July 19, 2010
YEZZI ASSOCIATES, L.L.C., PLAINTIFF-APPELLANT,
BRICK TOWNSHIP BOARD OF EDUCATION, DEFENDANT-RESPONDENT.
On appeal from the Superior Court of New Jersey, Law Division, Ocean County, Docket No. L-0712-05.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued: January 21, 2010
Before Judges Payne, C.L. Miniman and Waugh.
Plaintiff Yezzi Associates, L.L.C., appeals a December 5, 2008, order denying its motion in limine seeking to bar certain documentary and testimonial evidence at trial. It also appeals a January 23, 2009, order granting summary judgment in favor of defendant Brick Township Board of Education (defendant or the Board) dismissing plaintiff's complaint with prejudice. We reverse in part and affirm in part and remand for further proceedings consistent with this opinion.
We summarize all of the evidence presented to the judge with respect to both motions. Plaintiff provides architectural services for construction projects. During the summer of 2000, defendant solicited plaintiff's services for the construction and renovation of several schools. Plaintiff had previously provided similar services to defendant pursuant to requests for proposals. After the parties discussed the scope of the project, plaintiff submitted a draft contract for architectural services in September of 2000. The specified fee was apparently six percent of actual construction costs for architectural services and one percent for construction administration.*fn1
This draft contract was not accepted by defendant, because it was concerned that the project might not be approved by referendum. As a result, it wanted to limit its obligation to pay architectural fees to prepare drawings for the referendum in the event the project was rejected by the voters in Brick. Accordingly, defendant sought proposals from three architectural firms to secure the lowest fee possible for the architectural work needed to bring the project to referendum.
Plaintiff and the other architects made their presentations to defendant on October 23, 2000.*fn2 The focus of the presentation was the cost to take the project to referendum and the time needed to prepare construction documents. Not long after the presentation, defendant advised plaintiff it had been selected and requested a proposed form of contract. Plaintiff was awarded the contract, partly because plaintiff agreed to bring the project to referendum for $72,000,*fn3 whereas the other architects wanted $288,000 for this preliminary work. On November 16, 2000, the Board's attorney prepared a resolution appointing plaintiff to the position of architect for the subject project. The resolution specifically provided that "[t]he fees shall be 6% of construction cost." It did not indicate that any contract or proposal from plaintiff was attached nor did it indicate the scope of work to be performed. Defendant approved the resolution at its December 14, 2000, meeting.
On December 26, 2000, plaintiff prepared, and its principal Massimo F. Yezzi, Jr., (Yezzi) signed, a proposed AIA Document B151-1997, Abbreviated Standard Form of Agreement Between Owner and Architect and immediately began work on the project. Paragraph 2.6.2 required plaintiff to "provide administration of the Contract for Construction as set forth below... unless otherwise provided in this Agreement." It further provided in ¶ 2.6.4:
The Architect shall be a representative of and shall advise and consult with the Owner during the administration of the Contract for Construction. The Architect shall have authority to act on behalf of the Owner only to the extent provided in this Agreement unless otherwise modified by written amendment.
The contract also contained the following charges for services to be rendered for the project:
11.2 BASIC COMPENSATION
11.2.1 For Basic Services, as described in Article 2, and any other services included in Article 12 as part of Basic Services, Basic Compensation shall be computed as follows....
PHASE I - REFERENDUM: ASSIST THE BOARD IN DEVELOPING CONCEPT PLANS, TIME SCHEDULES AND COST ESTIMATES FOR VARIOUS SCHOOL BUILDINGS WITHIN THE DISTRICT FOR REFERENDUM REVIEW.
ARCHITECTURAL FEE: HOURLY WITH A NOT TO EXCEED OF $10,000 PER PROJECT.
PHASE II: CONSTRUCTION DOCUMENTS: PROVIDE ARCHITECTURAL/ENGINEERING CONSTRUCTION DOCUMENTS FOR BIDDING, INCLUDING BID DRAWINGS AND BID SPECIFICATIONS.
