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Meco, Inc v. Township of Freehold

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


April 13, 2011

MECO, INC., PLAINTIFF-APPELLANT,
v.
TOWNSHIP OF FREEHOLD, DEFENDANT-RESPONDENT.

On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-1466-09.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued February 16, 2011

Before Judges Sapp-Peterson and Fasciale.

This is an appeal from the trial court order granting the Township of Freehold (Township) summary judgment dismissing plaintiff, Meco, Inc.'s (Meco) complaint arising out of a contract dispute. We affirm.

The contract arose from the Township's solicitation of bids for the improvement and resurfacing of a public roadway. The bid package released to prospective bidders contained the following provisions which are relevant to this appeal.

SUBMISSION OF BIDS

H. Bidders must insert prices for furnishing all of the materials and/or labor required by these specifications. Prices shall be net, including any charges for packing, crating, containers, etc. . . .

INTERPRETATION AND ADDENDA

A. The bidder understands and agrees that its bid is submitted on the basis of the specifications prepared by the OWNER. The bidder accepts the obligation to become familiar with these specifications.

B. Bidders are expected to examine the specifications and related documents with care and observe all their requirements. Ambiguities, errors or omissions noted by bidders should be promptly reported in writing to the appropriate official. In the event the bidder fails to notify the OWNER of such ambiguities, errors or omissions, the bidder shall be bound by the bid.

C. No oral interpretation of the meaning of the specifications will be made to any bidder. Every request for an interpretation shall be in writing, addressed to the OWNER'S representative stipulated in the bid. In order to be given consideration, written requests for interpretation must be received at least seven (7) days prior to the date fixed for the opening of the bids. . . .

STANDARD SPECIFICATIONS

The Standard Specifications for Road and Bridge Construction of the New Jersey Department of Transportation, 2001 Edition is added to and/or amended elsewhere herein by the Proposal, General Conditions, Special Provisions and Supplementary Specifications; shall, insofar as technical requirements are involved, govern in the execution of this project.

Such Standard Specifications are made a part of these Specifications by this reference and will not be repeated herein. . . .

The Notice to Bidders (Advertisement), Proposal, General Conditions, Special Provisions and/or Supplementary Specifications shall govern and prevail in the case of conflict between them and the Standard Specifications.

Public bidding on the contract opened on April 9, 2008, and in accordance with the contract terms, the contract period commenced within fourteen days of the "issuance of the 'Notice to Proceed'" and required completion by August 31, 2008.

Meco submitted a bid in the amount of $876,921. Its bid contained the following unit prices for asphalt concrete: 15,680 square yards of Bituminous Stabilized Base Course Mix I-2 (Item 3.1) at $13.50, totaling $211,680; 350 tons of Bituminous Concrete Leveling Course Mix I-5 (Item 3.2) at $1.00, totaling $350; and 3,570 tons of Bituminous Concrete Surface Course (Item 3.3) at $69.50, totaling $248,115.

On April 22, 2008, the Township adopted Resolution No. R- 08-123, awarding Meco the contract as the lowest responsible bidder. That same day, Meco and the Township entered into Contract No. 08-08, which memorialized the terms of the bid package. On April 23, the Township issued a purchase order for the contract. Thereafter, Meco commenced work on the project.

Pursuant to the prices in the contract, Meco submitted the following invoices for payment, which the Township subsequently paid: $67,288.77 on June 3, 2008, paid on June 17, 2008; $144,858.18 on June 27, 2008, paid on July 29, 2008; $209,907.94 on August 1, 2008, paid on August 26, 2008; $374,607.77 on August 29, 2008, paid on September 23, 2008; $58,320.73 on September 16, 2008, paid on October 17, 2008; and $17,448.64 on September 24, 2008, paid on July 14, 2009. On September 24, 2008, the Township issued a change order reducing the final total by $4,488.97 due to the utilization of less material.

