Opinion
8338/11
01-13-2012
Outstanding Transport, Inc., Plaintiff, v. Interagency Council of Mental Retardation and Developmental Disabilities, Inc., d/b/a Interagency Transportation Solutions, Defendant.
Attorney for Plaintiff: Ilona Babkinsky, Esq. Silverman Sclar Shin & Byrne PLLC Attorney for Defendant: Jeffrey A. Kehl, Esq. Kehl, Katzive & Simon, LLP
Attorney for Plaintiff: Ilona Babkinsky, Esq. Silverman Sclar Shin & Byrne PLLC
Attorney for Defendant: Jeffrey A. Kehl, Esq. Kehl, Katzive & Simon, LLP
Carolyn E. Demarest, J.
In this action by plaintiff Outstanding Transport, Inc. (plaintiff) for damages based upon the alleged breach of the terms of a transportation contract and alleged fraudulent inducement, defendant InterAgency Council of Developmental Disabilities Agencies, formerly known as InterAgency Council of Mental Retardation & Developmental Agencies, Inc. and sued herein as Interagency Council of Mental Retardation and Developmental Disabilities, Inc., d/b/a Interagency Transportation Solutions (IAC) moves for summary judgment dismissing plaintiff's complaint on the grounds that there is no material issue of fact to be tried, and that the causes of action asserted therein have no merit as a matter of law.
IAC is a New York not-for-profit membership corporation formed in 1977, which provides centralized services to more than 120 social service agencies in the greater New York metropolitan area, which, in turn, serve 90,000 disabled and/or developmentally challenged persons who live in the agencies' service area. Many of IAC's member agencies provide day habilitation services for such disabled and/or developmentally challenged persons who need daily round trip transportation between their residences and their day programs. While some IAC member agencies have access to private contributions and/or private grant funding, the vast bulk of the funding for program operations comes from state and federal Medicaid monies administered and disbursed through the New York State Office of People With Developmental Disabilities (OPWDD). Each agency is awarded a daily rate for persons attending its day programs, which is computed by OPWDD based upon formulas, which include an allowance for daily transportation to and from its programs. The agency receives the daily rate only for those days on which individuals actually attend its day program for a minimum of four hours, and since the daily rate is fixed, it is up to the agency to get each individual to and from its program within the monetary constraints of the overall daily rate.
Prior to 2006, IAC's member agencies made their own individual arrangements for transportation to and from their day programs by entering into separate transportation contracts with various transportation contractors. Plaintiff was one of these transportation contractors, who provided transportation services for disabled individuals in and around the New York area pursuant to transportation contracts with some of IAC's member agencies for over 14 years prior to 2006. Prior to their assignment to defendant in October 2006, plaintiff had transportation contracts with the following social service agencies: the Association for the Advancement of Blind and Retarded Inc.; NYSARC Inc., New York City Chapter, Brooklyn Bureau; Queens Centers for Progress; AHRC, New York City; and the YAI/National Institute for People with Disabilities.
According to plaintiff, one of the services historically provided by IAC to member social service agencies was the periodic negotiation of a transportation rate that served as a template for all of the contracts entered into between the various transportation contractors and the respective social service agencies they serviced. Plaintiff asserts that IAC would negotiate the contract price on behalf of its constituent members with the transportation contractors, including it. Each member would then enter into its own separate contract with a transportation provider, incorporating the price and terms which had been negotiated previously by IAC. Plaintiff claims that although the social service agencies and transportation contractors sometimes modified various terms of the contracts, the one term that remained constant was the price for services negotiated with IAC.
According to IAC, its member agencies had varying degrees of success and efficiency with respect to routing, timeliness, quality control, communications, and billing in making individual arrangements for transportation to and from their day programs. In order to address this, IAC, in 2006, created its own unincorporated division, InterAgency Transportation Solutions (IATS), to manage transportation services and to enforce uniform and centralized standards for routing, safety equipment and training, conduct standards for drivers and escorts, follow-up on complaints, and centralized billing to and payment by IAC on behalf of the agencies. IATS was thus established in order to create a uniform system of transporting disabled clients on behalf of its constituent members who had theretofore fulfilled their transportation requirements through separate individual transportation contractors, including plaintiff. IATS was to coordinate and pay for transportation services on behalf of the providers of day treatment and/or day habilitation services and assume the responsibilities and obligations of these program providers to provide such transportation services on a centralized basis.
To that end, IAC approached plaintiff, as well as the other transportation contractors who were then rendering services to its various member agencies pursuant to individual transportation contracts, and requested that they forgo their individual contracts, which were not yet due to expire, and enter into a five-year contract directly with it, doing business as IATS. As part of the transition to IATS, plaintiff entered into an agreement dated June 30, 2006 (the Transition Agreement), negotiated between IAC, plaintiff, and the other transportation contractors, effectively assigning the existing individual contracts to IATS. The Transition Agreement recited that concurrently therewith, the transporter had entered into a Uniform Transportation Contract to provide vehicles, drivers, and escorts in order to transport program participants for a term commencing July 1, 2006 and ending June 30, 2011. It further recited that:
"The Transporter and IAC have agreed, subject to the conditions set forth herein, that upon the award by IATS of contracts encompassing transportation services currently performed by the Transporter, the Transporter shall consent to the assignment of the Transportation Contract to IAC and the termination of such contract."
