Opinion
DOCKET NO. A-0277-10T4
08-02-2011
AMERICAN ASPHALT COMPANY, Plaintiff-Appellant, v. DELAWARE RIVER PORT AUTHORITY, Defendant-Respondent.
Daniella Gordon argued the cause for appellant (Cohen Seglias Pallas Greenhall & Furman, P.C., attorneys; George E. Pallas, Janesa Urbano, and Ms. Gordon, on the brief). Christopher R. Gibson argued the cause for respondent (Archer & Greiner, attorneys; Mr. Gibson, of counsel; William F. Gill, IV, on the brief).
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
Before Judges Lisa, Sabatino, and Alvarez.
On appeal from the Superior Court of New Jersey, Law Division, Camden County, Docket No. L-393-09.
Daniella Gordon argued the cause for appellant (Cohen Seglias Pallas Greenhall & Furman, P.C., attorneys; George E. Pallas, Janesa Urbano, and Ms. Gordon, on the brief).
Christopher R. Gibson argued the cause for respondent (Archer & Greiner, attorneys; Mr. Gibson, of counsel; William F. Gill, IV, on the brief). PER CURIAM
This case involves a dispute arising out of a publicly-bid contract for the repaving of parking lots. The contractor, plaintiff American Asphalt Company, Inc., appeals an order granting summary judgment to defendant, Delaware River Port Authority ("DRPA"), dismissing the contractor's claims for price escalation and for payment on additional work it performed.
For the reasons that follow, we affirm the dismissal of the price escalation claim. However, we vacate summary judgment as to the claim respecting additional work, and remand for a trial on that discrete claim.
I.
Although the factual record is unclear and incomplete in certain respects, we summarize the relevant evidence as it was developed in discovery. We consider that evidence in a light most favorable to plaintiff, as the party appealing the entry of summary judgment. See Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995).
American Asphalt is a paving contractor with offices in West Collingswood Heights. DRPA is a bi-state transportation agency, created by a compact between New Jersey and Pennsylvania. See N.J.S.A. 32:3-1 (authorizing the New Jersey Interstate Bridge Commission to enter into an agreement with Pennsylvania to form DRPA). Among other things, DRPA operates the Port Authority Transit Corporation ("PATCO") high-speed rail service between New Jersey and Pennsylvania.
In February 2008, DRPA solicited bids for a parking lot improvement project at the Woodcrest and Ashland PATCO station parking lots. DRPA's bid package contemplated that the project would be completed within approximately seven months after bids were opened. The bid package required that the submitted prices include "all costs of any nature incident to and growing out of the [w]ork[.]" The bid package included detailed specifications concerning the materials to be supplied.
Plaintiff submitted a bid for the project based upon DRPA's specifications. The bid proposed to mill 105,992 square yards of parking area to an average depth of two inches. At a unit cost of $1.90 per square yard, the milling work entailed a sub-cost of $201,384.80. Plaintiff's bid also proposed to supply the project with 106,492 square yards of Bituminous Concrete Surface Course, Mix I-4 ("I-4"), at two-inch depth. The mix was priced at a unit cost of $6.65 per square yard, yielding a sub-cost of $708,171.80.
As defined in section T.6.1.1 of the parties' agreement, milling "consists of the removal of bituminous concrete surface and base courses to the prescribed depth, profile, and cross slope as indicated on the contract drawings."
"I-4 is a 3/4-inch nominal maximum size surface course mix for medium to heavy traffic roadways." N.J. Dep't of Transportation, Standard Specifications for Road and Bridge Construction 2001 tbl. 903-1, available at http://www.state.nj.us/transportation/eng/specs/english/English StandardSpecifications.htm.
DRPA awarded plaintiff, the lowest responsive bidder, the contract for the project on May 6, 2008. Thereafter, on May 22, 2008, the parties executed a lengthy agreement, Contract No. 15K. The contract specified a total price of $1,739,663.32, which was to include the following:
[T]he [c]ontractor's profit and general overhead and all costs and expenses of any nature whatsoever (including without limitation, taxes, labor and materials) foreseen or unforeseen, and any increases in said costs and expenses, foreseen or unforeseen, incurred by the [c]ontractor in connection with the performance of the [w]ork[.]The contract further specified that "all of [the above-cited] costs and expenses shall be borne solely by the Contractor." However, the contract did allow the scope of the work and other terms to be modified, in accordance with certain procedures, which we describe in Part III, infra. The contract further acknowledged that plaintiff could receive additional compensation, again in accordance with certain specified procedures, if it encountered site conditions "differing materially from those ordinarily encountered and generally recognized as involved in the [w]ork[.]"
