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N.E.R.I. Corp. v. New Jersey Highway Authority

July 11, 1995


On appeal from Superior Court of New Jersey, Law Division, Union County.

Approved for Publication July 11, 1995.

Before Judges King, D'Annunzio and Eichen. The opinion of the court was delivered by D'annunzio, J.A.D.

The opinion of the court was delivered by: D'annunzio


Appellants, New Jersey Highway Authority (Authority) and Sevell's Auto Body Co., Inc. (Sevell) appeal from a summary judgment requiring the Authority to "publicly bid its towing and storage contracts for the Garden State Parkway" and declaring the current contract between the Authority and Sevell "null and void." We now reverse.

The Authority, created by the New Jersey Highway Authority Act, N.J.S.A. 57:12B-1 to -26, operates the Garden State Parkway. To facilitate the removal of inoperable vehicles from Parkway property, the Authority contracts with entities to provide towing and road service. For that purpose, the Parkway is divided into fifteen sections. The Authority contracts with one towing operator for each section, giving each contractor the exclusive right to provide towing and road service for that section during the term of the contract. Sevell has had the contract for the section between mileposts 129 and 145.6 for approximately forty years. The Authority does not advertise or publicly solicit applications for towing contracts upon the expiration of each contract. Rather, the practice is that the contract is automatically renewed if the current service provider has performed adequately and if there are no substantial complaints regarding the service provided. The Authority, in effect, handpicks the towing contractors.

The Authority regulates the prices charged by its towing contractors for towing and road service. N.J.A.C. 19:8-2.12. The Authority's regulation of repair services is limited to the requirement that charges for parts and labor "be in accordance with the current edition of Chilton's Labor Guide and Parts Manual." N.J.A.C. 19:8-2.12(b)(3). Each towing contractor pays the Authority a percentage of the gross receipts generated by Parkway business. A motorist whose vehicle has broken down on the Parkway may not use a towing service other than the holder of the exclusive contract for that section. The motorist, however, has the option of being towed off the Parkway to the nearest exit or being towed to the contractor's storage/repair area.

Plaintiffs commenced this action seeking a judgment terminating the most recent contract awarded to Sevell and requiring the Authority to subject the award of towing contracts to public bidding under N.J.S.A. 27:12B-5.2 (hereafter § 5.2).

Section 5.2 provides:

a. The New Jersey Highway 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 operating 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 to be expended exceeds the sum of $7,500.00 or, after June 30, 1985, the amount determined pursuant to subsection b. of this section, 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 or for the supplying of any product or the rendering of any service by a public utility subject to the jurisdiction of the Board of Public Utilities of this State, and tariffs and schedules of the charges made, charged, or exacted by the public utility for any such products to be supplied or services to be rendered are filed with the said board.

This subsection 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 requires, 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.

The Authority makes four contentions. The first contention relies on N.J.S.A. 27:12B-14 (hereafter § 14), which provides in relevant part:

The Authority is hereby authorized to fix, revise, charge and collect tolls and charges for the use of each project and the different parts or sections thereof, and to contract with any person, partnership, association or corporation desiring the use of any part thereof, including the right-of-way adjoining a paved portion, for placing thereon telephone, telegraph, electric light or power lines, gas stations, garages, stores, hotels, and restaurants, or for any other purpose except for tracks for railroad or railway use, and to fix the terms, conditions, rents and rates of charges for such use; provided, that a sufficient number of gas stations may be authorized to be established in each service area along any project to permit reasonable competition by private business in the public interest; . . .

The Authority contends that the towing contracts fall within § 14 and, therefore, that § 5.2's requirement of ...

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