The Transition Agreement further provided that the parties had agreed as follows:
"1. The Transporter shall consent to the assignment of the Transportation Contract to IAC, and following such assignment[, to] the termination of such Contract, subject to the following conditions:
(i) IAC shall request contract proposals (RFP'), which RFP shall in the first instance be requested only from Previously Qualified Vendors'. For purposes of this Agreement, Previously Qualified Vendors shall mean Transporters . . . who were providing services to programs of day treatment and/or day habilitation services for individuals with developmental disabilities in the City of New York as of June 30, 2006, and have continued to provide such services on and after July 1, 2006."
In substance, the Transition Agreement provided that IATS would issue an RFP for the services provided by plaintiff and the other "Previously Qualified Vendors" and that plaintiff would be offered the same number of vehicle routes which it then provided to agency customers at rates equivalent to the rates being paid under the existing contracts.
Following the Transition Agreement, the "Previously Qualified Vendors," including plaintiff, negotiated specifications that were included in a Request for Proposals by IATS dated September 5, 2006 (the 2006 RFP). Pursuant to the 2006 RFP, the transportation contractors were asked to submit proposals for a new multi-year transportation contract which would expire on June 30, 2011 and would replace the individual transportation contracts which were then in place between the individual agencies and the transportation contractors.
The 2006 RFP, in Section 1 (i), similarly defined "Previous Qualified Transporter" as follows:
" PREVIOUS QUALIFIED TRANSPORTER' means any transportation company or predecessor in interest (1) which was providing transportation services on or before June 30, 2006 to agencies whose transportation requirements are covered under this contract, and (2) which continued to provide services on and after July 1, 2006 in accordance with a Uniform Transportation Agreement or substantially similar agreement, and (3) which otherwise meets the requirements of this Contract."
This section of the 2006 RFP further provided that proposers that fell within the category of a "Previous Qualified Transporter" would be given "preference in the awarding of Routes under this RFP to the extent described in an agreement between [IAS] and the Transporter, which agreement provide[d] for, inter alia, the assignment by the Agency to IATS of the Uniform Transportation Agreement."
According to plaintiff, it and the other Previous Qualified Transporters negotiated a set price which was to be paid to them, under the 2006 RFP, which IATS used to define the compensation for the contract services. Section 15 of the 2006 RFP, entitled "Terms of Payment," provided that "[p]ayment to the Transporter w[ould] be made by IATS based upon the daily rate per bus as established by the contract, multiplied by the number of days of transportation service provided by the Transporter for each Route provided under the terms of the contract."
During the transition period, while plaintiff and the other Previous Qualified Transporters negotiated with IAC, a memorandum dated October 19, 2006, was executed by Margery E. Ames (who was then the executive director of IAC), on behalf of IATS, and Peter R. Silverman, of Silverman Sclar Shin & Byrne PLLC (who is also plaintiff's present counsel), on behalf of the contracting Transporters, plaintiff Outstanding Transport, Inc., LaSalle Bus, Inc., Regents Bus, Inc. (Regents), Professional Charter Service Inc. (Professional Charter), Brooklyn Transportation Corp. (Brooklyn Transportation), Horizon Transportation Services Inc. (Horizon), Arm Transportation LLC (Arm Transportation), and Smart Pick, Inc., confirming the understanding that such contracts would be subject to the following relevant provisions:
"Interim Period. Commencing November 1, 2006 and until the IATS program is implemented, contractors will be paid on a per bus per day basis based upon their current number of bus routes, subject to IATS prior review. Alternatively, at the contractor's option, the contractor will continue to be paid on the current contract basis (per client attending per day) until the IATS program is implemented."
...
"Contract Extension. Prior to the end of the current contract term, IATS will conduct a new RFP. Contractors who have performed satisfactorily will receive preference regarding their RFP submissions."
By an e-mail dated November 29, 2006, Ms. Ames attached the final Transportation Services Agreement (the IATS Contract), which included the insertion therein of the daily rate under Section VI. Miscellaneous, providing that it was agreed that the initial daily rate per vehicle, as referenced in Section 15 of the 2006 RFP, would be $479. The IATS Contract was a standardized contract between the transportation contractors participating in the 2006 RFP and IAC, doing business as IATS. According to IAC, such standardized IATS Contract was used for all transporters that agreed to replace their existing agreements in 2006, and also for all new transporters that first started transporting disabled individuals after 2006.
The IATS Contract entered into between plaintiff "Transporter" and IATS, executed by plaintiff on December 12, 2006 and by Ms. Ames, on behalf of IAC, on March 10, 2007, for transportation services provided to and from various day program sites for individuals with developmental disabilities, applied to routes awarded to the Transporter pursuant to the submission of a proposal in response to the 2006 RFP, and stated that its term was to commence as of October 16, 2006, the effective date of the assignment of the prior underlying agreements from the Transporter to IATS and the commencement of IATS transportation services under this contract, and was to end on June 30, 2011. As conceded by the present executive director of IAC, Peter Pierri, "in order to get the transporters to participate in the 2006 RFP, it was important to give them a level of comfort that their prior service would be recognized, both then and thereafter." Therefore, Section V of the standardized IATS Contract provided:
"V. 2011 RFP
At the end of the current contract term, IATS will conduct a new RFP. Contractors who have performed satisfactorily will receive preference regarding their RFP submissions."
