Court Opinion

ID: 4187722
Source: CourtListenerOpinion
Date Created: 2017-07-20 13:19:17.10775+00
Date Added: 2024-06-11T14:40:07.327496
License: Public Domain

IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Solid Waste Services, Inc. d/b/a       :
J.P. Mascaro & Sons and M.B.           :
Investments and Jose Mendoza,          :
                  Appellants           :
                                       :   No. 1748 C.D. 2016
            v.                         :
                                       :   Argued: May 2, 2017
City of Allentown and Waste            :
Management of Pennsylvania, Inc.       :

BEFORE:     HONORABLE PATRICIA A. McCULLOUGH, Judge
            HONORABLE ANNE E. COVEY, Judge
            HONORABLE DAN PELLEGRINI, Senior Judge

OPINION NOT REPORTED

MEMORANDUM OPINION
BY JUDGE McCULLOUGH                                     FILED: July 20, 2017

            Solid Waste Services, Inc., J.P. Mascaro & Sons and M.B.
Investments (Mascaro) and Jose Mendoza (collectively, Appellants) appeal from
the September 19, 2016 order of the Court of Common Pleas of Lehigh County,
Pennsylvania, Civil Division (Trial court) denying Appellants’ request for a
permanent injunction that sought to void the contract for solid waste and
recyclables collection, disposal, and related services between the City of
Allentown (City) and Waste Management of Pennsylvania, Inc. (WMI), prevent
WMI from performing the contract, prohibit the City from awarding the contract to
any of the proposers under the City’s Request for Proposals (RFP), and remand the
matter so that a contract could be awarded after a competitive bidding process.

                                   Background

            In 2006, the City entered into a ten-year municipal solid waste and
recyclables contract, which was set to expire in June 2016. In December 2014, the
City engaged Gershman, Brickner & Bratton, Inc. (GBB), a waste management
consulting firm, to develop a practical and cost-effective arrangement for the
City’s waste and recycling program that would offer new advancements. GBB
recommended utilizing a flexible, value-added RFP rather than the fixed invitation
to bid (ITB) process the City had previously used.         The City’s Purchasing
Department and Bureau of Recycling and Solid Waste authorized the RFP process.
            On September 9, 2015, a mandatory pre-proposal conference was
held, at which all parties interested in submitting an RFP were required to attend.
Both Mascaro and WMI attended the conference.
            On September 29, 2015, Mascaro’s attorney sent a letter to the City’s
Mayor, Finance Director, Purchasing Agent, and Solicitor requesting that the RFP
be cancelled and withdrawn because the procedure was unlawful and contrary to
the City Code and City Administrative Code.
            On October 2, 2015, the City issued Addendum No. 3, replacing
Section 3.3 of RFP #2015-24. In pertinent part, Addendum No. 3 provides:

            The City of Allentown reserves the right to request
            additional information from any Proposer and the right to
            waive minor irregularities in the procedures or proposals
            if it is deemed in the best interests of the City of
            Allentown. The City further reserves the right to reject
            all Proposals and seek new proposals when such

                                         2
             procedure is considered to be in the best interest of the
             City.
(Finding of Fact No. 36).
             Further, Addendum No. 3 replaced Section 3.4 of RFP #2015-24 and
stated:

             The award will be made to that responsive and
             responsible Proposer whose Proposal, conforming to the
             specifications, will be most advantageous to the City;
             price and other factors considered. The prices submitted
             by the Proposer on the Forms in Appendix VI are firm
             and final and the award shall be made to the lowest
             responsible and qualified Proposer based on the Options
             selected by the City.
(Finding of Fact No. 37). The Addendum also added that any references to “bid”
or “bidder” shall be replaced with “proposal” or “proposer.”
             On October 15, 2015, the City announced that there were seven
proposers that responded to the RFP.         Five proposers submitted proposals,
including Mascaro and WMI, and two declined to submit a proposal. The prices of
each proposal were not opened, but given to the City’s Purchasing Department.
             On October 16, 2015, Mascaro’s attorney sent another letter to the
City’s Purchasing Agent, demanding that “the City immediately provide [Mascaro]
with copies of the Cost Proposals submitted by each of the bidders . . . since the
City did not open, read or disclose the bid amounts as required, and since it has not
made those bid numbers available for public inspection.” (Finding of Fact No.
45.)
             On October 19, 2015, three proposers were shortlisted for
consideration of the contract, including both Mascaro and WMI. After approval by
an evaluation committee, WMI was awarded the contract by letter dated October

