Court Opinion

ID: 9956192
Source: CourtListenerOpinion
Date Created: 2024-04-01 14:07:25.928753+00
Date Added: 2024-06-11T08:15:40.561252
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NOT FOR PUBLICATION WITHOUT THE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-0519-23

SUBURBAN DISPOSAL, INC.,

          Plaintiff-Appellant,

v.

CITY OF PATERSON and FILCO
CARTING, CORP.,

          Defendants-Respondents,

and

E & B HAULING SERVICES, LLC,

     Defendant.
_____________________________

                   Argued March 6, 2024 – Decided April 1, 2024

                   Before Judges Firko and Susswein.

                   On appeal from the Superior Court of New Jersey, Law
                   Division, Passaic County, Docket No. L-2447-23.

                   Richard D. Trenk argued the cause for appellant (Trenk,
                   Isabel, Siddiqi & Shahdanian, PC, attorneys; Richard
                   D. Trenk, of counsel and on the briefs; Mary Y. Moon,
                   on the briefs).
            Mary Anne Groh argued the cause for respondent City
            of Paterson (Cleary, Giacobbe, Alfieri & Jacobs LLC,
            attorneys; Mary Anne Groh, of counsel and on the
            brief).

            Greg Trif argued the cause for respondent Filco Carting
            Corp. (Trif & Modugno, LLC, attorneys; Greg Trif and
            Kyle Hudson Cassidy, of counsel and on the brief).

PER CURIAM

      Plaintiff Suburban Disposal, Inc. appeals an October 19, 2023 Law

Division order denying its application for preliminary and permanent injunctive

relief barring defendant City of Paterson (the City) from executing its solid

waste collection services contract with defendant Filco Carting, Corp. (Filco).

Plaintiff contends the City improperly awarded the contract to Filco,

disregarding "fatal defects" in Filco's bid. The trial court concluded the award

of the contract to Filco was not arbitrary, capricious, or unreasonable. After

carefully reviewing the record in light of the governing legal principles and

arguments of the parties, we affirm.

                                       I.

      We discern the following pertinent facts and procedural history from the

record. In April 2022, the City issued bid specifications for a new contract —

which was previously held by plaintiff. Bids were due June 2, 2022. Plaintiff

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submitted a responsive bid, but the City rejected it because it "substantially

exceeded the City's appropriations." The City rejected all bids.

        To ensure the collection of solid waste would proceed uninterrupted while

the City rebid the contract, on June 9, 2022, the City extended the contract with

plaintiff until December 31, 2022.

        On September 1, 2022, the City issued a second set of bid specifications

with bids due November 1, 2022. The City rejected plaintiff's bid because it

substantially exceeded the City's appropriations. The City again rejected all

bids.

        On June 5, 2023, the City issued a third set of bid specifications for the

new contract with bids due August 8, 2023. This time, the bid specifications

excluded bulk waste.

        The bid specifications notice included a requirement to complete the

Bidder Questionnaire issued by the Department of Environmental Protection and

to provide a bid guarantee.        The notice specified the amount, form, and

exceptions to the bid guarantee, stating:

              The City . . . requires that a bidder must submit with his
              bid a [b]id [g]uarantee in the form of a bid bond,
              certified check, or cashier's check in the amount of ten
              percent (10%) of the bid, along with Consent of Surety
              from a Bonding Company. In no case shall the Bid
              Guarantee exceed $20,000.00.

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      On June 14, 2023, the City entered into another extension agreement with

plaintiff until September 30, 2023. On August 8, 2023, the City received bids

from plaintiff, Filco, and E&B Hauling Services, LLC. Filco's bid was the

lowest. From an annual perspective, Filco's bid was approximately $10 million

lower than plaintiff's bid.