In or around May 2010, as the 2006 IATS Contract was entering its last year, plaintiff sought to purchase new and larger vehicles to be used in providing transportation services to IATS. In a letter dated May 6, 2010, addressed "To Whom it May Concern," which was provided by IAC to the lender financing such acquisition by plaintiff in order to verify that plaintiff was currently a provider of transportation services for IATS, IAC stated:
"[T]his letter is to note that [plaintiff] is a provider in good standing with IATS and has performed in an exemplary manner through the terms of the current contract. The current five (05) year contract expires on June 30th, 2011. As per numeral V. of the current contract At the end of the current contract term, IATS will conduct a new RFP. Contractors who have performed satisfactorily will receive preference regarding their RFP submissions'. IATS will certainly provide [plaintiff] preference with their RFP submission for the anticipated (July 2011 start) new five year contract currently being developed."
Plaintiff asserts that, in reliance upon its belief that it would be given "preference" in its bid for a new IATS contract and the representations made by IATS regarding such preference in this May 6, 2010 letter, it spent approximately $657,500 to purchase and re-configure 21 additional vehicles. Plaintiff maintains that it would not have made this purchase but for this reassurance by IAC that it would be given such preference.
In September 2010, IAC was advised by Regents and by plaintiff that Regents no longer wished to service its routes to IAC member agency programs and that plaintiff was willing to acquire the routes. Plaintiff and Regents requested IAC's consent to an assignment of the routes, as was required by Section 18 (d) of the 2006 RFP. Plaintiff claims that shortly prior to its acquisition of Regents' IATS Contract, IATS advised that it would not consent to the assignment of Regents' IATS Contract to another IATS contractor who was not in good standing and whose contract would likely be terminated at the end of the June 30, 2011 term. Plaintiff apparently inferred from this advice that it was not likely to be terminated at the end of the current contract.
On November 1, 2010, plaintiff purchased, by way of an assignment, Regents' 2006 IATS Contract, which was set to expire on June 30, 2011, as well as Regents' vehicles, for approximately $365,000. On November 17, 2010, Mr. Pierri, on behalf of IAC, executed a consent to the assignment of the 2006 IATS Contract between IAC and Regents to plaintiff, effective as of November 1, 2010. Mr. Pierri claims that at no time was IAC involved in, made privy to, or asked to approve, the contractual or financial terms of any arrangement between plaintiff and Regents. Plaintiff claims that it would not have purchased Regents' IATS Contract or Regents' vehicles without IAC's assurances that it would be given preference for the renewal contract.
In the summer and fall of 2010, IAC began planning for the new RFP referred to at Section V of the 2006 IATS Contract (the 2010 RFP). The 2010 RFP for transportation of individuals to adult day services in New York City, which was presented on November 15, 2010 by IAC, set detailed standards for, among other things, on-time performance, vehicle safety equipment, driver and escort qualifications and training, safety procedures, and the respectful treatment of consumers, and included a standard form of agreement for proposals. The 2010 RFP divided the routes to be served into 24 geographical "clusters" of agency programs (and one additional cluster for those agencies which run programs on the weekends), with multiple routes in each cluster. Each cluster was to be bid on as a whole and to be awarded to a single successful proposer.
Section 1 of the 2010 RFP listed "Definitions," and defined a "price quotation" as "the Proposer's binding price offer to furnish transportation services to any Cluster." It also provided that the term of the contract was three years from July 1, 2011 through June 30, 2014, which could be extended, at the option of IATS, for an additional one or two years. Section 2 of the 2010 RFP set forth that each Proposer was to provide written information describing its qualifications and prior experience.
Section 3 of the 2010 RFP required complete proposals to be received by IATS no later than December 15, 2010. Subdivision (a) of Section 3 of the 2010 RFP stated that, as to each cluster for which a proposer sought an award, three alternative price quotes on a standardized price quotation form were to be submitted: one based upon the price per passenger actually transported per program per day, one based upon the round trip for each individual enrolled in a program, and one lump sum quote for all individuals within the cluster. Subdivision (b) of Section 3 of the 2010 RFP provided as follows:
"Proposals may be modified or withdrawn before the time and date that the Proposal is due. Any Proposal not modified or withdrawn prior to the due date shall be good for a period of 60 days after the due date, and may not be withdrawn except on proof satisfactory to IATS, in its sole discretion, that withdrawal should be permitted due to a bona fide computational error of a magnitude such that it would work an egregious hardship on the Proposer to be bound thereby. Any Proposal received after the time and date that the Proposal is due is late and will be considered, if at all, only after all other Proposals submitted on time have been considered."
Subdivision (c) of Section 3 of the 2010 RFP provided that "IATS reserve[d] the right, in its sole discretion, to reject any or all Proposals, to waive non-conformities in any Proposal, or to solicit new Proposals." Subdivision (d) of Section 3 of the 2010 RFP further provided:
"Proposals will be evaluated on the totality of information received by IATS, and Contracts will be awarded on the basis of IATS' determination of how its component Agencies and their Individuals will best be served. While price will be a significant consideration in the evaluation of Proposals, IATS assumes no obligation to award any Contract solely on the basis of price." (emphasis added)
Under Section 3 (f) of the 2010 RFP, IATS reserved the right to request supplementation of a proposal, but specifically provided that it was "under no obligation to meet with any Proposer, and may, in [its] sole discretion . . . base any evaluation of the Proposal solely on the information and materials as submitted pursuant to this [RFP]."