                                         3
30, 2015, contingent on approval by the City Council. The City sent Mascaro a
rejection letter on October 30, 2015.
             On November 4, 2015, Mascaro’s attorney spoke at a regular public
meeting of the City Council and, on November 6, 2015, sent a letter to the
President of the City Council and all City Council members.
             On November 30, 2015, the City Council held a special meeting,
where a request for approval for the contract award was presented. Mascaro’s
Attorney spoke to the City Council about his concerns regarding the RFP process.
By a six-to-one vote, consideration of approval of the contract award was tabled.
             The matter was reconsidered on December 9, 2015.            Mascaro’s
attorney again spoke to the City Council. The contract was categorized as for the
“engagement of professional services” and the City Council recommended that the
contract be awarded to WMI.
             On January 8, 2016, the City Solicitor’s Office sent WMI the
agreement for signature, and the agreement between the City and WMI was
entered into on February 15, 2016, providing that, “the Contractor’s proposal
stipulates the details the Value Added Services that will be provided to the City.
These Value Added Services and all costs and pricing submitted by the Contractor
in Appendix VI of RFP 2015-24, and as part of the Proposal, shall be included
under the terms of the Contract.” (Finding of Fact No. 69.)
             On January 12, 2016, Appellants filed a complaint and petition for
preliminary injunction with the trial court. WMI filed preliminary objections and
both WMI and the City filed responses to the petition for preliminary injunction.
On February 17, 2016, Appellants amended their complaint and added Jose
Mendoza as a plaintiff.      On February 23, 2016, a hearing on the original

                                         4
preliminary injunction was held, at which both parties agreed to forego a
preliminary injunction and hold a final hearing on the matter.
              On March 24, 2016, briefs were filed by all parties and argument was
heard to address the legality of the request for proposal process under the City’s
Home Rule Charter and Administrative Code. On May 10, 2016 the trial court
denied Appellants’ request for a permanent injunction.                  On May 19, 2016,
Appellants filed a post-trial motion, which was denied on September 19, 2016. On
October 18, 2016, Appellants filed a notice of appeal.
              On December 15, 2016, Appellants appealed to this Court.1

                                         Discussion
              On appeal, Appellants argue that under section 815 of the City’s
Home Rule Charter, the City was required to utilize a competitive bid process to
award contracts. Appellants contend that the bidding process is synonymous with
competition, and that title of the statute, “Bidding Process,” evidences that the
intent was to provide the purchase of goods and services pursuant by a public bid
solicitation. Appellants cite the 1997 amendments to the Home Rule Charter,
which provided that services in excess of $20,000.00 required the City to solicit
bids and award those bids to the lowest responsible bidder. Appellants argue that
consideration should be given to both the City’s past practice in only awarding
contracts through the ITB process and to the fact that municipalities throughout the
Commonwealth of Pennsylvania have consistently awarded contracts via public

       1
         Our scope of review is limited to a determination of whether the trial court “committed
an error of law in granting or denying the permanent injunction.” Buffalo Township v. Jones,
813 A.2d 659, 672 n.4 (Pa. 2002).

