THE INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA v. DON SIEGEL CONSTRUCTION, INC.

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0888-05T5888-05T5

THE INSURANCE COMPANY OF THE

STATE OF PENNSYLVANIA,

Plaintiff-Appellant,

v.

DON SIEGEL CONSTRUCTION, INC. and

GULF INSURANCE COMPANY,

Defendants-Respondents.

_____________________________________

 

Submitted June 5, 2006 - Decided June 19, 2006

Before Judges C.S. Fisher and Miniman.

On appeal from the Superior Court of New Jersey, Law Division, Cumberland County, Docket No. CUM-L-679-02.

Harry R. Blackburn for appellant (John E. Hilser, of counsel and on the brief).

Angelini, Viniar & Freedman for respondent Don Siegel Construction, Inc. (August E. Knestaut, of counsel and on the brief).

McElroy, Deutsch, Mulvaney & Carpenter for respondent Gulf Insurance Company (James M. Mulvaney, of counsel and on the brief).

PER CURIAM

In this appeal, plaintiff The Insurance Company of the State of Pennsylvania (plaintiff) argues that the trial judge erroneously granted summary judgment dismissing its complaint by concluding that plaintiff and defendant Don Siegel Construction, Inc. (Siegel) failed to enter into an enforceable contract despite their extensive discussions. We agree that the facts, when viewed in a light most favorable to plaintiff, do not permit a finding that an enforceable contract was formed and, therefore, affirm.

The controversy that led to the filing of a complaint by plaintiff against Siegel and defendant Gulf Insurance Company (Gulf) had its genesis in a contract that MED Construction, Inc. (MED) entered into with the City of Vineland for water distribution improvements. Plaintiff had issued a performance bond guaranteeing MED's performance. In December 1999, MED defaulted and Vineland demanded that plaintiff take steps, as required by its bond, to complete MED's contractual obligations.

In early 2000, plaintiff entered into negotiations with Siegel, a subcontractor on the project at the time of MED's default. In March 2000, Siegel proposed to start the work in April and to complete the work within 150 days in exchange for $1,414,729. The April start date was significant to Siegel because the anticipated good weather and long work days at that time of the year would speed the completion of the project. At the time of this proposal, however, plaintiff had not finalized a takeover agreement with Vineland -- an essential requirement to Siegel's future performance.

Anticipating its entry into a contract with plaintiff, Siegel discussed with Gulf its issuance of a bond insuring Siegel's performance. On April 3, 2000, Gulf executed a performance and payment bond in favor of plaintiff and forwarded it to Siegel for execution and delivery to plaintiff if and when the contract between plaintiff and Siegel was executed. Siegel forwarded a copy of the bond to plaintiff but later, on May 31, 2000, because Siegel and plaintiff had not concluded their negotiations, and because plaintiff and Vineland had not concluded their negotiations regarding a takeover agreement, Siegel returned the original bond to Gulf.

In June 2000, still believing its continued negotiations with plaintiff might produce a binding contract, Siegel again asked Gulf for a bond. Gulf changed the date on the original bond that it had previously prepared, and sent it back to Siegel.

On June 27, 2000, Siegel advised plaintiff that the delays in reaching a binding contract required that it raise the price for the contract to $1,595,936.57. Yet another revised bid was sent to plaintiff on July 8, 2000. During July, Vineland considered putting the job out to public bidding rather than contracting with plaintiff to have the work finished.

In August 2000, plaintiff represented to Siegel that a takeover agreement with Vineland would be imminently signed. On August 8, 2000, Siegel signed a completion contract with a price of $1,476,000, leaving blank other material terms such as the effective date of the contract, the start date for the work, the end date for the work, and the completion date from which liquidated damages would be determined. Siegel forwarded a copy of this document to plaintiff on August 9, 2000 under cover of a letter which stated that "[a]s part of this agreement, you will be releasing the monies owed to [Siegel] for the Moorestown (Schoolley Street) project." On August 29, 2000, plaintiff issued and forwarded a check for $17,756.63 in satisfaction of Siegel's claims regarding this other, unrelated project.

Plaintiff did not execute the completion contract until September 18, 2000; Siegel claimed it was never forwarded by plaintiff.

On October 10, 2000, plaintiff issued to Siegel a notice to proceed with the work pursuant to the completion contract. This notice, however, also stated that work was to proceed only after plaintiff received an acceptable performance bond in favor of both plaintiff and Vineland. The notice also stated the completion date was February 9, 2001. In response, on October 24, 2000, Siegel wrote to say that due to the time that had elapsed, which caused increased costs in materials and potential increased time for completion of the work due to the time of year, that Siegel "will require [an] increase [in] our contract amount, as well as time adjustments to our contract."