Section 4 of the 2010 RFP provided that any correspondence or inquiries should be addressed to Mr. Pierri, but that "[n]o interpretation or clarification on the part of IATS w[ould] have any legal effect unless in writing." Section 5 of the 2010 RFP stated that changes might result from inquiries and suggestions from prospective proposers. Section 6 of the 2010 RFP listed the proposal documents and information required to be submitted, which included a completed and signed Price Quotation in the form annexed to such RFP as Addendum C. Addendum C stated:
"All price quotations shall be firm for the year commencing July 1, 2011, notwithstanding variation in the total transportable Individual population in each Cluster within a 10% aggregate variation up or down from the data provided. The Contract included in the Request for Proposals explains the formulas and time lines which will be used (a) for prospective adjustment prices if variations exceed 10% up or down, and (b) to re-set prices for succeeding years of the Contract."
Section 7 of the 2010 RFP set forth the information to be provided by the proposer, including, its previous experience in transportation. Section 8 of the 2010 RFP required the proposer's certification, verifying the information provided in the proposal, and Section 9 of the 2010 RFP required the proposer to identify any portions of its proposal which it wished to keep confidential. Part II of the 2010 RFP consisted of the Contract Terms, which, if the contract were awarded by IATS, constituted the binding contract between the proposer and IATS with respect to all clusters and routes awarded.
IAC sent the 2010 RFC to approximately 45 transportation companies, including all transportation contractors with whom IAC then had contracts pursuant to the 2006 RFP. When the proposals were received, IAC staff evaluated the proposer's credentials and the quality of the information provided, made a financial comparison of the price quotations, and recommended awards. With the exception of three clusters, all clusters were awarded on the basis of the lowest price. IAC asserts that as to the three clusters which were not awarded on the basis of the lowest price, IAC determined that the existing transporter who quoted the lowest price, to which other clusters had already been awarded, would be overextended if these three additional clusters were awarded to it, and, therefore, awarded these clusters to proposers with the next lowest proposals, who were also existing transportation contractors, under the 2006 RFP.
Awards were made to a total of nine transportation contractors, i.e., Approved Transportation, Arm Transportation, Brooklyn Transportation, Professional Charter, Countywide Transportation, D & J Service, Exclusive Ambulette, Rides Unlimited, and MR Transportation. According to IAC, with only one exception (MR Transportation), the cluster awards were made to existing transportation contractors which had previously held contracts pursuant to the 2006 RFP. Plaintiff, however, claims that half of the successful proposers for the 2010 RFP (i.e., Approved Transportation, Countywide Transportation, Exclusive Ambulette, and MR Transportation) were not transportation providers that had previous contracts supplanted by the 2006 RFP and whose IATS Contracts contained the Section V "preference" provision. It is undisputed, though, that Arm Transportation, Brooklyn Transportation, and Professional Charter, who were awarded several of the clusters, had IATS Contracts containing the Section V "preference" provision.
Plaintiff, who was then providing transportation services for 102 routes, submitted proposals to IATS for 10 clusters, but did not receive any awards based upon the fact that its price quotations were vastly higher than the quotations received from other qualified proposers. Specifically, plaintiff's proposals ranged from a low of 26.41%, to a high of 112.09%, higher than the proposals which were accepted. In the aggregate, these proposals by plaintiff, if accepted by IAC, would have cost its member agencies $13,205,194 more in each year of the new contract, or more than $39,600,000 over the full three-year period of the new contract. IAC contends that plaintiff's failure to be awarded the contracts resulted from its own inability or unwillingness to provide competitive pricing. IAC points out that every dollar of this incremental cost would have been a charge against funds which otherwise would have been applied to programs for the disabled individuals served by its member agencies.
On April 12, 2011, plaintiff filed this action against plaintiff alleging five causes of action. Plaintiff's first cause of action for breach of contract, seeking no less than $9,869,571 in damages, alleges that IAC breached the IATS Contract when it failed to give it preferential treatment in awarding the new transportation contract at the end of the 2006 contract term. Plaintiff's second cause of action also for breach of contract, seeking no less than $230,000, alleges that IATS breached the IATS Contract when it failed to pay late charges in the amount of $60,000 and arbitrarily withheld approximately $170,000 in contract payments for services duly rendered. Plaintiff's third cause of action for breach of the covenant of good faith and fair dealing alleges that IAC breached its obligations under the IATS Contract to give plaintiff a preference by awarding the 2010 contracts based solely on price and no other factor, knowing that plaintiff would be disadvantaged in competing because it had been previously induced to purchase larger vehicles, which IATS no longer favored. It seeks damages of no less than $9,869,571. Plaintiff's fourth cause of action alleges that it sustained damages of $1,766,500 as a result of IAC's fraudulent inducement to expand its operations and purchase larger vehicles to accommodate IATS. Plaintiff's fifth cause of action for negligent misrepresentation alleges that IATS negligently made false representations to it and various third parties that it would "certainly provide preference [to plaintiff's] RFP submission for the . . . new five year contract," and that it relied upon such representations to, among other things, purchase and retrofit additional vehicles, and to purchase the business of Regents within the last year of its contract with IATS, resulting in damages in the amount of $1,766,500. IAC has interposed an answer dated May 1, 2011, contesting plaintiff's allegations and pleading that defendant had improperly performed on at least one occasion and, in a separate incident, had been sued, together with defendant for insufficient supervision but had failed to cooperate with defendant in its defense. Defendant pleaded, as an affirmative defense, that the complaint fails to state a cause of action.