                                               5
bids similar to the ITB process.      Appellants further argue that no applicable
statutes permit contracts to be awarded via an RFP process and that the RFP
process is not a competitive process as it can be prone to favoritism and corruption,
regardless of whether the City acted in good faith.
             The City argues that, as a home rule municipality, it has broad powers
to arrange its local governmental affairs in any manner not inconsistent with the
Pennsylvania Constitution and other applicable state laws, and that nothing
prohibited the City from utilizing a competitive RFP process. The City argues that
Appellants’ reliance on the fixed public bidding requirements of other boroughs,
townships, and municipalities is misguided because those codes do not govern
home rule municipalities.     The City further argued that the Code does not
specifically address what the required process is for awarding a municipal services
contract.
             While Appellants argue that the title of the statute provides a clear
meaning, the City argues that a title cannot detract from the statutory language
itself, and that the title here is nonspecific, generic language that requires the
establishment of a competitive process. Further, Appellants note that the charter’s
specific direction that the city council institute “policies and procedures to
encourage the use of contemporary purchasing techniques such as a reverse
auctioneering and electronic commerce.” (Brief for Appellant, at 18.)
             The City further argues that Appellants’ reliance on a prior 1997
Amendment is misplaced as the argument is neither preserved for appeal nor
evidential in this case even if the argument was not waived. The City stated that
the 1997 Amendment was not in effect at any relevant time since the charter’s
current version was adopted in 2008, and that the absence of the language

                                         6
Appellants cite from the 1997 Amendment affirmatively rejects Appellants’
argument.
             The City alleges that a competitive system is not limited to a
traditional ITB, and that, here, the RFP secured the best value for the City by
providing the most technological advancements at the lowest cost.            The City
further alleges that the issue of the competitiveness of the RFP was waived because
Mascaro objected to the development of testimony relating to the competitiveness
of the RFP process and later expressly abandoned any argument regarding the
irregularity of the RFP process itself.
             The City contends that the doctrines of laches and unclean hands
apply because Mascaro became aware of the City’s decision to use the RFP
process as early as August 2015. While Mascaro informally objected to the RFP
process, it participated in the process and did not judicially challenge it until after
the proposal was denied. The City argues that it would be inequitable to reward
Appellants’ behavior as they were merely short-listed candidates who waited to see
whether they would be the ultimate beneficiary of the contract before initiating a
legal challenge.
             The City further argues that Appellants failed to carry their burden
and prove that more harm would result from denying the requested injunctive relief
than from granting it.     The City argues that Appellants did not present any
evidence of harm and that the City would suffer significant harm because, if the
injunctive relief was granted, the City would have to enter into an emergency
contract at a cost of approximately $175,000.00 per month and initiate a new
bidding process. Thus, it argues, this harm outweighs any harm Appellants may
have suffered.

                                          7
             Similarly, WMI argues that the trial court correctly denied Appellants’
request for permanent injunction because they did not satisfy the three elements
needed for injunctive relief.
             WMI first argues that Appellants did not show a clear right to relief
because Appellants cannot show that the City’s laws required a sealed bid process
as there is no support in relevant statutes. WMI relies on the City’s Home Rule
Charter, which grants the City the power to liberally construe a statute’s terms
regarding contracts for services, and argues that the City is only required to utilize
a competitive process and demonstrate broad solicitation of supplies and
opportunities to participate in the process, which occurred here. WMI contends
that Appellants overlooked what makes a process competitive and whether the RFP
process the City utilized was competitive. WMI contends that the measure of
competitiveness is an absence of favoritism and corruption and that this process
lacked both and, further, that Appellants were silent on how any characteristics of
the RFP process encouraged or evidenced favoritism or corruption. WMI further
contends that RFPs encourage and facilitate competition and that this process has
the same practical effect as a traditional ITB process. WMI states that Appellants
failed to allege how WMI’s proposal was deficient or how WMI had an advantage.
             WMI next contends that there is not an urgent necessity to avoid an
injury that cannot be compensated for by damages because Appellants did not
suffer an injury. More specifically, WMI contends that Appellants cannot allege
that they, as taxpayers, have been harmed because WMI was the lowest
responsible proposer and that there was no evidence that taxpayer dollars would
have been saved through a new bid solicitation process. Further, WMI contends
that any alleged injury is not urgent because Appellants were on notice of the RFP

