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Allan Feid, Inc. v. APS Contractors, Inc.

A-6702-03T2 (N.J. Super. App. Div. 2005) (Unpublished)

PUBLIC BIDDING — Under the New Jersey Public Bidding Act, a general contractor may not enter into an enforceable contract with a subcontractor for work to be performed on a public contract, and then hire another subcontractor to perform the work.

A general contractor wanted to submit a bid on a public contract for construction work to be performed on a property. It solicited offers from subcontractors to perform the plumbing work required under the contract and received an oral price commitment from a particular subcontractor. Based on this price, the general contractor submitted its bid. It was the lowest bidder and was awarded the public contract. Shortly thereafter, the subcontractor submitted a written proposal to the general contractor. The written proposal contained the same price that the subcontractor had orally agreed to, but didn’t cover work to be performed on the sprinkler system. The general contractor then tried to reach an agreement with the subcontractor for all of the contract plumbing work, including the sprinklers. The parties were unable to reach an agreement, and as a result the general contractor sought and received permission from the public entity to use another subcontractor. The original subcontractor sued the general contractor for breach of contract, quantum meruit, and lost profits, claiming that the general contractor violated the New Jersey Public Bidding Act when, after designating it as the subcontractor in its bid, later hired another subcontractor to perform the work at a lower price. The general contractor moved for summary judgment, but the lower court ruled that the general contractor had clearly violated the Act by bid shopping. A trial was then held to determine whether the general contractor had knowledge that the sprinkler system work was not included in the subcontractor’s oral commitment. The lower court found that the general contractor had no knowledge that the sprinkler work was not included in the original oral proposal, and therefore there was no contract with the original subcontractor because there was no meeting of the minds. It further held that there was no basis to enforce an implied contract based on breach of contract because the general contractor had not passively accepted the subcontractor’s services. If also ruled that the subcontractor was not entitled to relief based on quantum meruit. The subcontractor appealed, asserting that the lower court’s findings were not supported by evidence and that the general contractor had violated the Act.

The Appellate Division affirmed the lower court’s decision, holding that its findings of fact and conclusions of law were amply supported by the evidence presented at trial. It noted that the principle issue to be decided at trial was whether the general contractor believed that the subcontractor’s proposal included the sprinkler work prior to the submission of its bid package. In that regard, based on the credibility of the general contractor’s witnesses at trial, it believed that the lower court properly concluded that the general contractor did genuinely believe that the sprinkler work was included. The Court held that it had a duty to defer to the lower court on issues involving the credibility and demeanor of witnesses. It further held that the motion judge’s finding of bid shopping was not binding on the lower court which, after hearing all of the evidence, properly found that the general contractor did not engage bid shopping.

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