ARCHITECTURAL FEE: 6% OF ESTIMATED CONSTRUCTION COST.
PHASE III: CONSTRUCTION ADMINISTRATION: BASED ON ACTUAL CONSTRUCTION COST OF PROJECT, PROVIDE ADMINISTRATIVE SERVICES AT 1% OF CONSTRUCTION COST.
Additionally, paragraph 11.2.2 stated that "progress payments for Basic Services in each phase shall total the following percentages of the total Basic Compensation payable: 6% of CONSTRUCTION COST FOR CONSTRUCTION DOCUMENTS[,] 1% OF ACTUAL CONSTRUCTION COST FOR CONSTRUCTION ADMINISTRATION."
The contract also contained an integration clause, which reads as follows: "This Agreement represents the entire and integrated agreement between the Owner and the Architect and supersedes all prior negotiations, representations or agreements, either written or oral. This agreement may be amended only by written instrument signed by both Owner and Architect."
The printed form contract makes no reference to any attachments to the contract. However, in Article 12, which is on the signature page for the contract, plaintiff included the following as additional items:
1. ADDENDUM "A" ATTACHED.
2. EXHIBIT "A" ATTACHED.
3. ARTICLE 7.2 ARBITRATION DELETED IN ITS ENTIRETY.
4. AD PER PROPOSAL LETTER OF 9/14/00 ATTACHED -- EXHIBIT "B".
5. OWNER WILL APPROVE EACH PHASE OF WORK PRIOR TO PROCEEDING TO THE NEXT PHASE.
6. PROPOSAL DOES NOT INCLUDE SURVEY WORK, CIVIL ENGINEERING AND TEST BORINGS.
Exhibit A contains mandatory contract language respecting nondiscrimination and affirmative action. Exhibit B is not contained in the appendices before us and may not have been submitted to the motion judge. Addendum A made five modifications to the standard AIA form contract, none of which are relevant here.
According to Yezzi, on January 29, 2001, he reminded defendant to sign the contract, and he received it thereafter without any changes to any of its provisions, including the compensation provisions. During his deposition, Yezzi was not sure exactly when he received the Agreement, but could only "assume January sometime."
Dr. Philip W. Nicastro, Business Administrator and Board Secretary, stated that the AIA contract "was not consistent with the proposal that... Yezzi made to the Board at the October 23, 2000 meeting."*fn4 Therefore, Nicastro scheduled two meetings between himself, Yezzi, and the Board Attorney, Nicholas C. Montenegro, to negotiate the contract. Yezzi claimed that he could not remember these discussions ever having taken place.
Nicastro provided the following details about these meetings:
13. At the first meeting three issues were discussed. They were total compensation, change orders and an escrow for potential legal fees.
When the three issues were discussed at the first meeting[,]... Yezzi confirmed that the total fee was 6% of the actual costs of construction but was concerned about the remaining two issues.
There was a second meeting attended by myself,... Yezzi, and... Montenegro. It is my recollection that at this meeting a draft of a proposed Addendum "B" clarification was made available to... Yezzi at or before the second meeting.
The only concerns... Yezzi had at the second meeting were related to the escrow for potential legal fees and change orders.
On February 9, 2001, the Board's counsel faxed a letter to Yezzi enclosing a "revised Addendum 'B' Clarification." Yezzi asserted that he did not receive Addendum B until after he received the signed contract and that no one ever signed it on behalf of plaintiff. However, the February 9, 2001, letter clearly suggests plaintiff had seen an earlier version of Addendum B.
In the February 9 letter, Board counsel expressed the "hope that the revision incorporates all of the discussion we had at our office recently." The addendum contained five paragraphs, two of which are relevant here:
NOTWITHSTANDING any language contained in the Agreement, to the contrary, it is hereby agreed as follows:
1. Paragraph 11.2.2 is hereby amended to indicate that total compensation payable shall be six (6%) percent of the actual construction cost (contractor contract amount plus approved change orders). There shall be no additional compensation for administration.