      Filco's bid included a bid guarantee in the form of a bid bond. The

heading/caption of Filco's bid bond listed a "Bond Amount" of "10% of the total

amount of the bid proposal (not to exceed $20,000)." The text of Filco's bond

stated, in relevant part:

             The Contractor and Surety are bound to the Owner in
             the amount set forth above, for the payment of which
             the Contractor and Surety bind themselves, . . . as
             provided herein. The conditions of this Bond are such
             that if the Owner accepts the bid of the Contractor
             within the time specified in the bid documents, or
             within such time period as may be agreed to by the
             Owner and Contractor, and the Contractor either

             (1) enters into a contract with the Owner in accordance
             with the terms of such bid, and gives such bond or
             bonds as may be specified in the bidding or Contract
             Documents, with a surety admitted in the jurisdiction of
             the Project and otherwise acceptable to the Owner, for
             the faithful performance of such Contract and for the
             prompt payment of labor and material furnished in the
             prosecution thereof; or

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            (2) pays to the Owner the difference, not to exceed the
            amount of this Bond, between the amount specified in
            said bid and such larger amount for which the Owner
            may in good faith contract with another party to
            perform the work covered by said bid, then this
            obligation shall be null and void, otherwise to remain
            in full force and effect.

            The Surety hereby waives any notice of an agreement
            between the Owner and Contractor to extend the time
            in which the Owner may accept the bid. Waiver of
            notice by the Surety shall not apply to any extension
            exceeding sixty . . . days in the aggregate beyond the
            time for acceptance of bids specified in the bid
            documents, and the Owner and Contractor shall obtain
            the Surety's consent for an extension beyond sixty . . .
            days.

      Filco's bond included a clause that provided:

            When this Bond has been furnished to comply with a
            statutory or other legal requirement in the location of
            the Project, any provision in this Bond conflicting with
            said statutory or legal requirement shall be deemed
            deleted herefrom and provisions conforming to such
            statutory or other legal requirement shall be deemed
            incorporated herein. When so furnished, the intent is
            that this Bond shall be construed as a statutory bond and
            not as a common law bond.

            [(Emphasis added).]

      Filco's bid also included a completed Bidder Questionnaire. Question two

reads "[l]ist any other names under which the bidder, its partners or officers have

conducted business in the past five years."       Question six reads "[l]ist the

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government Solid Waste and Service contract that the bidder has completed

within the last five years. Give detailed answers to questions below relating to

this subject." Filco responded "[n]one" to both questions two and six. On

September 5, 2023, the City adopted a resolution awarding the contract to Filco

as the lowest responsible bidder.

      On September 7, 2023, plaintiff filed a verified complaint and an

application for an order to show cause (OTSC) seeking injunctive relief. On

September 13, 2023, the trial court heard oral argument and granted plaintiff's

application. The OTSC with Temporary Restraints stated: "[t]he City, and all

those acting in concert with it, are temporarily restrained and enjoined from

executing and/or implementing and Contract with Filco or any other vendor

pending a determination of [plaintiff's] claims as set forth in the verified

complaint." The City and plaintiff then entered an "expiring contract" so "the

City could avert a public safety crisis by continuing waste removal services for

its constituents."

      The trial court heard oral argument on October 11, 2023 and on October

19, 2023, denied plaintiff's application for preliminary injunctive relief. The

court dismissed plaintiff's verified complaint, issuing a sixteen-page statement

of reasons, and denied plaintiff's application for a stay pending appeal. We

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                                       6
granted leave for plaintiff to file an emergent application. On October 27, 2023,

we stayed the trial court's order dismissing plaintiff's action in lieu of

prerogative writs. On October 30, 2023, the Supreme Court denied the City's

application seeking permission to file for emergent relief from our stay.

      In November 2023, the City contacted Filco and plaintiff asking if they

would be interested in submitting proposals to perform emergency solid waste

removal services for the City beginning January 1, 2024.

      On December 5, 2023, the City awarded the emergency contract to Filco.

The emergency contract operates from January 1, 2024 to March 31, 2024. It

can be extended on a month-to-month basis to meet the City's waste disposal

needs.

