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American Asphalt Company, Inc. v. Delaware River Port Authority

A-0277-10T4 (N.J. Super. App. Div. 2011) (Unpublished)

PUBLIC BIDDING; CONTRACTORS — Where a public contract is clear that the price in intended to cover all of the contractor’s expenses and costs in performing the stated work, the contractor would not be entitled to additional compensation for the price of materials unless a statute expressly requires that the agency pay such additional costs.

A governmental agency and a contractor entered into a contract for improvement of a parking lot. They executed a fixed-price agreement calling for the contractor to incur all costs and expenses and absorb any increases in costs and expenses in connection with the performance of the work. The agreement also allowed the scope of the work and other terms to be modified in accordance to specific procedures. It also provided that the contractor could receive additional compensation if the site conditions were materially different than ordinarily encountered, but only in accordance to specific procedures.

An issue arose with respect to milling work that needed to be done and over the rise in price of asphalt. After the project was completed, the contractor submitted a letter furnishing details of additional costs it thought it was owed by reason of changes in the scope of work to the site conditions. The agency responded that it had not given any directions to the contractor as to these conditions and that the contractor made the changes at its own discretion and at its own cost. The agency referenced a section of the contract stating that written authorization was needed from the head of the agency. The agency also denied the contractor’s asphalt price escalation request and declined to issue a change order. It asserted that the contract did not provide for an adjustment based on the asphalt index.

The contractor sued, seeking damages for the increased cost of the asphalt mix material and for the additional milling costs. The agency moved for summary judgment and the contractor opposed with a cross-motion for summary judgment. The lower court granted the agency’s motion, finding that the relevant contract provisions were unambiguous and that the contract did not provide for additional compensation.

The contractor appealed, further asserting that the agency was unjustly enriched.

The Appellate Division affirmed the dismissal of the price escalation claim because the contract documents unambiguously precluded such a claim and also held that subsequently enacted legislation that had been designed to give certain price protection to asphalt contractors when market prices suddenly escalate did not apply retrospectively. Here, it was clear that the contract price was intended to cover all of the contractor’s expenses and costs in performing the work and that this included the cost of the asphalt mix.

On the other hand, the Court vacated and remanded the contractor’s claim for compensation for the additional work. It found the record to be unclear. It held that there were genuine issues about the intent of the parties, the chronology of events resulting in the additional work performed, the meaning of certain cryptic job minutes, and the parties’ communications with another. Both parties had very different versions of what actually occurred. Because the Court had many questions and few answers, summary judgment was therefore inappropriate.

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