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Robles v. South Jersey Transportation Authority


March 5, 2010


On appeal from the Superior Court of New Jersey, Law Division, Atlantic County, Docket No. L-3058-08.

Per curiam.


Argued December 14, 2009

Before Judges Rodríguez, Reisner and Chambers.

In July 2008, the South Jersey Transportation Authority (the Authority) awarded: (1) a contract for light duty towing services on the Western Sector of the Atlantic City Expressway (the Expressway) and (2) a contract for heavy duty towing services on the Eastern Sector of the Expressway to Riehl's Towing and Maintenance, Inc. (Riehl's). The lowest bidder, Joseph Robles, t/a Joe's Auto Repair (Joe's), was not awarded the contracts.

Joe's commenced this action in lieu of prerogative writs. The Authority and Riehl's answered. The parties stipulated the facts. Judge Steven P. Perskie found that the Authority's conduct was not arbitrary nor capricious and upheld the Authority's decision. We affirm.

The stipulated facts are as follows. Joe's is in the business of providing automobile and light and heavy duty towing and repair services. Riehl's is also engaged in the same business. The Authority, the owner and operator of the Expressway, is a quasi-governmental entity established pursuant to the South Jersey Transportation Authority Act (Act), N.J.S.A. 27:25A-1 to -43.

Joe's had been the authorized tow truck operator on the Western Sector of the Expressway since 1999. The most recent contract for towing services for the Western Sector was awarded in September 2002. Joe's continued to hold the contract through September 2008. Throughout this entire period, Joe's operated at the same location and facility.

In May 2008, the Authority advertised for bids for light duty towing services on the Western Sector of the Expressway. The Authority received a bid from Riehl's, which the Authority rejected because the bid contained a material defect. In July 2008, the Authority re-advertised for bids for light duty towing services on the Western Sector of the Expressway. The Authority received two bids in response, one from Joe's and the other from Riehl's. The Authority also advertised for bids for heavy duty towing services on the Eastern Sector of the Expressway. The Authority received no bids for this contract. The Authority publicly re-advertised for bids. It received four bids from Joe's, Riehl's, Jimmie's Lakeside Garage (Jimmie's) and Flannagan's.

In order to determine whether or not the bidders had facilities in compliance with the bid specifications, the Authority sent agents Kevin Rehmann and Jim Sullivan to examine the premises. Rehmann prepared a memorandum detailing his findings. Rehmann noted that "[a]lthough Joe's submitted the lowest bid, an inspection of their facilities revealed several areas where the specification was not met and they did not portray a positive representation of the Authority." Specifically, Rehmann found that Paragraph 2M of the Authority specifications provides:

Administrative and customer accommodations must be clean, well maintained, and presentable at all times. Motorist facility must include a waiting lobby with restroom facilities and public telephones. Restroom facilities must meet all local and state board of health standards. Tow truck operators must be equipped with a cellular phone to allow patrons to make a phone call, or must transport the patron to a location to make a phone call.

However, as a result of his examination, Rehmann found:

The bathroom and customer area found at Joe's was nothing less than deplorable. I asked Joe to point out which areas he had designated for each, and he showed me. The bathroom, which is shared by customers and employees alike, consisted of (1) toilet and (1) sink in an area approximately 6' x 6' and was also used to store an arc welder and uniforms on hang[e]rs. There is no customer waiting room. The area indicated as such doubles as a parts room and also contains a lathe. It is necessary to travel though a repair bay with a lift to enter this room. A small round table and chairs was placed in the room to accommodate any waiting customers. Both rooms were dirty and poorly lit. Several customers who were waiting for their vehicle to be repaired were observed walking around inside and outside the garage area. The design and layout of the facility is not conducive for customer waiting. Joe's is a repair shop as well as a used auto parts business located in a rural area, and does not have a retail, customer friendly atmosphere. This should not be considered an indictment of the quality of Joe's work, but rather an observation and evaluation of the facility as it pertains to the bid specifications.

