ACCADIA SITE CONTRACTING, INC. v. CARUANA, ANTHONY F. ( 2012 )

SUPREME COURT OF THE STATE OF NEW YORK
Appellate Division, Fourth Judicial Department
791.1
CA 12-00843
PRESENT: SCUDDER, P.J., SMITH, FAHEY, LINDLEY, AND MARTOCHE, JJ.
IN THE MATTER OF ACCADIA SITE CONTRACTING, INC.,
PETITIONER-APPELLANT,
V MEMORANDUM AND ORDER
ANTHONY F. CARUANA, SUPERVISOR, TOWN OF TONAWANDA,
MEMBERS OF TOWN OF TONAWANDA BOARD, IN THEIR
OFFICIAL CAPACITIES, YARUSSI CONSTRUCTION, INC.,
AND CONCRETE APPLIED TECHNOLOGIES, INC.,
RESPONDENTS-RESPONDENTS.
LIPSITZ GREEN SCIME CAMBRIA LLP, BUFFALO (JEFFREY F. REINA OF
COUNSEL), FOR PETITIONER-APPELLANT.
DUKE, HOLZMAN, PHOTIADIS & GRESENS LLP, BUFFALO (PATRICIA GILLEN OF
COUNSEL), FOR RESPONDENT-RESPONDENT CONCRETE APPLIED TECHNOLOGIES,
INC.
COLUCCI & GALLAHER, P.C., BUFFALO (PAUL G. JOYCE OF COUNSEL), FOR
RESPONDENTS-RESPONDENTS ANTHONY F. CARUANA, SUPERVISOR, TOWN OF
TONAWANDA, AND MEMBERS OF TOWN OF TONAWANDA BOARD, IN THEIR OFFICIAL
CAPACITIES.
Appeal from a judgment (denominated order) of the Supreme Court,
Erie County (John F. O’Donnell, J.), entered April 23, 2012 in a
proceeding pursuant to CPLR article 78. The judgment dismissed the
proceeding and vacated a temporary restraining order.
It is hereby ORDERED that the judgment so appealed from is
unanimously affirmed without costs.
Memorandum: Petitioner commenced this CPLR article 78 proceeding
seeking, inter alia, to restrain the Town of Tonawanda respondents
(collectively, Town) from proceeding on a contract with respondent
Concrete Applied Technologies, Inc. (CATCO), the second lowest bidder
for a public works project aimed at repairing and improving the Town’s
sanitary sewer system (project), and requiring the Town to re-bid the
contract for the project. After granting petitioner a temporary
restraining order (TRO) pending a hearing and later holding such a
hearing, Supreme Court dismissed the proceeding and vacated the TRO.
We granted a stay pending this expedited appeal by petitioner, and now
affirm.
Pursuant to the terms of the “bid book” provided to prospective
bidders, they were required to agree to all of the contractual
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provisions, including a provision that requires the winning bidder to
indemnify the Town for any claims “arising out of or incidental to”
work on the project. Additionally, the bid book informed prospective
bidders that the Town would not accept “[c]onditional bids.”
Upon reviewing the specifications for the project, petitioner, a
prospective bidder, became concerned about the property damage that
could result from performing the “sheet piling” component of the
project. In a letter dated January 11, 2012, a representative of
petitioner informed a representative of the entity hired by the Town
to oversee the project that, “should [petitioner] be the low bidder on
the project, [petitioner] will not be held responsible for any damage”
stemming from the sheet piling work. The letter also stated that
petitioner “wishe[d] to go on record prior to the bid regarding this
situation and will be held harmless should any damage claims [arise]
from the piles being driven through the clay strata.”
Petitioner thereafter submitted a compliant bid proposal in which
it affirmed its understanding of the terms of the contract governing
the project and neither referenced nor attached its pre-bid letter.
When the Town publicly opened the seven bids it received for the
project, petitioner’s bid was the lowest and CATCO’s bid was the
second lowest. By a subsequent resolution, the Town determined that
petitioner’s bid was made conditional by its pre-bid letter and was
therefore nonresponsive. The Town thus awarded the project to CATCO,
the second lowest bidder.
