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Washington Township Board of Education v. Sal Electric

May 4, 2011

WASHINGTON TOWNSHIP BOARD OF EDUCATION, PLAINTIFF-APPELLANT,
v.
SAL ELECTRIC, INC., DEFENDANT-RESPONDENT. SAL ELECTRIC, INC., PLAINTIFF-RESPONDENT,
v.
WASHINGTON TOWNSHIP BOARD OF EDUCATION, DEFENDANT-APPELLANT.



On appeal from the Superior Court of New Jersey, Chancery Division, Morris County, Docket Nos. C-173-09 and C-160-09.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued November 10, 2010

Before Judges Fuentes, Gilroy and Ashrafi.

These two appeals arise out of an arbitrator's award in a school construction contract dispute between the Washington Township Board of Education (the Board) as the owner and Sal Electric, Inc. (SEI) as the prime electrical contractor. The Board appeals from two January 21, 2010 orders that confirmed the arbitration award entered in favor of SEI and dismissed its complaint seeking to vacate the award. *fn1 We affirm on both appeals.

I.

On September 7, 2007, SEI filed a demand for binding arbitration with the American Arbitration Association (AAA) pursuant to that entity's construction industry's dispute resolution procedures. Under its demand, SEI not only sought payment of monies owed by the Board under the construction contract, but also interest and delay damages. On September 28, 2009, the arbitrator entered an award in favor of SEI in the amount of $372,020.09, representing the balance owed of $66,884.90 on the contract; interest of $20,346.19; and delay damages of $284,789.

On October 28, 2009, SEI filed a complaint seeking to confirm the arbitration award. On December 1, 2009, the Board filed a complaint seeking to vacate the award. Although the two matters were not formally consolidated, the trial court heard oral argument on both matters on January 21, 2010. At the conclusion of argument, the court entered the two orders from which the Board appeals. The order entered under Docket No. C-160-09 confirmed the arbitration award, granted pre-judgment interest from September 28, 2009, and awarded SEI attorney fees of $1,195.25 for the enforcement of the award. The order entered under Docket No. C-173-09 denied the Board's application seeking to vacate the award. Subsequent to the Board filing its two notices of appeal, the parties entered into a consent order under which the Board paid SEI those portions of the arbitration award relating to the balance owed on the contract claim and accrued interest. Because the Board does not challenge the award of attorney fees, the only remaining issue on appeal pertains to the trial court's confirmation of the arbitration award concerning the delay damage claim.

II.

We discern the following facts from the documents submitted in arbitration. In 2003, the Board publicly advertised for bids for the construction of a new elementary school. The bid proposal was divided into multiple prime contracts, including: general construction, structural steel, plumbing and fire protection, mechanical, and electrical. The Board awarded the electrical contract to SEI.

On April 27, 2004, notice-to-proceed letters were sent to each of the prime contractors on the project. In June 2004, the Board and SEI entered into a standard American Institute of Architects (AIA) form contract, wherein SEI would receive $1,993,570.00 for its timely completion of electrical work on the project. The contract set August 1, 2005, as the substantial completion date.

Additionally, the contract between the parties incorporated by reference AIA document A201/CMa-1992, entitled "General Conditions of the Contract for Construction," (the Rider). Article I, subsection 1.1.3 of the Rider defined "the Work" as: the construction and services required by the Contract Documents, whether completed or partially completed, and includes all other labor, material, equipment and services provided or to be provided by the Contractor to fulfill the Contractor's obligations.

Article 4, section 7, of the Rider addressing "Claims and Disputes," provided in pertinent part:

4.7.1. Definition. A claim is a demand or assertion by one of the parties seeking, as a matter of right, adjustment or interpretation of Contract terms, payment of money, extension of time or other relief with respect to the terms of the Contract. The term "Claim" also includes other disputes and matters in question between the Owner and Contractor arising out of or relating to the Contract . . . .

4.7.2 Decision of Architect. Claims . . . shall be referred initially to the Architect for action as provided in paragraph 4.8. A decision by the Architect . . . shall be required as a condition precedent to arbitration . . . of a Claim between the Contractor and Owner as to all such matters arising prior to the date final payment is due . . . . The decision by the Architect in response to a Claim shall not be a condition precedent to arbitration . . . in the event . . . the Architect has not received evidence or has failed to render a decision within agreed time limits [or] has failed to take action required under Subparagraph 4.8.4 within 30 days after the Claim is made [or] 45 days have passed after the Claim has been referred to the Architect . . ..

4.7.3. Time Limits on Claims. Claims by either party must be made within 21 days after occurrence of the event giving rise to such Claim or within 21 days after the claimant first recognizes the condition giving rise to the Claim, whichever is later. Claims must be made by written notice.

Article 4, section 4.7.8 of the Rider, addressing "Claims for Additional Time," provided in relevant part:

4.7.8.1 If the Contractor wishes to make

[a] Claim for an increase in the Contract Time, written notice as provided herein shall be given. The Contractor's Claim shall include an estimate of cost and of probable effect of delay on progress of the Work.

4.7.8.3 If any Prime Contractor is delayed in the progress of the Work at any time by the Owner, Architect, Construction Manager or other Prime Contractor, due to the incorporation of any major changes to the Work, the relative Prime Contractor shall not assert any claim regarding the same to any of these parties and the relative Prime Contractor's sole remedy shall be limited to an extension to the time, ...


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