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D''Annunzio Brothers Inc. v. New Jersey Transit Corp.

Decided: January 28, 1991.


On appeal from the Superior Court, Law Division, Essex County.

King, Long and R.s. Cohen. The opinion of the court was delivered by R.s. Cohen, J.A.D.


Plaintiff, D'Annunzio Brothers, Inc. (DBI) is a contractor which performed construction work for defendant New Jersey Transit Corporation (NJT) at its rail equipment maintenance facility in Kearny. Defendant Seelye, Stevenson, Value & Knecht/Daniel, Mann, Johnson & Mendenhall (SSVK/DMJM) is an engineering joint venture which prepared the technical bidding and contract documents for NJT. Defendant Morrison Knudsen/Parsons, Brinckerhoff (MK/PB) is a joint venture which served as NJT's construction manager.

DBI's action against NJT was for some $1.1 million allegedly owed for roughly 11,000 cubic yards of excavation and fill for which DBI said it should have been paid on a unit-price basis. The claim against SSVK/DMJM was for professional engineering negligence in preparing ambiguous specifications, in the event it turned out that NJT did not have to pay DBI under the contract. The charge against MK/PB was bad faith denial of DBI's claim in its contractual role of ruling on such claims. Defendants filed the appropriate crossclaims against one another.

Defendants moved for summary judgment. Law Division Judge Jared D. Honigfeld found that there was no material fact in dispute, and ruled that all of the defendants were entitled to judgment as a matter of law. We agree, and therefore affirm.

NJT is an instrumentality of the State, created by the New Jersey Public Transportation Act of 1979 to further the State goal of providing an efficient, coordinated, safe, coherent and responsive public transportation system. N.J.S.A. 27:25-2. Its contracts are made only after public advertisement for bids in the manner of other public bodies. N.J.S.A. 27:25-11. In 1984, NJT advertised for bids for site grading, drainage and utility work at the Kearny facility. The work described in the bid documents was complex and detailed. Among other things, it included the installation of hundreds of concrete structures, each of which involved excavation of soil materials and backfilling after installation.

The bid documents were supplied to prequalified prospective bidders in October 1984, and a site inspection and prebid conference was held that month in order to permit bidders to become familiar with the project and raise questions about work conditions, contract terms and specifications. In at least two places, the bid documents advised the bidders to seek prebid correction or clarification by NJT of any perceived contract, drawing or specification obscurities, errors, or discrepancies.

Before submitting DBI's bid for the November 28 bid opening, DBI's chief estimator, who prepared the bid, was aware of an apparent discrepancy regarding the amount of excavation and backfill involved in the contract and the method of paying for it. There were two separate unit-price bid items, for structure excavation and structure backfill, which NJT estimated at a total of 90 yards. DBI says it read the items as including the excavation and backfill for all of the hundreds of structures involved in the contract, even though DBI recognized that the estimate of 90 yards would have been wildly inaccurate for all of the work. (These are the items DBI eventually billed at over 11,000 yards.) DBI submitted the unit price bid of $100 per yard, a multiple of the unit price predicted to NJT by SSVK/DMJM.

Another possible reading of the bid documents was that the cost of excavation and backfill associated with each of the many structures to be installed was to be included in the costs calculated for each structure, and that the separate 90-yard item was for a particular structure in an area where work by another contractor made impossible any accurate estimate of the amount of necessary earth work, and thus made reasonable the requirement for a unit-price bid.

DBI unilaterally rejected this interpretation even though the chief estimator and the company president recognized the discrepancy before submitting the bid, and considered it to be an error on NJT's part. DBI's project manager independently discovered it and discussed it with the chief estimator before signing the actual contract with NJT. He did not mention it to NJT, however, until just after NJT signed the contract which DBI had earlier signed. And, when the project manager was told that NJT disagreed with DBI's interpretation, and would not make unit-price payments for all of the excavation and backfill, DBI went ahead with contract performance, and billed extra for the disputed work in anticipation of this lawsuit.

Before the bids were opened, SSVK/DMJM estimated the total contract was worth some $6.58 million. DBI's low bid was about $6.72 million. The second and third low bids were $6.94 million and $6.98 million. DBI's claim is that it was caused by the ...

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