On appeal from the Superior Court of New Jersey, Law Division, Sussex County, L-365-98.
Before Judges Pressler, Ciancia and Parrillo.
The opinion of the court was delivered by: Pressler, P.J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
This controversy arises out of the general construction contract for major renovations of and additions to the Vernon Township High School entered into between plaintiff Ingrassia Construction Company, Inc., the low bidder, and defendant, Vernon Township Board of Education. The contract provided for a final completion date of July 1, 1999. The Board, believing that plaintiff was in substantial breach of the contract, terminated it in May 1998. In May 1999, plaintiff filed a complaint against the Board, its architect and its project manager seeking damages for what it alleged to be a wrongful termination. The Board counterclaimed, seeking damages against plaintiff flowing from plaintiff's asserted breach. On plaintiff's motion for summary judgment against the Board, the court granted it partial summary judgment of liability and dismissed a portion of the Board's counterclaim. We granted the Board's motion for leave to appeal and now reverse.
The gravamen of plaintiff's summary judgment motion was its assertion that the Board had terminated the contract in violation of the termination-for-cause provisions of the contract in that it based the termination on a procedurally and substantively defective architect's certificate and, further, that that contractual violation by the Board, ipso facto and without regard to any deficiencies there may have been in its own contractual performance, entitled it to wrongful-termination damages including payments for all work done prior to the termination, loss of profits, office overhead, and its obligations to its subcontractors. By the same token, it asserted that by reason of the Board's improper termination, the Board was not entitled to recover damages for the deficiencies, if any, in plaintiff's performance that led the Board to its termination decision and was, further, not entitled to the liquidated damages provided for by the contract for plaintiff's failure to comply with its promised milestone dates. The trial judge agreed that as a summary judgment matter, the architect's certificate on which the termination was based was defective. It also agreed that the consequence of that defect was plaintiff's entitlement to the damages it sought against the Board and the Board's forfeiture of its claim for the damages it sustained as a result of the termination, sought in the first count of its counterclaim, as well as its forfeiture of liquidated delay damages, sought in the second count of the counterclaim. The court left intact for trial, however, three counts of the counterclaim by which the Board sought damages for allegedly improper work by plaintiff in pouring a concrete floor, for corrective work it allegedly had to have done, and for plaintiff's failure to have paid subcontractors who filed construction liens against the property.
We agree with the trial court's conclusion that the architect's certificate failed to substantially comply with the contract requirements. We disagree, however, with its views regarding the consequences of that non-compliance which we believe were based on a misperception of the nature and function of an architect's certificate and which failed to take into account the common-law remedies available to the Board and expressly reserved to it by the contract.
The Board had retained the architectural firm of Wiedersum Associates, P.C., as its design professional and administrator of the contract. Wiedersum assigned George Ferman to the project. Ferman, a licensed architect in Canada, is not licensed anywhere in the United States. The Board had also retained Vincentsen Consulting, Inc., as its project manager, and it appears that it was Vincentsen personnel rather than the architects who were supervising the job on a day-to-day basis.
Plaintiff started work on the job in September 1997. The performance of the work was subject to a specific schedule of milestone dates, that is, dates on which specific phases of the project were to be completed, the meeting of those dates, moreover, having been designated as essential conditions of the contract. According to the certifications submitted by the Board on the summary judgment motion, plaintiff consistently failed to meet the milestone dates, had insufficient workers on the job to enable it to comply with those dates, and was refusing to perform the work as directed.
Accordingly, in January 1998, four months after the work had commenced, Vincentsen wrote to plaintiff and its surety advising them that the Board was considering declaring plaintiff in default for its persistent refusal "to supply the project with enough properly skilled workers to maintain the ... job schedule and contract milestone dates." The situation, as asserted by the Board, thereafter deteriorated rather than improving despite its frequent notifications and warnings to plaintiff.
Matters apparently came to a head in the spring of 1998, when the Board and its representatives met with plaintiff to complain about plaintiff's failure to properly provide the required subsurface for a concrete floor, thus compromising the radon- protection system. Plaintiff's denial of a failure to comply with the contract specifications was contradicted by test borings taken thereafter which confirmed the asserted defect. By the beginning of May 1998, the Board concluded that plaintiff's persistent failure to perform both as to time and as to quality required termination of the contract and its engaging of another contractor to complete the project. It appears that plaintiff never denied that it had missed the milestone dates but rather attributed its inability to meet them to improper and obstructive actions of the Board. The factual questions involving plaintiff's performance and whether it had materially breached the contract have never been resolved.
The Board attempted to terminate the contract pursuant to its terms. We note that the contract documents included a so-called Standard Form of Agreement Between Owner and Contractor; General Conditions of the Contract for Construction, Document A201 of the American Institute of Architects (AIA Document A201); Supplementary General Conditions which, section by section, modified AIA Document A201; and Special Conditions. The termination procedure invoked by the Board is set forth in section 14.2 of AIA Document A201, captioned "Termination By The Owner For Cause" and provides in relevant part as follows:
14.2.1 The Owner may terminate the Contract if the Contractor:
1. persistently or repeatedly refuses or fails to supply enough properly skilled ...