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Dawson Corp. v. National Union Fire Ins. Co. of Pittsburgh

November 8, 1995

THE DAWSON CORPORATION, A CORPORATION OF THE STATE OF NEW JERSEY, PLAINTIFF-APPELLANT,
v.
NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA, A CORPORATION AUTHORIZED TO TRANSACT BUSINESS IN THE STATE OF NEW JERSEY, DEFENDANT-RESPONDENT, AND FALCONE CONSTRUCTION CORPORATION, A CORPORATION OF THE STATE OF NEW JERSEY, PRESSURE CONCRETE & GROUTING CO., INC., A CORPORATION OF THE STATE OF NEW JERSEY, AND NEW JERSEY HIGHWAY AUTHORITY, AN INDEPENDENT AUTHORITY OF THE STATE OF NEW JERSEY, DEFENDANTS.



On appeal from the Superior Court of New Jersey, Law Division, Monmouth County.

Approved for Publication November 8, 1995.

Before Judges Havey, D'Annunzio and Conley. The opinion of the court was delivered by Conley, J.A.D.

The opinion of the court was delivered by: Conley

The opinion of the court was delivered by CONLEY, J.A.D.

Plaintiff, a landscape subcontractor on a construction project for the New Jersey Highway Authority (Authority), appeals a summary judgment granted in favor of the general contractor's surety, National Union Insurance Company (Surety), and an order permitting the release to the surety of monies held by the Authority. *fn1 Plaintiff has been paid $81,300.00 by the general contractor, Falcone Construction Corp. (Falcone) for work performed on the job pursuant to the prime contract and its subcontract with Falcone. plaintiff contends that an additional $59,223.44 is owed. It has obtained a default judgment against Falcone in that amount. Falcone, we are told, is bankrupt and, thus, plaintiff looks to the surety. We, however, affirm the summary judgment and reject plaintiff's contention that it is entitled, as a "claimant," to payment under the surety's labor and material payment bond or, alternatively, that it is entitled, to a pro rata share of the $45,354.19 monies released to the surety, pursuant to the Trust Fund Act, N.J.S.A. 2A:44-148.

Several undisputed facts are critical. The particular payment bond, issued to Falcone as principal and the Authority as obligee, was obtained by Falcone pursuant to its contractual obligation with the Authority. The bond refers to and incorporates the provisions of that prime contract. As defined in the bond, a "claimant" is:

One having a direct contract with the Principal [Falcone] or with a Subcontractor of the Principal for labor, material, or both, used or reasonably required for use in the performance of the [prime] Contract [between the Authority and Falcone] . . .

It is not disputed that plaintiff has "a direct contract with the Principal" and it is clear that plaintiff's claim is for labor and material that was supplied on the job site.

However, it is also equally evident that plaintiff's claim represents labor and materials provided to Falcone in addition to that expressly required under both the prime contract and the subcontract. That work included supplying off-site topsoil not specified under the prime contract or subcontract, repairing topsoil damaged by others, and re-seeding and mulching areas damaged by others. It seems fairly clear that the additional work was required as a result of Falcone's actions or inactions. Department of Transportation Specification 104.08, which is incorporated into the prime contract, provides in pertinent part:

New and unforeseen work will be classed as Extra Work when it is determined by the Engineer that such work is not covered by any of the various items for which there is a bid price or by combinations of such items. In the event portions of such work are determined by the Engineer to be covered by some of the various items for which there is a bid price or combinations of such items, the remaining portion of such work will be classed as Extra Work. Extra Work also includes work specifically designated as Extra Work in the Contract Documents.

The Contractor shall do such Extra Work and furnish labor, material, and equipment therefor upon receipt of an approved change order or field order, and in the absence of such approved change order or field order he shall not perform, nor be entitled to payment for, such Extra Work.

And see DOT Specification 105.16 ("any extra work done without authority, will be considered as unauthorized and will not be paid for under the provisions of the contract."). Similarly, written authorization or "change orders" are required under the terms of the subcontract to include any additional work within the terms of the contract documents.

There is no dispute as to the applicability of these specifications. The additional work was "new and unforeseen" and Falcone did not obtain a change order for it from the Authority. Thus, without question, the Authority incurred no contractual obligation to Falcone for the additional work out of the contract monies and Falcone has no contractual right to look to those monies for such payment.

Plaintiff, then, possesses no contractual right to look to the Authority or the prime contract monies for payment therefrom. That this is clear is reflected by paragraph 19 of the ...


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