Court Opinion

ID: 4689705
Source: CourtListenerOpinion
Date Created: 2021-05-25 14:09:51.999997+00
Date Added: 2024-06-11T09:02:19.874923
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
                               APPROVAL OF THE APPELLATE DIVISION
        This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the
     internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.

                                                        SUPERIOR COURT OF NEW JERSEY
                                                        APPELLATE DIVISION
                                                        DOCKET NO. A-1217-20

TOMAR CONSTRUCTION, LLC,

          Plaintiff-Appellant,

v.

PASSAIC VALLEY SEWERAGE
COMMISSION, a body corporate
and politic of the State of New
Jersey, and STONE HILL
CONTRACTING CO., INC.,
a Pennsylvania Corporation,

          Defendants-Respondents.

                   Submitted April 28, 2021 – Decided May 25, 2021

                   Before Judges Whipple and Rose.

                   On appeal from the Superior Court of New Jersey, Law
                   Division, Essex County, Docket No. L-0599-20.

                   DeNoia, Tambasco & Germann, LLC, attorneys for
                   appellant (Thomas DeNoia and Tomaso R. DeNoia, on
                   the briefs).

                   Piro Zinna Cifelli Paris & Genitempo, LLC, attorneys
                   for respondent Passaic Valley Sewerage Commission
             (David M. Paris and Michael A. Koribanick, on the
             brief).

             Fenningham, Dempster & Coval, LLC, attorneys for
             respondent Stone Hill Contracting Co., Inc. (Gerald A.
             Hughes and Timothy B. Fenningham, on the brief).

PER CURIAM

      Plaintiff Tomar Construction, LLC appeals from a January 5, 2021 Law

Division order, dismissing its verified complaint in lieu of prerogative writs that

sought an award of a public contract as the lowest responsive and responsible

bidder. Defendant Passaic Valley Sewerage Commission (PVSC) awarded the

contract for its Decant Facility Rehabilitation Project to the next lowest bidder,

defendant Stone Hill Contracting Co., Inc. We affirm.

      The four-year project includes the structural repair of PVSC's decades-old

sludge decant tanks, replacement of certain components, and upgrades to

electrical and utility rooms involved in the sludge treatment process. In October

2019, PVSC solicited bids for the project.         The bid proposal required "a

combination of lump sum costs, unit prices and allowance items." Lump sum

amounts were required for individual line items.

      Pertinent to this appeal, section 1.17 of the bid specification provided, in

pertinent part:

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                  A. Pursuant to law, [PVSC] may reject bids when
           it has sound, documented business reasons which are in
           the best interest of [PVSC]. [PVSC] reserves the right
           to . . . disregard all nonconforming, nonresponsive,
           unbalanced or conditional [b]ids.

                 B. In evaluating [b]ids, [PVSC] will consider the
           qualifications of the [b]idders, whether or not the [b]ids
           comply with the prescribed requirements, and such
           alternates, prices and other data, as may be requested in
           the [b]id [f]orm prior to the [n]otice of [a]ward.

                 C. If the [c]ontract is to be awarded, it will be
           awarded to the lowest responsible [b]idder in
           accordance with applicable law.

Bidders were further advised: "Determination of low bid will be made by

comparing the total estimated bid price, which shall include the lump sum bid

price and allowances."

      On December 20, 2019, four bids were submitted for the project, as

follows:

                 TOTAL BID        BID          BID        BID        BID
     BIDDER
                  AMOUNT        ITEM 1C      ITEM 1D ITEM 1E ITEM 1H
1. Tomar        $51,879,500    $1,200,000   $2,500,000 $1,150,000 $20,000
2. Stone Hill   $53,671,263    $1,944,900   $5,642,400 $1,909,900 $330,200
3. Railroad     $55,754,675    $3,500,000   $4,000,000 $1,500,000 $200,000
   Constr., Inc.
4. North East $68,248,000 $4,000,000 $5,213,580 $2,300,000 $360,000
   Remsco
   Constr., Inc.

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                                       3
      Although plaintiff submitted the lowest bid, PVSC rejected its proposal,

finding plaintiff violated a material bid specification by submitting "an

unbalanced non-responsive bid." In reaching its decision, PVSC utilized four

sources to review the bids: Chief Operating Officer Bridget McKenna; Chief

Engineer John Rotolo; and the Operations Department (collectively, internal

PVSC sources); and PVSC's consulting engineers, Hazen and Sawyer. PVSC's

internal sources each identified issues with plaintiff's bid for several lump sum

items, concluding the bid was unbalanced and non-responsive. Hazen and

Sawyer also determined plaintiff's bid was

            unbalanced based upon the apparent front-loading of
            [b]id [i]tem 1F (Substation 16) which represents work
            to be completed in the initial stages of the project.
            Additionally, nominal pricing for [b]id [i]tems 1C, 1D,
            and 1E, and 1H as well as enhanced pricing for many
            of the unit pricing of [b]id [i]tems 14A-J also indicates
            an unbalanced bid.

