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Diamond Construction v. City of Jersey City

Superior Court of New Jersey, Appellate Division

December 12, 2013

DIAMOND CONSTRUCTION, Plaintiff-Appellant,
CITY OF JERSEY CITY, Defendant-Respondent.


Argued December 2, 2013

On appeal from the Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-1343-13.

Joseph A. Deer argued the cause for appellant (Bashwiner and Deer, LLC, attorneys; Mr. Deer, on the brief).

Raymond Reddington, Supervisory Assistant Corporation Counsel, argued the cause for respondent City of Jersey City (Jeremy Farrell, Corporation Counsel, attorney; Mr. Reddington, on the brief).

Shawn R. Farrell argued the cause for respondent Orchard Holdings, LLC (Cohen, Seglias, Pallas, Greenhall & Furman, P.C., attorneys; Mr. Farrell and Anthony M. Bottenfield, on the brief).

Before Judges Harris and Guadagno.


This is an action in lieu of prerogative writs that arises under a narrow provision of the Local Public Contracts Law (LPCL), N.J.S.A. 40A:11-1 to -51. Plaintiff Diamond Construction —— the purported lowest responsible bidder for a road construction contract located in defendant City of Jersey City —— appeals from the April 29, 2013 order dismissing its complaint. We affirm.


The facts are undisputed; we glean them from the record presented to the Law Division. In December 2012 and January 2013, Jersey City solicited bids for a construction contract to improve highways and roads as part of the city's Summit Avenue Corridor Safety Improvements Project. The bid documents contained a Schedule of Required Submittals By Bidder, which, among many other things, required bidders to submit "certificates of experience of subcontractors listed pursuant to N.J.S.A. 40A:11-16" either with their proposals or within twenty-four hours of bid opening. Non-compliance with this requirement was expressly noted as having the potential for the bid to be rejected. Moreover, bidders were required to present evidence of "New Jersey business registration certificates" and "public works contractor registration certificates" for a general contractor and all subcontractors listed pursuant to N.J.S.A. 40A:11-16. Failure to comply with the latter obligation would result in a bid rejection.

On January 24, 2013, Jersey City received bid proposals from Diamond, respondent Orchard Holdings, LLC, and three other contractors. When the bids were opened, it was evident that Diamond had submitted the lowest bid, with Orchard in second place.[1] A third bidder, Zuccaro Construction, had actually submitted the lowest bid, but it was disqualified because its bid proposal did not include a mandatory bid bond.

On February 1, 2013, after reviewing the details of each bid, Jersey City's purchasing director informed Diamond that its proposal was rejected for the following reason:

You named two electrical subcontractors in your bid proposal and the City is required by N.J.S.A. 40A:11-6(b) to reject your bid because you did not include a certificate with your proposal setting forth the scope of work that each of the electrical subcontractors would be performing.

In fact, Diamond's bid contained the handwritten names and addresses of two subcontractors for the contract's "Electric Work": Kevco Electric, located in Bloomfield; and J. Ford Electric, located in Farmingdale. Diamond's documentation failed to contain any further information about J. Ford Electric, and did not include a certificate setting forth the scope of work of each of the two listed subcontractors.

Diamond protested Jersey City's attempt to reject its bid. In a February 11, 2013 letter, Diamond contended that

the City's reliance on N.J.S.A. 40A:11-16(b) is misplaced. Diamond Construction submitted its bid fully compliant with Kevco Electric, Inc. as its electrical subcontractor. Based on the documents submitted, and pursuant to the Local Public Contracts [L]aw and applicable case[]law, Diamond Construction is required to use Kevcon [sic] Electric, Inc. as the sole electrical contractor on this project. Accordingly, Diamond Construction's bid is not defective and it should be awarded this project.

Later, on February 27, 2013, Diamond reiterated that "any reliance on [N.J.S.A. 40A:11-16(b)] is misplaced because that statue [sic] is intended to prevent unlawful 'bid shopping' under the Local Public Contracts Law, which isn't an issue with Diamond's bid." Furthermore, Diamond contended that

the amounts on Diamond's base bid for items 37-44 are virtually identical to the items contained in the Kevco base bid worksheet. Diamond submitted all of the required bid documents with respect to its subcontractor, Kevco. N.J.S.A. 40A:11-16(b) is not implicated here because based on Diamond's bid documents submitted, the only electrical subcontractor that Diamond can use on the project is Kevco, and there can be no bid shopping by Diamond. Further, and significantly, Diamond's base bid represents a significant savings of approximately $140, 000 to taxpayers.

On March 18, 2013, Diamond filed its action in lieu of prerogative writs, which sought a permanent injunction preventing Jersey City from awarding the contract "to any other contractor other than Diamond, " and requested a declaratory judgment that Diamond is the lowest responsible bidder and directing Jersey City "to award the [c]ontract to Diamond in accordance with its bid."

On March 25, 2013, Judge Peter F. Bariso, Jr. entered a temporary injunction restraining Jersey City "from entering into any [c]ontract with respect to the paving of an area within the City of Jersey City commonly known as the Summit Area

Intersection that is the subject of the [v]erified [c]omplaint." On April 10, 2012, Jersey City awarded the contract to Orchard.

