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Michael Risoldi Auto Repair, Inc. v. New Jersey Turnpike Authority


April 8, 2008


On appeal from a Final Agency Decision of the New Jersey Turnpike Authority.

Per curiam.


Argued January 9, 2008

Before Judges R. B. Coleman and Lyons.

Plaintiff Michael Risoldi Auto Repair, Inc. appeals from a Final Agency Decision by the New Jersey Turnpike Authority denying Risoldi's prequalification application for routine towing services on the New Jersey Turnpike. After reviewing the record in light of the contentions and applicable law, we affirm.

Michael Risoldi has been engaged in the business of towing vehicles since 1996. His corporation has been operating at its Eastampton location for over three years. The Turnpike Authority (the Authority) is a State agency responsible for the operation of the Garden State Parkway and New Jersey Turnpike. In order to properly maintain these roadways, the Authority often hires contractors to perform services. In accord with this practice, the Authority contracts with qualified towing companies to tow cars from the Turnpike. Towing companies are selected pursuant to a two-step process, as promulgated by N.J.A.C. 19:9-2.13. The first step requires prospective contractors to prequalify with the Authority for each applicable region or zone of roadway. Once prequalified, a contractor may submit a bid and these bids serve as the basis for the award of service contracts to the lowest qualified bidders for particular zones of the Turnpike.

On July 18, 2006, the Authority issued a public notice soliciting responses for a request for prequalification to provide routine towing services within a number of different zones of both the New Jersey Turnpike and the Garden State Parkway. The prequalification document was quite extensive, requiring a great deal of information. In particular, Section III(A) of the prequalification specifications required that an [a]pplicant must have a minimum of three (3) years general towing experience at present location, and a minimum of three (3) years of towing experience on New Jersey state highways or interstate roadways, or the New Jersey Turnpike or Garden State Parkway. At the discretion of the Authority, the requirement of three (3) years of towing experience at present location may be satisfied by time spent at another location.

Section III(D)(3) provided the necessary specifications of the tow company's garage facility:

Contractors will be required to have a garage facility with ample on-site secure storage for at least fifty (50) passenger vehicles, and five (5) tractor-trailers or buses. The garage facility must also be zoned accordingly to allow for these storage requirements. Satellite (off-site) storage yards will not be considered. All storage must be at address listed on the Contractor's submitted Prequalification Application. Under no circumstances will patron's vehicles be stored on city streets or in an unsecured location.

Once the Authority receives the application, the Authority personnel conduct an unannounced inspection of each proposed facility. The purpose of this inspection is to ensure that the facility meets the technical and security requirements set forth in the preapplication document. The Authority "shall make only one inspection per garage facility as part of the Prequalification process."

Plaintiff submitted a prequalification application in order to become a towing service provider at Location No. 5 of the Turnpike. In response to the Section III(A) requirement, Risoldi submitted a list of ten towing services contracts. Only six of those ten contracts had been in place for three years or more. The submission, however, made no mention of the company's experience with towing vehicles from state or interstate highways. It did mention the name of contracted companies, the location of the company and a description of work performed for each company.

On August 15, 2006, in response to the application, representatives of the Authority conducted an unannounced inspection of Risoldi's Eastampton facility. The officials also took aerial photographs of the site. Thereafter, the Authority informed Risoldi by letter, dated September 25, 2006, that its prequalification application was denied because Risoldi had "(a) no secured storage at the stated location of the garage facility; [and] (b) insufficient towing experience on New Jersey State highways or interstate roadways, or the New Jersey Turnpike or Garden State Parkway."

Upon receipt of that notice of denial, Risoldi filed a Notice of Protest. In a letter, dated September 29, 2006, counsel for Risoldi asserted "that the property is secured by fencing, natural water ways and they have security on-site 24 hours a day." Risoldi also asserted that "the information provided meets and exceeds the required qualification of the New Jersey Turnpike Highway Authority." Furthermore, plaintiff stated it has experience towing on Interstate 295, Interstate 195, Interstate 95, Interstate I-95, Interstate I-29, Interstate 129, US Highway 130, US Highway 541, US Highway 206, US Highway 537, US Highway 38, US Highway 70, US Highway 73 and Routes 1 and 9. With that letter, counsel attached several photographs of the towing company site.

On November 8, 2006, the Authority held an administrative protest hearing at which the designated hearing officer, Diane Scaccetti, Deputy Executive Director of Administration, presided. At the hearing, the Authority asserted that Risoldi's premises lacked perimeter fencing and did not have any security measure besides a gate at the front entrance. The Authority expressed its concern that cars left on the lot would be subject to theft and break-in. According to the Authority, the term "security," as it appeared in the prequalification application, was meant to be interpreted in the practical sense which includes protection against vandalism and theft. Even if thieves could not drive the cars off the lot, they might be able to purloin items from the cars. As to Risoldi's lack of experience on the Turnpike and Parkway, the Authority noted that it was paramount to be able to respond effectively to the time sensitive incidents on those roads, which are unique or distinct from other roadways.

