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Lenox Towing v. County of Bergen and Nick's Towing Services


October 24, 2011


On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket Nos. L-9004-09 and L-9317-09.

Per curiam.


Argued August 30, 2011

Before Judges Payne and Messano.

Plaintiff Hackensack Auto Body Co. (Hackensack) appeals from the grant of summary judgment dismissing its complaint against the County of Bergen (County) and Bergen Brookside Auto Body & Towing, Inc. (Brookside). We have considered the arguments raised in light of the record and applicable legal standards. We reverse and remand for further proceedings consistent with this opinion.


On July 1, 2009, Hackensack and Brookside submitted bids pursuant to the County's advertised solicitation for the towing and storage service contract with the County police department. Brookside's bid was submitted under the signature of John Salemme, its president, with its business address listed as 83 Zabriskie Street, Hackensack.

Pursuant to the bid specifications, storage facilities for towed vehicles needed to "be in compliance with all applicable State, County and Local regulations, including but not limited to, municipal zoning requirements," and be "contiguous to the applicant[']s principal place of business." Additionally, each bidder was required to submit "written evidence of [its] ability to meet [storage] requirements for the total duration period of the contract." With its bid, Brookside furnished a certification from the municipal zoning officer indicating that it was authorized to operate a towing business subject to the provision of "adequate storage facilities."

The bid specifications also provided:

It is not mandatory for the vendor to be in possession (own or lease) [of] all minimum equipment on the date the bid proposal is submitted. However, it is mandatory that such a vendor be able to establish his intent and ability to acquire the necessary equipment and be in possession of same, by no later than ten (10) business days prior to the award of this contract.

If the vendor was not in possession of the "minimum equipment" when the bid was submitted, the specifications required that "[a] performance bond in the amount necessary to buy and/or lease the said equipment required to fulfill the terms of the contract" be submitted with the bid. Each bidder was required to submit a roster of vehicles with specifications that complied with the "minimum equipment" requirements.

Two of the vehicles listed by Brookside were a new 2009 Ford F550 wrecker and a new 2009 Peterbilt 500 heavy duty wrecker. As proof of its intention to purchase these vehicles, Brookside submitted two purchase orders from Nussbaum Wreckers & Carriers. The purchase orders reflected the purchase of four vehicles, including the two vehicles listed by Brookside in the roster, with balances of $75,111 and $278,500 respectively, and receipt of a deposit on each order. Brookside did not furnish a performance bond or include a specification sheet for each vehicle.

On July 22, 2009, Hackensack forwarded written objection to Brookside's bid, arguing that the failure to post the required performance bond and adequately demonstrate ability to store vehicles at its principal place of business were material defects requiring disqualification. In a second objection letter, dated July 24, Hackensack added further objection, noting "it [was] impossible to determine who the bidder actually [was]," since the various documents and insurance information Brookside submitted listed several different business entities, all of which included the name "Brookside." In a third letter submitted September 10, Hackensack claimed its investigation revealed that 83 Zabriskie Street was owned by "John and Regina Salemme," not Brookside, and that other properties -- 85 Zabriskie Street and property on "Oak Street" -- were being used by Brookside in the operation of its towing business.

Both Hackensack and Brookside submitted bids in which they agreed to remit to the County $25 per towed vehicle. On October 7, 2009, the County's Board of Chosen Freeholders awarded the contract to Brookside. The resolution noted that both bids "offer[ed] equal prices and [we]re the highest revenue producing bids" received. Citing N.J.S.A. 40A:11-6.1(d), the resolution indicated that the award could be made "in the discretion of the contracting unit" to the "most advantageous [vendor], price and other factors considered." Further referencing the "bid evaluation" of the County Police Department, the resolution declared that Brookside "more closely [met] compliance with specifications." The contract commenced October 7, 2009 and ended September 1, 2010, with two "12-month options" thereafter.*fn1

On October 23, Hackensack filed a verified complaint in lieu of prerogative writs naming Brookside and the County as defendants. It alleged that Brookside's bid did not comply with the specifications in four areas: the absence of a performance bond and equipment specification sheet; lack of documentation demonstrating the storage facility complied with local zoning; the use of several different corporate and trade names on the bid documents; and submission of a "Business Registration Certificate" in a name other than that of the bidder. Hackensack sought to set aside the contract award to Brookside, have the contract awarded to Hackensack and damages pursuant to 42 U.S.C.A. § 1983 and § 1988.