3. Paragraph 11.2.1 is hereby amended[,] Phase I paragraph to include the following:
The architectural fee set forth in Phase II shall reflect six (6%) percent of actual construction costs. A reference to estimated construction cost is hereby deleted in its entirety. Paragraph entitled Phase III is hereby deleted in its entirety.
Paragraph 5 of the addendum required plaintiff to place $5000 in escrow for the entire project to offset any legal costs incurred by the Board that were attributable to an error or omission by plaintiff.
On February 12, 2001, Yezzi faxed a marked up copy of Addendum B back to Board counsel. He added the phrase "except if approved by owner" to the end of ¶ 1, modified ¶ 3, but not with respect to the issue of fees, and added the phrase "paid at occupancy by owner" to the end of ¶ 5.
At the March 1, 2001, meeting of the Board, Yezzi's agreement was considered:
The Buildings & Grounds Committee and Dr. Nicastro with [Board counsel] have finalized the details of the agreement between the Board of Education and Yezzi Associates. Mr. Yezzi has agreed to escrow a maximum of $30,000 for potential litigation.
The issue of the contract with plaintiff was discussed at the March 8, 2001, Board meeting. Plaintiff avers he was not aware of this meeting. A motion was made to "approve the attached Agreement and Board Addendum B Clarification between [defendant] and [plaintiff] in accordance with the Resolution approved on February 1, 2001." The document attached to the minutes of that meeting was the AIA document signed by Yezzi on December 26, 2000, but not yet signed by defendant, to which was attached a version of Addendum B containing, among other changes, the phrase "except if approved by owner" as an addition to ¶ 1 of the addendum, but also including some of the changes to ¶ 5 that Yezzi only requested after this meeting.
Nicastro asserted that on March 9, 2001, he sent Yezzi "a signature stamped copy of the original AIA contract dated December 26, 2000 and two copies of the original Addendum 'B' Clarification [that] the Board approved" and asked him to sign and return it. Yezzi never did so, although defendant claimed it relied on Addendum B as being part of the contract. Yezzi pointed out that Nicastro admitted in his deposition that Addendum B was never signed by plaintiff. Defendant's business administrator/secretary made the same admission. Nicastro avers that this was the first and only release of the AIA Agreement and it included Addendum B. Yezzi categorically denied receiving this letter and pointed out that it was not signed and was not on letterhead, unlike other letters he had received from defendant in the past.
Despite these denials, on March 12, 2001, Yezzi again faxed the original version of the second page of Addendum B to defendant's attorney, commenting, "AS PER DISCUSSION, AMENDMENT TO CONTRACT FOR BRICK REFERENDUM." Paragraph 5 on the second page of the addendum was marked up to add that the escrow retainage would be paid to plaintiff when each building was occupied; the escrow would be withheld from the last payment; the escrow would be limited to $5000 per site and was not to exceed $30,000 total; and interest would be paid on the escrow. Yezzi claimed that these changes were for negotiation purposes, not that he had agreed to them. Some, but not all, of these changes inexplicably appear in the version of Addendum B that is attached to the minutes of the March 8 meeting. In any event, Yezzi never signed Addendum B nor were all of these changes ever included in a subsequently revised Addendum B.
Plaintiff submitted two invoices on February 26, 2002, charging the one-percent fee for contract administration and did so again on March 20, 2002. Full payment was made. The Board insists that this was a result of an accounting error by the bookkeeping department, and that these payments were made without the Board fully knowing that they were applied against plaintiff's claim for construction administration fees. Plaintiff admits that these payments were ultimately stopped as a result of Addendum B.
It was not until May 14, 2002, that the business administrator/secretary wrote to Yezzi as follows:
As a follow-up to our meeting of May 13th[,] I researched the Board of Education minutes and found the approved AIA document and addendum as authorized at the March 8, 2001 Board meeting. For whatever reason[,] the Board of Education does not have a fully executed copy on file.
