ROBERT B. SPAWN reports on a recent unpublished decision from the Superior Court of New Jersey, Appellate Division.
In a recent New Jersey case, a Plaintiff-County initiated two separate construction projects to repair and extend a road in a city (the “Road”), and the Defendants-Design Engineers were hired to, among other things, perform geotechnical evaluations for both projects. The first project, which was completed in 1998, extended portions of the Road near 12th and 14th Streets in the city and included a connector loop constructed on timber pilings. The second project, which extended portions of the Road near 15th Street in the city and connected it to the loop built in the first project, was built on preexisting steel pilings and concrete platforms.
On July 2, 2001, after completion of the first project, the northern portions of the Road’s 15th Street extension related to the second project collapsed because the preexisting structures—i.e., the steel pilings and concrete platforms—gave out. Consequently, in 2006, the County sued the Design Engineers to recover repair costs relative to the 2001 collapse. Litigation ensued, and the parties eventually reached a settlement on July 16, 2010. The settlement included a release, which provided, in relevant part:
[The County] release[s] and give[s] up any and all claims and rights which [it] has against [the Design Engineers]. This releases all claims, including those of which [the County] is not aware and those not mentioned in this Release. This release applies to claims resulting from anything which has happened up to now.
The settlement also contained specific language regarding the County’s release of all claims that formed the basis of the 2006 lawsuit.
Then, on October 8, 2010, less than three months after the settlement, an entirely different portion of the road (near 14th Street) related to the first project collapsed, and, shortly thereafter, the County again initiated litigation against the Design Engineers seeking to remediate the damages related to this later incident. The Design Engineers eventually moved for summary judgment, arguing that the July 16, 2010 settlement and release arising from the earlier litigation insulated them from liability on all future claims after that date, which encompassed those claims arising out of the October 8, 2010 14th Street collapse. Not surprisingly, the County argued that the July 16, 2010 release did not bar future, unaccrued claims, meaning that the Design Engineers could be held liable for damages resulting from the October 8, 2010 collapse.
The trial judge agreed with the Design Engineers, and stated that the release clearly encompassed future claims growing out of these two projects as long as the Design Engineers’ wrongdoing took place before the release. As the October 8, 2010 collapse involved 14th Street, and because the first project involving 14th Street was completed by the Design Engineers in 1998, the trial judge held that the wrongdoing had taken place well before the eventual collapse at issue and granted the Design Engineers’ motion for summary judgment.
On appeal, the County argued: (1) that the release did not apply to claims occurring after the date the 2006 litigation was settled (July 16, 2010); (2) that the trial judge erred in granting summary judgment by relying upon an incorrect and factually presumptuous interpretation of the releases; and (3) that genuine issues of material fact were present regarding contractual intent and whether the release was future-oriented. The Appellate Division accepted these arguments and explained that the trial court could not unilaterally formulate a more advantageous contract for one of the parties to the detriment of the other. Indeed, the Appellate Division further noted that the trial judge had impermissibly rewritten the settlement in favor of the Design Engineers by definitively holding that the release barred future, unaccrued claims. However, because there was nothing in the language of the release that indicated whether it encompassed claims after the date of settlement (and thus nothing that supported the trial judge’s one-sided interpretation), the Appellate Division held that there was undoubtedly an issue of material fact concerning the scope of the release. Accordingly, the Court reversed the grant of summary judgment to the Design Engineers and remanded the matter back to the trial court.
Please contact Robert B. Spawn if you have any questions or need assistance in connection with this subject.