NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-
EAST BRUNSWICK SEWERAGE
AUTHORITY, a public body
politic and corporation
of the Township of East
Brunswick,
Plaintiffs-Appellants,
v.
EAST MILL ASSOCIATES, INC.,
A New Jersey limited
partnership, JACK WHITMAN,
individually and as general
partner,
Defendants-Respondents.
_______________________________
Argued: December 3, 2003 - Decided: January 2, 2004
Before Judges King, Lintner and Lisa.
On appeal from the Superior Court of New Jersey, Chancery Division, Middlesex County,
C-241-0.
Karl P. Kemm argued the cause for appellants (Philibosian, Russell, Killmurray & Kinneally,
attorneys; Mr. Kemm and Christina E. Jones Rowe, on the brief).
James E. Stahl argued the cause for respondents (Borrus, Goldin, Foley, Vignuolo, Hyman
& Stahl, attorneys; Mr. Stahl, on the brief).
The opinion of the court was delivered by
KING, P.J.A.D.
This case involves the allocation of costs associated with the upgrade of a
sewer pumping station. The defendant, East Mills Associates (EMA), was developing residential units
within the East Brunswick Sewerage Authoritys (EBSA) service area. The sewer pumping system
required an upgrade to accommodate the new units being built by the defendants.
In the developers agreement, EMA agreed to pay 55% of the costs of
the upgrade. Due to events unforeseen by both parties at the time of
the agreement, the costs of the project increased substantially. EBSA sought reimbursement in
accordance with the agreement. The trial judge held that EMA should not have
to pay for the increased costs associated with the unforeseen events.
We conclude that the judge erred. In effect, he rewrote the contract of
the parties. We reverse and direct entry of judgment for the full claim
of EBSA, $340,022.12 plus interest.
I
EBSA and EMA entered into a developers agreement on December 28, 1993
to upgrade the Ryders Lane Pumping Station. EMA was building thirty-seven residential units
located within EBSA's service area. Under the terms of the agreement, EMA was
permitted to connect a maximum of eighteen units to the existing sewerage system.
EMA could connect more units to the system with an EBSA engineer's approval.
EBSA needed to expand and upgrade the existing pumping station to accommodate the
additional units.
Pursuant to the agreement, EMA "agreed to pay for fifty-five percent (55%) of
the total cost." The agreement stated in paragraph one:
Developer [EMA] shall pay to the EBSA . . . fifty-five percent (55%)
of the costs and expenses incurred by the EBSA to upgrade the EBSA
Ryders Lane Pumping Station which costs and expenses shall be inclusive of engineering,
approval, design and construction costs and inclusive of approval costs as set forth
in paragraph three of this Agreement. The EBSA shall be responsible for the
difference of the Developers contribution and total costs and expenses relating to the
upgrade of the Ryders Lane Pumping Station.
Paragraph three addressed the costs related to approvals or permits necessary for the
pumping station improvements.
To the extent any costs are incurred in seeking approvals, permits and the
like from any governmental entity having jurisdiction which are required for upgrading the
EBSA Ryders Lane Pumping Station, such costs shall be borne by the EBSA
and the Developer in the same percentage contribution as provided for in Paragraph
1 of this Agreement.
The schedule of payments mandated that EMA pay 55% of the engineering and
design costs at the time of the bid award. Also, within ten days
of the contractors request, EMA had to pay 55% of the engineering and
design costs incurred since the prior payment in addition to 55% of the
amount set forth in the contractors request.
In 1993 the estimated cost to the defendant was $150,000 to $200,000. Although
the construction was anticipated to begin in 1998, it did not actually begin
until 2001. The reasons for the delay were threefold: (1) alterations because of
Middlesex Countys road-widening project on Ryders Lane; (2) a wetlands-encroachment application; and (3)
a stream-encroachment application.
EBSA could not make the improvements to the pumping station until Middlesex County's
road-widening project was complete. In the process, the entire site plan of the
pumping station was revised because the widening of the road took property from
the EBSA where the station was first located. The EBSA had approval from
the planning board for the original design but had to obtain board approval
for the new design.
EBSAs engineer for the project, Clifford Gold of C.G. Engineers, testified as a
fact witness on the wetlands and stream-encroachment issues. Before the execution of the
agreement, EBSA had obtained a letter of interpretation from the Department of Environmental
Protection (DEP) delineating the property as wetlands. The letter of interpretation expired before
EBSA started construction in 2001. Gold testified that even if the construction had
proceeded in 1998 as anticipated, EBSA still needed to reapply to DEP.
A stream-encroachment application was also required for the project. Gold testified that even
if the station had been built at its original location, a stream-encroachment application
and review by the State would have been required. As these impediments to
the projects arose, EBSA notified EMA of the status and the increased costs.
EMA never responded.
On April 19, 2001 EBSA awarded the bid for the upgrade of the
pump station to Estock Corporation t/a Middlesex Trenching in a bid amount of
$449,898. Pursuant to the agreement, EBSA requested the posting of the security performance
of $296,932.68 and 55% of the engineering and design costs up to that
point of $88,880.87, or $48,884.48.
EMA did not make the payment or post bond. EBSA filed suit on
November 1, 2001 for breach of contract demanding damages in accordance with the
terms of the agreement, attorneys fees, costs of suit, plus interest. EBSA also
alleged that EMA breached the agreement by connecting additional residential units to the
existing sewer system without obtaining the necessary approval from EBSA. The total reimbursement
sought at the time of trial was 55% of $618,222.03 ($340,022.12), which includes
55% of $88,880.87 ($48,884.48) in engineering and design costs, and 55% of $529,341.16
($291,137.64) in construction costs.
