PATRICIA RUFF VS. WEST KINNEY GARDENSÂ (L-4983-14, ESSEX COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE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-2117-16T4
UNITED SERVICES, INC.,
Plaintiff-Appellant,
v.
CITY OF NEWARK,
Defendant-Respondent.
____________________________________________
Argued February 28, 2017 – Decided April 17, 2017
Before Judges Messano and Guadagno.
On appeal from an interlocutory order of the
Superior Court of New Jersey, Law Division,
Essex County, Docket No. L-5010-16.
Gabriel H. Halpern argued the cause for
appellant (Pinilis Halpern, LLP, attorneys;
Mr. Halpern, on the brief).
Handel T. Destinvil, Assistant Corporation
Counsel, argued the cause for respondent
(Kenyatta K. Stewart, Acting Corporation
Counsel, attorney; Mr. Destinvil, on the
brief).
PER CURIAM
By our leave granted, plaintiff United Services Inc. (USI)
appeals from a December 16, 2016 Law Division order which
vacated temporary restraints previously entered against
defendant City of Newark, and denied plaintiff's application for
a preliminary injunction to prevent Newark from proceeding with
public contracting for janitorial services for city-owned
buildings. After granting leave to appeal, we filed an amended
order denying USI's request to enjoin Newark from receiving
responses to its solicitation for proposals, but enjoined Newark
from awarding a contract based on those solicitations pending
this appeal.
USI has been providing janitorial and maintenance services
for Newark since approximately 2008, after a previous contractor
defaulted on its contract. These services have been provided
pursuant to emergency contract extensions.
On March 29, 2016, Newark advertised bid specifications for
contracts to provide "Janitorial Services Part A and B" and
"Germicide" services for forty-eight of its buildings. The bid
specifications were sent to thirty-nine vendors, as well as the
Service Employees International Union Local 32BJ (Local 32BJ).1
The specifications provided that "[Newark] reserves the
right to reject any and all bids as is in the best interest of
1 Local 32BJ is the largest property services union in the
country with approximately 145,000 members nationwide and 10,000
members in New Jersey.
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the City." Bids were due on April 28, 2016, and were opened and
read to the public at that time. Eight proposals were received
for janitorial services, and seven proposals were received for
germicide services.
On April 28, 2016, Local 32BJ sent USI a letter informing
it of the Union's intent to organize its employees should USI be
awarded the contract. Following the opening of the bids, an
Evaluation Committee reviewed the bid packages to determine the
"lowest responsible bidder."
It is not disputed that USI was the successful bidder for
the contract. In a certification, USI's president, Raymond
Pardo, maintained that USI's bid was approximately $1,000,0002
less than the second lowest bid. USI's employees were not
members of Local 32BJ, but Pardo stated the employees of the
next three lowest bidders are members of Local 32BJ.
On June 28, 2016, Jerome Wakefield, the Supervising
Procurement Specialist in Newark's Department of Purchasing,
sent a letter to all bidders notifying them of Newark's
intention to reject all bids to allow Newark to revise the
specifications.
2 In its brief, USI maintains its bid was $3 million lower.
Absent proof in the record, we adopt the motion judge's figure.
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In a certification dated October 6, 2016, Wakefield stated
the Evaluation Committee determined there were a number of
"ambiguities" in the bid specifications "that may have had the
potential to discourage potential bidders." As a result,
Wakefield determined it was in Newark's best interests to
"reject all bids and substantially revise the specifications,
pursuant to N.J.S.A. 40-A:11-13.2(d), to correct those
ambiguities."
One of the ambiguities Wakefield identified in the March
29, 2016 bid specifications stated: "[b]idders may bid on
individual items[], except as otherwise specified" and "[i]f not
specified, no bid shall be accepted which seeks to sub-divide
any section or grouping of related items."
On July 19, 2016, USI filed a complaint against Newark
seeking to enjoin the rebidding of the janitorial contracts, and
to compel defendant to award the contract to plaintiff because
plaintiff was the lowest bidder.
On August 3, 2016, the Newark Municipal Council passed a
resolution authorizing the use of competitive contracting
pursuant to N.J.S.A. 40A:11-4.1 to procure custodial services.