In support of its motion for summary judgment with respect to plaintiff's first cause of action for breach of contract, IAC argues that it did not breach the IATS Contract by failing to award the new transportation contracts to plaintiff pursuant to the 2010 RFP. Mr. Pierri, in his affidavit, asserts that while Section V of the IATS Contract provided that plaintiff, as a transportation contractor who had performed satisfactorily, would receive "preference" regarding its RFP submissions, the term "preference" did not mandate that IAC award the clusters bid on to plaintiff regardless of its price quotes, but, rather, simply meant that deference would be given to plaintiff's prior service if its quoted prices were close to, or only slightly higher than, those of a competing new proposer.
Plaintiff, in opposition, argues that there is an issue of fact as to the meaning of "preference" in the 2006 IATS Contract, which precludes summary judgment. Plaintiff contends that Mr. Pierri's construction of this term in his affidavit should be ignored since he was not employed by IAC or IATS at the relevant time and that he has no personal knowledge of the facts relating to the negotiation of the term "preference." Plaintiff asserts that its president, Charles Curcio, on the other hand, has personal knowledge of the facts and circumstances concerning the inclusion of the "preference" provision in the IATS Contract, and that it should be interpreted according to his understanding of this term.
"The construction and interpretation of an unambiguous written contract is an issue of law within the province of the court" (Franklin Apt. Assoc., Inc. v Westbrook Tenants Corp., 43 AD3d 860, 861 [2007]; see also Etzion v Etzion, 84 AD3d 1015, 1017 [2011]; Katina, Inc. v Famiglietti, 306 AD2d 440, 441 [2003]). "In interpreting a contract, the court must read the document as a whole to determine the parties' purpose and intent, giving a practical interpretation to the language employed so that the parties' reasonable expectations are realized'" (Gutierrez v State of New York, 58 AD3d 805, 807 [2009], quoting Snug Harbor Sq. Venture v Never Home Laundry, 252 AD2d 520, 521 [1998]; see also Franklin Apt. Assoc., Inc. v Westbrook Tenants Corp., 43 AD3d at 861 [2007]; Queens Best, LLC v Brazal S. Holdings, LLC, 35 AD3d 695, 697 [2006]; Aivaliotis v Continental Broker-Dealer Corp., 30 AD3d 446, 447 [2006]). "Where . . . the contract is clear and unambiguous on its face, the intent of the parties must be gleaned from within the four corners of the instrument, and not from extrinsic evidence" (Rainbow v Swisher, 72 NY2d 106, 109 [1988]; see also Matter of Meccico v Meccico, 76 NY2d 822, 824 [1990]; Etzion, 84 AD3d at 1017; Clark v Clark, 33 AD3d 836, 837 [2006]). "Thus, a written agreement that is complete, clear and unambiguous on its face must be enforced according to the plain meaning of its terms" (Greenfield, 98 NY2d 562, 569 [2002]; see also W.W.W. Assoc., 77 NY2d 157, 162-163 [1990]).
However, " courts may not by construction add or excise terms, nor distort the meaning of those used and thereby make a new contract for the parties under the guise of interpreting the writing'" (Vermont Teddy Bear Co. v 538 Madison Realty Co., 1 NY3d 470, 475 [2004], quoting Reiss v Financial Performance Corp., 97 NY2d 195, 199 [2001]; see also Riverside S. Planning Corp. v CRP/Extell Riverside, L.P., 13 NY3d 398, 404 [2009]; McWade v McWade, 253 AD2d 798, 799 [1998]). "Evidence outside the four corners of the document as to what was really intended but unstated or misstated is generally inadmissible to add to or vary the writing" (W.W.W. Assoc., 77 NY2d at 162; see e.g. Mercury Bay Boating Club v San Diego Yacht Club, 76 NY2d 256, 269-270 [1990]; Judnick Realty Corp. v 32 W. 32nd St. Corp., 61 NY2d 819, 822 [1984]; Long Is. R. R. Co. v Northville Indus. Corp., 41 NY2d 455, 461 [1977]; Oxford Commercial Corp. v Landau, 12 NY2d 362, 365 [1963]). Such rule imparts "stability to commercial transactions" (W.W.W. Assoc., 77 NY2d at 162).
"Whether or not a writing is ambiguous is a question of law to be resolved by the courts" (id.; see also Van Wagner Adv. Corp. v S & M Enters., 67 NY2d 186, 191 [1986]; Maysek & Moran v Warburg & Co., 284 AD2d 203, 204 [2001]; Lake Constr. & Dev. Corp. v City of New York, 211 AD2d 514, 515 [1995]). In the present case, the IATS Contract, read as a whole to determine its purpose and intent (see W.W.W. Assoc., 77 NY2d at 162), plainly manifests the intention that, if all other factors were equal, plaintiff would receive preference regarding its RFP submissions, such that it would prevail over others equally qualified. However, there is no language in the IATS Contract (or Section 1 [i] of the 2006 RFP) requiring IAC to award to plaintiff the clusters bid on in response to the 2010 RFP regardless of the prices that it quoted. Nor is there any suggestion notwithstanding the prior negotiating practice, that price would not be a factor in evaluating the bids under later RFP's. Rather, Section V of the IATS Contract merely generally refers to a "preference," the plain language of which indicates that if all other factors were equivalent, plaintiff's bid would be accepted.
