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Horizon Group of New England, Inc v. New Jersey Schools Construction Corporation N/K/A New Jersey Schools

August 24, 2011

HORIZON GROUP OF NEW ENGLAND, INC., PLAINTIFF-APPELLANT,
v.
NEW JERSEY SCHOOLS CONSTRUCTION CORPORATION N/K/A NEW JERSEY SCHOOLS DEVELOPMENT AUTHORITY, IMPERIAL CONSTRUCTION GROUP, INC., BOVIS LEND LEASE, INC., IMPERIAL CONSTRUCTION GROUP, INC./BOVIS LEND LEASE, INC., DEFENDANTS, AND EI ASSOCIATES AND GZA GEOENVIRONMENTAL, INC., DEFENDANTS-RESPONDENTS.
NEW JERSEY SCHOOLS DEVELOPMENT AUTHORITY, THIRD-PARTY
PLAINTIFF,
v.
ST. PAUL FIRE AND MARINE INSURANCE COMPANY, THIRD-PARTY DEFENDANT. ST. PAUL FIRE AND MARINE INSURANCE COMPANY, THIRD-PARTY DEFENDANT FOURTH-PARTY PLAINTIFF,
v.
MICHAEL DAWSON, GAIL DAWSON, DEAN V. ROBBINS, III, AND CAMILLE ROBBINS, FOURTH-PARTY DEFENDANTS.



On appeal from the Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-4537-07.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued: March 9, 2011

Before Judges Cuff, Sapp-Peterson and Simonelli.

This appeal arises from a school construction project in Harrison, Hudson County, funded by defendant New Jersey Schools Construction Corporation, n/k/a New Jersey Schools Development Authority (NJSDA). We review an order granting summary judgment to defendants EI Associates (EIA) and GZA GeoEnvironmental, Inc. (GZA) dismissing the negligence claim filed by plaintiff Horizon Group of New England, Inc. (Horizon), and an order granting summary judgment to defendant EIA dismissing the indemnification claim filed by NJSDA and assigned by settlement to Horizon. We affirm the order granting summary judgment and dismissing the negligence claim but reverse the order granting summary judgment and dismissing the indemnification claim assigned to Horizon.

On March 4, 2003, EIA entered a contract with NJSDA for design and construction administrative services for the new Harrison High School (the project). The contract states that EIA is to "provide complete design and construction administrator services" for the project. The contract defines "Design Consultant" as "the Architect or Engineer or other Professional Services Consultant selected by [NJSDA] to provide design services and Construction Administration Services in connection with the [project]." Construction Administration Services is defined as "the services required to be performed by [EIA] pursuant to the Contractual Documents necessary for the administration and oversight of the construction of [the project] so as to ensure that the construction is being conducted as is required by the Construction Contract Documents."

As the Design Consultant, EIA was required to prepare detailed plans and specifications, initial and final cost estimates, schematic design documents, and construction documents; to redesign or offer alternative designs if the bids received exceed the final cost estimate; and to oversee the work "to determine in general if the Construction Work is proceeding in accordance with the Construction Contract Documents." During the schematic design phase, EIA was required to "review site boundary and topographic surveys, subsurface data, and foundation engineering recommendations, and any other [NJSDA]-furnished data or information related to each . . . site. [EIA] shall advise the [overall construction management firm] in writing whether such data and information is adequate for its intended use or whether additional data is necessary" to allow it to perform its design services.

EIA could suspend work if previously undetected hazardous materials were detected during the work. If the suspension or any other development would cause a delay in the work, EIA was required to promptly notify NJSDA in writing.

EIA was authorized to retain subcontractors, but the contract expressly provided that the subcontractor had no contractual relationship with the NJSDA. The EIA contract also contains a third-party beneficiary clause, which provides:

Nothing contained in this Agreement or the Contractual Documents shall create a contractual relationship with a third party or create a cause of action in favor of a third party against [EIA] or [NJSDA].

The contract also addresses indemnification as follows:

To the fullest extent permitted by law, [EIA] shall indemnify, protect, defend and save harmless . . . [NJSDA] . . . from and against any loss, damage, injury, cost or expense; and from and against any Claim, demand, liability, lawsuit, judgment, action or other proceeding arising, to arise from, in connection with, or as a result of any of the following:

[T]he negligent acts or omissions of [EIA], its agents, servants, officers, employees, Subconsultants or any other person acting at [EIA's] request, subject to its direction, or on its behalf . . . .

The NJSDA-EIA contract requires that any dispute regarding any provision of the contract will be submitted to a Claims Adjustment Committee. Upon submission of a claim to the committee, EIA had two options: act in accordance with the committee's determination or reserve the right to assert a claim pursuant to the New Jersey Contractual Liability Act, N.J.S.A. 59:13-1 to -10.

On April 2, 2003, EIA entered a subcontract with GZA to perform environmental and engineering services for the project. The GZA contract expressly incorporated EIA's contract with NJSDA by reference. Thus, the third-party beneficiary clause in the EIA-NJSDA contract was incorporated by reference into GZA's contract with EIA. Moreover, GZA expressly limited the use of the reports prepared by it to EIA only.

On November 15, 2004, Horizon entered a contract with NJSDA to construct an athletic field with bleachers, lighting, and paving for the project. St. Paul Fire and Marine Insurance Company (St. Paul) supplied a surety bond for the work on October 7, 2004. The Horizon-NJSDA contract provided:

The [NJSDA] is responsible for the administration of the Contract. The [NJSDA] will decide all questions regarding the quality, acceptability and the rate of progress of the Work; all questions regarding interpretation of the Contract Documents; all questions regarding the acceptable fulfillment of the ...


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