I have provided you with two copies of the document and have signed both on behalf of the Board. Please sign, retain one for your files and return a fully executed copy to my attention as soon as possible. I would also ask that you pay special attention to addendum "B", which details how the compensation should be paid to your firm as well as the agreement (item #5) for the Architect to place in escrow $5,000.00 per project to offset any legal costs that may be incurred attributable to any errors or omissions.
After you review this document[,] if you have any questions[,] please feel free to contact me at your convenience.
Yezzi responded that plaintiff was entitled to the one-percent fee for contract administration. He also averred that defendant had been paying the one-percent fee for some period of time and then stopped, apparently because of Addendum B. Defendant admitted that it had paid several invoices for contract administration for two schools. However, it asserts the payments were made in error. It has not denied that plaintiff provided construction administration services to it.
On March 15, 2004, plaintiff submitted an invoice to defendant reflecting $82,000 due and owing, minus $30,000 "HOLDING ON ACCOUNT" for a net amount due of $52,000. Defendant contends that the $30,000 is the escrow required by Addendum B and that this is evidence of plaintiff's knowledge that Addendum B was part of the agreement between the parties.
On December 5, 2008, the motion judge heard plaintiff's motion in limine to exclude Addendum B as inadmissible parol evidence varying the terms of the executed AIA agreement and to exclude evidence of any pre-contract negotiations. He denied plaintiff's motion as to both items.
The judge recognized that plaintiff never signed the Addendum, which would support plaintiff's position that the AIA Agreement constituted the entire contract. However, the judge also determined that because plaintiff "penned it up and sen[t] it back... a reasonable person could interpret that the intent was the contract plus the addendum. [Plaintiff] never writes back and says no way Addendum B, I can't live with that.... There's nothing like that."
Based on the parties' disagreement as to whether the AIA Agreement was fully integrated, and whether the AIA Agreement "requires Addendum B," the judge denied plaintiff's motion in limine as to Addendum B.
As for the pre-contract negotiations, the judge believed that
[i]f there's a dispute over what the agreement is, it would be counter-productive to rule negotiations could [sic] come into play for the jury. How can the jury possibly determine what the agreement is if they don't understand what the negotiations were? There's going to be argument on one side that the contract was executed; argument on the other side that it's not. If you can't tell the jury how you got to that point, they can't make an intelligent decision. The negotiations will go to the jury.
The matter was listed for trial on several occasions thereafter before defendant moved for summary judgment. Nicastro averred in support of the motion that he had no power to bind defendant to contract terms defendant did not approve by some resolution. Based on that resolution, he urged that plaintiff could not receive more than six percent of the actual construction costs.
Defendant also submitted the certification of the Board counsel, who certified that he was asked in late 2000 to review a proposed contract for the school construction project, which was to be submitted to referendum in September 2001. Nicastro asked him to make certain changes to the contract, and he prepared "Addendum B Clarification." Among those changes was deletion of the one-percent fee for construction administration because it was not part of the proposal made to the Board on October 23, 2000.
Board counsel stated that two meetings took place at his office, attended by Yezzi and Nicastro, at which changes to the contract were discussed. He faxed a draft of those changes to Yezzi on February 9, 2001. Yezzi faxed revisions back to him on February 12, 2001. Counsel then wrote his own notes on the copy that Yezzi faxed back to him. It was agreed that the one-percent fee for construction administration would be deleted.
Board counsel certified that subsequent to February 12, 2001, Yezzi spoke with him and requested a cap on the escrow of $30,000 to be held in an interest-bearing account, with the interest to be paid to him in the event there was no legal action taken as a result of his services. Although the minutes of the March 1, 2001, Board meeting did not speak of the return of the interest, Board counsel averred that he "was certain it was discussed with the Board as I would not have drafted a modification of the Addendum B Clarification for final Board approval without having obtained approval in advance in the Executive Session." The changes were formally adopted by defendant at the March 8, 2001, meeting.