[Emphasis added.]
DRPA retained an engineering firm, Remington & Vernick
Engineers ("Remington"), to assist it in overseeing the project. The record supplied to us reflects that Remington maintained an active presence at the two job sites, and participated in some of the discussions and decisions relating to subject matters involved in this litigation.
A pre-construction meeting was held on May 28, 2008. At that meeting, plaintiff was informed that Thomas Herron, P.E., would be DRPA's contact person for the work, and that Christopher A. Saporano, P.E., and Paul Magowan, an inspector, would be the contact persons at Remington. Plaintiff was specifically instructed that "[a]ll correspondence" concerning the work, such as "submittals, RFI's, payment applications, etc." were to be "submitted directly to Remington & Vernick Engineers[,] Attn: Christopher A. Saporano, P.E., P.P."
In this context, an "RFI" refers to a written Request for Information transmitted by the contractor.
Shortly thereafter, DRPA sent to plaintiff a notice, which was dated June 6, 2008, and effective June 9, 2008, to proceed with the work within ten days. Plaintiff accordingly began performing the contract.
Beginning in mid-June 2008, what are described in the record as "construction progress meetings" were usually held every two weeks during the project. According to the handwritten sign-in sheets provided in the record, the attendees typically included Herron and other personnel from DRPA; Saponaro from Remington; representatives of plaintiff, including its vice president, Robert Moncrief; and a PATCO representative. Typewritten minutes of each meeting were prepared by Saponaro. Each set of minutes states on its last page that the "minutes stand as written unless comments are received within three (3) working days of the date of issue."
The record contains no such timely corrections.
At the first such meeting, on June 16, 2008, one of the topics concerned so-called "leveling" work in certain portions of the parking lots. This topic was documented by Saporano in the minutes, under Item 1.8, as follows:
We have not located any technical definition of this term in the contract documents. It appears in context to refer to a process of adding, removing, or reshaping material on the parking lot surface, in order to literally make the surface "level."
The format of the minutes was to create a "running" series of entries for each item, so that "[a]ll issues introduced [would] be carried until they are resolved." Subsequent chronological entries under each item were distinguished as follows: bold typeface was used to identify "issues introduced at that meeting"; regular typeface was used to identify "issues carried over"; and italics were used to identify "issues to be removed from the minutes."
June 16, 2008At the second project meeting, which was held the following week on June 23, the leveling issue was discussed again:
[Plaintiff] stated that in Lots 1A & 1B sixty (60) extra Tons of aggregate were required for leveling in areas of the lots where "snow poles" were previously removed
by PATCO. John Rink [of PATCO] stated that he investigated the "snow poles" and verified that they had been previously installed and removed by PATCO. John Rink agreed that leveling the areas with additional aggregate was acceptable to PATCO. [Plaintiff] indicated that they would proceed with leveling in this manner should a similar condition arise in other areas.
June 23, 2008
[Plaintiff] asked for direction with regard to leveling and repairing areas that have an approximate 1/2" unadhered layer after the 2" milling operation has been completed. The DRPA and Remington & Vernick Engineers directed [plaintiff] to remove all loose and unstable materials left behind after milling is complete and provide 2" asphalt overlay as specified in the contract documents. Maintain a maximum [curb] reveal of 7" and ensure that drainage is adequate.
[Emphasis added.]
Two days later, on June 25, 2008, Moncrief sent an RFI to Saporano concerning "[a]dditional material required due to field conditions," specifically for "T.7 Bituminous Concrete Surface Course." In that request, Moncrief inquired:
We need to know how you would like to address payment for asphalt leveling course required due to existing field conditions? Those conditions are as follows: The existing overlay varied from 2 1/4" to 3" thickness. We milled as per our contract at a 2" depth. The remaining material becameThereafter, Item 1.8 of the minutes was updated, at each of the four remaining project meetings, as follows:
loose in various areas due to what would seem a lack of tack coat between the existing base and surface courses. We respectfully feel that this is above and beyond our scope of a 2" overlay as per our contractual obligation.