In support of the request for an order to show cause seeking temporary and permanent injunctive relief, Hackensack's principal, Donald Scheffler, certified that two of the trade names used by Brookside were names of companies owned by him and his partner. He attached a copy of Hackensack's zoning ordinance that prohibited "automobile junkyards or wrecking yards" in all zoning districts. On November 5, the Law Division judge entered an order to show cause returnable on December 10.

In opposition, the County filed certifications from Lieutenant Edward Sorace of the County police department, and Dominic J. Novelli, the County purchasing agent. Sorace reviewed the bids and determined that Hackensack stored its vehicles on property that was not its principal place of business or contiguous thereto. He further noted several complaints regarding Hackensack's past performance of County Police towing contracts, and that an audit of Hackensack's towing receipts "revealed a very substantial number of omissions [of] key information." Novelli certified that based upon this information, Hackensack "was in direct and material non-compliance with . . . the bid specs published, and . . . its bid had to be rejected."

Regarding Brookside, Novelli certified that pursuant to the bid specifications, "any alleged defects can be waived as immaterial, inconsequential variances or irregularities." Brookside's "use [of] slightly different names for the company" "constitute[d] a minor irregularity that can be waived," and its failure to submit vehicle specifications was "an inconsequential variance that [could] be waived." Novelli also noted that Brookside's failure to post a performance bond "was not a material defect" because it had actually acquired the "necessary vehicles." Novelli further certified to the "positive relationship" between Brookside and the County.

Salemme filed a certification in opposition that addressed the specific points raised by Hackensack. He attached: a certification from the municipal clerk demonstrating that Brookside was "license[d] to conduct an automotive towing business" at 83 Zabriskie Street; a certificate of continued occupancy for the property noting permission to conduct auto body repairs, automotive repairs, and the storage of vehicles; and a 1997 resolution of the Zoning Board of Adjustment granting Salemme and his wife a variance to use the properties located at 83 Zabriskie Street and 74 Oak Street in connection with the business. Notably, the resolution cited Salemme's representation that "there would be no storage of any vehicles for thirty days or more," and conditioned approval of the variance on this representation.

Scheffler filed a supplemental certification noting that he had towed vehicles at the behest of the County Police in the past, and that such vehicles frequently remained in Hackensack's yard for years.

In a written opinion filed January 4, 2010, citing the well-known standards for granting injunctive relief set forth in Crowe v. De Gioia, 90 N.J. 126, 132-34 (1982), the Law Division judge concluded that Hackensack had "not demonstrated a likelihood of success on the merits." Specifically, the judge determined that "any noncompliance [by Brookside] with the specifications . . . [was] immaterial and d[id] not invalidate the awarded contract." The judge also concluded that Hackensack failed to demonstrate irreparable harm. He dismissed the order to show cause.

Although Brookside had filed an answer in November, the County never answered Hackensack's complaint. Nevertheless, on April 28, the County moved for summary judgment dismissing the complaint.

In support of its motion, the County included a July 28, 2009 memorandum from Sorace detailing his investigation conducted after the bids were submitted. Sorace again noted Hackensack's noncompliance with bid specifications regarding the location of the storage lot and past problems with Hackensack's performance. As to Brookside, Sorace indicated that he was contacted on July 22, 2009 and advised that Brookside was not purchasing the two new vehicles Brookside had listed in its bid. Instead, it had purchased two used vehicles that Sorace inspected and found to be in good working order and compliant with the bid requirements. Sorace also inspected Brookside's lot and found it acceptable.

Hackensack filed opposition, as well as a supplementary certification from its counsel. He noted that discovery had not taken place because of scheduling conflicts and the County's refusal to proceed with any discovery until its motion was heard. The County filed a reply indicating that any delay in discovery was Hackensack's fault and that further discovery would not affect the outcome of the motion.