The takeover agreement between plaintiff and Vineland was finally executed on October 16, 2000. Neither Siegel nor Gulf ever delivered the original Gulf bond to plaintiff; indeed, Siegel never signed it or paid for it. And the concerns addressed by Siegel in its October 24, 2000 letter, regarding the impact on the purchase price caused by the delays, were never addressed by plaintiff.

Later, in December 2000, plaintiff took the stance that Siegel was in default and demanded performance under the Gulf bond.

On June 4, 2003, plaintiff filed its complaint in this action against Siegel and Gulf, alleging Siegel's breach of the completion contract and Gulf's breach of its obligations on the performance bond. The dispute regarding the enforceability of the completion contract, and Gulf's alleged concomitant obligations on the bond, were considered by the trial judge when each of the three parties filed motions for summary judgment.

The familiar standard applicable to these motions required that the trial judge 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 v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). On appeal, we apply the same standard. Antheunisse v. Tiffany & Co., 229 N.J. Super. 399, 402 (App. Div. 1988), certif. denied, 115 N.J. 59 (1989).

None of the parties alleged that there were disputed materials facts precluding the entry of summary judgment. The trial judge canvassed the facts we briefly outlined above, concluding there was a lack of a meeting of the minds of the parties because the time for performance was material and the delay in executing both the completion contract and the takeover agreement precluded any agreement on that important point.

As the trial judge recognized, the viability of plaintiff's complaint turned on fundamental concepts of contract law. That is, in considering plaintiff's claim of Siegel's breach of contract, the judge was first obligated to determine whether the parties had entered into an enforceable contract. A contract "arises from offer and acceptance, and must be sufficiently definite 'that the performance to be rendered by each party can be ascertained with reasonable certainty.'" Weichert Co. Realtors v. Ryan, 128 N.J. 427, 435 (1992) (quoting West Caldwell v. Caldwell, 26 N.J. 9, 24-25 (1958)). This concept requires that the parties agree "on essential terms and manifest an intention to be bound by those terms." Weichert, supra, 128 N.J. at 435. As summarized by our Supreme Court over fifty years ago:

It is fundamental that the essential element to the valid consummation of a contract is a meeting of the minds of the contracting parties and that until there is such a meeting of the minds either party may withdraw and end all negotiations. . . . "So long as negotiations are pending over matters relating to the contract, and which the parties regard as material to it, and until they are settled and their minds met upon them, it is not a contract, although as to some matters they may be agreed."

[DeVries v. The Evening Journal Ass'n, 9 N.J. 117, 119-20 (1952) (quoting Tansy v. Suckoneck, 98 N.J. Eq. 669, 671 (E. & A. 1925)).]

Governed by this approach, we agree with the trial judge that the discussions of plaintiff and Siegel never ripened into an enforceable contract. Although they agreed upon many of the elements of a proposed contract, the absence of a meeting of minds as to the start and completion date for Siegel's performance, which impacted upon an agreeable price for Siegel's performance, precluded any certainty as to the benefits the parties would receive from their anticipated agreement.

Plaintiff, however, insists that even though the last version of the contract left blank the date for commencement of the work, Siegel understood that this was subject to Siegel's own submission of a schedule, which was also subject to Vineland's approval. Plaintiff nevertheless argues that "[a]greeing to have the time frame for the project determined to the satisfaction of the City of Vineland is perfectly appropriate and does not render the agreement indefinite" because the contract sets a practicable method to determine the essential terms, relying upon the concept, discussed in Moorestown Mgmt. Inc. v. Moorestown Bookshop, 104 N.J. Super. 250, 259 (Ch. Div. 1969), that "an agreement is not enforceable for lack of definiteness . . . if the parties specify a practicable method by which the amount can be determined." Certainly, we agree that there are instances in which an incomplete written recitation of a contract's terms may nevertheless provide a basis for performance. But, here, all of the material terms were tied together, each being a linchpin to the entire understanding of all the parties. That is, an agreement as to the time for Siegel's performance could not be reached without Vineland's agreement to plaintiff's takeover of the job; the amount of money to which Siegel sought to be paid for the work could not be agreed upon until the time within which Siegel was to perform the work was agreed upon, and Gulf's promise to bond plaintiff's and Siegel's performance could not be triggered until all the terms of the agreements between plaintiff and Vineland, and plaintiff and Siegel, had been settled upon. All the provisions and circumstances remained uncertain and were never ultimately finalized.

For these reasons, we conclude, as did the trial judge, that an enforceable contract between plaintiff and Siegel did not arise from these circumstances, and that, in the absence of such an enforceable contract, Gulf was not obligated in any respect.

Affirmed.

 

For example, the provision that purported to stipulate the effective date of the agreement stated that plaintiff and Siegel "agree that the effective date of this Agreement is August ___, 2000" and, thus, was silent on the precise effective date of the agreement -- a material part of the bargain.

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A-0888-05T5

June 19, 2006