[Emphasis added.]
July 7, 2008
The DRPA asked [plaintiff] to submit a cost for the additional leveling previously performed and a cost for the additional leveling anticipated in the future. [Plaintiff] was reminded that [it] must follow the procedures specified in the contract documents for work that is out of the original contract scope.
[Emphasis added.]
July 21, 2008
[Plaintiff] submitted a change order request for additional leveling that is currently under review by Remington & Vernick Engineers and the DRPA.
[Emphasis added.]
August 4, 2008
Remington & Vernick Engineers and the DRPA agreed that one change order will be issued to cover all cost adds and deducts for the project.
[Emphasis added.]
August 18, 2008
This item is closed.
The minutes do not specify what this cryptic statement means or who determined the issue to be "closed."
After the project was completed, plaintiff's chief operating officer, Joseph R. Ford, submitted a letter to Saporano, dated September 18, 2008. The letter stated:
After reviewing the above referenced contract and applicable specifications, we are respectfully submitting the enclosed cost detail for additional costs due to the change in scope of work to the site conditions and as discussed in the job progress meetings.
Specifically, the change in scope caused by differing site conditions was the change from 2" milling to 2.5" milling. Please issue the necessary change order request to cover these additional costs as soon as possible.
Summary: $ 204,151.26[Emphasis added.]
15% Overhead 30,622.69
10% Profit 23,477.39
Total $ 258,251.34
In a letter dated September 19, 2008, Saporano responded, citing Section E.3.5.2 of the contract and denying plaintiff's request in its entirety. He stated, "Remington & Vernick Engineers and the DRPA are not aware of any written authorization for the above referenced [m]illing work and therefore consider it to be unauthorized. In light of this, your request for a Change Order for Milling Adjustment is denied."
That provision states, in relevant part, that "Any Work performed by [plaintiff] . . . done contrary to or regardless of the instructions of the Engineer, . . . beyond the lines and grades shown on the Contract Documents or established by [DRPA], and all extra work performed without written authorization will be considered as Unauthorized Work, and will not be paid for under the provisions of the Contract." (Emphasis added).
On September 23, 2008, Moncrief sent a letter to Saporano, hoping to "clear up some confusion in reference to Mr. Ford's letter dated September 18[,] 2008 regarding the change order request for 'differing site conditions'." Moncrief explained that:
The amount requested for the change order is actually $87,251.34, which reflects the difference between $171,000.00 for 2" Milling Average Depth at 90,000 SY in the original contract and the revised pricing of $258,251.34 for 2 1/2" Milling Average Depth at 90,000 SY as submitted.
This change was discussed in depth at our bi-weekly meetings and was to alleviate any additional costs to the DRPA for excessive leveling course that may have been required. This direction was mutually agreed upon by all parties.
[Emphasis added.]
In a letter response, Saporano asserted that "[t]here was never any direction given by Remington & Vernick Engineers or the DRPA to mill the entire parking area to a depth of 2.5 [inches]. If this operation occurred it was done by [plaintiff] at their own discretion and cost." Saporano suggested that plaintiff actually saved money by milling a half-inch deeper to 2.5 inches:
After completing five (5) parking lots, using your original procedure, [plaintiff] may have realized that the removal of loose material was labor intensive and time consuming. In lieu of removing the loose material after milling, [plaintiff] may have decided to mill to a depth of 2.5 [inches], which produced a stable "base" surface that did not need further cleaning. This change in your "means and methods" actually provided [plaintiff] with an over all [sic] cost savings.Saporano again cited Section E.3.5.2 of the contract as a basis to deny plaintiff's request in its entirety. He repeated, as in his prior letter of September 19, that "Remington & Vernick Engineers and the DRPA are not aware of any written authorization for the above referenced [m]illing work and therefore consider it to be unauthorized. In light of this, your request for a Change Order for Milling Adjustment is denied."