      In January 2020, plaintiff filed an order to show cause and verified

complaint seeking preliminary injunctive relief.         Defendants agreed to

temporarily restrain the contract award while the parties conducted extensive

discovery and fully briefed the bid challenge.

      On August 17, 2020, Judge Keith E. Lynott issued a comprehensive oral

decision – spanning sixty transcript pages – articulating in great detail the

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relevant case law and principles pertaining to unbalanced bids. See, e.g., M.J.

Paquet, Inc. v. N.J. Dep't of Transp. (Paquet II), 171 N.J. 378, 399 (2002);

Riverland Constr. Co. v. Lombardo Contracting Co., Inc., 154 N.J. Super. 42,

45-48 (App. Div. 1977), aff'd o.b., 76 N.J. 522 (1978); Armaniaco v. Borough

of Cresskill, 62 N.J. Super. 476, 482 (1960).

      For example, the judge recognized "unbalanced bids are not per se illegal

or inappropriate, but can be employed in ways that are conducive to fraud or

collusion that can expose the bidding agency to demands or change orders

seeking additional funding after accepting the bid and entering a contract . . . ."

In that regard, the judge recognized the inherent risk of unbalanced bids on

public funds. See Armaniaco, 62 N.J. Super. at 486-87 (holding a governmental

entity's ability to reject unbalanced bids prevents the risks to public funds).

      Observing New Jersey "case law does not delineate any bright line test

. . . [for] the determination of an unbalanced bid[,]" the judge noted front-loaded

and nominal bids "are perhaps the most frequent type[s] of unbalanced bids."

But the judge also recognized unbalanced bids can include those "types of bids

or bidding strategies that . . . involve disproportionately high o r low bids on

individual items or components." Rejecting plaintiff's argument to the contrary,

the judge found "a nominal bid need not only be a penny bid . . . but . . . can be

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any bid that is so low that it does not bear its appropriate share of the cos ts or

profit."

      Finding plaintiff failed to "establish[] a reasonable probability of success

on the merits[,]" the judge nonetheless concluded a prompt plenary hearing was

appropriate here, where the "issue of what constitutes an unbalanced bid" was

best resolved by live expert testimony, rather than the competing expert reports

presented by the parties. The judge continued restraints pending the outcome of

the hearing.

      Between September and November 2020, Judge Lynott conducted a

seventeen-day bench trial. Plaintiff presented the testimony of five witnesses,

including its president, Thomas Mottackal; chief estimator, Sobhan Nallamothu;

and expert in general engineering and bid review, George Moglia. Plaintiff also

compelled the testimony of McKenna, who is retired from PVSC, and Hazen

and Sawyer's project manager, Julian Chianelli. Plaintiff also submitted in

evidence deposition excerpts of various witnesses who testified at trial and

PVSC's purchasing agent, Thomas Fuscaldo. Rotolo testified on behalf of

PVSC. Glenn Brunje was qualified – over plaintiff's objection – as PVSC's

expert in engineering, bid package preparation, bid submittal review and

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construction project oversight. Numerous documents were jointly admitted in

evidence. Stone Hill did not present the testimony of any witnesses.

      Following closing arguments on November 18, 2020, Judge Lynott

reserved decision. On January 4, 2021, the judge issued a cogent decision from

the bench that spanned more than fifty transcript pages. Incorpor ating the legal

principles pertaining to unbalanced bids set forth in his earlier decisions, 1 the

judge meticulously detailed his findings of fact and conclusions of law.

      As to the meaning of unbalanced bids, the judge found it "noteworthy that

the experts of the respective sides examined the same data and applied what the

court [found] was essentially the same definition of an unbalanced bid from an

industry standard and consistent with applicable New Jersey case law and came

to anecdotal conclusions."     Explaining his finding that plaintiff's bid was

unbalanced, the judge stated, in pertinent part:

            [Plaintiff's] lump sum line item bid . . . for items 1C,
            1B, 1E and 1H were substantially lower than the
            average of the bids of the other bidders. . . . [T]he
            comparison of this nature to the bid of the other bidders
            is completely appropriate in determining if the bid was
            unbalanced using industry standards employed by staff,
            the Hazen and Sawyer firm and the litigation experts in
            this case.