      Plaintiff sought permission from this court to file an emergent appeal,

asserting the City violated the preliminary stay we had issued by awarding the

emergency contract to Filco. We denied that application on December 13, 2023.

      This appeal follows. Plaintiff contends Filco's bid guarantee was fatally

defective, Filco's response to the Bidder Questionnaire was materially defective

for failing to disclose its prior contracting history, and the City's challenge to

plaintiff's standing is unsupported by the record.

                                       II.

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      We first address the City's threshold argument plaintiff does not have

standing to challenge Filco's bid because plaintiff's bid substantially exceeded

the appropriated funds available in 2023. Accordingly, the City contends,

plaintiff would not be entitled to the contract even if Filco's bid were set aside.

Plaintiff counters the City's standing argument "fails as a matter of law" because

"[n]ow, in 2024, the 2023 budget is irrelevant."

      We disagree with the notion the City's budget was irrelevant when the

decision was made to reject plaintiff's bid. N.J.S.A. 40A:11-13.2(b) provides

"[a] contracting unit may reject all bids . . . [when] [t]he lowest bid substantially

exceeds the contracting unit's appropriation for the goods or services." That

confirms a municipality's budget is a relevant consideration since the budget

determines the amount appropriated for a contract. We add that a municipality

cannot award a contract in excess of appropriated funds. See N.J.S.A. 2C:30-4

(making it a fourth-degree crime for a public official to "[i]ncur[] obligations in

excess of the appropriation and limit of expenditure provided by law").

      It is well-settled "[a] direct challenge aimed at the lack of qualification or

responsibility of a successful contractor cannot be brought by one whose interest

stems from his position as an unsuccessful bidder who would not be entitled to

the contract even if the defendant were disqualified." Interstate Waste Removal

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                                         8
Co. v. Bd. of Comm'rs of City of Bordentown, 140 N.J. Super. 65, 71 (App. Div.

1976) (finding no standing for the third lowest bidder to "question the

responsibility of the lowest bidder" if it would not be entitled to the contract).

Here, the record shows plaintiff's bid exceeded the City's appropriated funds for

2023 and thus plaintiff lacks standing to challenge the City's decision to award

the bid to Filco.

                                       III.

      In Interstate Waste Removal Co., we held the plaintiff had no standing to

question the responsibility of the lowest bidder but added "[e]ven if it had the

requisite standing, its argument is baseless on the merits." 140 N.J. Super. at

72. We likewise proceed to address plaintiff's substantive contentions on their

merits, as did the trial court. We begin by acknowledging the legal principles

governing the scope of our review, which is narrow. See In re Protest of Award

of On-Line Games Prod. & Operation Servs. Cont., Bid No. 95-X-20175, 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.") (citing

Palamar Constr. Inc. v. Twp. of Pennsauken, 196 N.J. Super. 241, 250 (App.

Div. 1983); Stano v. Soldo Constr. Co., 187 N.J. Super. 524, 534 (App. Div.

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1983)). We will not interfere with the exercise of an agency's discretion in

awarding a contract or rejecting a bidder "in the absence of bad faith, corruption,

fraud or gross abuse of discretion." Com. Cleaning Corp. v. Sullivan, 47 N.J.

539, 549 (1966).

      The Local Public Contracts Law (LPCL), N.J.S.A. 40A:11-1 to -60, was

created to ensure a fair, public, and competitive bidding process for the

taxpayer's benefit. "The statutes authorizing competitive bidding accomplish

that purpose by promoting competition on an equal footing and guarding against

'favoritism, improvidence, extravagance and corruption.'"           Meadowbrook

Carting Co. v. Borough of Island Heights, 138 N.J. 307, 313 (1994) (quoting

Twp. of Hillside v. Sternin, 25 N.J. 317, 322 (1957)).

      A public 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." Ibid. A contracting

unit must award a contract "to the lowest responsible bidder," which is the

bidder: "(a) whose response to a request for bids offers the lowest price and is

responsive; and (b) who is responsible."       N.J.A.C. 7:26H-6.7(d); N.J.S.A.