Meanwhile, after the project commenced, the market costs of oil and other petroleum products temporarily spiked. This spike in the market also escalated the costs of asphalt mix. As a result, Moncrief sent a letter to DRPA on July 24, 2008. Moncrief's letter, which was in the nature of a change order request, sought additional compensation for the I-4 surface course prices payable to his company under the contract:
Due to the increased costs of fuel energy and petroleum it has become necessary for us to request a change order as per the reference to the NJDOT [New Jersey Department of Transportation] Specifications in your contract documents.
We hope you can understand these costs are out of our control and are extraordinary. The actual bid dated was February 28[,] 2008 with a notice to proceed given for June 9[,] 2008. Attached for your review is the Asphalt Index, in which you will see the financial impact that we feel justifies our request. If you do not agree with this change order, please notify us in writing so we may arrange for a special meeting to address this issue.
See N.J. Dep't of Transp., Asphalt & Cement Fuel Price Index, available at http://www.state.nj.us/transportation/business/trns port/PriceIndex.shtm.
According to the published Asphalt Index, when plaintiff's bid was submitted to DRPA in February 2 008, the average cost of asphalt in the southern region of New Jersey was $362.50 per ton. That average cost rose to $44 7.50 by May 2008, when the contract agreement was executed, and to $517.50 by June 2008, when DRPA issued the notice to proceed. At the time Moncrief sent the change order request in July 2008, the average price had risen to $700.00. Applying a projected per-ton price of $700.00 for August 2008, the request sought an extra $167,651.15 to compensate plaintiff for the price escalation.
Apparently, I-4 surface course is composed of an asphalt mixture. Although its cost is substantially less than that of pure asphalt, a significant change in the market costs of asphalt will produce a corresponding significant change in the costs of I-4 surface course.
By comparison, in the twelve months preceding plaintiff's February 2008 contract bid, the average cost of asphalt on the Index for South Jersey had only increased from $295.00 to $362.50 per ton, a substantial but much less steep, increase.
DRPA denied plaintiff's price escalation request and declined to issue a corresponding change order. It asserted that the contract did not provide for an adjustment based on the Asphalt Index. DRPA advised that plaintiff itself "must assume responsibility for an expense of this nature."
Having failed to obtain any additional compensation based on the extra work or the dramatic rise in asphalt prices, plaintiff filed a complaint against DRPA in the Law Division in January 2009. The complaint sought damages for the increased cost of Hot Mix Asphalt Material ("HMA"), and for additional milling costs.
In June 2010, DRPA moved for summary judgment, which plaintiff opposed with its own cross-motion for summary judgment in July 2010. The trial judge initially denied summary judgment to both parties in an oral ruling, but prior to issuing a written order, the judge identified "some issues" with the record, and requested another appearance by the parties. Following that second oral argument session, the judge granted DRPA's motion for summary judgment and denied plaintiff's cross-motion. The judge concluded that the relevant contract provisions were unambiguous, and that they disentitled plaintiff to any further compensation. The court issued a corresponding order on August 12, 2010, dismissing all of plaintiff's claims with prejudice.
II.
On appeal, plaintiff argues that the trial court erred in granting summary judgment to defendant on both the price escalation issue and the additional work issue. Plaintiff construes the contract documents to authorize recovery on both items. Plaintiff further argues that DRPA's legal position is inequitable, and that the agency's refusal to pay the additional requested compensation allows it to be unjustly enriched.
As we shall discuss, we agree with plaintiff that the trial court erred in dismissing its claims for payment regarding the extra work. However, we do not enter judgment for plaintiff on those particular claims. Instead, we remand for a trial, as there are genuine issues of material fact concerning such matters as the contractual intent of the parties, the precise meaning and significance of the minutes concerning Item 1.8, plaintiff's alleged reliance on direction from Remington and DRPA to perform the extra work, and the supposed assurances that a change order for that work would issue.
By contrast, we conclude that summary judgment was properly granted to defendant on the price escalation issue. We agree with the trial judge that the contract documents unambiguously precluded such a claim. Moreover, legislation that has since been enacted to give certain price protection to asphalt contractors when market prices suddenly escalate does not retrospectively apply to this case.