                                          8
process since September of 2015; participated in the process, albeit with
reservations; and did not file for injunctive relief until after they were not awarded
the contract. WMI contends that this delay results in a bar by the equitable
doctrine of laches. WMI further contends that the delay causes prejudice to WMI
because they could lose the costs incurred and future profits if the injunctive relief
is granted.
              Lastly, WMI contends that a greater injury will not result by refusing
to grant relief. More specifically, WMI contends that Appellants made no effort to
argue that the balance of harms tips in their favor. On the contrary, WMI contends
that they and the City would suffer a greater harm if the injunctive relief is granted.
WMI contends they would lose the costs they have incurred as well as future
profits. WMI states that they have invested $6.7 million as of June 2016 in
reliance on the contract. WMI contends that Appellants have not articulated actual
harms, only a general grievance that the RFP process is flawed, and that rather than
suing as taxpayers, Appellants are really challenging the process as disappointed
proposers who would not have challenged it had they been awarded the contract.
              To establish a claim for permanent injunction, a plaintiff “must
establish a clear right to relief, that there is an urgent necessity to avoid an injury
which cannot be compensated for by monetary damages, and that greater injury
will result from refusing rather than granting the relief requested.” Richard Allen
Preparatory Charter School v. School District of Philadelphia, 123 A.3d 1101,
1107 (Pa. Cmwlth. 2015).
              In order to determine whether there is a clear right to relief, we must
evaluate whether the City was entitled to use the RFP process to award the contract
or whether the ITB process was required.

                                          9
             The Third Class City Code2 states that all contracts greater than
$18,500.00 are to be awarded to the lowest responsible bidder after advertising and
competitive bidding. 11 Pa. C.S. §11901.1. Appellees argue that the Third Class
City Code does not apply here as the City operates under the Home Rule Charter
and Optional Plans Law, 53 Pa.C.S. §§2901-3171. Section 102 of the City of
Allentown Home Rule Charter (Allentown Charter) provides the City with “the
power to exercise any power or to perform any function not denied by the
Constitution of the United States, by the Constitution of Pennsylvania, by act of the
General Assembly of Pennsylvania, or by this Charter.” (Reproduced Record
(R.R.) at 396a.) Section 103 of the Allentown Charter also provides that if no
provisions are provided, the powers of the city shall be provided by the City
Council. Id. Further, section 105 of the Allentown Charter provides that all
powers of the City shall be liberally construed in the favor of the City. Id.
             This Court held in Bell v. Lehigh County Board of Elections, 729 A.2d
125 (Pa. Cmwlth. 1999), that the Home Rule Charter and Optional Plans Law and
the Allentown Charter supersede the Third Class City Code. Further, in Ziegler v.
City of Reading, 142 A.3d 119, 133 (Pa. Cmwlth. 2016), this Court held that “[i]n
the absence of explicit constraint or collateral effect on another municipality, there
will be no conflict between the home rule municipality’s actions and the former
code provisions, since the latter no longer apply.” Further, in Wecht v. Roddey,
815 A.3d 1146 (Pa. Cmwlth. 2002), this Court held that “[i]n general, the adoption
of a home rule charter acts to remove a municipality from the operation of the
Code provisions enumerating the powers of that particular class of municipality.”

      2
        The Act of June 23, 1931, P.L. 932, as amended, formerly 53 P.S. §§ 35101–39701,
repealed and codified, effective January 25, 2016, 11 Pa.C.S. §§10101–14702.

                                          10
               Section 815 of the Allentown Charter entitled, “Bidding Process,”
states:
               A. Competition Principle
               All purchases of materials, supplies, equipment and
               services by the City government shall be made through
               competitive processes, with evidence available to
               demonstrate broad solicitation of suppliers and
               opportunities for participation in the acquisition process;
               and the value received for the money paid.