Risoldi argued that the Authority had not clearly defined the term "secure." Risoldi indicated it would have had fencing installed, if it had known perimeter fencing was required. Risoldi submitted aerial photographs of other towers' facilities that it contended the Authority had previously found to be adequate despite not having perimeter fencing. Regarding his experience, Michael Risoldi represented that he founded his business in 2002; therefore, he should have been found to meet the three-year experience requirement.

At the close of the hearing, the Authority acknowledged that Risoldi had presented much new information, not contained in his original application. As a result, the Authority staff conducted site inspections of other facilities in an effort to confirm or rebut certain information that had been presented. Contrary to what Risoldi had stated, the Authority found that one previously approved facility identified at the hearing had perimeter fencing and another one had perimeter fencing and surveillance cameras. These findings were confirmed in a memorandum written by a member of the Authority's staff on December 11, 2006.

On March 13, 2007, the hearing officer issued a written decision recommending the denial of Risoldi's prequalification application. She concluded she was "not satisfied that the secured storage as proposed by Risoldi's [was] sufficient to meet the Turnpike Authority's requirements." Likewise, she was "satisfied that the experience provided by Risoldi [was] not sufficient to meet the Turnpike Authority's requirements." She noted that "Risoldi's application was deficient and information as critical as experience cannot be supplemented after the fact." On March 15, 2007, the recommended decision of the hearing officer was adopted without modification by the Executive Director for the Authority as the Final Agency Decision of the Authority.

In its brief on appeal, Risoldi argues the following points:



We find insufficient merit in those arguments to disturb the determination of the Authority.

Defendant first contends that he was not afforded due process in his case before the New Jersey Turnpike Authority. We disagree. According to the Authority's regulation:

Upon the filing of a timely protest, the Authority's Executive Director or his or her designee shall have the authority to conduct a hearing, to settle and resolve a protest of an aggrieved bidder, offeror or contractor concerning the solicitation or award of a contract or its prequalification status or classification, with the Executive Director retaining authority for the final decision of the Authority. [N.J.A.C. 19:9-2.12(b).]

The Executive Director must file a written decision for all unresolved matters and that decision "shall be final and conclusive, unless any person adversely affected by the decision commences an action in court." N.J.A.C. 19:9-2.12(d). A trial type hearing, however, is not required. Commercial Cleaning Corp. v. Sullivan. 47 N.J. 539, 552 (1966). We have more fully explained that "a plenary quasi-judicial hearing need not be afforded provided there is a fair opportunity, consistent with the desideratum of a fair and expeditious conclusion of the procurement process, for the protesting bidder to present the facts and law supporting the protest." Nachtigall v. N.J. Turnpike Auth., 302 N.J. Super. 123, 143 (App. Div. 1997); see also George Harms Constr. Co., Inc. v. N.J. Turnpike Auth., 137 N.J. 8, 19-20 (1994) (articulating that due process would be satisfied if "the parties had adequate notice, a chance to know opposing evidence, and the opportunity to present evidence and argument in response . . . .").

Risoldi complains that it was deprived of due process because it was not provided with notice that the Authority would be conducting an investigation of security measures at other sites. An assistant to the designated hearing officer drafted a memo reporting certain findings regarding such other sites. The memo was allegedly never sent to defense counsel. Therefore, defendant views the memo as an improper ex parte communication, creating an unjust basis for the hearing officer's ultimate decision. We disagree, first because what may have happened with others is not relevant to whether Risoldi's facility met the requirements established for prequalification. The pertinent issue is whether Risoldi meets the standards. The hearing officer determined it did not. Moreover, defendant is not entitled to cross-examine each investigator who provides input to the Authority, as it sought to confirm information advanced by an applicant. To pass due process muster, defendant should have had access to an informal hearing wherein he could argue the applicable facts and law. The Authority conducted such a hearing.

The focus thus turns to Risoldi's argument that the Authority was unreasonable or arbitrary in making its determinations regarding inadequate security and Risoldi's lack of experience. In that regard, we must acknowledge that this court's role in reviewing an administrative agency's decision is limited. Univ. Cottage Club of Princeton N.J. Corp. v. N.J. Dep't of Envtl. Prot., 191 N.J. 38, 48 (2007); In re Taylor, 158 N.J. 644, 656 (1999).