On August 4, 2008, Meco submitted a written change order request to cover the costs of the "asphalt escalation" in the amount of $36,678.75. In its request, Meco acknowledged that there was no "line item in the proposal for asphalt escalation[,]" but suggested that the contract incorporated § 404.25 of the NJSS*fn1 which set the guidelines for "determining the asphalt price adjustment." According to the Asphalt Cement and Fuel Price Index that Meco included with its request, the price per ton of asphalt cement was $410 in April 2008, $447.50 in May 2008, $517.50 in June 2008, $625 in the first half of July 2008, $700 in the second half of July 2008, and $822.50 in August 2008.

On August 27, 2008, the Township denied Meco's request and based its denial on the fact that the "price which was bid by Meco is not a technical requirement which would be amended by the State specifications." The letter also noted that because Meco failed to notify the Township of any ambiguity in the bid package, Meco, in accordance with Paragraph B of "Interpretation and Addenda," was "'bound by the bid.'" After receiving this correspondence, Meco continued to perform the contract and submitted three invoices for payment. Each submission charged the Township for asphalt cement at the rate set forth in its original bid proposal.

However, On February 4, 2009, Meco's counsel requested payment from the Township in the amount of $123,817.11 for increased asphalt cement costs and, the following month, filed a complaint in Superior Court alleging that the Township breached the terms of its contract. Meco sought damages of $123,817.11, including counsel fees and costs. The Township filed an answer denying the allegations and asserting the affirmative defenses of accord and satisfaction, laches, and statute of limitations.

As part of the exchange of discovery, Meco's president, Arlindo Lucas (Lucas), filed certified answers to interrogatories. In response to Question #5: "State whether any admissions or statements were made by Defendant's agent, employee, official or representative[,]" he responded: "One of Defendant's inspector[]s said to Greg Ulias (Meco Inc.'s estimator) that Meco, Inc. should make application to the Township for a change order for the additional, unexpected cost of asphalt. The name of the inspector is unknown and Mr. Ulias has passed away."

In response to Question #30: "Did the Defendant, by letter dated August 28, 2008 deny the Plaintiff's request for a Price Adjustment as set forth in Exhibit 'A'[,]" he responded: "Objection, Defendant's correspondence speaks for itself. Without waiving said objection, yes." In response to Question #31: "Did the Defendant thereafter ever agree to a Price Adjustment in the Bid Proposal[,]" he responded: "No."

The Township moved for summary judgment, arguing that its contract did not incorporate § 404.25 of the NJSS into the contract. Additionally, the Township argued that even if § 404.25 was deemed incorporated into the contract, Meco failed to comply with the requirements of this provision.

In opposition to the motion, Lucas filed a certification on behalf of Meco in which he certified that it has been "standard industry practice" to rely upon the NJSS "throughout the bidding and construction phases of municipal roadway projects" and that he did so in preparing Meco's bid for the contract. Due to the "exponential[]" increase in asphalt, he "notified Township officials Mike Rij [(Rij)] and Robert Wickel [(Wickel)] of the need to employ the escalation provision of the NJDOT Specifications" and they "stated that [they] would rely on the NJDOT escalator provision and advised that Meco, Inc. would be compensated in accordance with same." Lucas further certified that after the Township denied Meco's written request for a change order, Meco completed the project before making another request because the project involved "public roadways and public safety" and because of Meco's "past relationship" with the Township.

The Township submitted a reply to plaintiff's opposition, attaching certifications from Rij and Wickel denying that any such conversations occurred with Lucas. In addition, Township Administrator, Thomas E. Antus, submitted a certification stating that neither Wickel, as Township Principal Engineer, nor Rij, as Senior Inspector, "have the authority or ability to bind the Township of Freehold as to any contract, amendment of contract or interpretation of contract."

The court granted the Township's motion, issuing a written statement of reasons:

A review of Defendant's Bid Package page, S-13, clearly states that "The Standard Specifications for Road and Bridge Construction of the New Jersey Department of Transportation, 2001 Edition[,] is added to and/or amended elsewhere herein by the Proposal, General Conditions, Special Provisions and Supplementary Specifications; shall, insofar as technical requirements are involved, govern the execution of this project." The Bid Package Standard Specifications Section, page S-13, goes on to direct that "The Notice to Bidders (Advertisement), Proposal, General Conditions, Special Provisions and/or Supplementary Specifications shall govern and prevail in the case of a conflict between them and the Standard Specifications." The language of the contract is clear and unambiguous. The court has determined that it was the composition of the cement only that was to conform to the technical requirements of the New Jersey Standard Specifications and not the price of the cement. The price was to be determined/governed by the Bid Proposal.

