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American Asphalt Company, Inc v. County of Gloucester

March 29, 2011

AMERICAN ASPHALT COMPANY, INC., PLAINTIFF-RESPONDENT,
v.
COUNTY OF GLOUCESTER, DEFENDANT-APPELLANT.



On appeal from the Superior Court of New Jersey, Law Division, Gloucester County, Docket No. L-1412-08.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued November 29, 2010

Before Judges Reisner and Sabatino.

This appeal arises out of a vendor's claim for price escalation under a government contract. The trial court interpreted the contract as authorizing the requested price increase, and granted summary judgment to the vendor. We reverse.

I.

In March 2008, defendant, the County of Gloucester ("the County"), solicited bids for vendors to supply the County with hot mix asphalt ("HMA") materials*fn1 for use in repairing and repaving its roads. The County's bid proposal, PD 08-021,*fn2 contemplated the award of an extendable one-year, fixed-price contract. The bid proposal included detailed specifications concerning the materials to be supplied. In particular, the proposal stated that "[a]ll materials herein specified shall comply with the 2001 New Jersey State Highway Department standard specifications for road and bridge construction, and the additions to and modifications of the standard specifications to county and municipal construction."

With respect to price, the critical subject of this appeal, the County's bid proposal instructed that "[p]rices shall include all charges that may be imposed in fulfilling the terms of the [awarded] contract." (Emphasis added). It further instructed that "[t]he bid prices shall remain in effect for the entire contract period." (Emphasis added). Additionally, the proposal alerted bidders that "[s]hould any difference arise between the contracting parties as to the meaning or intent of these instructions or specifications, the county purchasing agent's decision shall be final and conclusive." (Emphasis added).

Plaintiff, American Asphalt Company, Inc., timely submitted a responsive bid to the County. In its bid, plaintiff agreed to supply the County during the one-year contract period with HMA "I-2" mix at $31.90 per ton, "I-4" mix at $35.90 per ton, and "I-5" mix at $36.90 per ton.

Plaintiff was the lowest bidder, and the County awarded it the contract. Plaintiff and the County memorialized their agreement in a written contract dated April 2, 2008. The one-year contract commenced immediately, and was to conclude on April 1, 2009. Article two*fn3 of the contract limited the maximum amount to be paid to plaintiff at $1,200,000. This maximum sum was repeated in an award letter from the County to plaintiff dated April 14, 2008.

Article three of the contract incorporated by reference certain specifications contained in "Attachment A" appended to the agreement:

The specific duties of the Contractor shall be as set forth in "Program Specifications" which are incorporated and made part of this contract as Attachment A, or as more particularly set forth in PD# 08-021, together with any other specifications issued by the County in connection with this contract. Expenditures shall conform to the Budget Justification described in Attachment A or such budget revisions submitted by the Contractor to and authorized in writing by the Department. [Emphasis added.]

Attachment A specified the agreed-upon contract prices for each of the HMA mixes:

A. The Contractor agrees to the supplying of Hot Mix Asphalt Material (HMA) to be used on County Roadways by county employees in accordance with PD# 08-021.

B. I-2 Mix shall be paid at a rate of $31.90 per ton.

C. I-5 Mix shall be paid at a rate of $36.90 per ton.

D. I-4

Mix shall be paid at a rate of $35.90 per ton.

[Emphasis added.]

After plaintiff began supplying the County with HMA, the market costs of oil and other petroleum products temporarily spiked. This led ...


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