1
  In addition to his August 17, 2020 decision, the judge issued a detailed oral
decision, denying PVSC's motion for a directed verdict at the close of plaintiff's
case on October 19, 2020.
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                                        7
      Recognizing plaintiff's total bid was "1.7 million dollars less than the next

lowest bid of Stone Hill," the judge nonetheless credited the testimony of

PVSC's staff, which "had serious concerns . . . that acceptance of [plaintiff's]

bid would put the agency in a position of having to pay[] substantially more than

the bid by Stone Hill." The judge elaborated:

                   There w[ere] reasons in the record before [PVSC]
            to find that [plaintiff's] bid was not merely different,
            but was materially found unbalanced, meaning the level
            of unbalancing . . . presented a risk to [PVSC] of
            increased costs, delay and interruption of operations,
            [and] reflected a lack of understanding of the bid
            specifications by [plaintiff] and the critical sequencing
            of the project and that impaired the competitive bidding
            process.

      As one notable example, the judge cited plaintiff's $20,000 bid for item

1H. That item included not only "the trailers themselves, but office, conference,

furnishings, computers and communication equipment all for a four-year

project, together with mobilization costs." According to the judge:

                  It was and is appropriate to find that this line item
            bid was seriously deficient and indeed nominal. Even
            tho[ugh] the item itself represents only a relatively
            small portion of the overall contract amount as
            [plaintiff] has pointed out . . . the nominal amount
            [plaintiff] submitted on its face reflected to the PVSC
            analyst lack of understanding [of] what was needed to
            perform this critical contract and attributed to a
            problem of compromising the ability to compare

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                                        8
            [plaintiff's] bid with that of other bidders to determine
            the actual low bidder, thereby undermining the
            competitive process contemplated by the public bidding
            laws.

      The judge also cited bid items 1B and 1E, finding they were

            substantially low because [plaintiff] did not include the
            bid item amounts for HVAC-related equipment.
            Instead [plaintiff] placed all or virtually all of the costs
            for such equipment in item 1G. . . . Given the content
            of [the bid specifications, drawings, and equipment
            lists] read together, it was entirely reasonable for PVSC
            to expect the bidders to include costs for HVAC-related
            items in items 1B and 1E. And it was therefore not an
            arbitrary, capricious act to find that [plaintiff]'s
            significantly lower bids for these items apparently
            lacking such cost[s] were unbalanced.

      Judge Lynott referenced other issues with plaintiff's bid, including Hazen

and Sawyer's determination that item 1F was "front-loaded." While the judge

recognized McKenna did not reach the same conclusion, the judge found "[o]n

the record before Hazen and Sawyer at the time, this was certainly not an

unreasonable or arbitrary conclusion."        Rather, the "analysists came [to]

separate, but ultimately like-minded conclusions about [plaintiff]'s bid." The

judge found credible the testimony of all witnesses on staff or otherwise

associated with PVSC.

      Conversely, Judge Lynott found plaintiff's process and approach in

preparing the bid was flawed and demonstrated its lack of understanding of the

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                                         9
requirements. Citing the testimony of Mottackal and Nallamothu, the judge

concluded "their essential focus was on the bottom-line bid amount."

Importantly, the judge found Nallamothu "was not familiar in any meaningful

way with the concept of an unbalanced bid."

       Turning to the experts, Judge Lynott found Brunje's testimony "credible,

straightforward, and generally consistent." According to the judge, Brunje

"employed an industry-based standard for an unbalanced bid" that "was not

meaningfully different from that used by [plaintiff]'s expert, . . . Moglia."

Having previously rejected plaintiff's in limine challenges to Brunje's

qualifications and his opinion as "net," the judge determined Brunje's "findings

as to unbalancing [we]re supported by the record."

      As for Moglia's testimony, the judge found the expert "used a virtually

identical standard of review" as Brunje, "but came to different, ultimate

conclusions, positing that [plaintiff's] bid was merely different and not

unbalanced." Importantly, however, the judge found Moglia acknowledged

plaintiff's bids for "items 1C, 1B, and 1E were extremely low" and substantially

lower than the other bidders. Further, Moglia testified "it was necessary to look

behind [plaintiff's] bid and the facts [that were] not available to PVSC . . . at the

time it made its decision." The judge found that need rendered Moglia's opinion

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                                        10
"less credible, less persuasive and less meaningful or helpful to [him as] the

factfinder in the circumstances of this case."