40A:11-2(27). Responsible "means able to complete the contract in accordance

with its requirements" including requirements pertaining to experience, moral

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integrity, credit, workforce, and financial capacity. N.J.S.A. 40A:11-2(32).

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

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

request." N.J.S.A. 40A:11-2(33).

      With respect to bid bonds, the LPCL outlines five items that must be

submitted with a bid: (1) "[a] guarantee to accompany the bid"; (2) "[a]

certificate from a surety company"; (3) "[a] statement of corporate ownership";

(4) "[a] listing of subcontractors"; and (5) "[a] document provided by the

contracting agent in the bid plans, specifications, or bid proposal documents for

the bidder to acknowledge the bidder's receipt of any notice or revisions or

addenda to the advertisement or bid documents." N.J.S.A. 40A:11-23.2. Failure

to submit a mandatory item is a fatal defect rendering the bid unresponsive. Ibid.

      For the bid guarantee, N.J.S.A. 40A:11-21 provides: "[t]he guarantee shall

be in the amount of 10% of the bid, but not in excess of $20,000.00, except as

otherwise provided herein, and may be given, at the option of the bidder, by

certified check, cashier's check or bid bond."        N.J.A.C. 7:26H-6.5(d)(3)

specifically requires a bid proposal to include:

                   ....

            3. A bid guarantee made payable to the contracting unit
            which shall certify that upon the award of the contract,

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            the successful bidder will execute the contract. The bid
            guarantee shall meet the requirements listed below:

            i. The guarantee shall be in the amount of 10 percent of
            the bid, but not in excess of $20,000, and may be given
            at the option of the bidder, by bid bond, certified check
            or cashier’s check; and

            ii. The bid guarantee shall be signed by an authorized
            agent or representative of the guarantor and not by the
            individual or company submitting the bid proposal.

      In the matter before us, plaintiff argues Filco submitted a defective bid

guarantee in the form of a bid bond that "did not provide for the statutory amount

as required under Section 3.2 of the Bid Specifications for 10% of the [c]ontract

amount."   We are satisfied the trial court correctly determined Filco's bid

guarantee complied with the LPCL and implementing regulations. The trial

court found Filco submitted a bid with a guarantee in the amount of 10% of the

bid in the form of a bid bond. See N.J.A.C. 7:26H-6.5(d)(3)(i). It did not exceed

$20,000.00. See ibid. Filco's bid bond clearly states: "10% of the total amount

of the bid proposal (not to exceed $20,000.00)." Further, "[t]he Contractor and

Surety are bound to the Owner in the amount set forth above [referencing 'Bond

Amount']." It is also signed by the guarantor and was made payable to the City.

See N.J.A.C. 7:26H-6.5(d)(3)(ii). We agree with the trial court that Filco's bid

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bond contains all the mandatory requirements and its savings clause 1 effectively

eliminated any language that might be construed to render the bond defective.

                                      IV.

      We turn next to plaintiff's contentions regarding Filco's answers to the

Bidder Questionnaire. Plaintiff argues Filco failed to accurately respond to

question two pertaining to the names under which the bidder, its partners, or

officers have conducted business in the past five years. Specifically, plaintiff

asserts by answering "none" to question two, Filco failed to disclose the name

of the person who it claims co-founded Filco and served as the company's

Executive Vice President, Adam Pasquale.

      The trial court noted that Filco's owner and sole officer, Dominic

Monopoli, certified Pasquale is only an employee of Filco—not an owner,

partner, or officer. Finding Pasquale is not an officer of Filco, the trial court

concluded "Filco's omission of Pasquale and his previous contracts from

[q]uestion [two] does not constitute a deviation from the question." Given the

1
   As we have noted, Filco's bid bond states "any provision in this Bond
conflicting with said statutory or legal requirement shall be deemed deleted
herefrom and provisions conforming to such statutory or other legal requirement
shall be deemed incorporated herein."
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scope of our review, we have no basis upon which to second-guess that finding

and decline to do so.