In reviewing these two central issues on appeal, we bear in mind the court's role in the context of summary judgment practice. Generally, the court must "consider whether the competent evidential materials presented, when viewed in the light most favorable to the non-moving party, are sufficient to permit a rational factfinder to resolve the alleged disputed issue in favor of the non-moving party." Brill, supra, 142 N.J. at 540; see also R. 4:46-2(c). An appellate court reviews a grant of summary judgment de novo, applying the same standard governing the trial court under Rule 4:46. Estate of Hanges v. Met. Prop & Cas. Ins. Co., 202 N.J. 369, 382-83 (2010).
Further, we recognize that the construction of contract terms generally presents a question of law for the court. Bosshard v. Hackensack Univ. Med. Ctr., 345 N.J. Super. 78, 92 (App. Div. 2001). The scope of that legal review includes deciding whether a contract provision is clear and unambiguous. Grow Co. v. Chokshi, 403 N.J. Super. 443, 476 (App. Div. 2008); Nester v. O'Donnell, 301 N.J. Super. 198, 210 (App. Div. 1997). Because such decisions entail questions of law, a de novo standard of appellate review normally applies to the construction of a contract. Thus, a reviewing court will not accord any special deference to the trial court's interpretation of the contract terms. See Fastenberg v. Prudential Ins. Co. of Am., 309 N.J. Super. 415, 420 (App. Div. 1998); Bradford v. Kupper Assocs., 283 N.J. Super. 556, 583 (App. Div. 1995), certif. denied, 144 N.J. 586 (1996).
We now examine the issues on appeal in light of these standards.
A.
We begin with the claim for additional compensation stemming from the additional one-half inch of material that plaintiff removed from all or some of the parking areas. It is undisputed that both the bid proposal and the contract required that plaintiff perform milling to an average depth of two inches. However, once plaintiff began the milling, it encountered what has been described as a "delamination", i.e., disintegration and fragmentation of the base course — the subsurface upon which plaintiff was to lay the surface course of asphalt material.
Both plaintiff and DRPA agree that plaintiff encountered delaminated areas in the parking lots. However, their positions diverge with respect to the facts surrounding the parties' resolution of that condition, in addition to the characterization of the condition itself.
In its statement filed pursuant to Rule 4:46-2 in connection with the parties' summary judgment motions, plaintiff summarized its contentions with respect to the delamination and the need for deeper milling, as follows:
When [plaintiff] began to perform milling at the [p]roject, it encountered unforeseen site conditions. Specifically, upon milling to the specified contractual depth of two inches, the base course of the existing parking lot began to delaminate in uneven patches throughout the lot. These areas of delamination created massive, uneven ditches, and prevented [plaintiff] from repaving without first remediating the condition. At the direction of DRPA, [plaintiff] first performed leveling in order to address the delamination problem. This process required [plaintiff] to
purchase additional HMA in order to fill the uneven areas. In subsequent lots, also at the direction of DRPA, [plaintiff] milled to a depth of two and a half inches as an alternative to leveling.
Plaintiff contends that it specifically advised DRPA of the delamination problem at the progress meetings. Plaintiff thereafter submitted to DRPA, through Remington as DRPA's on-site engineer, a request for clarification. In that request, plaintiff stated that it believed that the additional milling and leveling work was outside the scope of its contract.
In a certification filed with the trial court, Thomas Brown, plaintiff's president, asserted that "[t]he delamination of the base course prevented [plaintiff] from repaving with 2 [inches] of surface course, as specified in the Technical Specifications, without first repairing the problematic condition. [Plaintiff] did not have the option of paving over loose material, or an uneven surface." Brown acknowledged that plaintiff conceivably could have addressed the condition by "either removing loose HMA and adding fresh HMA into the uneven patches, or milling slightly deeper in order to remove the problematic areas entirely." According to Brown, his firm was thereafter "advised to mill an additional half inch if it encountered the problematic subsurface condition." He stated that his company complied with that instruction, but that doing so "resulted in additional debris, labor and trucking costs" that were "not included in [plaintiff's] original bid."
