PARSIPPANY CONSTRUCTION, CO., INC. v. NEW JERSEY DEPARTMENT OF TRANSPORTATION

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-5179-05T25179-05T2

PARSIPPANY CONSTRUCTION,

CO., INC.,

Plaintiff-Appellant,

v.

NEW JERSEY DEPARTMENT OF

TRANSPORTATION,

Defendant-Respondent.

_______________________________

 

Argued: March 12, 2007 - Decided April 19, 2007

 

Before Judges Seltzer and King.

On appeal from the Superior Court of New Jersey, Law Division, Mercer County, Docket No. L-0784-04.

Harold M. Pressberg argued the cause for appellant (Norton & Christensen, attorneys; Mr. Pressberg, of counsel and on the brief).

Wayne J. Martorelli, Deputy Attorney General, argued the cause for respondent (Stuart Rabner, Attorney General, attorney; Patrick DeAlmeida, Assistant Attorney General, of counsel; Mr. Martorelli, on the brief).

PER CURIAM

Appellant Parsippany Construction Company, Inc. (Parsippany), the successful low bidder on an environmental remediation contract with the New Jersey Department of Transportation (NJDOT), brought suit to recover more than $900,000 in excess costs incurred to supply specific fill material on the project. Parsippany, a road contractor which had never before performed an environmental remediation contract, claimed that the contract language was ambiguous, and misled its estimators who prepared its bid.

After a non-jury trial, Judge Jacobsen found in favor of NJDOT and dismissed Parsippany's complaint with prejudice. In her ruling, the judge said that the contract was unambiguous, clearly described the fill material required under the contract in a manner which was not misleading, and placed squarely upon the contractor the burden of procuring material which met the specified contractual requirements. The judge also said that Parsippany failed to exercise due diligence in pricing the material when preparing its bid. The judge found Parsippany was not entitled to additional compensation for the material, beyond the price in its bid proposal. We find no merit to this appeal and affirm for the reasons provided in Judge Jacobsen's nineteen-page oral opinion of April 20, 2006.

The contract was dated June 22, 2001 and was for environmental remediation, the capping of a sanitary landfill at Duck Island, Mercer County. The five bids ranged from Parsippany's $5.921 million low to Carbro's $7.447 million high.

The standard technical requirements of the contract were described in a published volume entitled "New Jersey Department of Transportation, Standard Specifications for Road and Bridge Construction, 1996," and modified by a published set of 1998 Supplemental Specifications (the Standard Specifications).

The Standard Specifications included these provisions:

102.06 Examination of Contract Documents and Site of Project.

The Bidder shall examine carefully the site of the proposed Project and the Contract Documents before submitting a Proposal. The submission of a bid is conclusive evidence that the Bidder has made such examination and is fully aware of the conditions to be encountered in performing the Work and is fully aware of the requirements of the Contract Documents and has considered the following:

1. Investigation of Subsurface and Surface Conditions

[A] Bidder is cautioned to make such independent investigation and examination as necessary to satisfy the bidder as to conditions to be encountered in the performance of the Work and, with respect to possible local material sources, the quality and quantity of material available and the type and extent of processing that may be required in order to produce material conforming to the requirements of the Contract Documents. . . .

204.03 Construction Requirements

Material which does not meet the gradation requirements shall be removed and may be blended to correct gradation off the placement site and then returned to the site. . . .

The contract documents also included a set of project-specific Special Provisions (Special Provisions) which, in part, supplemented or superseded certain provisions of the Standard Specifications. The Special Provisions to the contract were prepared by TAMS, Inc. (TAMS), a professional geotechnical engineering firm retained by NJDOT to design the Project and oversee completion of the work, under the supervision of TAMS' project manager, Andrew Leung, P.E.

The bids of all of the bidders, including Parsippany, consisted of the sum of prices for 97 individual line items, representing the various elements of work required under the contract. For unit price items, the bidder's price for each individual line item was determined by multiplying the bidder's per-unit price for that line item by the estimated required quantity for that line item, as determined by TAMS.

Line Item No. 20 under the contract was identified as "Borrow Excavation." The technical requirements for Line Item No. 20, Borrow Excavation, were described in the Special Provisions, Section 204, paragraph 204.02, and stated:

204.02 Borrow Excavation

THE FOLLOWING IS ADDED:

Borrow excavation used for common fill shall be well-graded, free of organic matter, putrescible or other objectionable materials and shall meet the following requirements:

Sieve Size Percentage by

Weight Passing

50 mm 100

4.75 mm 30-75

75 um 20-30

Plasticity Index 2%-15%

Hydraulic conductivity 1 x 10-5 centimeters per second

This borrow fill specified in paragraph 204.02 was a critical component of the landfill cap, and was to be placed on top of and to protect the polyethylene plastic membrane covering the contaminated material. The borrow fill provided by the contractor has to meet the technical requirements of paragraph 204.02 and was designed to establish a specific level of permeability. If the fill layer was impermeable, rainwater would run off, causing flooding. On the other hand, the fill layer could not be too permeable because permeating water could cause structural instability of the cap.

In preparing the specifications, TAMS estimated that the contractor would need 51,895 cubic meters of the fill identified as Line Item No. 20 and specified in paragraph 204.02. Parsippany's unit price in its bid for Line Item No. 20 was $17 per cubic meter. Parsippany's bid price for Line Item No. 20 was $882,215, i.e., $17 x 51,895.

This was Parsippany's first work on capping a sanitary landfill. It usually did road contracting for NJDOT. After completion, Parsippany submitted a claim seeking recovery of its excess costs associated with procurement of the borrow fill material specified in Section 204 of the Special Conditions, over and above the cost that it estimated when preparing its submission. The claim sought additional payment of $912,966.63. NJDOT denied the claim; this law suit followed.

