T HE LEGAL ISSUES THAT ACCOMPA- things, all improvements were to be - PDF document

LAW Construction & Real Estate Clients Often Require Vigorous Advocacy C OMPILED BY M ILES Z. E PSTEIN Top-notch attorneys can minimize risks and, if necessary, fight for clients with the law on their side. E DITOR , COMMERCE the particular project (as, among other repair program to be implemented T HE LEGAL ISSUES THAT ACCOMPA- things, all improvements were to be on an expedited basis. Collectively, the ny construction and real estate at the expense of the private developer parties reached an amicable solution, transactions require vigorous and for its benefit), a lack of jurisdiction contributing funds and repairing the advocacy, from protecting clients from by the trial court relating to state water damages and mold conditions, unnecessary liability to guiding decisions agency determinations, and immunity thereby avoiding time-consuming litiga- that minimize risk and that offer an under the Tort Claims Act for acts or tion, while at the same time allowing upside. These case studies illustrate that omissions of a public entity. The court, all of the parties to reserve their rights fighting can be avoided with the right after hearing oral argument, issued a under various contract documents. counsel and, if it becomes necessary, detailed written decision in favor of our Within three months, the work was having a top attorney in your corner client based on the multiple grounds complete, and the formerly homeless is always a good strategy for the compli- argued in our motion to dismiss and and runaway youth were back in the cated issues that are common for these ordered the claim be dismissed. building. Thanks in part to the efforts key industries. of Connell Foley, these youths are embarking on a brighter future. Connell Foley LLP Cole Schotz P.C. By Michael X. McBride, Esq., By Brian Gardner, Esq., Chair, Construction Day Pitney LLP Chair, Construction Group By Craig Gianetti, Esq., Services Dept. Real Estate Partner Connell Foley advised an Cole Schotz P.C. success- international organization dedicated to We were contacted by a fully represented a New Jersey authority providing food, shelter and crisis care client that was considering in a matter that resulted in a clarifica- to homeless and runaway youth in relocating its headquarters and ware- tion as to when payment bonds are resolving a major construction defect house/distribution facility, currently in required on certain work. Here, suit issue related to significant water/leak- New Jersey, out of state in order to take was brought by a foreign manufacturer ing/mold conditions at the organiza- advantage of logistics benefits. The of amusement ride components that tion’s rights-of-passage building. The client heard about New Jersey incentives were to be incorporated into a large facility houses at-risk street youths, who available to keep businesses and jobs regional development project on prop- for the first time in their lives are work- in New Jersey. After contacting us and erty leased by our client to a private ing, paying rent and supporting their identifying a possible alternative loca- developer. The principal claim by this families. Due to the mold conditions, tion in New Jersey, we performed an subcontractor against our client was the building’s residents had to be tem- analysis of the incentives that could be negligence in failing to require that porarily sheltered in facilities located in available to the client under the GrowNJ a payment bond be posted for the proj- other towns, making transportation to program if they relocated to this alter- ect under the New Jersey Bond Act. and from work very challenging. Connell native site. After performing the analy- We filed a motion to dismiss this claim Foley developed a strategy to work with sis, we prepared a memorandum outlin- based on numerous grounds, including the construction manager, architect and ing the incentives available through tax the inapplicability of the Bond Act to certain trade contractors to devise a credits, as well as bonus opportunities. continued on page 52 COMMERCE • www.commercemagnj.com 50

LAW BANKING continued from page 50 Banks and Credit Unions After discussing the results of the research with the client, we worked with the client to prepare a GrowNJ application Fuel Vital Construction & and worked with the NJEDA representatives in processing the application. The client was eventually awarded tax credits to remain in New Jersey and did not relocate out Real Estate Projects of state. The client has now moved into the new, larger location and has added additional jobs to its workforce. Gibbons P.C. By Russell B. Bershad, Esq., Co-Chair, Real Property & Environmental Dept. Your client is a major conglomerate that owns dozens of domestic facilities and leases hundreds more in the United States and overseas. What do you do when the client announces it plans to divide into three new companies, divide its facilities among them and asks you to spearhead the real estate work involved in trans- ferring the facilities? First step, you put on your management hat, organize a team of lawyers to handle the work, set up a database to assemble and report critical information and enlist the assistance of other lawyers in the firm who are flu- ent in a dozen or so languages needed to review the over- seas leases in-house, while engaging outside lawyers for the balance of the agreements. While many overseas agreements New Jersey’s economic well-being is supported by the are written in English and the local language, others are not capital investments of the state’s banks and credit unions. and you need to understand the terms related to transfers and assignments. With lead lawyers negotiating new head- C OMPILED BY M ILES Z. E PSTEIN quarters leases and a great team of lawyers, well organized E DITOR , COMMERCE and led, completing the reviews, populating the database, managing outside counsel, and carrying out the transfers, E Gibbons got the job done on time and within budget— CONOMIC DEVELOPMENT, CONSTRUCTION AND and the “spin” transaction was successfully completed. real estate projects are fueled by capital investments from area banks and credit unions, who often use inno- vative strategies to help clients get financing. The following Greenbaum, Rowe, Smith & Davis, LLP examples show how this process is vital to New Jersey’s citi- By Dennis A. Estis, Esq., zens, businesses, communities, as well as the state’s economy. Chair, Construction Practice Group Our firm represented a northern New Jersey North Jersey Federal Credit Union condominium association in a construction By Richard Garcia, Chief Lending Officer defect lawsuit against a developer. Almost all of the unit owners in the building, a newly completed 18 story high- Recently, we were able to successfully fund rise with Hudson River and New York City skyline views, had two mortgages and a home equity loan that entered into mortgages that were “taken back” by the devel- larger banks wouldn’t have touched. Two of the oper, which had offered the loans as the mortgagee when loans for mortgages were for longtime members, so we were the units were purchased. The mortgages were then sold by even more delighted to be able to successfully work with the developer to a bank at a discount, with the developer’s them. In both cases, we refinanced mortgages. Both needed principal executing estoppel certificates as required by the to consolidate some debt. There were some minor credit bank. Developers have historically been reluctant to take flags in both cases, but through our due diligence, not back mortgages and be faced with waiting decades for their enough to make either member a true credit risk. We were money, but this permitted the developer to sell the loans at successful in making our members happy. We were also able a discount, and receive the bulk of the payments. The court to fund a home equity loan for a city employee. Again, we ruled in favor of our client, the association, on its defective recognized that larger financial institutions would not have construction claim, and judgment was entered in an amount worked with the member to successfully fund the loan. We slightly under $3 million. The developer, however, believing helped members realize their financial goals. This is what it was judgment-proof as it had discontinued operations and service to our members is all about. continued on page 54 continued on page 54 COMMERCE • www.commercemagnj.com 52