On July 12, a second Law Division judge heard oral argument on the County's motion for summary judgment, and, on July 16, he rendered an oral decision on the record. He noted that Hackensack was not entitled to a "responsibility" hearing because its bid was not rejected, and both Hackensack and Bergen Brookside "submitted the lowest respons[ible] . . . bids." In such circumstances, "the statutory language authorized the contracting unit to exercise its discretion." With respect to Hackensack's argument that Brookside's bid was non-compliant, the judge cited the previous Law Division judge's opinion denying injunctive relief. Concluding he was bound by "the law of the case," the judge reasoned there was "no basis to disturb [the prior judge's] determination," with which he agreed.

Lastly, with respect to Hackensack's opposition based upon lack of discovery, the judge concluded that "the proffer made by [Hackensack] as to what the discovery would produce would not change what [the prior judge] decided or what [he] decided was the law of the case." The judge granted summary judgment and this appeal followed.*fn2


Before us, Hackensack argues that 1) Brookside's bid was "filled with non-waivable defects and should have been rejected"; 2) it was improperly denied discovery and summary judgment should not have been granted; 3) the denial of injunctive relief was not "the law of the case"; and, 4) because the County "did not dispute [Hackensack's] responsibility, [it] is entitled to the contract."

We initially note that to the extent the second judge relied upon the law of the case doctrine, his reliance was misplaced. The law of the case doctrine "is a non-binding rule intended to 'prevent relitigation of a previously resolved issue.'" Lombardi v. Masso, 207 N.J. 517, 538 (2011) (quoting In re Estate of Stockdale, 196 N.J. 275, 311 (2008)). It is discretionary in nature. Ibid. "Importantly, the law of the case doctrine is only triggered when one court is faced with a ruling on the merits by a different and co-equal court on an identical issue." Id. at 539 (citation omitted) (emphasis added). Here, the first judge decided only whether to grant Hackensack injunctive relief. In applying the appropriate analysis, he concluded that Hackensack was not likely to succeed on the merits of its challenge. The first judge did not, however, finally adjudicate the merits of the complaint.*fn3

When reviewing a grant of summary judgment, we employ the same standards used by the motion judge. Atl. Mut. Ins. Co. v. Hillside Bottling Co., 387 N.J. Super. 224, 230 (App. Div.), certif. denied, 189 N.J. 104 (2006). We first determine whether the moving party has demonstrated there were no genuine disputes as to material facts. Ibid.

[A] determination whether there exists a "genuine issue" of material fact that precludes summary judgment requires the motion judge to consider whether the competent evidential materials presented, when viewed in the light most favorable to the non-moving party, are sufficient to permit a rational factfinder to resolve the alleged disputed issue in favor of the non-moving party. [Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995).]

We then decide "whether the motion judge's application of the law was correct." Atl. Mut. Ins. Co., supra, 387 N.J. Super. at 231. We owe no deference to the motion judge's conclusions on issues of law. Ibid. (citing Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995)). In this case, our first inquiry is whether the County had demonstrated that its award of the contract to Brookside was unassailable as a matter of law.

We review the County's decision to award the contract to Brookside utilizing the same standard applied by the trial court. Palamar Constr., Inc. v. Twp. of Pennsauken, 196 N.J. Super. 241, 250 (App. Div. 1983). We must determine whether the decision was arbitrary, capricious or unreasonable. Ibid. Our role, therefore, is not to substitute our judgment for that of the County. Colonnelli Bros., Inc. v. Vill. of Ridgefield Park, 284 N.J. Super. 538, 541 (App. Div. 1995), certif. denied, 143 N.J. 327 (1996).

"The competitive-bidding process is incorporated in the Local Public Contracts Law[,] . . . . [t]he purpose of [which] . . . is to 'secure for the public the benefits of unfettered competition.'" Meadowbrook Carting Co. v. Borough of Island Heights, 138 N.J. 307, 313 (1994) (quoting Terminal Constr. Corp. v. Atl. County Sewerage Auth., 67 N.J. 403, 410 (1975)). Our laws have therefore been construed to curtail "the discretion of local authorities by demanding strict compliance with public bidding guidelines." L. Pucillo & Sons, Inc. v. Mayor & Council of Borough of New Milford, 73 N.J. 349, 356 (1977).