Daniel Woska, a member of the Board, was present when the architects submitted their proposals on October 23, 2000. He certified "without question" that plaintiff's "proposal for his services on the project was to be 6% of the actual construction costs of the project." He was also present on December 14, 2000, when defendant adopted a resolution to contract with Yezzi for a total compensation of six percent of the construction costs. After Yezzi submitted an initial contract, there were open issues, including an escrow for legal fees and the one-percent fee for construction management. Nicastro instructed Board counsel "to negotiate the changes in the contract and to deal with the legal escrow." Woska claimed that the Board approved a $5000 escrow per school with a $30,000 cap in Executive Session on March 1, 2001, with the escrow to be held in an interest-bearing account, which would be paid to plaintiff at the completion of the project. These changes were unanimously approved by the Board on March 8, 2001. Woska certified that defendant never agreed to pay plaintiff an additional one percent for construction management.
The last certification defendant submitted in support of summary judgment was from John Paredes, a former member of the Board. His certification was substantially identical to the certification of Woska.
Plaintiff, in opposing summary judgment, submitted the certification of Frank Pannucci, another member of the Board during the relevant time period. Pannucci stated in his certification that "it has always been my understanding that [plaintiff] was to receive a 6% fee for preparation of construction documents, and a 1% fee for construction administration. That understanding was shared by a majority of the Board at the time." However, as the Board points out, Pannucci was present at the March 8, 2001, meeting and took part in a unanimous vote to approve both the AIA Agreement and Addendum B.
Defendant does not contend that plaintiff failed to perform any of its contractual duties and apparently does not dispute that plaintiff provided construction management services. Likewise, plaintiff does not contend that defendant failed to pay any invoices for the 6% fee due for Phase I and Phase II work.
On January 26, 2009, the judge placed his determinations on the record after granting summary judgment in the Board's favor. The judge first determined that "in order for [defendant] to be bound to any contract, it must be authorized. There was an authorizing resolution to permit the execution of the contract. However, the contract itself must be reviewed and approved by the entire board." The judge then found that "a contract of such magnitude and one that calls for the expenditure of millions of dollars is something that cannot be essentially delegated out to an agent of the body," i.e., Nicastro. Here, the March 8, 2001, authorizing resolution "clearly... indicated that it authorized the contract itself as well as Addendum B. Addendum B clearly indicates that... the administrative fee would not be paid."
The judge believed that if plaintiff were truly unaware that the resolution had been passed, it was Yezzi's own fault, for "[t]his is a man who is well familiar with public contracts." Although it was "somewhat curious" that plaintiff did not receive the resolution, "there was nothing on behalf of [defendant] that ever led [Yezzi]... to believe that he was being authorized to proceed with services and that he would be paid for the administrative services."
The judge did not determine whether Addendum B was part of the overall contract between Yezzi and the Board. Rather, he determined that, even if there is such a dispute, as a matter of law Nicastro could not bind defendant to pay the one-percent construction-administration fee if defendant never authorized that fee by adopting a resolution. Because this never happened, the judge found no issues of material fact prevented summary judgment on this particular ground. This appeal followed.
Plaintiff contends there are many material fact issues precluding summary judgment. It urges that the judge ignored existing precedent and misapplied case law in granting summary judgment. Further, the summary-judgment motion was time barred by Rule 4:46-1 and should not have been heard at all. It argues that its motion in limine should have been granted because evidence of the contract negotiations and Addendum B were inadmissible parol evidence and the latter was not supported by adequate consideration.
Defendant asserts that plaintiff cannot recover more money than was authorized by resolution and that the facts are so one-sided that it is entitled to judgment before trial. It points out that Pannucci approved the December 14, 2000, and March 8, 2001, resolutions providing six percent of actual construction costs as total compensation for services under the contract. Defendant contends that it did not unilaterally alter the contract. It urges that the colloquy and statements by the judge during the summary-judgment arguments do not mandate reversal, and he appropriately considered and decided the summary-judgment motion. Furthermore, it argues that the denial of plaintiff's motion in limine was proper.
