News & Noteworthy

Authored - NJ Contract Law Update - Instructive Opinion on (1) Performance "Under Protest" and (2) Prejudgment Interest
JUNE 14, 2013

In Pine View Estates v. Brick Municipal Authorities, __ N.J.Super. __, 2013 WL 1788299 (App.Div. April 29, 2013), the Appellate Division (which upheld the trial court's decision) issued on instructive Opinion regarding (1) the issue of "payment under protest"; and (2) the circumstances under which prejudgment interest may be suspended or denied in a contract dispute, especially with a governmental entity.

Pine View involved an agreement between a developer and a municipal utilities authority (the "Authority"). Thus, there potentially were unique considerations relating to government contracts. And certainly the subject matter (offsite improvements relating to land development) had some sui generis governmental considerations. Nonetheless, the first issue discussed below --the most important one--does not appear to have been materially influenced by the governmental context.

By way of broad overview, Pine View is instructive on two issues:

  1. Where the agreement did not expressly cover what would happen if off-site improvements were made (by demand of the Authority) going beyond any requirement in the contract, the Court validated plaintiff's decision to proceed "under protest". Specifically, the Court held that plaintiff's contemporaneous written expression that ongoing performance was "under protest" and "with a reservation of...rights"--even in the face of an immediate contrary response by the Authority--was sufficient to preserve (for litigation) the issue of entitlement to partial compensation. Certainly, the Court said, that issue was preserved as against the issues raised by the Authority of: (1) equitable estoppel; (2) the embedded issue (in equitable estoppel) of the Authority having been misled (not so, the Court said--Pine View was clear in its position throughout); and (3) laches (seemingly raised via facts similar to the unsuccessful equitable estoppel-defense).
  2. On a contract issue where governmental status was deemed important, the Pine View Court denied prejudgment interest. It did so because (a) there were no "dilatory tactics...or unreasonable position[s]" on) the part of the Authority; and (b) the Authority was a "governmental agency"--a status (under prior case-law cited in Pine View) presumptively contraindicating the award of interest.

In sum, Pine View is somewhat instructive on the issue of prejudgment interest, but is particularly enlightening in terms of the issue of performance1 "under protest--an issue which is rarely discussed analytically in the case law. Because Pine View was upheld in its 'payment under protest' position as against a governmental entity, such a stance seems likely to survive a fortiori in a non-governmental context.

Contact & Legal Disclaimer

Clark Alpert is the author of Guide to New Jersey Contract Law, published by the New Jersey Institute for Continuing Legal Education, originally published in 2007 and updated in November 2011. His updates on New Jersey contract law are based in recent issues and practical methods for addressing similar situations in your practice or business. They are not intended to serve as legal advice. Clark welcomes your questions and comments.

1 In most other cases, the "performance" under protest is "payment".

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