Brown further stressed in his certification that "DRPA made it clear" from the outset of the contract "that time was of the essence, and that DRPA would hold [plaintiff] liable for any and all delays at the [p]roject." He asserted that "[plaintiff] would not have been able to keep the [p]roject on schedule if it had waited [for written change orders authorizing the extra milling work]." He also pointed out that DRPA did, in fact, issue a change order and paid additional sums for the extra leveling that plaintiff performed on the "first lots where it encountered delamination."
DRPA's characterization of the events differs significantly from that of plaintiff. At his deposition, DRPA's on-site representative Herron contended that:
[T]he ultimate resolution [of the delamination issue] was that [plaintiff] requested permission to reduce the amount of loose material that was left behind by milling an additional half inch.Herron acknowledged that additional leveling would not have been provided for in the original contract. He explained that:
So, they milled two-and-a-half inches from the original surface down as opposed to only two inches.
They requested permission to do this . . . [so] that [the] delaminated area would then be picked up by the machine and taken away with the rest of the material. And that would save them the need for sweeping up afterwards with — either by hand or with
sweeping machines or however. Less material that they would have to come in behind the milling machine afterwards to pick up.
And they requested permission to proceed in that manner, and DRPA considered their request. And our response was that we had no objection to it.
And our only comment was we wanted to be sure that once they milled an extra half an inch and the job was done and they replaced only two inches, which was part of the contract, that they didn't leave additional curb reveal. The curbs wouldn't be higher.
So, that was our only comment that as long as the curb reveal doesn't go beyond a certain point — I think we said seven inches — then we had no objections to them milling an additional half an inch.
As it turns out, the curb reveals didn't become a problem and they continued the project using that means and methods of addressing the delamination process.
[Emphasis added.]
[T]here [were] discussions of the fact that milling just as the contract says just to two inches, you have a delaminated section that couldn't be used for the pavement [and] that had to be removed along with the other loose material.Hence, according to DRPA, the reason that additional leveling was not necessary was because plaintiff opted to mill the delaminated areas an additional half-inch — an option that DRPA contends is not compensable.
Therefore, the surface would be irregular and not suitable for paving over, so a leveling course would have been needed.
So, that as an option was discussed. But, as it turns out, providing leveling wasn't needed since [plaintiff] opted for milling an extra half an inch. And once they milled the extra half inch, that produced a surface that was even enough and not in need of lamination. So, they were able to pave.
[Emphasis added.]
DRPA argues that no additional work can be paid for under the contract without a change order, and, moreover, under section E.2.3 of the contract, a change order must be "signed by the Chief Executive Officer" of DRPA. Similarly, section E.2.6 of the contract requires modifications to the contract to be "signed by the Chief Executive Officer of [DRPA]."
Plaintiff concedes that the Chief Executive Officer of DRPA did not sign a change order, nor a contract modification, specifically authorizing payment for the additional milling down to the 2.5 inch level that had been allowed by DRPA's project coordinator and the on-site engineer from Remington. Plaintiff argues that it had no realistic alternative except to proceed with the extra work, lest the project get delayed and possibly cause it to be held financially accountable by DRPA for that delay.
Although we requested, and received, additional submissions from counsel after oral argument to address and attempt to clarify these issues, numerous questions still remain unresolved. Most importantly, we cannot tell with any confidence what the various entries in Item 1.8 within the job minutes signify. It is clear that the parties recognized the delamination problem encountered in the field. It is also clear that the parties ultimately concurred in having plaintiff mill an additional half-inch of material, so long as the curb heights did not become too pronounced.
But we remain unsure what to make of other subjects referred to or implicated by the minutes. The minutes say that "DRPA asked [plaintiff] to submit a cost [amount] for the additional leveling [already] performed and a cost [amount] for the additional leveling anticipated in the future." If DRPA did not intend to pay for that additional prospective work because it was something that plaintiff should have taken into account in bidding for the contract, why did DPRA pay for extra leveling done in the initial areas? What would justify such inconsistent treatment?
Moreover, is the extra "leveling" alluded to in the minutes qualitatively different than the extra "milling" that plaintiff actually undertook, apparently with the blessing of the on-site representatives of DRPA and its consulting engineers? Even if the leveling referred to in the minutes did not encompass any milling, why should those processes, which are jointly referred to in Item 1.8, be logically treated differently for purposes of change orders and additional compensation?