               B. Competitive Policies Code
               Consistent with applicable Federal and State laws, the
               Council shall adopt and may amend, by Ordinance, a
               Code for the establishment, regulation, and maintenance
               of a competition system; governing the policies necessary
               to effectively administer a system of competitive
               purchasing for the City government. This Code may
               include but is not limited to: 1) establishing varied
               procedures for types of services or materials to be
               acquired; 2) setting the dollar limits which would require:
               a) verbal solicitation of price quotes with a written
               record; b) written price quotes after informal solicitation;
               and c) formal public solicitation of written price quotes
               after public advertising; 3) establishing procedures for
               determining sole source contract awards; 4) policies
               regarding minority or local resident preference; and 5)
               policies and procedures to encourage the use of
               contemporary purchasing techniques such as reverse
               auctioning and electronic commerce.
(R.R. at 161a.) In other words, this section provides that services purchased by the
City shall be purchased via “competitive processes” and that a code shall be
adopted for the “establishment, regulation, and maintenance of a competition
system.” Id.
               Competitive procedures the City must abide by in awarding contracts
are governed by section 130.16 of the City of Allentown Administrative Code
(Administrative Code), stating, in part:

                                           11
             A. Administration
             1. Contract administration for the City including but not
             limited to authority as to preparation of specifications,
             letting of bids, award of contracts and payment of bills,
             shall be vested in the Mayor and the Department of
             Finance to be exercised in accordance with procedures
             adopted by the Mayor, on file with City Council, and
             consistent with the requirements set forth herein.
             (a) For the award of contracts or the engagement of
             professional services, coordination with and approval by
             Resolution of City council prior to contract or
             engagement execution is required. ...
             (b) For the award of all contracts over $40,000 that are
             required to be bid, recommendation of the lowest
             responsible bidder by the Department of Administration
             and approval by Resolution of City Council prior to
             contract execution are required.
             (c) For all contracts over $40,000 that are required to be
             bid whenever an increase by 10% or more is
             recommended by the Administration, resubmission to
             City Council and approval by Resolution prior to
             execution of any increase are required.
             (d) - (g) ...
             (h) All bid, contract and engagement contracts with the
             exception of legal counsel exempt under the provisions
             of the Home Rule Charter shall contain language noting
             such engagement is subject to Council approval by
             resolution at a public meeting.
(R.R. at 163a-66a.)
             Here, as the trial court correctly found, a contract for solid waste and
recyclable collection is a service contract, not a contract for professional services,
and, therefore, is not a contract delineated in Section 130.16(a). Further, as the
trial court stated, no evidence was submitted to support that the service contract
falls under subsection (c). Therefore, in order to determine whether a contract for
services falls under subsection (b), we look to the procedures specific to bids under
section 130.16B of the Administrative Code, stating:

                                         12
B. Bidding Process
1. Whenever the estimated cost of any construction,
erection, installation, completion, alteration, repair of, or
addition to, any project subject to the control of the City
shall exceed Forty Thousand ($40,000) Dollars; it shall
be the duty of the City to have such work performed
pursuant to a contract awarded to the lowest responsible
bidder, after advertisement for bids. Every such contract
shall contain a provision obligating the contractor to the
prompt payment of all material furnished, labor supplied
or performed, rental for equipment employed, and
services rendered by public utilities in or in connection
with the prosecution of the work, whether or not the said
material, labor, equipment or service enter into and
become component parts of the work or improvement
contemplated. Such provision shall be deemed to be
included for the benefit of every person, partnership,
association or corporation who, as subcontractor or
otherwise, has furnished material, supplied or performed
labor, rented equipment or services in or in connection
with the prosecution of the work as aforesaid, and the
inclusion thereof in any contract shall preclude the filing
of any such person, partnership, association or
corporation of any mechanics' lien claim for such
material, labor or rental of equipment.
2. Whenever the estimated costs of any purchase of
supplies, materials or equipment or the rental of any
equipment, whether or not the same is to be used in
connection with the construction, erection, installation,
completion, alteration, repair of, or addition to, any
project subject to the control of the City, shall exceed
Forty Thousand ($40,000) Dollars, it shall be the duty of
the City to have such purchase or rental made pursuant to
a contract awarded to the lowest responsible bidder, after
advertisement for bids...
a. The City shall not evade the provisions of subsection
(a) or (b) as to advertising for bids by purchasing
materials or contracting for services piecemeal for the
purpose of obtaining prices under Forty Thousand
($40,000) Dollars upon transactions which should, in the
exercise of reasonable discretion and prudence, he