The court finds no support for Plaintiff's argument that the incorporation language referred to more than the technical requirements. Although Plaintiff argues that the Township's own professionals recognized this, Plaintiff has provided no evidence/testimony to support this assertion. There has been no showing by Plaintiff that a price escalator term was included in the contract. Moreover, there was no price escalator included in the September 24, 2008 change order. Plaintiff never even mentioned that it was entitled to a price escalator until August 4, 2008 even though the price of asphalt cement had steadily risen since June 2008. In light of the clear and unambiguous language of the contract and Plaintiff's lack of evidence that the Township's professionals "recognized" that the price escalator was included in the contract, the court finds that the price escalator provision was not included in the contract and that there are no issues of fact in dispute with regard to same.

If the court were to find material issues of fact in dispute with regard to the price escalator, the next issue for the court to address would be whether the doctrine or accord and satisfaction was satisfied in this case, such that Plaintiff will be precluded from contesting the terms of the contract. The three elements of accord and satisfaction are: (a) a bona fide dispute as to the amount owed; (b) a clear manifestation of intent by the debtor to the creditor that payment is in satisfaction by the creditor; and (c) acceptance of the satisfaction by the creditor. Loizeaux Builders Supply Co. v. Donald B. Ludwig Co., 144 N.J. Super. 556, 564 (Law Div. 1976). There appears to have been a bona fide dispute regarding the price of the asphalt as Plaintiff requested a price escalator in its August 4, 2008 letter. However, Plaintiff also accepted the Township's payments which were in accord with the price terms of the Bid Proposal/contract despite the fact that Plaintiff had requested the price escalator. There also appears to have been a clear manifestation of intent by debtor, Defendant, to creditor, Plaintiff, that fifth and sixth payments satisfied the disputed amount. Plaintiff also accepted each of Defendant's payments and deposited same. Plaintiff's actions constitute a clear acceptance of the payments in satisfaction of the debt. In light of the fact that all three elements appear to have been satisfied, there has been an accord and satisfaction.

The present appeal followed.

On appeal, plaintiff raises the following points for our consideration:

POINT I

THE LAW DIVISION ERRED BY GRANTING SUMMARY JUDGMENT IN THE FACE OF AN AMBIGUOUS CLAUSE AND ISSUES OF MATERIAL FACT.

POINT II

THE LAW DIVISION ERRED BY RELYING UPON THE DOCTRINE OF ACCORD AND SATISFACTION.

POINT III (Not Raised Below)

THE TOWNSHIP WAS NOT ENTITLED TO SUMMARY JUDGMENT BECAUSE IF THE NJDOT SPECIFICATION PROVISION IS INTERPRETED IN THE MANNER URGED BY THE TOWNSHIP, SUCH A PROVISION REPRESENTS AN UNCONSCIONABLE PROVISION IN A CONTRACT OF ADHESION.

POINT IV

THE DOCTRINE OF EQUITABLE ESTOPPEL PRECLUDES THE PLAINTIFF FROM ENFORCING THE AGREEMENT AGAINST THE DEFENDANT.

A. THE NJDOT SPECIFICATIONS PROVISION, AS INTERPRETED BY THE LAW DIVISION, IS UNCONSCIONABLE.

B. PLAIN ERROR AND THE PUBLIC INTEREST WARRANT CONSIDERATION OF THE ADHESION ISSUE ON APPEAL.

I.

Our review of an order granting summary judgment is de novo. Turner v. Wong, 363 N.J. Super. 186, 198-99 (App. Div. 2003). We employ the same standard of review as that employed by the trial court. Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608 (1998). Our task is to determine "'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[s] in favor of the non-moving party.'" Spinks v. Twp. of Clinton, 402 N.J. Super. 465, 473 (App. Div. 2008) (quoting Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995)), certif. denied, 197 N.J. 476 (2009). We do not decide the disputed fact but only whether the allegedly disputed fact is material, warranting resolution by the factfinder. Brill, supra, 142 N.J. at 520.