In reviewing a ruling on a summary-judgment motion, we apply the same standard as that governing the trial court. Liberty Surplus Ins. Corp. v. Nowell Amoroso, P.A., 189 N.J. 436, 445-46 (2007); Alloway v. Bradlees, Inc., 157 N.J. 221, 231 (1999); Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608 (1998); Antheunisse v. Tiffany & Co., 229 N.J. Super. 399, 402 (App. Div. 1988), certif. denied, 115 N.J. 59 (1989).
Summary judgment is designed to provide a prompt, businesslike and inexpensive method of resolving cases. Judson v. Peoples Bank & Trust Co. of Westfield, 17 N.J. 67, 74 (1954). Summary judgment is appropriate if there is no genuine issue as to any material fact in the record. R. 4:46-2(c).
The judgment or order sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law. [Ibid.]
Brill v. Guardian Life Insurance Co. of America, 142 N.J. 520, 540 (1995), outlined the standard for deciding a summary-judgment motion:
[A] determination whether there exists a "genuine issue" of material fact that precludes summary judgment requires the motion judge to consider whether the competent evidential materials presented, when viewed in the light most favorable to the non-moving party, are sufficient to permit a rational factfinder to resolve the alleged disputed issue in favor of the non-moving party.
Therefore, the court must consider the motion on the basis that the non-moving parties' assertions of fact are true and "grant all the favorable inferences to the non-movant." Id. at 536. The determination is whether the evidence "'is so one-sided that one party must prevail as a matter of law.'" Ibid. (quoting Anderson v. Liberty Lobby, Inc. 477 U.S. 242, 251-52, 106 S.Ct. 2505, 2512, 91 L.Ed. 2d 202, 214 (1986)).
"If there exists a single, unavoidable resolution of the alleged disputed issue of fact, that issue should be considered insufficient to constitute a 'genuine' issue of material fact for purposes of Rule 4:46-2." Id. at 540. "However, an opposing party who offers no substantial or material facts in opposition to the motion cannot complain if the court takes as true the uncontradicted facts in the movant's papers." Baran v. Clouse Trucking, Inc., 225 N.J. Super. 230, 234 (App. Div.) (citation omitted), certif. denied, 113 N.J. 353 (1988). Assertions that are conclusive and self-serving are insufficient to defeat a summary-judgment motion. Puder v. Buechel, 183 N.J. 428, 440-41 (2005).
We begin by assuming that plaintiff's assertions of fact are true, and we then "grant all the favorable inferences to [plaintiff]." Brill, supra, 142 N.J. at 536. The evidence so viewed is that plaintiff prepared and signed a contract on December 26, 2000, that required plaintiff to provide basic services and administration of the construction contract. Nicastro signed and returned that contract in late January or early February without making any changes to the document. Specifically, Nicastro made no changes to Article 12 by adding a seventh paragraph to include Addendum B Clarification as part of the integrated contract between the parties.
Thereafter, on February 9, 2001, Board counsel submitted a modification to the contract in the form of Addendum B to Yezzi. Plaintiff never signed Addendum B, although Yezzi did negotiate its terms and conditions. The Addendum B that is attached to the minutes of the March 8, 2001, meeting was not created until after the Board meeting and could not have been the document discussed at that meeting. Despite the alleged March 8, 2001, action of the Board, Pannucci certified it was always his understanding that plaintiff would be paid a one-percent fee for contract administration. The March 9, 2001, letter was never sent to plaintiff. Plaintiff did establish an escrow for legal fees that was consistent with ¶ 5 of Addendum B, although it billed for contract administration services and was paid at least some of the fees billed, contrary to ¶¶ 1 and 3 of Addendum B.
