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D.J. Miller & Associates, Inc. v. State of New Jersey

356 N.J. Super. 187, 811 A.2d 952 (App. Div. 2002)

CONTRACTS; GOVERNMENTS; REMEDIES—A state agency cannot limit a contractor’s remedy for claims relating to final Director’s decisions to an action before the Appellate Division because it is contrary to court rules and only the New Jersey Supreme Court has the authority to allocate jurisdiction.

This case presented the issue as to whether a “State contracting agency can require in its contract that any claim of breach must be pursued by an appeal to the Appellate Division rather than by an action in the appropriate trial court.” A state agency, after a competitive bidding process, awarded a contract for a business practices study. The contract was for a one-year term and permitted the agency to terminate the contract where circumstances or the agency’s needs significantly changed or the contract might otherwise be deemed no longer to be in the public interest. The contract was terminated, and in response, the consultant sent a letter requesting the agency to “inform us, in writing, of precisely each and every change of circumstance, change of needs, and/or reason that the contract is no longer in the public interest… .” The agency did not respond to the letter. The consultant challenged the termination in the Chancery Division. The lower court denied temporary restraints, but signed an order to show cause. Before the return date, the consultant dismissed its Chancery Division action, without prejudice, and filed a notice of appeal to the Appellate Division. At oral argument, the consultant indicated that it was no longer seeking restatement of the contract, but was only seeking money damages. A court rule confers jurisdiction upon the Appellate Division “to review final decisions or actions of any state administrative agency or officer.” Not all actions or inactions of agencies constitute an “administrative” agency action or inaction that is subject to review by the Appellate Division. Prior case law held “that an action for breach of contract under the Contractual Liability Act does not constitute State administrative action within the intent of [the court rule] and thus jurisdiction over such a claim resides in the appropriate trial court rather than the Appellate Division.” An administrative rule provides, however, that “any claim against the State relating a final decision by the Director regarding contract award recision, contract interpretation, ..., suspension or termination shall not accrue, ... until a decision is rendered by the Superior Court of New Jersey, Appellate Division… .” Here, the Appellate Division found that this particular provision of the Administrative Code was “inconsistent with the rules of court, as interpreted [by prior case law], which confer jurisdiction over actions for breach of contract upon the trial divisions of the Superior Court.” Because the New Jersey Supreme Court “has exclusive constitutional authority to allocate jurisdiction among the divisions of the Superior Court by court rule, ... [a] State agency may not override those rules by inserting a provision in the contract that any claim for breach shall be brought in a different division of the Superior Court than [the one] the Supreme Court has determined to be appropriate.” Accordingly, the matter was transferred to the Law Division.


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