An inspection of Riehl's Towing revealed that their facility, located in Deptford Township, contained a separate customer waiting room, adjacent to the office, and separate, dedicated, customer bathroom facilities. The entire facility was clean, modern and well maintained.

Based on this finding, Rehmann concluded that "[t]he apparent low bidder, Joe's, should be disqualified for the same failure to maintain customer areas . . . ." He also noted that "[i]n some instances the lowest submitted bid may not be the best value when all circumstances are taken into consideration. It is the responsibility of the Fleet Department and the Authority to provide clean, professional services to its patrons at all times." Rehmann recommended acceptance of Riehl's bid for light duty in the Western Sector and Jimmie's for heavy duty in the Eastern Sector.

As to the response time requirement in the bid specifications, Rehmann determined that none of the bidders could meet the twenty-five minute response time. Thus, in accordance with Section 17 of the Instructions to Bidders, Rehmann recommended that the time requirement be waived.

After receiving Rehmann's memorandum, the Director of Engineering recommended the award of both five-year contracts (Western Sector, light duty and Eastern Sector, heavy duty) to Riehl's. The Authority authorized its Executive Director to award the heavy duty and light duty towing contracts to Riehl's.

Joe's commenced this action. Judge Perskie denied Joe's request for temporary restraints. After hearing the arguments of counsel, the judge found: my authority in this instance, I believe, is very limited. It is to determine the narrow question of whether on this record [the Authority] could have reached the result that it did. I conclude that they could have. I conclude that their conduct was therefore not arbitrary and capricious, and judgment will therefore enter in favor of [the Authority] and the Complaint will be dismissed.

On appeal, Joe's contends that the judge erred in holding that the Authority's rejection of Joe's bid was not arbitrary and capricious. Joe's further contends that all affected contracts should be voided and rebid. We do not agree.

N.J.S.A. 27:25A-8a requires that all purchases, contracts or agreements made by the Authority shall be awarded only after public advertisement for bids. Bidding statutes are enacted to benefit the taxpayers and they "are construed as nearly as possible with sole reference to the public good." Terminal Constr. Corp. v. Atlantic County Sewerage Auth., 67 N.J. 403, 409-10 (1975). "Their objects are to guard against favoritism, improvidence, extravagance and corruption; their aim is to secure for the public the benefits of unfettered competition." Id. at 410.

The Authority is governed by the Purchasing Regulations, N.J.A.C. 19:2-7.1 to -7.9, pursuant to its capacity as owner and operator of the Expressway. The Purchasing Regulations provide in part:

(a) Pursuant to N.J.A.C. 19:2-7.1, all contracts between the Authority and towing service providers, which are required by law to be publicly advertised, shall be made or awarded directly by the Authority after public advertisement for bids.

(b) The following criteria shall be considered by the Authority in awarding a contract for towing services:

1. Reliability;

2. Experience;

3. Response time;

4. Acceptance of credit cards and prepaid towing contracts;

5. Location and quality of storage and repair facilities;

6. Quality of equipment to safely handle sufficient volume of common vehicle types under a variety of traffic and weather conditions;

7. Security of vehicles towed or stored;

8. Appropriate safeguards to protect the personal safety of customers, including considerations related to the criminal backgrounds of employees; . . .

(c) The [Authority] may award a towing service contract to a person other than the lowest bidder, if it is determined that the lowest bidder is not the most responsible bidder.

[N.J.A.C. 19:2-7.9 (emphasis added).]

Thus, pursuant to the Authority Purchasing Regulations and the Authority's Towing and Road Services Bid Specifications, the Authority was permitted to award a service contract to a person or entity other than the lowest bidder, so long as the lowest bidder was not the most responsible bidder.