These facts clearly do not support a summary-judgment finding that Addendum B modified the AIA agreement to eliminate compensation for contract administration. To the extent that defendant seeks to prove otherwise,
[w]hile it is a general rule that the construction of a contract is a question of law for the court, that rule is predicated upon the absence of an issue of fact. Where the effect of a written instrument depends not merely on its construction and meaning but upon disputed collateral facts in pais and extrinsic circumstances, the inferences of fact to be drawn therefrom are for the jury's determination. [Jennings v. Pinto, 5 N.J. 562, 569-70 (1950) (citing Edge v. Boardwalk Sec. Corp., 115 N.J.L. 286 (E. & A. 1935)).]
The judge found, as a matter of law, that the Board could not be bound to pay the one-percent contract-administration fee in light of the March 8, 2001, resolution. When the issue on appeal from summary judgment is a matter of law, the standard of review is de novo. Dempsey v. Alston, 405 N.J. Super. 499, 508-09 (App. Div.), certif. denied, 199 N.J. 518 (2009). "[T]he 'trial court's interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference.'" Ibid. (quoting Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995)).
The Local Public Contracts Law, N.J.S.A. 40A:11-1 to -51 governs contracts for goods and services procured by counties, municipalities, boards, commissions, committees, authorities and agencies awarded on and after July 1, 1971. N.J.S.A. 40A:11-2. Defendant is a governmental board, Botkin v. Westwood, 52 N.J. Super. 416, 425 (App. Div.), appeal dismissed, 28 N.J. 218 (1958), and is, thus, subject to this Law, which requires public bidding for contracts over the bid threshold of $14,500. N.J.S.A. 40A:11-3.
Every contract awarded by the contracting agent for the provision or performance of any goods or services, the cost of which in the aggregate exceeds the bid threshold, shall be awarded only by resolution of the governing body of the contracting unit to the lowest responsible bidder after public advertising for bids and bidding therefor, except as is provided otherwise in this act or specifically by any other law. [N.J.S.A. 40A:11-4(a) (emphasis added).]
There are, however, exceptions to the requirement for competitive bidding:
Any contract the amount of which exceeds the bid threshold, may be negotiated and awarded by the governing body without public advertising for bids and bidding therefor and shall be awarded by resolution of the governing body if:
(1) The subject matter thereof consists of:
(a)(i) Professional services. The governing body shall in each instance state supporting reasons for its action in the resolution awarding each contract and shall forthwith cause to be printed once, in the official newspaper, a brief notice stating the nature, duration, service and amount of the contract, and that the resolution and contract are on file and available for public inspection in the office of the clerk of the county or municipality, or, in the case of a contracting unit created by more than one county or municipality, of the counties or municipalities creating such contracting unit....
[N.J.S.A. 40A:11-5(1)(a)(i) (emphasis added).]
There is no exception to the requirement for award by resolution. Additionally, "[a]ll contracts for the provision or performance of goods or services shall be in writing." N.J.S.A. 40A:11-14. Plaintiff is charged with knowledge of the law. St. Barnabas Med. Ctr. v. Essex County, 111 N.J. 67, 77 (1988). There, the Court observed,
[T]he Local Public Contracts Law, N.J.S.A. 40A:11-1 to -40,... seeks to protect public funds by ensuring that money is spent in an efficient manner, by those properly authorized to spend it. See Slurzberg v. Bayonne, 29 N.J. 106, 114-15 (1959) (public contracting laws further the "interest of efficient and economical local administration of government" through avoidance of "waste, extravagance and ill-considered spending"). Accordingly, the law presumes that public contractors operate with knowledge of relevant laws constraining the procedural and substantive discretion and authority of officials with whom they deal, see State v. Erie R.R. Co., 23 N.J. Misc. 203, 212 (Sup. Ct. 1945), and where applicable provisions are not followed, any agreements entered into are unenforceable absent lawful ratification. [Id. at 77-78 (citations omitted)].
