On appeal from Superior Court of New Jersey, Law Division, Cumberland County.
Muir, Jr. and Skillman. The opinion of the court was delivered by Skillman, J.A.D.
The issue presented by this appeal is whether a contractor awarded a competitively bid public contract which is subsequently set aside because the specifications were illegal may seek money damages from the contracting agency's consulting architect for his negligence in preparing the specifications.
In connection with renovations to the heating and air conditioning in one of its buildings, the Cape May Housing Authority (the Authority) decided to seek competitive bids for a "facilities management control system." The original specifications for this system, which were prepared by Jay Morie, a principal of plaintiff Morie Energy Management, Inc. (Morie), required bidders
to provide a system called a "Detection Systems, Inc. D.S. 8000." Morie is the sole distributor of this product in New Jersey. The specifications prepared by Morie further provided that:
[t]he use of manufacturers' specifications is to be considered informative to give the bidder information as to the type and kind requested. Proposal on any reputable manufacturer regularly produced facility management systems products which are equivalent will be considered.
However, based upon the recommendation of its consulting architect, defendant Joseph Badame, the Authority subsequently deleted this provision from its bid proposal. Consequently, bidders for the facilities management control system were required to provide the Detection Systems, Inc. D.S. 8000. Only Morie and one other contractor submitted bids and Morie was the low bidder. The unsuccessful bidder filed suit seeking to vacate the award on the ground that the specifications failed to provide for the use of the equivalent of the Detection System, Inc. D.S. 8000 on the project. The trial court in that suit concluded that the brand name limitation in the specifications violated N.J.S.A. 40A:11-13 and therefore vacated the award to Morie. The contract was subsequently rebid, resulting in an award to another contractor.
Morie then filed this suit against Badame seeking damages for its litigation expenses in the prior lawsuit, its expenses in submitting a new bid, and its lost profits as a result of the award of the contract to another contractor. The trial court granted partial summary judgment in favor of Badame, dismissing the part of the complaint seeking damages for lost profits on the ground that it was barred by considerations of public policy. The parties subsequently resolved Morie's claims for litigation expenses and the costs of rebidding.*fn1
Plaintiff appeals from the partial summary judgment dismissing its claim for lost profits. We affirm.
The recognition of a cause of action in negligence involves a "value judgment, based on an analysis of public policy, that the actor owed the injured party a duty of reasonable care." Kelly v. Gwinnell, 96 N.J. 538, 544, 476 A.2d 1219 (1984); see also Shackil v. Lederle Laboratories, 116 N.J. 155, 177, 561 A.2d 511 (1989). This value judgment requires "a weighing of the relationship of the parties, the nature of the risk, and the public interest in the proposed solution." Goldberg v. Housing Auth. of Newark, 38 N.J. 578, 583, 186 A.2d 291 (1962); accord Weinberg v. Dinger, 106 N.J. 469, 485, 524 A.2d 366 (1987).
The public interest in awarding public contracts by competitive bidding is "to secure competition and to guard against favoritism, improvidence, extravagance and corruption." Hillside Tp. v. Sternin, 25 N.J. 317, 322, 136 A.2d 265 (1957). Consequently, whatever rights a bidder may have in the process are "conferred . . . to the end that the public will obtain all that is due it in the procurement process, rather than for ...