this way: "Is the 'lien fund' that is available to satisfy suppliers, and thus the property owner's maximum liability to those claimants, reduced by premature or otherwise unearned payments to the prime contractor, as long as they were made before the suppliers' liens were filed?" Legge, supra, 333 N.J. Super. at 547, 756 A.2d 608. The Court answered that question in the negative and said, "we hold that a property owner's maximum liability under the Lien Law--the 'lien fund'--is not reduced by payments to the contractor that were not earned and due before the suppliers' liens were filed." Ibid.