       The judge concluded:

                      The battle of experts in this case serves
              . . . to highlight the discretionary nature of [the
              definition of] a balanced bid. . . . Brunje's
              opinion on the subject was credible, grounded in
              an appropriate industry-based standard and
              method and the facts, the facts on the record and
              fully supports as reasonable and non-arbitrary
              that PVSC exercised good discretion to
              determine [plaintiff's] bid was unbalanced.

                    To adopt . . . Moglia['s] opinion and
              circumstances here would be very much like
              substituting the court's judgment for that of . . .
              PVSC.

       In reaching his decision, the judge rejected plaintiff's contention that its

"bid was not unbalanced . . . but merely different" and that had PVSC inquired,

plaintiff could have explained that difference. As the judge aptly recognized,

the burden did not fall upon PVSC "to inquire post bid how [plaintiff] interpreted

the specifications . . . ."

       Ultimately, Judge Lynott concluded plaintiff failed to prove PVSC's

rejection of its bid "was arbitrary, capricious, unreasonable or contrary to law."

Instead, the judge found PVSC's conclusion that plaintiff's bid was unbalanced

"fully consistent with the New Jersey case law defining an unbalanced bid,

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                                        11
describing the dangers associated with an unbalanced bid and authorizing . . .

[the] disqualifi[cation of] such a bid." The judge was particularly persuaded

PVSC's rejection of plaintiff's bid as unbalanced was warranted to "prevent[] a

practical possibility of the risk of delay and costs in the future," which could

prove "catastrophic."     Based upon the well-developed record, the judge

concluded plaintiff failed to prove PVSC's rejection of its bid was "arbitrary,

capricious, unreasonable or contrary to law."

      On January 5, 2020, Judge Lynott entered a memorializing order,

dismissing plaintiff's complaint with prejudice. Plaintiff's ensuing applications

for emergent relief were denied by this court and the Supreme Court, although

we agreed to accelerate its appeal.

      On appeal, plaintiff primarily argues: (1) the definition of an "unbalanced

bid" in the PVSC's specifications was "ambiguous"; (2) PVSC inappropriately

rejected its bid for prior negative experience; and (3) the trial judge erroneously

admitted the testimony of PVSC's expert witness. Defendants urge us to dismiss

the appeal on procedural grounds or otherwise affirm the judge's order.

      We have carefully considered plaintiff's contentions in view of the

applicable law, and conclude they lack sufficient merit to warrant extended

discussion in a written opinion. R. 2:11-3(e)(2). We affirm substantially for the

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                                       12
reasons stated by Judge Lynott in his thoughtful and well-reasoned decision.

We add only the following comments as to plaintiff's points III and IV, which

assert PVSC's specifications were "ambiguous" regarding the definition of an

unbalanced bid, and that its bid was not unbalanced as "a matter of law."

      We review de novo the trial court's legal conclusions. Manalapan Realty,

L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995). Similar to the

trial court, we must determine whether PVSC's rejection of Tomar's bid as non -

responsive and unbalanced was arbitrary, capricious, or unreasonable. See In

Re Protest of the Award of the On-Line Games Prod. & Operation Servs. Cont.,

279 N.J. Super. 566, 590 (App. Div. 1995) ("The standard of review on the

matter of whether a bid on a local public contract conforms to specifications

. . . is whether the decision was arbitrary, unreasonable or capricious.").

      We are also guided by well-established principles governing public

bidding disputes. A public contract shall be awarded to the lowest responsible

bidder, N.J.S.A. 40A:11-4(a), where "[l]owest responsible bidder" means "the

bidder or vendor: (a) whose response to a request for bids offers the lowest price

and is responsive; and (b) who is responsible."          N.J.S.A. 40A:11-2(27).

"'Responsive' means conforming in all material respects to the terms and

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                                       13
conditions, specifications, legal requirements, and other provisions of the

request." N.J.S.A. 40A:11-2(33). Plaintiff's responsiveness is at issue here.

      To be responsive, bids must not materially deviate from the specifications

and requirements set forth by the local contracting unit. Meadowbrook Carting

Co. v. Borough of Island Heights, 138 N.J. 307, 314 (1994). "[A]ny material

departure invalidates a nonconforming bid as well as any contract based upon

it." Ibid. (citing Twp. of Hillside v. Sternin, 25 N.J. 317, 323 (1957)).

      As a preliminary matter, we reject defendants' contentions that plaintiff's

appeal should be dismissed as moot because "significant action" on the project

has been undertaken since the trial judge lifted the stay. See Statewide Hi-Way

Safety, Inc. v. N.J. Dep't of Transp., 283 N.J. Super. 223, 225-26 (App. Div.