The case was tried on December 12 and 13, 2002. The judge ordered
EMA to pay 55% of $88,880.87 ($48,884.48), the engineering and design costs incurred
up to the time of the bid award pursuant to the letter of
April 4, 2001, and 55% of $300,000 ($165,000), the estimate of construction costs
EMA received from EBSA in the letter of July 29, 1998. The total
awarded was $213,884.47. The trial judge observed that the estimates were given at
different times, but the greater amount in engineering costs were awarded to compensate
for EMAs failure to notify EBSA that they had connected additional homes. The
judge deviated from the 55% contractual allocation of costs and divided the costs
associated with the unforeseen events in a manner he determined "fair [and] equitable."
EBSA filed this appeal challenging the amount of the award. EBSA requests an
award of $340,022.12, 55% of $618,222.03, the total amount spent on the project,
excluding engineering and design costs.
II
In the developer's agreement, EMA agreed to pay "fifty-five percent (55%) of the
total cost, including engineering, application, design and construction costs, to upgrade and expand
the existing Ryders Lane Pumping Station owned by the EBSA based upon the
terms and conditions set forth." Paragraphs one and three specifically addressed this allocation
as it pertains to construction and approval costs. The agreement contained no other
limiting or conditioning language.
Generally, contracts are given their plain and ordinary meaning.
M.J. Paquet, Inc. v.
N.J. Dept. of Transp.,
171 N.J. 378, 396 (2002) (citing
Nester v. ODonnell,
301 N.J. Super. 198, 210 (App. Div. 1997)). When the terms of a
contract are clear, the court must enforce them as written.
County of Morris
v. Fauver,
153 N.J. 80, 103 (1998) (citing
Koshliek v. Bd. of Chosen
Freeholders of Passaic County,
144 N.J. Super. 336, 344 (Law Div. 1976)). A
court
has no power to rewrite the contract of the parties by substituting
a new or different provision from what is clearly expressed in the instrument.
See Schenck v. HJI Assoc.,
295 N.J. Super. 445, 450 (App. Div. 1996),
certif. denied,
149 N.J. 35 (1997);
Taomaiuoli v. U.S. Fid. & Guar. Co.,
75 N.J. Super. 192, 201 (App. Div. 1962).
"It has been decided many
times and in many cases that the court will not make a different
or a better contract than the parties themselves have seen fit to enter
into."
Washington Construction Co. v. Spinella,
8 N.J. 212, 217 (1951).
However, courts of equity have the power not to enforce a contract that
inequitably imposes a great hardship or a manifest injustice.
See Brower v. Glen
Wild Lake Co.,
86 N.J. Super. 341, 350 (App. Div.),
certif. denied,
44 N.J. 399 (1965).
In this case, the terms of the contract are clear; the judge must
enforce them as written. The contract bound EMA to pay 55% of the
total costs associated with the upgrade and expansion of the Ryders Lane Pumping
Station. The additional costs relating to the road-widening project and the wetlands and
stream-encroachment applications are part of the total costs. EBSA notified EMA of the
increased costs in a timely fashion. EMA chose not to respond in any
fashion to the notices regarding these increased costs.
The judge thought these events, the road-widening and the wetlands and stream-encroachment issues,
were not "foreseeable by either party at the time when they entered into
the developer's agreement." But this is not the test of contractual liability. Contract
law frequently deals with future, contingent events. The parties to the contract here
were fully capable of allocating costs for future events, either foreseeable or unanticipated,
in their agreement. They could have capped the costs, reallocated cost over-runs, or
required renegotiation. They did not do so. We must assume that the parties
were satisfied with the cost allocation expressed in the agreement.
See OBrien (Newark)
Cogeneration, Inc. v Automatic Sprinkler Corp. of America,
361 N.J. Super. 264, 270
(App. Div. 2003) (contractual provision relieving seller of obligation to provide electricity where
"
unforeseeable causes beyond the reasonable control of and without the fault or negligence
of [seller] . . . which by exercise of due foresight such party
could not reasonably have been expected to avoid");
Monsen Engineering Co. v. Tami-Githens,
Inc.,
219 N.J. Super. 241, 244 n.2 (App. Div. 1987) (exception to time
requirement for the
installation of a computerized zone-controlled energy management system when delays
are "due to unforeseeable causes beyond the control and without the fault or
negligence of the Contractor.") EMA and EBSA did not negotiate a clause regarding
cost over-runs or unforeseeable events and the judge should not have supplied this
additional term, not agreed upon by the parties.
We reject EMA's contention that the judge has discretion not to enforce this
contract because it imposes a great hardship on EMA.
See Weisbrod v. Lutz,
190 N.J. Super. 181, 186 (App. Div. 1983);
Brower, 86
N.J. Super. at
350;
Giberson v. First Natl Bank of Spring Lake,
100 N.J. Eq. 502,
507 (Ch. 1927). This argument is unpersuasive. The cases relied upon by EMA
are inapplicable to this situation. In each of those cases, the remedy sought
was specific enforcement. The judges in those cases decided that specific enforcement would
impose an undue hardship on the party and monetary damages were awarded instead.
Here the remedy sought is monetary only. We see no manifest injustice or
great hardship in this case sufficient to justify relief from clearly expressed terms
in the contract.
Experienced parties to these types of agreements, developers and public authorities, are well-equipped
to express their intentions in clear contractual terms. We find that they did
so here and reverse. EMA should pay $340,022.12 or 55% of $618,222.01, plus
interest, and not $213,884.47.
Reversed for entry of judgment.