Also, do the "snow poles" that were removed by PATCO, as referred to in the first sentences of Item 1.8, provide a clue? Was only the extra work needed around the snow poles compensable? Or is the snow pole reference in the minutes inconsequential to the payment issue?
The last three sentences of the minutes for Item 1.8 add even more confusion. The July 28 entry states that "[plaintiff] submitted a change order request for additional leveling that is currently under review by Remington & Vernick Engineers and the DRPA." (Emphasis added.). Is that additional "leveling" the same as the additional "milling" that is the subject of this appeal? It appears, at least at that point, that DRPA and Remington had open minds about authorizing some additional payment — or else why would they have plaintiff bother to submit anything?
The next entry, for August 4, then states that "Remington . . . and the DRPA agreed that one change order will be issued to cover all cost adds and deducts for the project." What is meant by this? Is this merely reciting an administrative procedure, telling plaintiff that all of its various claims for greater compensation should be grouped together under a single, omnibus change order request? Or does this wording create a reasonable expectation that DRPA had "agreed" that it would issue, at the very least, "one change order?" If so, a change order for what kinds of work? Leveling? Milling? Both? What exactly are appropriate "cost adds" and "cost deducts" in the lexicon of the minutes? And how would the price be computed in the change order: based on plaintiff's actual increased costs, a per-unit basis, a square footage basis, or some other method?
The last sentence of Item 1.8 is also mystifying: "This item is closed." Does that mean that the claim was conclusively rejected? Or does it only mean that the claim was administratively closed so that the dispute could be litigated or resolved in some forum? And who decided that the matter was closed? Was a change order request even presented to DRPA's chief executive officer for a decision? And what was the basis for the final decision, if any? And how does that square with the August 4 entry, immediately preceding it, announcing that "one change order will be issued?"
The actual meaning of the pertinent contract provisions is uncertain in several other respects. For example, how do the provisions in sections E.2.3, E.2.6, and E.3.3 requiring change orders or contract modifications to be signed by the agency's chief executive officer mesh with section E.3.4, which states that an equitable adjustment to the contract "shall be made" if the engineer confirms that actual site conditions materially differed from what was anticipated? Was the delamination encountered here such a material and unanticipated condition? Can the executive director still refuse to sign a change order or contract modification in such circumstances?
More fundamentally, can the executive director's signature of approval be unreasonably withheld? Can it be withheld if, as plaintiff alleges, the extra milling was specifically authorized in the field, and time was of the essence? Does plaintiff's reasonable reliance, if proven, matter?
In this regard, we note that while courts are generally reluctant to apply estoppel against government agencies, in special circumstances of inequity, we have done so. See, e.g., Vogt v. Borough of Belmar, 14 N.J. 195, 205 (1954) (noting that although "[e]quitable estoppel is rarely invoked against a government entity . . . . [i]t may be invoked to prevent manifest injustice"). Moreover, although we appreciate DRPA's difficult and important mission in providing the general public with safe and affordable means of transportation, it must, like any other government agency, refrain from acting in a wholly arbitrary and capricious manner. See George Harms Constr. Co. v. N.J. Tpk. Auth., 137 N.J. 8, 20 (1994); see also M.A. Stephen Constr. Co. v. Borough of Rumson, 117 N.J. Super. 431, 438 (1971) (citing Cordell, Inc. v. Twp. of Woodbridge, 115 N.J. Super. 442, 449-51 (App. Div. 1971), certif. denied, 60 N.J. 236 (1972) ) (holding that public entities cannot circumvent public bidding laws by arbitrary and unreasonable action).
We thus are left with many questions and few answers concerning the claim for additional work. With the case in such an inconclusive posture, summary judgment was inappropriate. There are genuine issues about the intent of the parties, the chronology of events resulting in the additional work performed, the meaning of the cryptic job minutes and the parties' communications with one another, and other pivotal questions that could affect plaintiff's claim for payment. We therefore vacate summary judgment on this issue and remand for trial.
B.
We turn to plaintiff's rejected claim for additional compensation due to the spike in market prices for asphalt products while the contract was being performed. We agree with the trial court that the parties' contract cannot be fairly read to authorize such a price escalation claim.