The Supreme Court has recognized that "the legislative mandate that a bidder be 'responsible' embraces moral integrity just as surely as it embraces a capacity to supply labor and materials." Trap Rock Indus., Inc. v. Kohl, 59 N.J. 471, 481 (1971), cert. denied, 405 U.S. 1065, 92 S.Ct. 1500, 31 L.Ed. 2d 796 (1972). Responsibility may also involve the financial ability, experience and skills of the bidder. Arthur Venneri Co. v. Paterson Hous. Auth., 29 N.J. 392, 403 (1959).

We note that judicial review of an administrative agency's final 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). A court 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. Ibid. Courts generally afford substantial deference to an agency's interpretation of a statute that it is charged with enforcing. R & R Mktg., L.L.C. v. Brown-Forman Corp., 158 N.J. 170, 175 (1999).

"Arbitrary and capricious action of administrative bodies means willful and unreasoning action, without consideration and in disregard of circumstances. Where there is room for two opinions, action is [valid] when exercised honestly and upon due consideration, even though it may be believed that an erroneous conclusion has been reached." Worthington v. Fauver, 88 N.J. 183, 204-05 (1982) (quoting Bayshore Sewerage Co. v. N.J. Dep't of Envtl. Prot., 122 N.J. Super. 184, 199 (Ch. Div. 1973), aff'd o.b., 131 N.J. Super. 37 (App. Div. 1974)). The test is therefore essentially one of rational basis. Ibid.

Here, Rehmann's investigation of Joe's facilities provides a rational basis for the Authority's determination that Joe's was not a responsible bidder. Thus, we agree with Judge Perskie that the Authority's decision finding Riehl's as the lowest responsible bidder was not arbitrary and capricious.

Joe's also argues that the judge erred in permitting the award of the contracts to Riehl's because Riehl's bid plainly did not meet the specified requirements that a bidder have storage space for 100 vehicles. We disagree.

Joe's has standing to make this argument as New Jersey law has long recognized that the lowest bidder, though passed over by the contracting authority, may challenge public contract awards by way of an action in lieu of prerogative writs in the Law Division. See R. 4:69-1; Sempre Constr. Co. v. Twp. of Mount Laurel, 196 N.J. Super. 204, 207 (Ch. Div. 1984).

Moreover, as long as the losing bidder is properly before the court as a party, it has standing to argue that a common standard was required to be applied to every bidder and that the winner's bid was nonconforming. Schlumberger Indus., Inc. v. Borough of Avalon, 252 N.J. Super. 202, 207 (App. Div. 1991), certif. denied, 130 N.J. 8 (1992). In New Jersey, the material conditions of bidding specifications may not be waived. Terminal Constr., supra, 67 N.J. at 411. This rule, however, is inapplicable in the context of minor or inconsequential conditions. Ibid. Here, we do not reach the issue of whether this condition was material because there is no evidence that there was actually a defect in Riehl's bid, necessitating a waiver.

Joe's alleges that Riehl's facility was not authorized by Deptford Township to store more than thirty vehicles. This argument is based on the final site plan, which shows a proposed vehicle storage area with thirty spaces. However, the stipulated facts at trial established that the resolutions granting Riehl's use variance "[did] not contain any limitations on the amount of vehicles that may be stored on Riehl's property." Moreover, the Riehl's property has a separate area for temporary overnight storage as well as a great deal of open space between the vehicle storage area and temporary storage area. In addition, there is a large open space enclosed by a fence on the other side of lot 47.

The Authority and Riehl's contend that the Zoning Board did not require the site plan to include the number of vehicles being stored in any of the areas on the property. Riehl's claims that it was merely for the sake of demonstration that it depicted 30 boxes of 10' by 16' spaces and that such a depiction is excessive for storage of a single motor vehicle.

The record shows that the only bid specification that was "waived" by the Authority was the twenty-five minute response time with respect to the award of the contract for the Eastern Sector for Heavy Duty towing services. This waiver, however, was made for all three bidders being considered for the contract, Joe's, Riehl's and Jimmie's, because none met the response time requirement. Therefore, the Authority's determination that Riehl's facility met the bid specifications was not arbitrary and capricious and thus the contract between the Authority and Riehl's should not be voided.



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