It is not simply any disputed fact that is sufficient to defeat a summary judgment motion. Rather, the disputed fact must be material and warrant resolution by the trier of fact. Id. at 530.

In viewing a non-moving party's opposition to a summary judgment motion and according all favorable inferences from the evidence to that party, the motion will not be defeated merely by discrediting the credibility of the movant's evidence. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256-57, 106 S. Ct. 2505, 2514, 91 L. Ed. 2d 202, 217 (1986). Likewise, "conclusory and self-serving assertions in certifications without explanatory or supporting facts will not defeat a meritorious motion for summary judgment." Hoffman v. Asseenontv.Com, Inc., 404 N.J. Super. 415, 425-26 (App. Div. 2009) (citation and internal quotation marks omitted). Moreover, a party does not create a genuine issue of fact simply by offering a sworn statement, particularly if it conflicts with prior statements. Carroll v. N.J. Transit, 366 N.J. Super. 380, 388 (App. Div. 2004) ("[W]here plaintiff's contradiction is unexplained and unqualified, he cannot create an issue of fact simply by raising arguments contradicting his own prior statements and representations.") (citation and internal quotation marks omitted); see also Shelcusky v. Garjulio, 172 N.J. 185, 201-02 (2002).

Measured against this analytical framework, we are satisfied the motion judge properly granted summary judgment. We agree, in the first instance, that there was no ambiguity in the language contained in the bid package and, second, Lucas's certification did not create a genuinely disputed issue of fact sufficient to defeat the otherwise undisputed evidence.

II.

We initially address plaintiff's claim that a "material issue of fact existed with respect to the precise meaning of the clause incorporating the NJDOT Specifications." Meco argues that the grammar in the clause is "substandard," and the "construction of the clause . . . makes it difficult" to understand. In particular, Meco points to the semi-colon punctuation as creating the ambiguity: "The Standard Specifications for Road and Bridge Construction of the New Jersey Department of Transportation, 2001 Edition[,] is added to and/or amended elsewhere herein by the Proposal, General Conditions, Special Provisions and Supplementary Specifications; shall, insofar as technical requirements are involved, govern in the execution of this project."

To determine if a contract is ambiguous and therefore properly subject to interpretation, we begin by examining the plain language and punctuation used in the contract and consider whether it is susceptible to different meanings. 11 Williston on Contracts, § 30:5 (Lord ed. 1999). Here, if the semi-colon were a period, then one could persuasively argue that the intent of the provision was to alert bidders that NJSS would be added to or amended elsewhere in the bid package. If the semi-colon were omitted in its entirety, then it would be clear that this language was intended to apply solely to technical requirements. Thus, this section clearly is susceptible to different meanings. However, language in a contract cannot be read in isolation. Wheatly v. Sook Suh, 217 N.J. Super. 233, 239 (App. Div. 1987) ("In construing a contract, a court must not focus on an isolated phrase but should read the contract as a whole as well as considering the surrounding circumstances.").

Here, despite the confusing phraseology, additional language makes clear the extent to which NJSS applied to the agreement. Under the "Standard Specifications" is the following language: "The Notice to Bidders (Advertisement), Proposal, General Conditions, Special Provisions and/or Supplementary Specifications shall govern and prevail in the case of conflict between them and the [NJSS]." Further, there was additional language in the bid package instructing that:

Bidders are expected to examine the specifications and related documents with care and observe all their requirements. Ambiguities, errors or omissions noted by bidders should be promptly reported in writing to the appropriate official. In the event the bidder fails to notify the OWNER of such ambiguities, errors or omissions, the bidder shall be bound by the bid.