Here, plaintiff's bid was not roughly equivalent to those of the other proposers, but, instead, was $39.6 million more over the course of the new three-year contract. There is nothing in the 2006 RFP or the IATS Contract which would impose such an unreasonable construction as to require defendant to accept plaintiff's bid at any price. In this regard, it is noted that, while plaintiff asserts that it would not have entered into the 2006 RFP and the IATS Contract if it had not been given this "preference," plaintiff's July 2006 contracts would have terminated on June 30, 2011 in any event. Thus, plaintiff did not sacrifice any advantage by agreeing to the assignment to IATS and would not have been entitled to any "preference" in the 2010 bidding if it had not done so.
Plaintiff's interpretation of the term "preference" to require that IAC accept its bid, over other qualified transportation providers that submitted substantially lower bids, regardless of the price it quoted, "does not give it a fair and reasonable meaning'" (Tri-Messine Constr. Co. v Telesector Resources Group, 287 AD2d 558, 558 [2001], quoting Heller v Pope, 250 NY 132, 135 [1928]; Albanese v Consolidated Rail Corp., 245 AD2d 475, 476 [1997]). As IAC points out, the argument made by plaintiff, that the "preference" to which it was entitled as an existing transportation contractor entitled it to be awarded the three-year contracts on which it unsuccessfully bid, would have cost IAC's member agencies (and hence the public, since the funds at issue are Medicaid funds) over $39.6 million more than the contracts which were awarded. While the contracts at issue are private, as opposed to public contracts subject to competitive bidding statutes, under which all contracts for public works must be awarded to the lowest responsible bidder, it is noted that the 2010 RFP was imbued with a public purpose because it involves the expenditure of public Medicaid funds and services to disabled persons.
Moreover, plaintiff's argument that the "preference" to which it was contractually entitled should be interpreted as an obligation to accept its proposals, which ran from 26.52% to 112.09% higher than the successful quotations, particularly where at least some of the clusters were awarded to other existing transportation contractors who were entitled to the very same "preference," would impose an unreasonable result. Since plaintiff's construction would lead to an unreasonable result, such a construction must be avoided (see Tri-Messine Constr. Co., 287 AD2d at 558; Hsieh v Pudge Corp., 122 AD2d 198, 199 [1986]; Nassau Ch., Civ. Serv. Empls. Assn. v County of Nassau, 77 AD2d 563, 564 [1980], affd 54 NY2d 925 [1981]).
Plaintiff asserts, however, that it is not claiming that it was entitled to a new contract at the price included in its bid proposal. Rather, Mr. Curcio, plaintiff's president, contends that it was not intended that the solicitation of competitive pricing would be the criteria for new contract awards since the solicitation of competitive pricing had not been part of the contracting process when the parties had entered into the 2006 IATS Contract. Plaintiff argues that the "preference" to be accorded to it referred to its ability to satisfy contract specifications, and not price, which had historically been established through a universal, industry-wide contract negotiated collectively by IAC and the transportation contractors.
However, while plaintiff argues that the negotiation of price for the 2006 RFP was made as a group on an industry-wide basis and that the term "preference" applied only to performance specifications in an RFP, there was no contractual provision assuring plaintiff that this practice would continue in the 2010 RFP. The inclusion of certain requirements with respect to bids contained in a prior contract does not comprise an implied representation that similar requirements will be mandated with respect to a subsequent contract (see Varsity Tr. v Saporita, 48 NY2d 767, 768 [1979]). Indeed, while price may have been negotiated previously as a group, it is undisputed that at least three of the other Previous Qualified Transporters (along with plaintiff) submitted bids which gave separate competitive price quotations in complaince with the RFP.
Thus, inasmuch as there was no contractual requirement contained in the 2006 RFP that the future 2010 RFP could not be awarded based upon price, to adopt plaintiff's view that the parties agreed to not base the awards under the 2010 RFP upon price would necessarily require the court to add terms to the IATS Contract which the parties did not include. The "court's role is limited to interpretation and enforcement of the terms agreed to by the parties; it does not include the rewriting of their contract and the imposition of additional terms" (Matter of Salvano v Merrill Lynch, Pierce, Fenner & Smith, 85 NY2d 173, 182 [1995]; see also Tri-Messine Constr. Co., 287 AD2d at 558; Matter of Macrae v Dolce, 249 AD2d 476, 477 [1998]; Matter of Scalabrini v Scalabrini, 242 AD2d 725, 726 [1997]).
Plaintiff additionally argues that if pricing were to be a pivotal factor in determining preference, Section 3 (g) of the 2010 RFP permitted IATS to negotiate its pricing by providing that "IATS reserve[d] the right to negotiate changes in the scope of the required services as well as changes in the cost of the basic service from the Proposer," and that "[t]he final cost agreed upon will be the basis for the evaluation of the Proposal, and for a Contract to be awarded." Plaintiff contends that pursuant to this provision, based upon its entitlement to a preference, IATS should have sought to negotiate changes in its proposal, rather than contracting with others. Plaintiff also points out that Section 3 (d) of the 2010 RFP provided that IATS "assume[d] no obligation to award any Contract solely on the basis of price," and complains that it, nevertheless, awarded the new contracts solely on price without entertaining any further discussions with plaintiff.
Plaintiff's argument must be rejected. While IATS reserved this right in the 2010 RFP, it had no duty to re-negotiate plaintiff's price. Rather, as noted above, Section 3 (f) specifically provided that IATS could evaluate the proposal "solely on the information and materials as submitted pursuant to th[e 2010 RFP]." Moreover, as noted above, the terms of the 2010 RFP expressly provided, in Addendum C, that "[a]ll price quotations shall be firm," and further provided, in Section 3 (b), that proposals could not be modified or withdrawn by plaintiff after the date the proposal was due without proof satisfactory to IATS that there was a bona fide "computational error" of a magnitude that would work an egregious hardship on it.