On April 15, 2013, Judge Bariso heard oral argument on Diamond's application for permanent restraints. The next day, the judge entered an "Order Denying OTSC, "[2] and attached an eight-page written opinion explaining why he refused to order Jersey City to award the contract to Diamond.[3] After outlining the undisputed facts, and canvassing and analyzing the LPCL's appropriate provisions, Judge Bariso concluded the following:

This application is governed by the LPCL. Diamond submitted the names of two bidders under the "electrical work" category codified in N.J.S.A. 40A:11-16. Diamond's failure to submit a certificate setting forth the scope of work for listed subcontractors is not negated by the fact that Diamond submitted a Certificate of Experience and a Plant Equipment Questionnaire for Kevco only. During oral argument it was apparent that to accept the machinations of logic that would support Diamond's position would require Jersey City to exercise discretion and conclude that Diamond intended to subcontract solely with Kevco. Courts have repeatedly interpreted the LPCL as curtailing such discretion.

This appeal followed.


Because we generally subscribe to Judge Bariso's LPCL analysis, we affirm substantially on the basis of his written opinion. However, we expressly eschew reliance upon any purported precedential effect of the unpublished opinions cited by the judge.[4] We briefly add only the following.

The dispute in this case involves a question of law. Thus, our standard of review is de novo.[5] Regalado v. Curling, 430 N.J.Super. 342, 345 (App. Div. 2013) (citing Thornburgh v. Am. Coll. of Obstetricians & Gynecologists, 476 U.S. 747, 757, 106 S.Ct. 2169, 2177, 90 L.Ed.2d 779, 791-92 (1986)).

"The long-standing judicial policy in construing cases governed by the Local Public Contracts Law . . . has been to curtail the discretion of local authorities by demanding strict compliance with public bidding guidelines." Meadowbrook Carting Co., Inc. v. Borough of Island Heights, 138 N.J. 307, 314 (1994) (quoting L. Pucillo & Sons, Inc. v. Mayor of New Milford, 73 N.J. 349, 356 (1977)). The mandates set forth in N.J.S.A. 40A:11-16(b) and -23.2(d) for the award of bids leaves little room for discretion, requiring the public entity here to reject Diamond's bid.

These provisions of the LPCL provide, in pertinent part, the following:

Whenever a bid sets forth more than one subcontractor for any of the categories (1) through (4) in paragraph (1) of subsection a. of this section, the bidder shall submit to the contracting unit a certificate signed by the bidder listing each subcontractor named in the bid for that category. The certificate shall set forth the scope of work, goods and services for which the subcontractor has submitted a price quote and which the bidder has agreed to award to each subcontractor should the bidder be awarded the contract. The certificate shall be submitted to the contracting unit simultaneously with the list of the subcontractors. The certificate may take the form of a single certificate listing all subcontractors or, alternatively, a separate certificate may be submitted for each subcontractor. If a bidder does not submit a certificate or certificates to the contracting unit, the contracting unit shall award the contract to the next lowest responsible bidder.
[N.J.S.A. 40A:11-16(b).]
When required by the bid plans and specifications, the following requirements shall be considered mandatory items to be submitted at the time specified by the contracting unit for the receipt of the bids; the failure to submit any one of the mandatory items shall be deemed a fatal defect that shall render the bid proposal unresponsive and that cannot be cured by the governing body:
. . . .
d. A listing of subcontractors pursuant to section 16 of P.L. 1971, c. 198 (C.40A:11-16);

[N.J.S.A. 40A:11-23.2(d).]

We have observed that "[t]he intent of N.J.S.A. 40A:11-23.2 was to 'circumscribe[] the authority of local contracting agencies to waive bid defects by designating five kinds of defects that cannot be waived under any circumstances.'" Star of the Sea Concrete Corp. v. Lucas Bros., Inc., 370 N.J.Super. 60, 68 (App. Div. 2004) (quoting P & A Constr., Inc. v. Twp. of Woodbridge, 365 N.J.Super. 164, 176-77 (App. Div. 2004)). "N.J.S.A. 40A:11-23.2, which is the only section of [the] Local Public Contracts Law that deals with the waiver of bid requirements, is purely prohibitory; it requires rejection of any bid that does not include all of the mandatory items set forth therein." P & A Constr., supra, 365 N.J.Super. at 176.

We reject Diamond's opportunistic construction of the LPCL. It contends that because its bid was utterly barren of information about one of its electrical subcontractors, J. Ford Electric, Jersey City was obliged to treat this silence as a de facto erasure of the subcontractor's listing from the bid. This flies in the face of the precision required by the LPCL, and fosters delay, additional expense, and the injection of uncertainty into the realm of public contracts awards.

We are firmly convinced that the public policy served by the LPCL, and referenced throughout our decisional law, is fortified by the outcome in this case. A bid proposal containing multiple subcontractors must, by plain statutory language, comply with N.J.S.A. 40A:11-16(b) for each subcontractor that is listed, or risk bid rejection: "If a bidder does not submit a certificate or certificates to the contracting unit, the contracting unit shall award the contract to the next lowest responsible bidder." Id . Such failure creates a fatal defect in the bid proposal that renders it defective and incurable under N.J.S.A. 40:11-23.2(d).

Diamond submitted a palpably noncompliant bid to Jersey City. It cannot expect the judiciary to correct its self-created gaffe, particularly when the public interest of the LPCL is at stake. "Men must turn square corners when they deal with the Government." Rock Island, A. & L. R. Co. v. United States, 254 U.S. 141, 143, 41 S.Ct. 55, 56, 65 L.Ed. 188, 189 (1920).


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