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G. Pacillo Contracting, Inc. v. Township of South Orange Village

July 23, 2008


On appeal from the Superior Court of New Jersey, Chancery Division, General Equity Part, Essex County, Docket No. C-53-06.

Per curiam.


Argued: May 5, 2008

Before Judges Stern, C.L. Miniman and Kestin.

Plaintiff G. Pacillo Contracting, Inc. (Pacillo), appeals from a final judgment dismissing its complaint to compel defendant Township of South Orange Village (the Township) to arbitrate Pacillo's claim that the Township breached its contract for the renovation of an historic firehouse in South Orange when the Township terminated the contract, allegedly for cause. Because the plain language of the contract required arbitration, we reverse and remand the matter for entry of an order to compel the Township to arbitrate the dispute in accordance with the terms of the contract.


The historic firehouse in the Township needed to be renovated and the Township obtained partial funding from the State. As a result of State funding requirements, the Township required an architect with a background in historic buildings. In December 2001, the Township engaged the services of the Mylan Architectural Group (Mylan) in connection with renovations and additions to its historic firehouse. The Township had used Mylan on previous projects and was familiar with its work.

First, the Township asked Mylan to ascertain the building's condition. Then Mylan and the Township planned the restoration work, involving mainly the exterior of the building, such as windows, re-pointing, roof repairs, and the construction of additions. Mylan was engaged to draft and review the specifications for the construction project, including the technical, structural and engineering specifications, as well as the written portions of the specifications, and to manage the bidding process.

The Township Engineer, Salvatore Renda, was involved in the firehouse renovation project from the beginning and served as the contact between Mylan and the Township. He consulted with Mylan on the details and technical aspects of the restoration. The Township and Renda relied upon Mylan to prepare the plan specifications, bid documents and contract documents. Mylan drafted these documents, and the Township submitted some additional documents that it specifically wanted included in the initial bid documents and the later contract documents. One of the submitted documents was entitled "General Instructions to Bidders" (GIB).

When the bid documents were prepared, Mylan submitted the bid package to Renda, including the plans; specifications; general conditions, which included the standard American Institute of Architects Contract Form A201 (AIA Form A201); and the Township's documents, including the GIB. Renda reviewed the specifications before they were submitted to prospective bidders, but he had no discussions with Mylan about anything other than some "technical portions of the specifications, the nuts and bolts, [and] the actual construction practice." Thus, the Township was given an opportunity to make any comments or express any concerns about the contract. It did not. As a result, the bid package, which included the future contract, became final and was made available to prospective bidders who went to Mylan's office to purchase a copy of the package.

Pacillo is an experienced public contractor, having worked on about one hundred public projects before this renovation project. It had also worked with Mylan on a prior municipal building project and was invited by it to bid on this one. Pacillo, like other bidders, obtained and reviewed the entire bid package in order to bid on the project. The only persons who were involved in the contracting process were Mark Ritacco, a Pacillo partner; Dennis Mylan, the architect, who was the Township's authorized contract agent; and Renda, but only with respect to some technical matters.

The contract was comprised of the bid documents bound or incorporated by reference into two volumes dated January 19, 2004, entitled "Specifications for Renovation and Addition to South Orange Fire Headquarters." The first book contained a list of the Township's eighteen loose sheets, instructions to bidders, general conditions, supplementary conditions and some of the technical specifications. The second book contained the balance of the technical specifications, which are not relevant here. The general conditions incorporated AIA Form A201 by reference,*fn1 making it a part of the contract. Ritacco reviewed the bid package and was fully familiar with AIA Form A201 from all of Pacillo's prior public contracting work.

Pacillo then submitted two formal bids and one negotiated bid pursuant to N.J.S.A. 40A:11-5(3). When bidding was complete, the Township awarded the contract to Pacillo on January 24, 2005. Pacillo and the Township executed a two-page formal contract on February 14, 2005, that required compliance with the January 19, 2004, specification document.

After work had begun, Construction Technology Corporation (CTC), a construction management firm retained by the Township to oversee the renovation of the firehouse, on November 4, 2005, sent a letter to Pacillo terminating the contract "for cause" under ΒΆ 14.2.2 of AIA Form A201. By letter dated January 25, 2006, Pacillo filed a demand for arbitration against Township with the American Arbitration Association (AAA) in accordance with the Construction Industry Arbitration Rules under AIA Form A201. Pacillo sought $689,000 in damages against the Township in ...

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