We will not reverse an agency's decision unless: (1) it was arbitrary, capricious, or unreasonable; (2) it violated express or implied legislative policies; (3) it offended the State or Federal Constitution; or (4) the findings on which it was based were not supported by substantial, credible evidence in the record. [Univ. Cottage Club of Princeton N.J. Corp., supra, 191 N.J. at 48.]

See In re Protest of the Award of the On-Line Games Prod. and Operation Servs. Contract, 279 N.J. Super. 566, 593 (App. Div. 1995) [hereinafter On-Line Games] (adopting this standard of review for bid conformity decisions by State agencies). Nevertheless, we are not bound by an agency's statutory interpretation. Univ. Cottage Club of Princeton N.J. Corp., supra, 191 N.J. at 48; Taylor, supra, 158 N.J. at 658.

Risoldi contends the specification asserting that each bidder must have a "secure" location is ambiguous. Risoldi, however, chose not to seek clarification or challenge any of the contractual terms prior to the submission of its application. Unsuccessful bidders such as Risoldi "who bid on a contract without first objecting to the specifications lack standing to 'challenge the award of a contract to a rival bidder or to attack the allegedly illegal specifications.'" Entech Corp. v. City of Newark, 351 N.J. Super. 440, 459 (Law Div. 2002) (quoting Waszen v. Atlantic City, 1 N.J. 272, 276 (1949)). "The rationale of such a holding is that one cannot endeavor to take advantage of a contract to be awarded under illegal specifications and then, when unsuccessful, seek to have the contract set aside." Waszen, supra, 1 N.J. at 276. Cf. Sevell's Auto Body Co., Inc. v. N.J. Highway Auth., 306 N.J. Super. 357, 369-70 (App. Div. 1997) (stating that where an action challenging the bid specifications is made prior to the bid specification date, that party has standing to challenge the specifications).

Putting aside plaintiff's failure to have sought clarification of any assertedly ambiguous terms, we find the present challenge fails:

Our obligation when interpreting contractual provisions is clear. First and foremost, "fundamental canons of contract construction require that we examine the plain language of the contract and the parties' intent, as evidenced by the contract's purpose and surrounding circumstances." State Troopers Fraternal Ass'n v. N.J., 149 N.J. 38, 47 (1997) (citations omitted). As stated in Marchak v. Claridge Commons, Inc., "[w]hen reading a contract, our goal is to discover the intention of the parties. Generally, we consider the contractual terms, the surrounding circumstances, and the purpose of the contract." 134 N.J. 275, 282 (1993) (citations omitted). [Highland Lakes Country Club & Cmty. Ass'n v. Franzino, 186 N.J. 99, 115-16 (2006).]

Language that is asserted to be ambiguous should not be analyzed in a vacuum. "Rather it should be considered within its particular context, both textual and factual." Sevell's Auto Body Co., Inc., supra, 306 N.J. Super. at 366.

In its prequalification application, the Authority required that each potential bidder "have a garage facility with ample on-site secure storage for at least fifty (50) passenger vehicles, and five (5) tractor-trailers or buses." (emphasis added).

The challenged section of the application evidenced the Authority's legitimate concern for the security of the towed automobiles. The plain language of the application makes it clear that a practical interpretation of "secure" is warranted. Risoldi, therefore, needed to demonstrate that its facility would protect the vehicles from theft or vandalism. As the Authority suggests, Risoldi had ample time to question precisely what security measures would make its site secure.

Risoldi's site does not have fencing around its entire perimeter; it does not have security cameras; it has a single gate at the front designed to prevent the unauthorized taking of automobiles. The gate, however, cannot prevent individuals from accessing the property. Once on the property, potential vandals or thieves could damage vehicles or steal items contained inside the cars. We are not convinced that it was not unreasonable for the Authority to find that Risoldi's does indeed present an unacceptably high security risk. Although plaintiff claims its land is protected by natural barriers, it is undisputed that it lacks perimeter fencing and/or security cameras. Some vandals may be dissuaded by natural barriers, but the Authority needs to be assured that each vehicle will be safe.

Risoldi claims that it has the requisite experience to be prequalified to bid on towing services and that the Authority's decision, finding otherwise, would therefore be arbitrary and capricious. As noted, the scope of our review is limited and the agencies factual determinations are entitled to substantial deference. Risoldi has not shown that it had three years experience on the roadways identified in the prequalification specifications, or that the Authority acted in bad faith in fixing that specification or that the Authority's final decision was arbitrary and capricious. The Authority investigated Risoldi's towing business. At the behest of Risoldi's counsel, it reinvestigated several other towing companies, though it was not obliged to do so. Only after conducting a full hearing and analyzing all gathered evidence, did the Authority render its decision. It found that Risoldi did not have the requisite experience or on-site security to be considered a proper applicant. With our limited standard of review in mind, we defer to that finding.



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