This provision was not hidden in some obscure place in fine print. Rather, it was displayed under the bold-printed heading, "Interpretation and Addenda." Thus, while we agree that the insertion of the semi-colon had the capacity to cause confusion, unambiguous language located elsewhere directed bidders to carefully examine the documents and bring to the Township's attention "ambiguities" and "errors" or be bound by the bid. Such language provided an adequate remedy to address any confusion. Having failed to avail itself of the opportunity to address what it now claims is an ambiguity, Meco may not seek to recover its additional costs on this basis.

III.

Moreover, Meco's attempt to defeat summary judgment by claiming that Lucas's conversations with Wickel and Rij raise a genuine issue of material fact amounts to little more than self-serving statements that are unsupported by the record. First, it was Lucas who, in response to an interrogatory whether any admissions or statements were made on behalf of defendant, stated that one of defendant's inspectors told his estimator, Ulias, that "Meco . . . should make application to the Township for a change order for the additional, unexpected cost of asphalt." This response was provided in September 2009. It was in fact Ulias who authored the August 4, 2008 letter requesting the price adjustment for the increase in asphalt cement. Ulias, in his letter, noted that the increased costs had been at an alarming rate since "January this year." The letter was written to Wickel and does not state that Wickel or anyone else told him that the Township would rely upon the NJSS escalator provision and that Meco would be compensated in accordance with this provision. Rather, Ulias acknowledged in the letter that there was "no line item in the proposal for asphalt escalation" and he suggested that the escalation clause was incorporated by reference into the project specifications, a position the Township rejected in its response to Ulias.

Lucas's certification is dated May 5, 2010. Meco, at no time subsequent to submitting its responses to interrogatories in September 2009, sought to amend its responses. See R. 4:17-7. Nor did Lucas's certification attempt to explain the contradiction between his interrogatory response and his certification. Shelcusky, supra, 172 N.J. at 201-02 (in applying sham affidavit rule "[c]courts should not reject alleged sham affidavits where the contradiction is reasonably explained . . . and the affidavit reasonably clarifies the affiant's earlier statement."). Lucas's certification contained no such explanation or clarification.

Additionally, Lucas's certification acknowledged that Meco had previously performed similar projects for the Township and did not dispute the certification of Joseph Mavuro, the Township Engineer, who stated:

There was also a prior contract for the 2007 Road Overlay Program that had already been completed between these two parties. The terms of this prior contract were substantially similar in all respects to the terms of the contract for the 2008 Road Overlay Program, including reference to the limited incorporation of the [N.J.] Standard Specifications. During the time of performance of the prior contract, the price of asphalt cement also increased. However, plaintiff did not seek any price escalator and made claim only to be paid for the price it bid.

Further, assuming, as plaintiff contends, the escalation clause contained within the NJSS was incorporated into the bid package, it is undisputed that Meco failed to comply with this provision. Section 404.25 provides in pertinent part:

The basic asphalt price index will be the most recent monthly asphalt price index before receipt of bids.

Should a monthly asphalt price index increase 50 percent or more over the basic asphalt price index, no additional HMA [(Hot Mix Asphalt)] shall be furnished for the Project without written approval from the Director of Construction Services and Materials.

Asphalt price adjustment will be on a lump sum basis, and an estimated amount to cover the asphalt price adjustment will be included in the Proposal. Payments for increases will be made from this amount.

As Ulias's letter notes, Meco's bid proposal did not include a line item for asphalt escalation as required. Further, when the asphalt price index "increased 50 percent or more," Meco did not seek written approval to continue to provide materials for the project or cease furnishing materials for the project until it received written approval. As the motion judge observed, "[p]laintiff never even mentioned that it was entitled to a price escalator until August 4, 2008 even though the price of asphalt cement had steadily risen since June 2008."

We agree with the Township that § 404.25 is not an arbitrary requirement. Public entities are statutorily constrained from expending funds beyond that which has been duly appropriated. N.J.S.A. 40A:4-57; N.J.S.A. 2C:30-4(b). To require a public entity to adjust a contract price without the vendor having first complied with the provisions of § 404.25 deprives the public entity from considering options other than a price adjustment, such as, reducing the scope of the project. See In Re Jasper Seating Co., Inc., 406 N.J. Super. 213, 222 (App. Div. 2009) (noting public bidding benefits taxpayers and, among other objectives, guards against extravagance).