Judge Jacobsen thoroughly explored the matter in her extensive oral opinion. This is the essential basis for her ruling in favor of NJDOT:

So, the situation that we have here is that Parsippany bid the job with the assumption that common fill would be readily available. They used a bid price based upon their experience with obtaining common fill that didn't need to be blended. And when they actually started performing under the contract they found out that the specifications for this material made it a material that was not readily available in the area. Although ultimately they were able to meet the specifications and as ultimately adjusted by DOT, by blending first with stone and then with sand.

So the issue really comes down to whether or not the contract was clear, whether or not mistakes were made either on one side or on both sides. And if mistakes were made by both parties, who bears the risk of those mistakes in the public bidding process? And given the contract between the parties.

There's general contract law principles which some of the -- there are two cases I relied on. I mentioned one earlier, Driscoll Construction Company v. State of New Jersey DOT, 371 N.J. Super. 304,[] a decision of the Appellate Division from 2004. And also for general contract principles I look at J.L. Davis and Associates v. Heidler, et al., 263 N.J. Super. 264,[] an Appellate Division decision from 1993.

There [is] a lot of discussion with the motion in limine about allowing trade usage as to what common fill means. And the Driscoll case and Davis both note that you have to interpret language in accord with justice and common sense. You have to look at the relationship of the parties, the attendant circumstances and the objects [we are] trying to obtain. And you look at the agreement in the context of the circumstances and give it a rational meaning. And a Court cannot rewrite a contract even if the Court concludes that it would have been desirable to draft it differently. And the Court can't make a better contract for the parties than they made for themselves. And the general purpose of the agreement is to be considered by looking the at sense [sic] of the particular terms. And the literal sense may be qualified by context. And the contract should be given the meaning that comports with the probable intention. So the case law does not have the -- not necessarily the rigid approach that the State had argued in not looking at the trade usage here.

Even when the contract on its face is free from ambiguity, evidence of the situation of the parties and the surrounding circumstances and conditions is admissible in aid of interpretation. And the aim of it is not for the purpose of changing the writing, but to secure the significance. And that comes out of the Driscoll case. So those were among the general principles that I was looking at here. And going to the language of the contract itself, the Department of Transportation gave certain specifications. So when they used the term common fill it was not used -- it was qualified. It was qualified by the particular specifications that were contained in the addendum to the bid documents. And all the bidders had these specific specifications which, as I noted earlier, contained deviations from what the borrow excavation provisions in the standard specification of DOT were.

So, in addition to the word common fill, there were requirements that Parsippany knew they had to meet. And I think that the evidence here does show that there were mistakes -- mistaken assumptions on both sides. I mean, Mr. Leung testified that he had really -- it seems to me you could take from his testimony that he assumed this material would be available. He assumed that there might have to be blending. Mr. Potash mentioned that common fill could include blending. But the whole aim of the contract was to use commonly available materials and not something special like the I-10 that would necessarily be more expensive. So both parties seemed to have gone into this process expecting that these specifications would able to be filled -- be able to be filled somewhat easily. And so the issue, at least for the Court, comes down to who bears the risk of the mistake.

The standard specifications for the DOT in 102.06 does speak in terms of cautioning a bidder to make such independent investigation and examination as necessary to satisfy the bidder as to the conditions to be encountered in the performance of the work and with respect to possible local material sources, the quality and quantity of material available and the type and extent of processing that may be required in order to produce material conforming to the requirements of the contract documents.

So the contract with DOT, as I interpret it, as agreed to by the parties, places the risk on the contractor. Particularly where the specifications are clear, there's no ambiguity into what the sieve size and plasticity index and hydraulic conductivity were. That was clear. And really where the mistake came in was where certain assumptions were made by the contractor regarding what common fill meant. And also where certain assumptions were made by the DOT people about the availability of the material. But the contact itself places the risk on the contractor.

. . . .

But I find that the contract was not ambiguous because the words common fill were clearly qualified by the specifications listed here. And that the contractor has to bear the risk of a mistake even where DOT is not completely blameless. And that DOT, like the contractor, even like Mr. Leung assumed that this material would be available and it wasn't easily available. But looking at that, you know, the Restatement of Contracts and who bears the risk of mistake, it -- my analysis of the facts here, given the specifications in the contract at 204.02, given the provision of the contract that I read earlier, the standard specifications that talks about the bidder's responsibility, I conclude that the burden of the -- the risk of the mistake was on the contractor, and so I will award a judgment [to] the State of New Jersey Department of Transportation.

The judge's conclusion was fully consistent with our deeply embedded public policy which serves to secure for the public the benefits of unfettered competition and to guard against favoritism, improvidence, extravagance and corruption. M.J. Paguet, Inc. v. New Jersey Dep't of Transp., 171 N.J. 378, 386 (2002); Terminal Constr. Co. v. Atlantic Cty. Sewerage Auth., 67 N.J. 403, 412 (1975).

Affirmed.

 

The bids were:

Bidder Bid Price

Parsippany. . . . . . . . . . . . $5,921.111.00

Marsellis-Warner Corp. . . . . . 6,148,307.00

Rosangela Contracting Co., Inc. . 6,691,889.00

Richard E. Pierson

Construction Co., Inc. . . . 6,789.768.10

Carbro Construction Corp. . . . . 7,447,126.97

Driscoll Constr. Co. v. New Jersey Dep't of Transp., 371 N.J. Super. 304 (App. Div. 2004).

J.L. Davis & Assoc. v. Heidler, 263 N.J. Super. 264 (App. Div. 1993).

(continued)

(continued)

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A-5179-05T2

April 19, 2007