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Structural Concepts, Inc. v. Kean University

January 16, 2009

STRUCTURAL CONCEPTS, INC., PLAINTIFF-APPELLANT/ CROSS-RESPONDENT,
v.
KEAN UNIVERSITY, AN ALTER EGO OF THE STATE OF NEW JERSEY, THE STATE OF NEW JERSEY, SYSKA & HENNESSEY, INC., THERMACOR PROCESS, INC., EDUARDO DEL VALLE, AND HEMANT MEHTA, P.E., DEFENDANTS-RESPONDENTS, AND THE STATE OF NEW JERSEY ON BEHALF OF KEAN UNIVERSITY, THIRD-PARTY PLAINTIFFRESPONDENT/CROSS-APPELLANT,
v.
SAFECO SURETY, THIRD-PARTY DEFENDANT-CROSS-RESPONDENT.



On appeal from the Superior Court of New Jersey, Law Division, Union County, L-4547-02.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued October 27, 2008

Before Judges Lisa, Reisner and Sapp-Peterson.

This construction case involves a project to replace the steam heating and sanitary piping system at defendant Kean University (Kean). Following years of litigation, all parties agreed to submit their remaining disputes to arbitration before a retired judge, Reginald Stanton. After sixty-nine days of hearings, the arbitrator issued a cogent and exhaustively-detailed ninety-five page arbitration decision dated December 21, 2006, addressing all issues. Judge Anzaldi confirmed the arbitrator's award in an order dated February 22, 2007. Plaintiff Structural Concepts, Inc. (SCI) now appeals from Judge Anzaldi's February 22 order. Kean cross-appeals from the same order.*fn1 We affirm, substantially for the reasons set forth in the arbitrator's decision.

I.

We begin by noting several significant procedural issues. The parties agreed that the arbitrator would render proposed findings of fact and conclusions of law, and a proposed award, which the Law Division judge would consider under the traditional, very limited standard for review of an arbitrator's decision. See N.J.S.A. 2A:23B-23a and -24a. However, pursuant to N.J.S.A. 2A:23B-4c, the parties also agreed that for purposes of appealing the Law Division judge's order, the underlying decision of the arbitrator would be fully reviewable to the same extent as the decision of a trial court. Therefore, the parties contemplated that on this appeal we would review the arbitrator's decision to determine whether it was supported by substantial credible evidence and was consistent with applicable law. See Rova Farms Resort, Inc. v. Investors Ins. Co., 65 N.J. 474, 484 (1974).

In their appellate briefs, however, both Kean and SCI advise us that they accept the factual findings of the arbitrator. In its brief, SCI states that: "The record of the arbitration is admittedly lengthy; however, the Arbitrator's factual findings are substantially in accord with the testimony and documentary evidence and not disputed by SCI." Likewise, Kean advises us that: "The award of the Arbitrator included findings of fact supported by the evidentiary record, which are not disputed by either SCI or Kean." Consequently, in this opinion we will treat the arbitrator's factual findings as stipulated, and we will focus on whether the arbitrator's conclusions drawn from those facts (including his construction of the relevant bid documents and contracts) were correct as a matter of law. Under the traditional appellate standard of review, for which the parties bargained in this case, our review of the arbitrator's legal conclusions is de novo. See Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995).

II.

On this appeal, SCI presents the following points for our consideration:

POINT I: THE ARBITRATOR, AND THE COURT BELOW, ERRED AS A MATTER OF LAW BY FAILING TO FIND THAT (A) SCI WAS A THIRD PARTY BENEFICIARY UNDER THE S&H CONTRACT AND (B) S&H'S PERFORMANCE UNDER THE S&H CONTRACT WAS DEFICIENT AND IN BREACH OF ITS OBLIGATIONS AND THEREFORE, S&H WAS "DIRECTLY RESPONSIBLE" TO SCI FOR ALL DAMAGES CAUSED THEREBY.

POINT II: THE ARBITRATOR'S FACTUAL FINDINGS, CONFIRMING THAT THE PLANS, DRAWINGS AND SPECIFICATIONS WERE NOT FINAL AS REQUIRED BY N.J.S.A. 18A:64-64(g), ARE INCONSISTENT WITH HIS HOLDING THAT KEAN AND S&H ARE NOT RESPONSIBLE FOR SCI'S DAMAGES PROXIMATELY CAUSED BY THIS OMISSION.

POINT III: THE ARBITRATOR FOUND THE BIDDING DOCUMENTS INHERENTLY AMBIGUOUS, BUT ERRED AS A MATTER OF LAW BY NOT CONSTRUING THEM AGAINST KEAN AND S&H AS THE DRAFTERS.

POINT IV: EVEN IF SCI'S BID CONTAINED A MISTAKE, S&H AND KEAN CANNOT ESCAPE LIABILITY FOR SCI'S DAMAGES.

POINT V: THE GENERAL EXCULPATORY LANGUAGE IN THE CONTRACT DOCUMENTS DOES NOT TRANSFER RESPONSIBILITY FOR DEFECTIVE PLANS, DRAWINGS ANS SPECIFICATIONS TO SCI.

POINT VI: THE ARBITRATOR ERRED BY INVOKING EXCULPATORY LANGUAGE IN THE CONTRACT TO SHIELD KEAN FROM LIABILITY WHEN KEAN HAD "SUPERIOR KNOWLEDGE" CONCERNING THE DESIGN THAT IT WITHHELD FROM SCI.

POINT VII: THE ARBITRATOR APPLIED AN INCORRECT BURDEN OF PROOF REGARDING THE NO DAMAGES FOR DELAY PROVISION.

POINT VIII: SCI CAN RECOVER AGAINST KEAN UNDER A NEGLIGENCE THEORY FOR VIOLATION OF ...


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