On appeal from Superior Court of New Jersey, Law Division, Middlesex County.
Morton I. Greenberg, J. H. Coleman and Gruccio. The opinion of the court was delivered by Coleman, J.h., J.A.D.
This case involves a claim by a contractor against the State for delay damages arising out of a public construction project. The crucial question raised by this appeal is whether the exculpatory "no delay damage" clause in the contract precludes recovery. The trial judge sitting without a jury concluded that this clause did not preclude recovery. He awarded the contractor delay damages. We now reverse and enter judgment for the defendant.
The facts essential to our decision are not complicated despite the lengthy statement of facts in the briefs. On July 1, 1977 plaintiff Edwin J. Dobson, Jr., Inc., contracted with the New Jersey Division of Buildings and Construction (DOBC) to furnish and install a low pressure steam distribution system for 27 buildings at the State Home for Boys in Jamesburg. The contract called for the removal of about 2,000 feet of old pipe as well as the removal and/or installation of about 6,000 feet of underground conduits. The contract documents used in the bidding process called for Ric-Wil "galvanguard" conduit, but a bid could have been based on a substitute conduit of like quality if written approval was obtained. The notice to proceed with the job was given on July 1, 1977. The contract required the project to be completed by April 12, 1978. The job was not completed, however, until February 21, 1979 due to a series of delays.
On July 8, 1977 plaintiff submitted a purchase order to Ric-Wil for the required piping and materials. Ric-Wil did not respond to the purchase order until August 1, 1977 when its manager of sales and marketing, Carl D. Whisler, advised plaintiff that the purchase order contained conditions unacceptable to Ric-Wil. It agreed to accept the purchase order only if modified as follows:
1. Receipt of necessary field measurement values.
2. RICWIL, Inc. terms and conditions of sale will prevail in lieu of [plaintiff's] terms. . . .
3. Shipments will be made on a cash-in-advance basis with payment received at RICWIL prior to shipment.
4. No portion of the purchase price will be withheld.
5. RICWIL will provide "RICWIL Fiberglass insulation" to meet the heavy density fiberglass specification requirement.
6. Release of certain invoice dated January 30, 1975 is made.
The release related to a January 1975 invoice for $264,833 arising out of a sewer project known as the Southern Water Pollution Control Facility for the Ocean County Sewerage Authority. It was this outstanding claim for which plaintiff had sued Ric-Wil that apparently motivated Ric-Wil to insist on the foregoing modifications in plaintiff's purchase order. Ric-Wil wanted to protect itself against plaintiff attempting to satisfy its claim from proceeds payable pursuant to the present purchase order.
On or about August 9, 1977, plaintiff requested permission to use a substitute conduit because plaintiff was unwilling to comply with all of the conditions demanded by Ric-Wil. Joffre Lewis, Deputy Director of DOBC, held a conference in his office on August 16, 1977 concerning the request to use a substitute. Lewis advised plaintiff that the request for a substitution was rejected. He further advised plaintiff that unless plaintiff and Ric-Wil reached an agreement on the purchase order, DOBC would buy the conduit from Ric-Wil and back-charge plaintiff the purchase price plus a penalty. The rejection of a proposed substitute and the threat of a penalty persuaded plaintiff to accept Ric-Wil's conditions on August 16. Ric-Wil accepted plaintiff's order with the modifications on September 13, 1977.
Ric-Wil submitted a shipping schedule which called for shipments weekly between December 2, 1977 and January 20, 1978. DOBC granted plaintiff a 39 day delay extension because of the Ric-Wil problem. The shipping schedule meant that the conduit would arrive during the winter when bad weather could cause further delays in the installation. As it turned out, Ric-Wil was late with its deliveries. Consequently, plaintiff requested that Lewis grant ...