1995) (dismissing as moot an appeal challenging the award of a highway

construction contract, where the project was "substantially completed"). To

support their position, defendants have provided on appeal certifications

concerning the status of the project following the judge's final decision.

Notably, defendants did not move to dismiss the appeal as moot before us. See

R. 2:8-2.

      We nonetheless observe that while action has been taken in preparation

for the project, actual construction had not yet occurred when defendants'

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                                       14
responding briefs were filed. As such, there is no evidence before this court that

the contract has been "substantially completed." And arguably, the matter is of

public importance and capable of repetition.        See Advance Elec. Co. v.

Montgomery Twp. Bd. of Educ., 351 N.J. Super. 160, 166 (App. Div. 2002).

We therefore decline to dismiss the appeal as moot.

      Nor are we persuaded that plaintiff lacked standing to file its appeal.

Although raised in the Law Division, the trial judge did not specifically address

the issue, implicitly ruling instead to conduct an extensive plenary hearing and

decide the matter on the merits. Defendants did not cross-appeal from any

aspect of the judge's decision. Nor did they move to dismiss plaintiff's appeal

for lack of standing before this court. See R. 2:8-2.

      We have nonetheless considered defendants' contentions and decline to

dismiss the appeal on standing grounds. Although plaintiff's bid was deem ed

unresponsive, that flaw did not defeat standing. See Jen Elec., Inc. v. Cnty. of

Essex, 197 N.J. 627, 644 (2009) (recognizing an unsuccessful bidder has

standing to challenge a public contract award); see also In re N.J. State Cont.

A71188, 422 N.J. Super. 275, 289 (App. Div. 2011).

      We next turn to plaintiff's overlapping contentions that the specifications

were ambiguous because the term "unbalanced bid" was not defined therein, and

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                                       15
plaintiff's bid was "not unbalanced under any definition under New Jersey case

law or otherwise." During summation, however, plaintiff argued its bid was not

unbalanced – not whether the specifications were ambiguous for failure to define

the term, "unbalanced bid." At the conclusion of the judge's decision – in

response to plaintiff's inquiry – the judge acknowledged "the absence of a

definition of unbalanced bid" in the specifications. But the judge further noted

his ruling "incorporated" PVSC's decision, which "utilized an appropriate

standard and process for making that determination."

      Indeed, the focus of the protracted trial was the methodology employed

by PVSC's sources in evaluating the bids for the project and the competing

experts' opinions as to whether plaintiff's bid was unbalanced under the

circumstances presented. The procedural history of this matter demonstrates the

judge's indulgence of plaintiff's claims, affording full pre-trial discovery and a

multiple-day trial. The judge's opinion aptly addressed the issues presented in

view of the legal principles that define unbalanced bids.

      We need not repeat those principles here. We simply note, as did the trial

judge, New Jersey case law has long recognized various "mode[s] of unbalanced

bidding." See, e.g., Boenning v. Brick Twp. Mun. Utils. Auth., 150 N.J. Super.

32, 37 (App. Div. 1977). And PVSC's bid specifications expressly reserved the

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                                       16
right to reject unbalanced bids. See Armaniaco, 62 N.J. Super. at 487 (stating

that a public entity could reserve the right to reject unbalanced bids to guard

against the "catastroph[e]" of greater than anticipated quantities of a high unit -

priced item).

      Moreover, based on our de novo review of the record, we discern no basis

to disturb Judge Lynott's decision that, plaintiff's bid was unbalanced.         In

summary, the judge credited Hazen and Sawyer's determination that bid item 1F

for substation 16 constituted the "front-loading" mode of unbalanced bidding.

In reaching his decision, the judge reasonably observed plaintiff's bid for this

item was "substantially higher than the bids of the other bidders and the

engineering estimate." And "[t]he substation was to be constructed in the first

phase of the project."

      Further, plaintiff's bid contained multiple nominal bid items, thereby

evidencing another mode of unbalanced bidding. In fact, unlike in Riverland

where only one category pertaining to a relatively minor item involved a

nominal bid, 154 N.J. Super. at 45-46, and in Armaniaco where nominal bids

were submitted only for two unit prices, 62 N.J. Super. at 479-80, nominal bids

here were submitted for ten out of the eighteen bid items. We defer to the judge's

credibility findings, which cited substantial evidence in the record to support the

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                                       17
testimony of McKenna and Chianelli that plaintiff's bid contained nominal bid

items. We discern no basis to disturb the judge's conclusion.

      Affirmed.

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