A municipality that solicits bids for a public works project
generally must award the contract for that project to the “lowest
responsible bidder” (Town Law § 122; see General Municipal Law § 103
[1]; Matter of AAA Carting & Rubbish Removal, Inc. v Town of
Southeast, 17 NY3d 136, 142). If a bid fails to comply with bid
specifications, the municipality may waive such noncompliance “if the
defect is a mere irregularity and it is in the best interests of the
municipality to do so” (Le Cesse Bros. Contr. v Town Bd. of Town of
Williamson, 62 AD2d 28, 32, affd 46 NY2d 960). If, however, “the
variance between the bid and the specification is material or
substantial, . . . the defect may not be waived and the municipality
must reject the bid so that all bidders may be treated alike and so
that the possibility of fraud, corruption or favoritism is avoided”
(id.). The municipality “has the right to determine whether a
variance from bid specifications is material” (Matter of AT&T
Communications v County of Nassau, 214 AD2d 666, 667), and such a
determination “ ‘must be upheld by the courts if supported by any
rational basis’ ” (Diamond D Constr. Corp. v County of Erie, 209 AD2d
922, 923). A variance from bid specifications is material, and thus
cannot be waived by a municipality, if the variance “affect[ed] the
competitive character of the bidding” and gave the bidder “a
substantial advantage or benefit not enjoyed by the other bidders” (Le
Cesse Bros. Contr., 62 AD2d at 32; see Diamond D Constr. Corp., 209
AD2d at 922-923). In a CPLR article 78 proceeding challenging a
municipality’s handling of bids for a public works project, the
municipality’s “discretionary decision [to reject any bids] ought not
to be disturbed by the courts unless [that decision is] irrational,
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dishonest or otherwise unlawful” (Matter of Conduit & Found. Corp. v
Metropolitan Transp. Auth., 66 NY2d 144, 149).
Here, we conclude that the determination of the Town that
petitioner’s bid was conditional and nonresponsive, and thus
constituted a material variance from the project’s bid specifications,
was rational, honest, and lawful (see generally id.). The unequivocal
language of petitioner’s pre-bid letter was such that it was
reasonable for the Town to conclude that the term stated therein
concerning the refusal to be held liable for any damage arising from
the sheet piling work was intended to impose a condition on
petitioner’s subsequent bid proposal regardless of whether the pre-bid
letter was attached to or otherwise incorporated into that proposal.
Because petitioner indicated prior to submitting its bid that it did
not intend to comply with the indemnification clause in the contract
governing the project with respect to an apparently risky component of
the project to which other bidders would be subject, we conclude that
the Town had a “ ‘rational basis’ ” for determining that petitioner’s
bid materially deviated from the bid specifications (Diamond D Constr.
Corp., 209 AD2d at 923; see generally Le Cesse Bros. Contr., 62 AD2d
at 31-32). Thus, it was reasonable for the Town to determine that
petitioner had “a substantial advantage or benefit not enjoyed by the
other bidders” (Le Cesse Bros. Contr., 62 AD2d at 32), because the
Town reasonably could have believed that, if other bidders had known
that they could shift liability to the Town for claims arising out of
the sheet piling work, their bids would have been lower. Inasmuch as
it was reasonable for the Town to deem petitioner’s bid variance
“material,” it necessarily follows that it was reasonable for the Town
to reject petitioner’s bid and to accept the next lowest bid (id.).
Petitioner’s contention that the parol evidence rule barred the
Town from considering its pre-bid letter is without merit because
petitioner’s bid was a mere offer to contract (see S.S.I. Invs. v
Korea Tungsten Min. Co., 80 AD2d 155, 157-159, affd 55 NY2d 934; Le
Cesse Bros. Contr., 62 AD2d at 33), and because there was no written
contract between the Town and petitioner (see generally W.W.W. Assoc.
v Giancontieri, 77 NY2d 157, 161-162). Moreover, contrary to
petitioner’s contention, it was not required to send its pre-bid
letter pursuant to the terms of the “Information to Bidders” portion
of the bid book. The section to which petitioner refers states that
prospective bidders should notify the Town of “discrepancies[] in, or
omissions from the Drawings or Contract Documents” and should inquire
if they are “in doubt as to their meaning,” but petitioner’s letter
did neither. Finally, although petitioner is correct that CATCO and
several other bidders, like petitioner, estimated a cost of $0.01 per
square foot for the sheet piling work, which may have been an
indication that those bidders did not intend to carry out that part of
the project, the fact remains that only petitioner expressly stated
its intention to demand that the contract be altered to hold it
harmless for that activity.
Entered: June 15, 2012 Frances E. Cafarell
Clerk of the Court