On appeal from the Superior Court of New Jersey, Law Division, Essex County.
King, Gaulkin and Gruccio. The opinion of the court was delivered by King, P.J.A.D.
This is an appeal by leave granted, R. 2:2-3(b), by defendant, New Jersey Department of Transportation (DOT), from an order denying its motion for summary judgment. The issues are (1) whether the doctrine of equitable estoppel was properly invoked to enlarge the period of limitations for filing suit under the Contractual Liability Act, N.J.S.A. 59:13-1 to 10, and (2) when is a project "complete" within the terms of the standard DOT construction contract.
The plaintiff, W.V. Pangborne & Co., Inc. (Pangborne), is a licensed electrical contractor. DOT was the owner of a construction project known as the "Erie Lackawanna Electrification Conversion Extension and Rehabilitation, New Providence to Gladstone line work" (Erie). Pangborne filed suit against DOT seeking damages for cost overruns in connection with work performed on the Erie project.
In 1980, DOT solicited bids for the extension and rehabilitation of Erie. DOT made available to all bidders information on subsurface conditions and other specifications. On October 6, 1980 Pangborne submitted a bid on a portion of the construction project which was accepted as the low bid.
On November 19, 1980 DOT contracted with Pangborne to furnish all labor and materials necessary for the project and all allied works required in accordance with the plans and specifications. The contract included the standard contract terms employed in construction projects with DOT.
The contract's official starting date was December 19, 1980. The work did not actually start until February 18, 1981. Early in the project, Pangborne began to encounter subsurface conditions not described in the original specifications or otherwise
contemplated by the parties. Pangborne submitted change orders requesting additional compensation. The requests were reviewed by the DOT and denied on November 17, 1983. The denial letter stated:
If W.V. Pangborne and Co., Inc. wishes to pursue this claim any further, they may do so by submitting the claim in accordance with N.J.A.C. 16:33.2-1 through 2.8.*fn1
On July 3, 1985 Pangborne submitted a claim pursuant to N.J.A.C. 16:33-2.5. Processing of the claim was protracted; documentation was requested and supplied over a period of 15 months. During that time DOT forwarded Pangborne a release form for the contract balance. Pangborne executed the release on July 25, 1985. On August 14, 1985 DOT notified Pangborne that the July 25, 1985 document contained an unqualified final release:
We have, however, previously received a claim for subsurface rock and a steel supplier claim. We must assume that the claim has been withdrawn or the unqualified release has been submitted in error.
Pangborne executed a new release which expressly reserved its claims pending final review. On December 20, 1985 the State accepted Pangborne's qualified release and tendered final payment. Pangborne received the payment on January ...