"[P]ublicly advertised contracts must be awarded to 'the lowest responsible bidder[,]' N.J.S.A. 40A:11-6.1[,]" which "has [been] interpreted . . . to mean . . . the contract must be awarded not simply to the lowest bidder, but rather to the lowest bidder that complies with the substantive and procedural requirements in the bid advertisements and specifications." Meadowbrook Carting, supra, 138 N.J. at 313 (citing Twp. of Hillside v. Sternin, 25 N.J. 317, 324 (1957)). "[A]ll bids must comply with the terms imposed, and any material departure invalidates a nonconforming bid as well as any contract based upon it." Id. at 314. "However, minor or inconsequential discrepancies and technical omissions can be the subject of waiver." Ibid. (citations omitted).

N.J.S.A. 40A:11-6.1(d) provides:

Whenever two or more responses to a request of a contracting agent offer equal prices and are the lowest responsible bids or proposals, the contracting unit may award the contract to the vendor whose response, in the discretion of the contracting unit, is the most advantageous, price and other factors considered. [(Emphasis added).]

Hackensack contends that the statute does not apply because Brookside, while offering an equal price, was not a "responsible" bidder. The County acknowledges that Brookside's bid did not strictly comply with the specifications. The issue is whether the deviations are minor and waivable, or material and non-waivable.

Conditions that may be waived are those that "by their nature may be relinquished without there being any possible frustration of the policies underlying competitive bidding." Meadowbrook Carting, supra, 138 N.J. at 314 (quotation omitted).

In sharp contrast, advertised conditions whose waiver is capable of becoming a vehicle for corruption or favoritism, or capable of encouraging improvidence or extravagance, or likely to affect the amount of any bid or to influence any potential bidder to refrain from bidding, or which are capable of affecting the ability of the contracting unit to make bid comparisons, are the kind of conditions [that] may not under any circumstances be waived. [Id. at 314-15 (quoting Terminal Constr. Corp., supra, 67 N.J. at 412) (alteration in original).]

Of the four specific claims that Hackensack raised before the motion judge, we think two of them have merit and can be resolved on the record presented.*fn4 The County required every successful bidder to specify the equipment it intended to use to perform the contract. Whenever a bidder included equipment it intended to purchase to meet the requirements, the specifications required the posting of a performance bond. In this manner, the County would be assured that the successful bidder either possessed, or would possess under penalty of forfeiture, the necessary equipment to perform. And, the County could evaluate the equipment each bidder proposed to use upon receipt of the bid.

It is undisputed that Brookside never posted the performance bond and never purchased the vehicles it submitted as part of its bid. Instead, after the bids were opened and Brookside's bid and Hackensack's were obviously numerically equal, and before Sorace conducted his investigation, Brookside purchased older, used vehicles to comply with the specifications' minimum equipment standards.

We have said:

Fundamentally, bidders and the public entities that solicit bids are bound by the express terms of the bid proposal. "Settled principles of public bidding dictate that no material element of a bid may be provided after bids are opened." George Harms Constr. Co. v. N.J. Tpk. Auth., 137 N.J. 8, 37 (1994). . . . One of the tests of materiality of a defect in a bid is "whether it is of such a nature that its waiver would adversely affect competitive bidding by placing a bidder in a position of advantage over other bidders or by otherwise undermining the necessary common standard of competition." [Twp. of River Vale v. R. J. Longo Constr. Co., 127 N.J. Super. 207, 216 (Law Div. 1974)]. That bedrock principle of our public bidding scheme applies with equal force to post-bid conduct . . . . [Suburban Disposal, Inc. v. Twp. of Fairfield, 383 N.J. Super. 484, 492-93 (App. Div. 2006).]