Newark issued a competitive contract request for proposals (RFP)
on September 13, 2016, with a due date of October 13, 2016. The
new RFP indicated that "the City will make its final selection
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based upon such factors as deemed by the City to be in its best
interests." Further, in addition to the Model Evaluation
Criteria provided in N.J.A.C. 5:34-4.2, defendant set forth the
following criteria: thirty-five percent weight to company
overview and qualifications; twenty-five percent to approach and
implementation; and forty percent to proposed contract cost.
Moreover, the RFP split the contract into eight separate parts,
with a set-aside for Qualified Minority Business Enterprises
(MBE) for three of the locations. The revised bid
specifications also eliminated the previous requirements of
posting surety and performance bonds.
On September 23, 2016, USI filed an order to show cause to
enjoin Newark from soliciting and receiving bids through the
competitive contracting process. USI argued that it would
suffer irreparable harm if it is not awarded the contract it is
entitled to. USI further argued that because this is a public
bidding issue, public interests are at stake.
On September 26, 2016, the motion judge granted temporary
restraints against Newark. On October 14, 2016, the judge
denied USI's motion for expedited discovery, finding that the
motion would "overly burden the defendant" and that the
opposition papers would provide names of those involved in the
matter.
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On December 9, 2016, the judge vacated the temporary
restraints and denied USI's application for a preliminary
injunction. On appeal, USI maintains the judge applied the
wrong standard in denying its motion for temporary restraints
and misunderstood its arguments; interlocutory relief is
necessary to preserve the status quo pending trial; Newark's
right to reject all bids is not unfettered; Newark has
misrepresented its reason for rejecting all bids; the
Competitive Contracting Statute prohibits Newark from changing
the competitive bidding after it has opened public bids for the
same work; Newark's inclusion of representatives of Local 32BJ
and/or other contractors in the procurement process is collusive
and violates State law; Newark may not object to ambiguities in
its own bid specifications; Newark's claim that it is making
substantial changes to the bid specifications does not comport
with the intention of the statutes or the public bidding laws;
and Newark's reasons for making specific changes and
incorporating them in the RFP make no sense and are not in the
interests of Newark and therefore evidence manipulation of the
contract award.
In its complaint, USI alleged its bid was the lowest by a
substantial margin and would have resulted in millions of
dollars in savings by Newark. Newark does not deny this claim.
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USI also claimed Newark's asserted reason for rejecting all bids
was a "subterfuge" and it sought to direct the bids to a company
which is unionized and represented by Local 32BJ which "directly
or indirectly contributed hundreds of thousands of dollars to
the election campaigns of Newark officials." Specifically,
Local 32BJ formally endorsed Mayor Baraka's candidacy in the
2014 mayoral campaign. Afterward, Mayor Baraka stated that he
was "look[ing] forward to working with 32BJ as part of the
movement to create a more fair and just city."
In support of this claim, USI submits a certification of
its president, Raymond Pardo alleging Newark has intentionally
withheld payments to USI to cause financial hardship; between
2011 and 2016, Newark attempted to direct janitorial bids to a
favored bidder; Newark attempted to bribe a USI employee to
divulge confidential information; and USI was excluded from
secret meetings Newark held with contractors to discuss
information about the bid. Most troubling is Pardo's allegation
that he was advised by a Newark official that representatives of
Local 32BJ were attending meetings to draft new specifications
which were tailored to eliminate USI as the successful bidder.
The motion judge rejected USI's claim that it was
disadvantaged by the opening of the public bids, because USI was
privy to the amounts submitted by the unsuccessful bidders. We
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disagree. It is not disputed that USI's bid was substantially
lower than the next lowest bid. In any rebid, the unsuccessful
bidders now have the advantage of knowing the lowest bid. By
contrast, USI's knowledge of the unsuccessful bids is useless.
