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Autotote Limited v. New Jersey Sports and Exposition Authority

Decided: December 13, 1979.


On appeal from the Superior Court, Law Division, Bergen County.

Seidman, Michels and Devine. The opinion of the court was delivered by Devine, J.A.D.


Plaintiff Autotote Limited filed a complaint in the Law Division seeking to set aside the award of a contract by defendant New Jersey Sports and Exposition Authority (Authority) to defendant American Totalisator Company (American) covering the installation and servicing of a totalisator system at the Meadowlands racetrack on the principal ground that it violated the provisions of the public bidding statute, N.J.S.A. 5:10-21. The Law Division granted defendants' motion for summary judgment dismissing the complaint, based on a finding that the contract fell within the statutory "professional services" exemption. Plaintiff appeals.

Defendant Authority operates a racetrack within the Meadowlands complex pursuant to N.J.S.A. 5:10-1 et seq. Among other things, the enabling legislation provides, under N.J.S.A. 5:10-21:

The authority, in the exercise of its authority to make and enter into contracts and agreements necessary or incidental to the performance of its duties and the execution of its powers, shall adopt standing rules and procedures providing that, except as hereinafter provided, no contract on behalf of the authority shall be entered into for the doing of any work, or for the hiring of equipment or vehicles, where the sum expended exceeds the sum of $2,500.00 unless the authority shall first publicly advertise for bids therefor, and shall award the contract to the lowest responsible bidder; provided, however, that such advertising shall not be required where the contract to be entered into is one for the furnishing or performing services of a professional nature. . . This section shall not prevent the authority from having any work done by its own employees, nor shall it apply to repairs, or to the furnishing of materials, supplies or labor, or the hiring of equipment or vehicles, when the safety or protection of its or other public property or the public convenience require, or the exigency of the authority's service will not admit of such advertisement. In such case the authority shall, by resolution, passed by the affirmative vote of a majority of its members, declare the exigency or emergency to exist, and set forth in the resolution the nature thereof and the approximate amount to be so expended. [Emphasis supplied].

The racetrack commenced operations in September 1976. Prior to the opening the Authority sought proposals from plaintiff and defendant American for the installation of a totalisator system, which involved a computer network designed to tabulate and categorize the monies wagered on each horse in each race, and to determine the pay-off for each race, including the daily double, exacta, etc. Bids were not sought, but ultimately a lease was entered into with plaintiff covering the period from October 30, 1975 to August 1979, under which plaintiff installed a totalisator system at the track. The lease was authorized by an Authority resolution dated September 11, 1975.

Initially, the resolution recognized that "in the normal course of events" contracts exceeding $2500 must be advertised, and "the installation of the totalisator system is a technical service of a professional nature." But under the primary resolving section the letting of the contract without advertising was said

to be based on an exigency of the Authority's service declared to exist which "would not admit of public advertisement of its intention to let a totalisator service contract." Only by a subsequent, secondary resolution was it stated that "in any event the Authority concludes that the major protions [ sic ] of the contract to be let relate to services of a technical and professional nature."

During the course of plaintiff's lease the state of the totalisator art advanced to a point where there evolved a sophisticated system known as "sell/pay" or "sell/cash." Its operation is succinctly described in an affidavit filed with the trial court:

The Authority became aware of the advantages of the new "sell/pay" and in 1977 requested both plaintiff and defendant American to submit proposals relating to the installation of the new system at the track to commence in September 1979 on the expiration of plaintiff's existing lease. In October 1978 plaintiff was permitted to install a pilot system at the track for a period of seven days. Apparently it malfunctioned, causing the Authority to conclude that it was not sufficiently reliable. Further negotiations with plaintiff were terminated, and the American proposal was accepted.

The contract between the Authority and American, dated February 23, 1979, is for a period of five years commencing "with the date on which racing begins closest to September 1, 1979." It provides ...

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