In this case, the County's decision to overlook Brookside's failure to post a performance bond as required by the specifications at the time it tendered its bid was, in and of itself, improper. Without any performance bond in place, the County had no assurance that Brookside had, or would have, the equipment necessary to perform. Sorace's inspection and report did not cure this flaw since the County had not received what it was promised, i.e., a bidder who would perform the contract with two brand new vehicles.

Moreover, permitting Brookside to exchange two used vehicles permitted it an unfair advantage. It was able to represent its intention to purchase, at great expense, two new vehicles, wait until the bids were opened and its bid deemed equal to Hackensack's, and then represent something else -- its actual purchase of older used vehicles at significantly less expense. In short, "'[s]uch post-bid manipulations are repugnant to our public bidding laws.'" In re Jasper Seating Co., 406 N.J. Super. 213, 226 (App. Div. 2009) (quoting Suburban Disposal, supra, 383 N.J. Super. at 493).

We also conclude that Brookside's failure to submit a business registration certificate in its own name was a material defect requiring disqualification. The specifications required every bidder to submit a copy of its business registration certificate with the proposal. Brookside submitted a certificate in the name "Bergen Brookside Towing Corp."

Citing N.J.S.A. 52:25-24.2, the County's bid specifications required every bidder to also "submit[] a statement setting forth the names and addresses of all stockholders in the corporation or partnership who own 10% or more of its stock." "[T]he statute . . . prohibit[s] the award of the contract without a disclosure of the bidder's individual stockholders." Schlumberger Indus., Inc. v. Borough of Avalon, 252 N.J. Super. 202, 210 (App. Div. 1991) (citing and explaining George Harms Constr. Co. v. Borough of Lincoln Park, 161 N.J. Super. 367 (Law Div. 1978)), certif. denied, 130 N.J. 8 (1992). "The Legislature in enacting N.J.S.A. 52:25-24.2 expressed its clear purpose to ensure that all members of a governing body and the public be made aware of the real parties in interest with whom they are asked to contract." George Harms, supra, 161 N.J. Super. at 372.

Salemme certified that he owned all of Brookside's outstanding shares, but there is nothing in the bid submission or the record that reflects who are the shareholders of Bergen Brookside Towing Corp. Nor is there any explanation in the record as to why Brookside did not submit a business registration certificate in its own name. We conclude that submitting the business registration certificate of a corporation different from the bidder was not a waivable deviation from the specifications.

As a result of the above conclusions, the grant of summary judgment to the County must be reversed. Moreover, the award of the contract to Brookside must be set aside because its bid materially deviated from the specifications issued by the County.*fn5 We therefore agree with Hackensack that the County can not invoke the provisions of N.J.S.A. 40A:11-6.1(d) because it had not received "two or more responses" of equal value contained in two "responsible" bids.

Hackensack further contends that it should be awarded the contract because, in invoking N.J.S.A. 40A:11-6.1(d) as justification for its award to Brookside, the County deemed Hackensack's bid to be responsive and adopted that position during the proceedings in the Law Division. Here, we disagree.

Generally speaking, if the second-lowest bidder prevails in setting aside a contract award based on violation of the bidding statutes, and is otherwise itself a responsible bidder, it should receive the award rather than permitting the public entity to re-bid the contract. Bodies by Lembo, Inc. v. Cnty. of Middlesex, 286 N.J. Super. 298, 305-07 (App. Div. 1996). Permitting the re-bid "could cause [the] plaintiff, although winning the battle, to lose the war." Id. at 307.

In this case, the County adopted a litigation posture that conceded Hackensack was an otherwise responsible bidder. Yet, the facts asserted by Sorace and Novelli were otherwise. As noted above, Novelli certified that Hackensack "was in direct and material non-compliance with . . . the bid specs published, and . . . its bid had to be rejected." Since the case was dismissed on summary judgment, the factual issue of whether Hackensack itself was a responsible bidder was never decided.

Therefore, we reverse the grant of summary judgment to the County and reinstate Hackensack's complaint. We remand the matter to the Law Division for entry of an order setting aside the award to Brookside and for trial on Hackensack's claim that it is entitled to the contract award. We leave the management of the trial, and any requested discovery, to the sound discretion of the trial judge.

Reversed and remanded. We do not retain jurisdiction.

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