USI also maintained that Newark violated N.J.S.A. 40A:11-41
by inserting a specification in the RFP requiring qualified MBEs
to only include minority group members who were New Jersey
residents, thereby eliminating USI as a qualified MBE as one of
its members recently purchased a house in Florida. The judge
rejected this claim finding that the Local Contracts Law "does
not prohibit a specification from requiring a bidder be a
resident of a state." Actually, the statute does prohibit
residency requirements unless it can be demonstrated that "the
physical proximity of the bidder is requisite to the efficient
and economical performance of the contract." N.J.S.A. 40A:11-
13(b). Although this residency requirement has apparently been
removed from subsequent RFPs, USI would have been permitted at
trial to prove that the specification did not meet the N.J.S.A.
40A:11-13(b) requirement, and was included in the initial RFP in
an attempt to exclude USI from the bidding process.
Applications for a stay pending appeal are governed by the
standard outlined in Crowe v. De Gioia, 90 N.J. 126, 132-34
(1982). A party seeking a stay must demonstrate that "(1)
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relief is needed to prevent irreparable harm; (2) the
applicant's claim rests on settled law and has a reasonable
probability of succeeding on the merits; and (3) balancing the
relative hardships to the parties reveals that greater harm
would occur if a stay is not granted than if it were." Garden
State Equal. v. Dow, 216 N.J. 314, 320 (2013). Each of these
factors must be "clearly and convincingly" demonstrated.
McKenzie v. Corzine, 396 N.J. Super. 405, 414 (App. Div. 2007).
Although generally, all four factors must weigh in favor of
injunctive relief, ibid., we have held that "'a court may take a
less rigid view' of the Crowe factors and the general rule that
all factors favor injunctive relief 'when the interlocutory
injunction is merely designed to preserve the status quo.'"
Waste Mgmt. of N.J., Inc. v. Morris Cty. Mun. Utils. Auth., 433
N.J. Super. 445, 453 (App. Div. 2013) (quoting Waste Mgmt. of
N.J., Inc. v. Union Cty. Utils. Auth., 399 N.J. Super. 508, 520
(App. Div. 2008)). Clearly, USI seeks to preserve the status
quo and its application must be examined under the more relaxed
standard.
The motion judge found USI had not shown irreparable harm
because Newark had a "right under N.J.S.A. 40A:11-4.1 and
N.J.S.A. 40A:11-4.3 to utilize competitive contracting as
opposed to public bidding." This conclusion ignores USI's
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status as the lowest bidder and suggests that Newark is free to
peremptorily reject USI's bid without justification. It is not.
See N.J.S.A. 40A:11-13.2 (defining those circumstances whereby
the contracting unit may reject all bids).
The motion judge also determined that the legal right
underlying USI's claim is unsettled. However, "the basis for
the claim that a publicly-advertised contract should . . . be
awarded to a bidder who has . . . [met] material bid
requirements . . . is not doubtful but well-established." Waste
Mgmt., supra, 433 N.J. Super. at 452 (citing Meadowbrook Carting
Co. v. Borough of Island Heights, 138 N.J. 307, 313 (1994)
("publicly advertised contracts must be awarded to 'the lowest
responsible bidder.'" (in turn citing N.J.S.A. 40A:11-6.1)).
This right is subject only to Newark's ability to either reject
all bids and proceed to competitive contracting, or otherwise to
conclude USI is not a "responsible" bidder.
Particularly when the public interest is at stake, "[t]he
power to impose restraints pending the disposition of a claim on
its merits is flexible[.]" Waste Mgmt., supra, 433 N.J. Super.
at 453.
This less rigid approach, for example, permits
injunctive relief preserving the status quo
even if the claim appears doubtful when a
balancing of the relative hardships
substantially favors the movant, or the
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irreparable injury to be suffered by the
movant in the absence of the injunction would
be imminent and grave, or the subject matter
of the suit would be impaired or destroyed.
[Id. at 454 (citations omitted)].
We perceive no harm to any of the parties by reinstating
the stay, and the balancing of the equities involved militate in
favor of injunctive relief.
That portion of the December 16, 2016 order denying USI's
application for a preliminary injunction against Newark is
reversed, and our January 31, 2017 order enjoining Newark from
making any award of the contract is continued until resolution
of the underlying complaint. The matter is remanded to the
trial court. We do not retain jurisdiction.
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