                             13
             conducted as one transaction amounting to more than
             Forty Thousand ($40,000) Dollars,
             b. Written or telephonic price quotations from at least
             three (3) qualified and responsible contractors or vendors
             shall be requested for all contracts that exceed Ten
             Thousand ($10,000) Dollars but are less than the amount
             requiring advertisement and competitive bidding or, in
             lieu of price quotations, a memorandum shall be kept on
             file showing that fewer than three (3) qualified
             contractors exist in the market area within which it is
             practicable to obtain quotations.
(R.R. at 163a-66a.)
             As the trial court correctly held, the procedure specific to bids only
applies where the “estimated cost of any construction, erection, installation,
completion, alteration, repair of, or addition to, any project subject to the control of
the City shall exceed Forty Thousand ($40,000) Dollars.” (R.R. at 164a.) Here,
the solid waste and recyclable collection contract is not a construction project or
erection or installation project, and it neither involves the completion, repair, nor
addition to any project. Therefore, contrary to Appellants’ argument that the ITB
process was required, it is a service contract not listed in the categories of contracts
that require a bid under section 130.16B of the Administrative Code.
             While Appellants argue that the 1997 Amendments require the City to
solicit bids where the services are in excess of $20,000.00, this argument was not
raised with the trial court and is therefore waived. Issues not raised in the lower
court are waived and cannot be raised for the first time on appeal. Glencannon
Homes Association v. North Strabane Township, 116 A.3d 706, 724-25 (Pa.
Cmwlth. 2015).        However, even if Appellants’ argument was raised, it is
misguided. The language Appellants cited from the 1997 Amendments was not in
effect at any relevant time throughout the RFP process. The City’s current charter
was adopted in 2008, and did not include the language Appellants cited. Intent is

                                          14
evidenced by enacted law, not a prior, rejected version of the law. Phoenixville
Hospital v. Workers’ Compensation Appeal Board (Shoap), 81 A.3d 830, 844 (Pa.
2013).
             Appellants argue that the RFP process is not a competitive process
under section 815 of the Home Rule Charter. However, Appellants did not raise
the issue of the RFP’s competitiveness with the trial court, but rather, they objected
to the development of testimony relating to the competitiveness of the RFP
process. (R.R. at 285a-90a.) As such, the issue of competitiveness under section
815 is also waived. Glencannon Homes Association, 116 A.3d at 724-25.
             Because this is governed by the Administrative Code and section
130.16 does not require the waste contract to be bid, the trial court did not err in
denying Appellants’ request for a permanent injunction.
             Accordingly, the order of the trial court is affirmed.

                                            ________________________________
                                            PATRICIA A. McCULLOUGH, Judge

                                         15
             IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Solid Waste Services, Inc. d/b/a     :
J.P. Mascaro & Sons and M.B.         :
Investments and Jose Mendoza,        :
                  Appellants         :
                                     :    No. 1748 C.D. 2016
            v.                       :
                                     :
City of Allentown and Waste          :
Management of Pennsylvania, Inc.     :

                                   ORDER

            AND NOW, this 20th day of July, 2017, the order of the court of
Common Pleas of Lehigh County is affirmed.

                                         ________________________________
                                         PATRICIA A. McCULLOUGH, Judge