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Aspen Landscaping Contracting, Inc. v. A. juliano & Sons Contractors, Inc.

Superior Court of New Jersey, Appellate Division

August 9, 2013

ASPEN LANDSCAPING CONTRACTING, INC., Plaintiff,
v.
A. JULIANO & SONS CONTRACTORS, INC., Defendant-Appellant, and COUNTY OF UNION, a body politic and corporate in law in the State of New Jersey, Defendant/Third-Party Plaintiff-Respondent,
v.
T&M ASSOCIATES (a/k/a "T&M"), Third-Party Defendant-Respondent.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued May 22, 2013

On appeal from Superior Court of New Jersey, Law Division, Union County, Docket No. L-1079-08.

Richard T. Garofalo argued the cause for appellant (Garrity, Graham, Murphy, Garofalo & Flinn, P.C., attorneys; Mr. Garofalo, on the brief).

Guido Stefan Weber argued the cause for respondent County of Union (Weber Dowd Law, LLC, attorneys; Mr. Weber and Aleksandra Tasic, on the brief).

Thaddeus J. Hubert III argued the cause for respondent T & M Associates (Hoagland Longo Moran Dunst & Doukas, LLP, attorneys; Mr. Hubert III, of counsel and on the brief; Thaddeus J. Hubert IV, on the brief).

Before Judges Grall, Simonelli & Accurso.

PER CURIAM

Defendant Union County (the County) awarded defendant A. Juliano & Sons Contractors, Inc. (Juliano), the successful bidder, a public contract for excavation, demolition and construction work needed to establish a public park in Clark. In the context of consolidated lawsuits filed by Juliano's subcontractors seeking payment from Juliano and the County, Juliano filed a cross-claim against the County asserting entitlement to payment on six change orders. After all claims, including Juliano's claims for amounts due under five of its six change orders, were settled, the County filed a third-party complaint seeking indemnification from and alleging negligence by T&M Associates, its project engineer with responsibility for drafting the specifications and managing the project.

On December 22, 2011, the trial court granted the County summary judgment on Juliano's claim for $631, 895.27 allegedly due on the sixth change order for the cost of borrow excavation material, and the court denied Juliano's timely motion for reconsideration on February 17, 2012. The third-party claims between the County and T&M were pending in the trial court until May 31, 2012, when the court entered the third parties' stipulation of dismissal without prejudice or costs.[1]

In granting the County summary judgment and denying reconsideration, the trial court concluded that because Juliano's change order for borrow excavation material was based upon Juliano's resolution of a patent ambiguity in the bid documents not brought to the attention of the County as required by the specifications, the relief it sought was barred by "the patent ambiguity doctrine." Agreeing with that conclusion, we affirm.

I

We review a grant of summary judgment "using the same standard" as the trial court. Dugan Const. Co. v. N.J. Tpk. Auth., 398 N.J.Super. 229, 238 (App. Div.), certif. denied, 196 N.J. 346 (2008). Thus, the question for us is whether the County is entitled to summary judgment on this ground as a matter of law. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995).

The controlling law is clear. Public contracts are different than private contracts, and the doctrine of patent ambiguity is best understood in light of the purposes of public contract law and the rules developed to effectuate it. Public contracts are "let only after the broadest opportunity for public bidding is given in order to secure competition, and guard against favoritism, improvidence, extravagance and corruption." D'Annunzio Bros., Inc. v. N.J. Transit Corp., 245 N.J.Super. 527, 532 (App. Div. 1991). "An essential element of the bidding process is a common standard of competition." Ibid.

A common standard of competition is achieved through equal application of "conditions and specifications . . . to all prospective bidders, " which permits preparation of "bids on the same basis." Id. at 532-33. The only two published decisions by courts of this state addressing the patent ambiguity doctrine describe it as a "necessary part of" our "salutary approach to public contracting." Id. at 533; accord Dugan, supra, 398 N.J.Super. at 241 (quoting D'Annunzio).

A patent ambiguity in a publicly bid contract is one that "either (1) would have been apparent to reasonable prospective bidders from the facts available, or (2) was in fact known to the contractor before submitting its bid." D'Annunzio, supra, 245 N.J.Super. at 534 (citations omitted). Where ambiguity is patent, the bidder has a duty to inquire, and a failure to do so bars a claim based on the contractor's resolution of the ambiguity. Ibid. Thus, the doctrine acts as a bar to relief sought by a successful bidder who did not bring the ambiguity to the bidding authority's attention.

The doctrine of patent ambiguity, applied by federal courts in addressing claims under federal public contracts, has been adopted by this court. Id. at 533-34. In effect, the patent ambiguity doctrine precludes reliance on an interpretation of a patently ambiguous contractual term against the drafter; it requires an interpretation disfavoring the successful bidder whose price is based on his or her independent resolution of a patent ambiguity. See Brezina Constr. Co. v. United States, 449 F.2d 372, 375 (Ct. Cl. 1971) (discussing the effect of the doctrine as applied by federal courts); D'Annunzio, supra, 245 N.J.Super. at 533 (explaining this established principle used in interpreting federal government contracts).

The difficulty is in distinguishing between ordinary and patent ambiguity. It requires "a case-by-case judgment based upon an objective standard." Newsom v. United States, 676 F.2d 647, 650 (Ct. Cl. 1982). The question is whether a reasonable person would find the ambiguity "patent and glaring." L. Rosenman Corp. v. United States, 390 F.2d 711, 713 (Ct. Cl. 1968); see also Newsom, supra, 676 F.2d at 650 n.6 (incorporating by reference L. Rosenman's objective standard). Resolution of that question requires a court to place "the contractual language at a point along a spectrum" and ask whether the ambiguity is "so glaring as to raise a duty to inquire[.]" Newsom, supra, 676 F.2d at 650.

By way of illustration, courts deem an ambiguity patent when there is no way to resolve a conflict without ignoring or violating one of the provisions. Ibid. In contrast, where a contract is simply silent on a point such as the location of transmitters required by the contract, a finding of patent ambiguity is unwarranted because a reasonable contractor can assume that the matter was left to his or her discretion. United States v. Turner Constr. Co., 819 F.2d 283, 286 (Fed. Cir. 1987).

The first part of the two-part standard for assessing patent ambiguity iterated in D'Annunzio and set forth previously — ambiguity that "would have been apparent to reasonable prospective bidders from the facts available" — is consistent with the federal standard. The second and alternate part of the D'Annunzio standard — the ambiguity "was in fact known to the contractor before submitting its bid" — is best viewed as addressing a contractor who actually perceived an ambiguity, patent or not, and resolved it without inquiry. Cf. Blount Bros. Constr. Co. v. United States, 346 F.2d 962, 973 (Ct. Cl. 1965) (finding an ambiguity latent and noting, "the contractor was genuinely ...


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