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Isobunkers, LLC. v. Byram Township Board of Education

February 16, 2011

ISOBUNKERS, LLC.
PLAINTIFF,
v.
BYRAM TOWNSHIP BOARD OF EDUCATION DEFENDANT



The opinion of the court was delivered by: Hon. Dennis M. Cavanaugh

NOT FOR PUBLICATION

OPINION

DENNIS M. CAVANAUGH, U.S.D.J.:

This matter comes before the Court upon motion for summary judgment by Byram Township Board of Education ("Defendant") pursuant to Fed. R. Civ. P. 56. Pursuant to Fed. R. Civ. P. 78, no oral argument was heard. After considering the submissions of the parties, and based upon the following, it is the decision of this Court that Defendant's motion for summary judgment is granted in part and denied in part.

I. BACKGROUND

As was their annual custom, Defendant Byram Township Board of Education solicited bids for the purchase of #2 fuel oil to be delivered to eleven individual schools within the district for the period July 1, 2008 through June 30, 2008. On August 6, 2008, Plaintiff submitted their sealed bid. Although Plaintiff was not the lowest bidder, they were notified by phone on that date that the school board planned to award them the contract. An e-mail memorializing that conversation was sent by Plaintiff, and received without objection by Defendant also on August 6, 2008. On the very next day, the lowest bidder, Petroleum Traders Corporation, called Defendant to complain that their bid had been rejected, allegedly for non-compliance with the bidding procedure. Petroleum Traders subsequently filed a written complaint with Defendant. On August 13, 2008, Defendant sent an e-mail to all those who had bid on August 6, 2008 informing them that due to the complaint, the bidding process would be repeated, and the results of the August 6th process were void. On August 6th Plaintiff purchased the #2 oil futures required for fulfillment of the contractual obligation it believed itself to have accepted, and upon which it relied. Plaintiff was able to resell the fuel oil contract, but took a loss of approximately $100,000. Plaintiff also avers that it lost expected profit of approximately $200,000 that would have been earned had they been allowed to fulfill the contract as originally bid.

II. LEGAL STANDARD

A. New Jersey Public School Contracts Law New Jersey's Public School Contracts Law, N.J.S.A. 18A:18A-4 states in relevant part "[e]very contract for the provision or performance of any goods or services, the cost of which in the aggregate exceeds the bid threshold, shall be awarded only by resolution of the Board of Education to the lowest responsible bidder after public advertising for bids and bidding therefor, except as provided otherwise in this chapter or specifically by any other law." Moreover, N.J.S.A. 18A:18A-40 states "[a]ll board of education contracts for the provision or performance of goods or services shall be in writing." The law further provides in N.J.S.A. 18A:18A-4.5 that "[a]ward of a contract shall be made by resolution of the Board within 60 days of the receipt of the proposals" unless there is consent "for such longer period as may be agreed."

B. Promissory Estoppel "Promissory estoppel is made up of four elements: (1) a clear and definite promise; (2) made with the expectation that the promisee will rely on it; (3) reasonable reliance; and (4) definite and substantial detriment." Toll Bros., Inc. v. Board of Chosen Freeholders of Burlington, 194 N.J. 223, 254, 944 A.2d 1 (2008) (citing Lobiondo v. O'Callaghan, 357 N.J.Super. 488, 499, 815 A.2d 1013 (App.Div.2003)).

III. DISCUSSION

A. Contract Claims

The law in New Jersey is clear as to the awarding of contracts to provide goods or services to local school boards. The process begins with a sealed bid, and is only consummated when the school board passes a resolution within sixty days thereafter. Prior to the passage of a resolution, no contract can exist as a matter of law. In the instant case, where Plaintiff was specifically instructed in the bid packet that familiarity with applicable law was incumbent on the bidder,*fn1 Plaintiff is unequivocally charged with knowledge that no contract could issue without a formal resolution, regardless of any representations as to the expected outcome of that resolution made by the school board's agent. It is for this reason, and not for what Defendant terms "a non-waivable material defect." that the Court holds there to have been no enforceable contract between the parties. Had the losing bidder not protested, and had the board gone on to ratify the contract that ISObunkers believed itself to have been awarded on August 6, 2009, the issue of

ISObunkers' notation in the margin of the bid as to the fixed firm price would have been immaterial. There is no reason to apply different logic to invalidate the bid itself after the fact, especially in light of ISObunkers' representation that in previous successful bid submissions, the same or similar language had been included, and the contract awarded without incident. If the defect had not been material in any of the previous contract awards, there is no reason to hold that it suddenly became material and non-waivable just because the losing bidder called Defendant's attention to it.

Since the Court holds that, as a matter of law, no contract was formed, Count II alleging breach of an implied covenant of good faith and fair dealing is ...


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