We note that our analysis of the price escalation issue here mirrors our similar rejection of plaintiff's price escalation claim against another government agency, the County of Gloucester, in American Asphalt v. Cnty. of Gloucester, A-4360-09T3 (Mar. 29, 2011). We refer to that unpublished case for background purposes only, and not because it is necessarily binding upon plaintiff under principles of collateral estoppel. See R. 1:36-3.
We have already underscored that both the bid documents and the contract itself make clear that the contract price of over $1.7 million was intended to cover all of plaintiff's costs and expenses in performing the work. That included the costs of the hot-mix asphalt used by plaintiff in resurfacing the parking lots.
Plaintiff contends that in entering the contract, it reasonably understood that, based on section T.7 within the contract's Technical Specifications, "the price adjustment provision of the 2001 NJDOT Standard Specifications was incorporated into the Contract." In particular, Brown, the company president, asserted in his certification that "Section 404 of the 2001 NJDOT Specifications, which is referenced in the Technical Specifications for the Project, is an all encompassing specification which applies to all aspects of the production, supply, paving, measurement, billing and method of delivery for HMA." Section 404.25 of the DOT specifications does contain a price escalation clause to protect State contractors when the price of HMA dramatically rises. See Standard Specifications, supra, § 404.25.
Section T.7 of the present contract, headed "Bituminous Concrete Surface Course Mix I-4, 2" Depth," subsection T.7.1.2, "Quality Assurance," provides that: "All work shall conform to the NJDOT Standard Specifications for Road and Bridge Construction, 2001," and specifically includes "Bituminous Concrete Surface Course[,] Section 404[ .]" The preceding subsection, i.e., subsection T.7.1.1 ("Description"), explains that:
This work shall consist of the construction of a surface course of bituminous concrete; the treatment of joints and cracks in bituminous concrete surface course and concrete surface course prior to an overlay; the sealing of saw cuts in bituminous concrete overlays constructed over existing pavement; and the taking of core samples for testing.
This contract provision refers to Section 404 of the NJDOT Standard Specifications for Road and Bridge Construction only insofar as it pertains to quality assurance of the work to be performed under the contract. The contract specifically clarifies that "[i]n all paragraphs marked DESCRIPTION OF WORK or SUMMARY in each Technical Section, the Required Scope of the Work described in that paragraph includes, but is not limited to, those items mentioned in the list."
Most importantly for purposes of our analysis, the description of work in section T.9 in no way indicates that the compensation provisions of NJDOT Section 404 were incorporated in the parties' contract, let alone that such provisions superseded the express pricing and payment provisions elsewhere agreed to in the parties' contract. Plaintiff's circuitous attempt to incorporate the price escalation clause within Section 404.25 of the NJDOT Specifications is simply too oblique and attenuated to adopt.
As in the Gloucester County case, the record is bereft of proof that the parties had a contemporaneous meeting of the minds assuring plaintiff of higher compensation if asphalt prices in the marketplace rapidly inflated while the contract was being performed. Nor is there proof that plaintiff had, and relied upon, an understanding that it would be entitled to such an adjustment if the petroleum market spiked.
There is simply no reason to construe this contract, in retrospect, as having an ambiguity as to price. Although we appreciate the financial burden that plaintiff probably sustained because of the temporary spike in worldwide petroleum costs, that unfortunately was an inherent contract risk that it bore as the bid recipient, not DRPA and the general public. Indeed, other bidders knowledgeable of escalating material costs and anticipating such future cost increases might well have factored that into their bids, resulting in higher bids that were rejected.
We note that since the time that the contract in this case was bid and executed, the Legislature enacted a statute in 2010 according asphalt contractors some price protection in instances of sudden and extreme market increases. See N.J.S.A. 40A:11-16. However, as plaintiff concedes, that remedial legislation does not apply, post facto, to the present contract, and plaintiff's claims of public policy are therefore of no moment.
We have considered the remaining arguments raised by plaintiff and they lack sufficient merit to warrant discussion. R. 2:11-3(e)(1)(E).
Affirmed in part, vacated in part, and remanded for trial.
I hereby certify that the foregoing is a true copy of the original on file in my office.
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CLERK OF THE APPELLATE DIVISION