Hoboken wins appeal, to be reimbursed legal fees in case related to restaurant damage during construction

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Hoboken won their appeal against a construction company that worked on the Washington Street Redesign Project after a restaurant sued the city for damages, with the court citing a contractual-indemnification clause in their bid contract.

A rendering of the Washington Street Redesign Project that was completed in 2019. Photo via hobokennj.org.

By John Heinis/Hudson County View

“Here, Underground is bound by the language of the contract it had with the City, including the contractual indemnification language which required Underground to defend the City in claims, lawsuits, or causes of action, like those set forth in plaintiff’s complaint, arising out of or relating to the work Underground performed in the Washington Street Redesign Project,” Superior Court of New Jersey Appellate Division Judges Robert J. Gilson and Katie A Gummer ruled yesterday.

“Defense of such claims was a ‘risk’ the City ‘insured against’ and a risk Underground accepted when they entered into the contract.”

The Linden-based Underground Utilities Corporation entered into a construction contract with Hoboken in 2016 for their Washington Street Redesign Project, which was completed in 2019.

On November 13th, 2017, The Brass Rail restaurant, located at 135 Washington St., filed a tort claim against the city since street and/or pipe work related to the project led to water damage at the establishment.

This eventually turned into a lawsuit against the city and Underground, which was filed on August 27th, 2018.

After trading a series of court motions, the city moved for partial summary judgement on Underground’s duty to defend, citing the indemnification clause in their contract, in February 2020.

At the same time, Underground moved for summary judgement, which they won, though the appellate ruling says the lower court erred in that decision.

“Instead of addressing the duty to defend issue substantively at the beginning of the case when it should and could have been addressed, the motion judge evaded the issue on inaccurate technical grounds and allowed it to linger,” the appellate decision says.

” … Had he then performed the required side-by-side comparison of the language of the complaint and the language of the contract, the motion judge would have seen that plaintiff’s complaint contained allegations which, if sustained, would have required Underground to pay the judgment.”

With the lower court’s ruling reversed, the city is now entitled to counsel fees and expenses related to the case. Additionally, a lower court will determine those fees.