IV.

Finally, for the first time on appeal, plaintiff argues that the Township's contract constitutes an unconscionable and unenforceable contract of adhesion because the bid package was a "take-it-or-leave-it" deal. Meco argues that the inflexible public bid forced it to absorb the exponential increase in the cost of asphalt. Further, Meco posits that the recent amendment to N.J.S.A. 40A:11-16(d) evidences the Legislature's recognition of the unequal bargaining power between prospective bidders on public contracts and public entities because it now requires inclusion of the escalation clause in bid packages of this type.

Ordinarily, we will decline to consider questions or issues not properly presented to the trial court when an opportunity for such a presentation is available "'unless the questions so raised on appeal go to the jurisdiction of the trial court or concern matters of great public interest.'" Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 234 (1973) (quoting Reynolds Offset Co., Inc. v. Summer, 58 N.J. Super. 542, 548 (App. Div. 1959), certif. denied, 31 N.J. 554 (1960)). Neither exception applies here, but because we may dispose of the arguments summarily and in the interest of justice, we address this contention.

The bid package, by its very terms, was neither a "take-itor-leave-it" deal nor "unconscionable." As noted earlier, the bid package invited bidders to bring to the Township's attention any ambiguities or errors. Further, assuming Meco was operating under the belief that the price escalation clause was incorporated into the contract, it failed to take the necessary steps to comply with the requirements of § 404.25.

Finally, notwithstanding the recent amendment to N.J.S.A. 40A:11-16 requiring inclusion of a price escalation clause in bid packages, the vendor to whom a contract is awarded must adhere to appropriate procedures before a price adjustment occurs. Section 160.03.02 of the updated 2007 NJSS provides: "If the monthly asphalt price index increased 50 percent or more over the basic asphalt price index, do not perform work on Items containing asphalt binder without written approval from the RE [NJDOT representative]." Therefore, under the amended statute, when the "monthly asphalt price index increased 50 percent or more over the basic asphalt price index," plaintiff would have been precluded from continuing with a project without written approval. Consequently, the statute, as amended, does not alter a vendor's obligation to comply with appropriate procedures as a condition precedent to receiving a contract price adjustment.

V.

In addition to finding no ambiguity in the contract, the motion judge also concluded that there was accord and satisfaction. "The traditional elements of an accord and satisfaction are the following: (1) a dispute as to the amount of money owed; (2) a clear manifestation of intent by the debtor to the creditor that payment is in satisfaction of the disputed amount; (3) acceptance of satisfaction by the creditor." A.G. King Tree Surgeons v. Deeb, 140 N.J. Super. 346, 348-49 (Cty. Dist. Ct. 1976) (citing U.S. for Use of Glickfeld v. Krendel, 136 F. Supp. 276, 282 (D.N.J. 1955)).

Ulias's August 4, 2008 letter seeking a price adjustment and the Township's August 28, 2008 letter denying Meco's request constitute evidence of a genuine dispute between the parties as to the amount of money owed to Meco. The Township's letter also invited Meco's attorney to contact the Township's attorney to resolve the matter. Instead of following up with the Township's attorney regarding the cost dispute, Meco submitted three additional invoices for payments: (1) August 29, for $374,609.77; (2) September 16, for $58,320.73; and (3) September 24, for $17,448.64. These invoices contained no indication that plaintiff continued to seek a price adjustment based upon the increased asphalt cement costs. The September 24 invoice for payment was marked "Final." Also on September 24, the Township issued a change order reducing the final total by $4,488.97. Meco provided its written acceptance to this price adjustment. These undisputed facts satisfy all three elements of accord and satisfaction. Meco's contention that the motion judge erred as a matter of law in finding accord and satisfaction is based upon statements contained in Lucas's certification, which we have already concluded are not supported by the record. Therefore, the motion judge properly found accord and satisfaction.

Plaintiff's remaining argument that the doctrine of equitable estoppel should be applied against the Township is without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).

Affirmed.


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