June 5, 2008
D.A. NOLT, INC., PLAINTIFF-APPELLANT,
CAMDEN COUNTY COLLEGE, DEFENDANT-RESPONDENT.
On appeal from the Superior Court of New Jersey, Law Division, Camden County, L-3368-07.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted May 19, 2008
Before Judges Lintner and Graves.
Plaintiff, D.A. Nolt, Inc., a general contractor, appeals from an order granting summary judgment dismissing its complaint for declaratory judgment and breach of contract against defendant, Camden County College. We affirm.
The substantially undisputed facts are as follows. On or about January 23, 2007, plaintiff submitted a bid proposal in the amount of $1,327,341, for a construction project at defendant's CIM Center, located in Blackwood, New Jersey. The Bid Request required the submission of the names of all subcontractors, including evidence of performance security, the amount of the subcontract, and type of work to be performed. Plaintiff listed Palmer Waterproofing, Inc. (Palmer) as a subcontractor to perform masonry work in the amount of $428,000. In the section of the bid, designated Form 00300-19 and entitled "USE OF MINORITY, WOMEN & SMALL BUSINESSES," with a target level of 25%, plaintiff indicated that it is an SBE (Small Business Enterprise), and "will be self performing the roofing and wall panel work on the project," the value of which would exceed the 25% of the total bid proposal.
Plaintiff's bid was accepted on February 6, 2007, by the College Board of Trustees and, on February 8, 2007, the parties entered into a contract whereby plaintiff agreed to provide the work enumerated in the contract in accordance with its bid proposal. Section 3.3.1 of the contract provided in part that "[t]he Contractor shall be solely responsible for and have control over construction means, methods, techniques, sequences and procedures and for coordinating all portions of the Work under the Contract, unless the Contract Documents give other specific instructions concerning these matters." Section 5.24 provided: "The Contractor shall not change a Subcontractor, person or entity previously selected if the Owner or Architect makes reasonable objection to such substitute."
Approximately one month after the contract documents were signed, plaintiff informed defendant that it intended to self-perform the masonry work instead of using Palmer. After defendant refused to permit plaintiff to substitute itself for Palmer, defendant issued Palmer a contract "under protest . . . reserv[ing] all rights under the terms of the contract." On April 6, 2007, plaintiff entered into a subcontract with Palmer by which Palmer agreed to perform the masonry work for $402,400.
Plaintiff filed its complaint on June 29, 2007, seeking a declaratory judgment and damages, asserting breach of contract respecting its right to self-perform the masonry work, indicating that "[d]espite the fact that Palmer has already begun the masonry work, [it] still desires to self-perform this work," and indicating that if it "could have self-performed, it would have made a profit in excess of $150,000.00." After defendant answered, cross-motions for summary judgment were filed. On September 7, 2007, Judge Fernandez-Vina determined that N.J.S.A. 18A:64A-25.25, requiring that all bid submissions include "the name or names of, and evidence of performance security from, all subcontractors to whom the bidder will subcontract the work," militates against the subsequent substitution of a subcontractor, be it by the self-performing general contractor or the naming of a different subcontractor.
On appeal, defendant contends that substituting itself to self-perform the masonry work: (a) does not offend the bidding statutes; (b) encourages the participation of SBEs by permitting them to provide self-performance of at least 25% of the target level of the Bid as desired by Form 00300-19; and (c) breached the provisions of the contract requiring that defendant have sole responsibility and control "over construction means, methods, techniques, sequences and procedures and for coordinating all portions of the Work under the Contract." We disagree and address the issues raised in reverse order.
Generally, when the terms of a contract are clear, "the construction and effect of [the contract] is a matter of law which must be resolved by the court and not the jury." Cedar Ridge Trailer Sales, Inc. v. Nat'l Cmty. Bank of N.J., 312 N.J. Super. 51, 62-63 (App. Div. 1998). The contract clearly expresses the intention of the parties. Control over the means, methods, techniques, sequences, procedures, and coordination of the project applies to the work performed, not the entity performing the work. Moreover, the contractual provision forbidding the substitution of subcontractors, so long as the owner makes reasonable objection to such substitute, evinces an intent not to permit substitutions merely to permit the general contractor who previously listed the subcontractor and cost of the work to make a greater profit. Here, defendant's decision not to permit the substitution of the masonry subcontractor previously named by plaintiff did not amount to a breach of the parties' agreement as a matter of law.
Beyond that, we are convinced that Judge Fernandez-Vina correctly found that defendant's refusal to permit plaintiff to self-perform the work in place of the previously designated subcontractor was consistent with the applicable public contracts law.
N.J.S.A. 18A:64A-25.25 of the New Jersey County College Contracts Law (CCCL), requiring all bid submissions to include the names of all subcontractors to whom the bidder will subcontract work, is similar to the language found in N.J.S.A. 40A:11-16, of the Local Public Contracts Law (LPCL), which requires a single bid by a prime contractor to "set forth in the bid the name or names of all subcontractors to whom the bidder will subcontract." In O'Shea v. N.J. Schools Constr. Corp., 388 N.J. Super. 312, 315, 320 (App. Div. 2006), we held that it would be "contrary to public bidding laws" to permit the New Jersey Schools Construction Corporation (SCC), a public entity authorized to construct and finance schools pursuant to N.J.S.A. 18A:7G-5a, to permit a general contractor to substitute a subcontractor for one listed on the general contractor's bid. In so holding, we noted that controlling language used in N.J.S.A. 34:1B-5.7b of the New Jersey Economic Development Authority Act, requiring bidders on school facilities to set forth the names of subcontractors furnishing work and materials is similar to the language used in N.J.S.A. 40A:11-16. O'Shea, supra, 388 N.J. Super. at 320.
Plaintiff concedes in its appellate brief that the CCCL, like the LPCL, would preclude a general contractor from substituting a subcontractor previously listed on its bid. However, plaintiff attempts to distinguish the replacement of a subcontractor with another subcontractor from self-performance by a general contractor. It argues that allowing the general contractor to self-perform in the place of a previously listed subcontractor does not undermine the bidding statutes and does not constitute a competitive advantage. It also maintains that allowing the general contractor to substitute itself encourages the use of SBEs. We disagree.
Plaintiff's contention that allowing it to self-perform encourages the use of SBEs is disingenuous, given its bid proposal limiting its self-performance to the roofing and wall panel work on the project. Moreover, plaintiff's asserted distinction has no basis in law or fact. The requirement that a general contractor use the same subcontractor listed on its bid is intended to foster a competitive bid, thus disallowing bid shopping, a practice by which a general contractor "could wait until after being awarded the bid and negotiate for a lower price, the savings from which would accrue to him and not to the public." Stano v. Soldo Constr. Co., 187 N.J. Super. 524, 535 (App. Div. 1983); see also Gaglioti Contracting, Inc. v. City of Hoboken, 307 N.J. Super. 421, 431, 434-35, (App. Div. 1997); Prismatic Dev. Corp. v. Somerset County Bd. of Chosen Freeholders, 236 N.J. Super. 158, 163-66 (App. Div.), certif. denied, 118 N.J. 205, 570 (1989). Here, it is clear from plaintiff's own complaint that its decision to replace Palmer was to line its own pockets by creating an additional $150,000 profit. As Judge Fernandez-Vina succinctly concluded, "whether you replace or substitute, they're the same, self-perform or substitute, someone else is coming in to do the job who was not on the bid."
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