Thus, the court finds that there is no ambiguity in the term "preference" which could raise a triable issue of fact as to plaintiff's breach of contract claim. Consequently, summary judgment dismissing plaintiff's first cause of action must be granted (see CPLR 3212 [b]).With respect to plaintiff's second cause of action, IAC has submitted the affidavit of Glenn Godin, IATS' director, who explains that IAC's ability to pay its transportation contractors is dependent upon its receipt of funds from its member agencies, and that the agencies' ability to remit funds to IAC is, in turn, dependent upon payment from OPWDD. He explains that payment delays are inherent in this arrangement, which is why the 2006 RFP, in Section 15 (b), provided that any payment not made within 45 days after submission to IAC of a correct invoice would bear interest at the rate of one percent per month (or partial month) of delay. He attests that IAC has consistently honored its payment obligations and its obligations to pay interest on late amounts, and that it will continue to do so. Plaintiff does not address in its opposition papers IAC's request for dismissal of this cause of action. Therefore, summary judgment dismissing plaintiff's second cause of action is granted (see CPLR 3212 [b]).
With respect to plaintiff's third cause of action for breach of an implied covenant of good faith and fair dealing, such cause of action must be dismissed since "such a claim may not be used as a substitute for a nonviable claim of breach of contract" (Sheth v New York Life Ins. Co., 273 AD2d 72, 73 [2000]; see also Murphy v American Home Prods. Corp., 58 NY2d 293, 304 [1983]; Prestige Foods v Whale Sec. Co., 243 AD2d 281, 281 [1997]; Trade & Indus. Corp. [USA] v Euro Brokers Inv. Corp., 222 AD2d 364, 367-368 [1995]). While "New York does recognize that in appropriate circumstances an obligation of good faith and fair dealing on the part of a party to a contract may be implied and, if implied will be enforced," such implied obligation "is in aid and furtherance of other terms of the agreement of the parties," and "[n]o obligation can be implied . . . which would be inconsistent with other terms of the contractual relationship" (Murphy, 58 NY2d at 304; see also Sheth, 273 AD2d at 73).
Here, the contractual relationship between plaintiff and IAC was governed by the terms of the IATS Contract. Although plaintiff alleges that IAC breached its obligations under the IATS Contract by awarding contracts under the 2010 RFP based solely on price, as noted above, the terms of the IATS Contract did not prohibit plaintiff from doing so. "The covenant of good faith and fair dealing cannot be used to add a new term to a contract, especially to a commercial contract between two sophisticated commercial parties represented by counsel" (D & L Holdings v Goldman Co., 287 AD2d 65, 73 [2001]).
In addition, contrary to plaintiff's assertions, it has not shown that IAC breached the implied covenant of good faith and fair dealing by causing it to be disadvantaged in competing due to its purchase of larger vehicles (i.e., 25-passenger buses). As explained by Mr. Godin, while the 2010 RFP stated that proposal of "[r]outes which utilized smaller vehicles where possible (i.e. as opposed to the use of only 40-passenger vehicles)" would influence a favorable award, this language merely expressed the concern that the exclusive use of 40-passenger buses would result in routes which were too long and would have program participants on buses for excessive periods of time. Mr. Godin attests that 25-passenger buses were entirely acceptable and that plaintiff could have served the clusters on which it bid with 25-passenger buses. He further attests that, in any event, the reason for the denial of the contract awards to plaintiff had nothing to do with the size of its vehicles, but only to do with the inordinately high prices quoted by plaintiff. Thus, plaintiff's third cause of action must be dismissed (see CPLR 3212 [b]).
With respect to the viability of plaintiff's fourth cause of action, the essential elements required to adequately plead a cause of action for fraudulent inducement are: that the defendant made a false representation of a material fact, that the defendant made such misrepresentation knowingly (i.e., with scienter), that the misrepresentation made was justifiably relied upon by the plaintiff, and that some injury or damage resulted to the plaintiff (see Lama Holding Co. v Smith Barney, 88 NY2d 413, 421 [1996]; New York Univ. v Continental Ins. Co., 87 NY2d 308, 318 [1995]; Graubard Mollen Dannett & Horowitz v Moskovitz, 86 NY2d 112, 122 [1995]; Channel Master Corp. v Aluminum Ltd. Sales, 4 NY2d 403, 407 [1958]; Gordon v Oster, 36 AD3d 525, 525 [2007]; CFJ Assoc. of NY v Hanson Indus., 274 AD2d 892, 894 [2000]; National Union Fire Ins. Co. of Pittsburgh, Pa. v Worley, 257 AD2d 228, 233 [1999]).
Plaintiff has not shown that IAC knowingly made any false representation of a material fact. While plaintiff claims that prior to its acquisition of Regents' IATS Contract, IATS advised it that it would not consent to the assignment of Regents' IATS Contract to another IATS contractor who was not in good standing with it and whose contract would likely be terminated at the end of the June 30, 2011 term, it is undisputed that plaintiff was, at that time, in good standing with IATS. There is also no showing that, at that time, plaintiff was likely to be terminated at the end of the June 30, 2011 term, so as to render such representation false when made. Rather, the likelihood of plaintiff's termination was necessarily dependent upon plaintiff's successful bidding on the 2010 RFP which had not yet been determined.
