suitt construction by jondavis


									                                      Determining Where To File
                                 Suit In Construction Matters - Part II
                                                       Steven E. Brawer, Esq.
                         The rules governing where to pursue            the Superior Court of New Jersey, Appellate
                    claims relating to public construction              Division, as generally required when dealing
 October 2004       contracts in New Jersey are significantly           with the State or its subordinate
                    different depending upon whether the                departments or agencies.
  This article is   defendant is a State governmental agency or
  reprinted with    a local entity. In the first of a two part series       The LPCL expressly provides that
permission from     of articles in the last edition of Legal Dig, a     prospective bidders are entitled to a hearing
the October 2004    summary of the operative rules governing            if they are dissatisfied with their
 issue of Utility   where to pursue various types of actions            classification.     Contractors who are
       and          involving State contracts was discussed. In         precluded from bidding on responsibility
 Transportation     this month’s column, considerations relating        grounds, whether financial or moral, are also
    Contractor      to the pursuit of relief on local government        entitled to a hearing, and if it rejects a low
    Magazine.       projects will be addressed. As noted in the         bid on responsibility grounds the public
                    first article on this topic, whenever legal         entity must expressly set forth the reasons for
                    action is contemplated a public contractor          finding that the apparent low bidder is not
                    should confer with and follow the advice            responsible.
                    provided by his or her attorney, but it is
                    hoped that the following information will be            With regard to a challenge to bid
                    useful in helping potential litigants better        specifications, in 1996 the New Jersey
                    understand the process which they will be           Legislature amended the LPCL to provide
                    facing in dealing with New Jersey public            that such a challenge be brought at least
                    owners.                                             three days prior to a bid opening. Unless a
                                                                        protest over specs is filed pre-bid, the
                    Local Governmental Actions                          prospective bidder loses its right to challenge
                        Disputes between contractors and local          the adequacy of the specifications at all. If
                    governmental units such as municipalities,          the local governmental unit chooses to go
                    counties and certain authorities, are               forward with receipt of bids notwithstanding
                    governed by the Local Public Contracts Act          the challenge to the specifications, the
                    (N.J.S.A. 40A:11-1, et seq. (“LPCL”)). The          bidder may press its challenge after an award
                    rules governing final State agency actions do       is made, at which time an informal hearing
                    not apply to local governmental units and,          before the governing body must be afforded.
                    therefore, all disputes -- whether in the           The better practice, however, is for the
                    context of prequalification, bidding or claims      prospective bidder to quickly file a motion to
                    -- should be filed at the trial level and not in    stay the bid opening. While a potential
                                  Determining Where To File
                             Suit In Construction Matters - Part II
                                                   Steven E. Brawer, Esq.
               bidder has standing to challenge the bid             dispute, either party is entitled to a trial by
               specifications pre-bid, an unsuccessful bidder       jury, since unlike State contracts, projects
October 2004   lacks such standing if it seeks to complain          subject to the LPCL are not governed by the
               about specifications post-bid.                       Contractual Liability Act, which precludes
                                                                    jury trials.
                   Once bids have been received and
               opened, the apparent low bidder has the              Conclusion
               right to a hearing challenging a decision to              The process of pursuing legal action to
               reject its bid. If the bidder remains                protect and advance a contractor’s legal
               dissatisfied with the decision of the local          rights and interests can be fraught with
               unit, an action should be filed in the               difficulty, not to mention substantial costs.
               Superior Court of New Jersey, Law Division,          Understanding basic information about how
               in the county where the job is located, where        that process works and where different types
               temporary restraints may be sought.                  of claims should be brought may make a
                                                                    contractor’s experience in this often
                    A 1998 amendment to the LPCL                    unfamiliar a little less intimidating.
               provides that all construction contracts             Recognizing the fundamental differences
               entered into with local governmental                 between how to deal with State and local
               entities subsequent to the effective date of         government units and, particularly, where to
               the amendment must include an alternative            pursue claims against those entities, can save
               dispute resolution (“ADR”) mechanism,                a contractor time and money, and avoid
               such as mediation, non-binding arbitration           unnecessary aggravation.
               or binding arbitration, but the ADR
               processes apply only to claims disputes, not
               to the bid solicitation or award process. By
               definition, if the contract includes a binding
               arbitration clause, the arbitration decision is
               final and neither party is generally entitled to
               litigate the matter if it is dissatisfied with the
               award. However, if the contract provides for
               mediation or non-binding arbitration and
               the ADR proceeding does not resolve the

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