                                       V.

      We likewise reject plaintiff's contention Filco's response to question six

constitutes a material defect. That question pertains to Filco's other solid waste

contracts. Relying on a New York State database, plaintiff identified three New

York-based contracts Filco completed. 2 But even accepting Filco's "none"

answer to question six constitutes a defect, we must apply a two-prong test to

determine whether it is a substantial defect and therefore non-waivable. River

Vale Twp. v. R.J. Longo Const. Co., 127 N.J. Super. 207, 216 (Law. Div. 1974).

      The first prong asks whether waiver would deprive the municipality of its

assurances the awarded contract will be adhered to, performed, and guaranteed

to meet the specifications. Ibid. Second, a reviewing court considers whether

waiver of the bid defect would adversely affect competitive bidding by placing

the bidder in a position of advantage over other bidders or otherwise negatively

2
  Filco and the City argue Filco did not disclose the New York contracts because
it interpreted question six, in tandem with question five, not to require
"information arising from out-of-state contracts." Question five states: "[l]ist
all public entity contracts which the bidder or its partners is now performing or
for which contracts have been signed, but work not begun. Give the name of
the municipality or owner, the amount of the contract and the number of years
the contract covers." Filco listed two New York State contracts in its answer.
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affect competitive bidding. Ibid.; see Nat'l Waste Recycling, Inc. v. Middlesex

Cnty. Improvement Auth., 150 N.J. 209, 220 (1997) ("[B]idding statutes exist

for the benefit of taxpayers, not bidders, and should be construed with sole

reference to the public good.").

      In analyzing the first prong, the trial court identified the "many indicators"

of Filco's capability to perform the contract. See River Vale, 127 N.J. Super. at

216. Specifically, the trial court found Filco demonstrated its ability to perform

the contract "in the form of a bid bond backed by a reputable surety, its

disclosure of experience in New York in [q]uestion [fourteen], and other related

experiences in [q]uestion [five]." 3 Additionally, the City "determined Filco's

qualifications based on the totality of the bid, not just the questionnaire." The

trial court also noted the City considered the report from its solid waste

consultant. Considering all relevant circumstances, we are satisfied the trial

court correctly concluded the City's waiver of Filco's response to question six

3
   In its answer to question fourteen—"[a]dditional remarks if any"—Filco
stated: "Filco Carting Corp. proudly services 5,000+ commercial, residential,
industrial, and institutional customers daily, including all the Verizon and Con
Edison locations, throughout the [five] boroughs of NYC, Westchester,
Rockland, and Putnam counties. Our experience[d] team of waste professionals
use the most comprehensive high-level solutions for waste collection and
recycling."
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"would not deprive the municipality of the assurance that Filco was willing to

enter the Contract and capable of the completion."

      In analyzing River Vale's second prong, the trial court concluded "Filco's

omission of prior experience would harm, not advantage it" in the competitive

bidding process. See River Vale, 127 N.J. Super. at 216. The trial court added,

"[u]nless the undisclosed prior contracts revealed harmful elements such as

fraud or breach of contract, it is unlikely that an omission would advantage

Filco."   Furthermore, Filco provided its work history in response to other

questions. Considering all relevant circumstances, we conclude the trial court

did not err in finding Filco's response to question six was an immaterial defect

waivable by the City.

      In sum, we agree with the trial court that the City was not arbitrary,

capricious, or unreasonable in awarding the contract to Filco. See In Re On-

Line Games, 279 N.J. Super. at 590. To the extent we have not specifically

addressed them, any remaining arguments raised by plaintiff lack sufficient

merit to warrant discussion. R. 2:11-3(e)(1)(E).

      We vacate our stay of the trial court's order dismissing plaintiff's action

in lieu of prerogative writs and affirm.

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