Thus, we presume that plaintiff knew that defendant could only award the contract by resolution. Unlike the plaintiffs in St. Barnabas and Slurzberg where no resolution of any kind was adopted, here defendant by motion "approve[d] the attached Agreement and Board Addendum B Clarification between [defendant] and [plaintiff] in accordance with the Resolution approved on February 1, 2001." That resolution is not in the record on appeal, yet it is a pivotal piece of evidence.
If the contract plaintiff submitted to defendant on December 26, 2000, was approved by resolution on February 1, 2001, and signed by Nicastro, as plaintiff contends and defendant denies, it governs the contractual relationship between the parties. This would be consistent with plaintiff's claim that he received the fully executed contract in late January or early February 2001. If so, the agreement between the parties would have called for a one-percent contract-administration fee, and all the negotiations thereafter respecting Addendum B were nothing more than an attempt to modify the contract. Plaintiff's rights, then, "are to be derived from the contract which the parties signed, not from the resolution, whose only function was to authorize the contract." Manning Eng'g, Inc. v. Hudson County Parks Comm'n, 71 N.J. 145, 156 (1976), vacated on other grounds, 74 N.J. 113 (1977).
Of course, there would still be the issue, disputed by the parties, of whether plaintiff agreed to modify the contract by including Addendum B into the fully integrated AIA agreement. We do not know when the three meetings discussing Addendum B took place, although surely those dates can be established by Board counsel. They may have occurred after February 1, 2001, and after the executed contract was returned to plaintiff. Basic contract principles dictate that
[a] proposed modification by one party to a contract must be accepted by the other to constitute mutual assent to modify. Unilateral statements or actions made after an agreement has been reached or added to a completed agreement clearly do not serve to modify the original terms of a contract, especially where the other party does not have knowledge of the changes, because knowledge and assent are essential to an effective modification. Finally, an agreement to modify must be based upon new or additional consideration. [County of Morris v. Fauver, 153 N.J. 80, 100 (1998) (internal citations omitted).]
Although the AIA agreement required any modifications to be in writing, that is not necessarily the end of the inquiry, as such a requirement can be waived by the parties. Lewis v. Travelers Ins. Co., 51 N.J. 244, 253 (1968) (citations omitted); Home Owners Constr. Co. v. Borough of Glen Rock, 34 N.J. 305, 316 (1961). The issue, of course, is one governed by the law of contracts.
It is questionable whether Yezzi's post-contract negotiations of the Addendum B language, minus a signature, constitute a valid acceptance of the modification proposal. There is no evidence on record suggesting that Addendum B was supported by additional consideration. If there was no agreement to Addendum B, the Board would remain liable for paying the one-percent contract-administration fee.
Of course, if the February 1, 2001, resolution did not approve the contract plaintiff submitted, the discrepancy between the faxed changes plaintiff proposed on March 12, 2001, and their appearance as an attachment to the minutes of the March 8, 2001, meeting must be resolved through evidence presented to the trier of fact.
Yet another issue is whether, assuming Addendum B is part of the contract between the parties, defendant approved compensation for contract-administration services, as contemplated by ¶ 1 of the addendum. Certainly, defendant paid the one-percent fee billed by plaintiff for some unspecified period of time. This issue, like all the other disputed issues, must be resolved by the trier of fact.
Because the parties present different factual allegations with two very different implications in the realm of contract law, summary judgment in favor of the Board was improper absent a viable legal defense.
With respect to plaintiff's appeal from the denial of its motion in limine, after carefully reviewing the record in the light of the written and oral arguments advanced by the parties, we conclude that the remaining issues presented by plaintiff are without sufficient merit to warrant discussion in this opinion, R. 2:11-3(e)(1)(E), and we affirm substantially for the reasons expressed by the trial judge in his oral opinion delivered on December 5, 2008. There is clearly a dispute as to what constitutes the contract between the parties, and that dispute must be resolved by determining when and how the contract was formed.
Reversed and remanded for further proceedings consistent with this opinion.