Furthermore, plaintiff's fourth cause of action fails to allege any material misrepresentation that was not part of the IATS Contract (see Refreshment Management Services, Corp. v Complete Office Supply Warehouse Corp., 89 AD3d 913 [2d Dept 2011]; Lee v Matarrese, 17 AD3d 539, 540 [2005]). The representation by IAC in the May 6, 2010 letter that IATS would certainly provide plaintiff with a "preference" regarding its 2010 RFP submission, which is also relied upon by plaintiff in support of this cause of action, merely quotes the language of Section V of the IATS Contract. Thus, plaintiff's fourth cause of action for fraudulent inducement is "impermissibly premised upon an alleged breach of contractual duties'" (Weinstein v Natalie Weinstein Design Assoc., Inc., 86 AD3d 641, 642 [2011], quoting Yenrab, Inc. v 794 Linden Realty, LLC, 68 AD3d 755, 757 [2009]).
Moreover, plaintiff cannot be found to have reasonably relied upon this contract language (see Perrotti v Becker, Glynn, Melamed & Muffly LLP, 82 AD3d 495, 498 [2011]). The possibility that plaintiff's bids would be rejected so as to render useless investments made in the hope that its bids would be accepted over the other transportation contractors is a normal risk of doing business which may not be shifted to IAC based on no more than is alleged in this action. Consequently, summary judgment dismissing plaintiff's fourth cause of action must be granted (see CPLR 3212 [b]).
As to plaintiff's fifth cause of action, " [a] claim for negligent misrepresentation can only stand where there is a special relationship of trust or confidence, which creates a duty for one party to impart correct information to another, the information given was false, and there was reasonable reliance upon the information given'" (H & R Project Assoc. v City of Syracuse, 289 AD2d 967, 969 [2001], quoting Hudson Riv. Club v Consolidated Edison Co. of NY, 275 AD2d 218, 220 [2000]; see also Mandarin Trading Ltd. v Wildenstein,16 NY3d 173, 180 [2011]). These elements are absent here.
"A 'special relationship' requires a closer degree of trust than an ordinary business relationship" (Solondz v Barash, 225 AD2d 996, 998 [1996]), and nothing more than an ordinary business relationship existed between plaintiff and IAC and IATS (see St. Patrick's Home for Aged & Infirm v Laticrete Intl., 264 AD2d 652, 658-659 [1999]). Furthermore, plaintiff has not shown that the alleged misrepresentations were false, as opposed to "merely 'an expression of future expectation'" with respect to the 2010 RFP (Dunlevy v New Hartford Cent. School Dist., 266 AD2d 931, 933 [1999], quoting Bower v Atlis Sys., 182 AD2d 951, 953 [1992]). In addition, any reliance by plaintiff was not reasonable since it was in a position to know that the award of the 2010 RFP was contingent upon its successful bid and that such an award could be denied, and it, thus, cannot " be heard to complain that [it] was induced to enter into the [subject] transaction[s] by misrepresentations'" (H & R Project Assoc., 289 AD2d at 969, quoting Schumaker v Mather, 133 NY 590, 596 [1892]; see also Hudson Riv. Club, 275 AD2d at 220-221). Plaintiff suggests that defendant's decision to make competitive pricing an element of the bidding for 2010 somehow violated its rights. But plaintiff submitted its bid upon the terms of the 2010 RFP in full awareness of the terms and provided the requested three alternative bid computations for each cluster bid upon. Thus, plaintiff entered into a prospective contract under terms set forth in the 2010 RFP and cannot now complain of a breach of the 2006 RFP or the 2006 IATS contract because the terms of the 2010 RFP were different. There is no contractual obligation expressed in any of the documents that required defendant to retain its prior practice of relying upon an industry-wide set price rather than seeking the best advantage for its member agencies by requiring the submission of competitive price bids. Therefore, summary judgment dismissing plaintiff's fifth cause of action is mandated (see CPLR 3212 [b]).
Finally, the court rejects plaintiff's argument that since no discovery in this action has yet taken place, this motion must be denied as premature in order to afford it an opportunity to conduct such discovery. CPLR 3212 (f) provides that if it appears from affidavits submitted in opposition to the motion for summary judgment "that facts essential to justify opposition may exist but cannot be stated, the court may deny the motion or may order a continuance to permit affidavits to be obtained or disclosure to be had and may make such other order as may be just." However, "[m]ere hope and speculation that additional discovery might uncover evidence sufficient to raise a triable issue of fact is not sufficient" to warrant denial of a motion for summary judgment (Sasson v Setina Mfg. Co., Inc., 26 AD3d 487, 488 [2006]). The granting of a summary judgment motion should not be postponed to allow for discovery where the proponent of the additional discovery has failed "to demonstrate that the discovery sought would produce relevant evidence" (Frith v Affordable Homes of Am., 253 AD2d 536, 537 [1998]).
"A grant of summary judgment cannot be avoided by a claimed need for discovery unless some evidentiary basis is offered to suggest that discovery may lead to relevant evidence" (Bailey v New York City Tr. Auth., 270 AD2d 156, 157 [2000]; see also Freiman v JM Motor Holdings NR 125-139, LLC, 82 AD3d 1154, 1156 [2011]; Dempaire v City of New York, 61 AD3d 816, 817 [2009]; Conte v Frelen Assoc., LLC, 51 AD3d 620, 621 [2008]; Lopez v WS Distrib., Inc., 34 AD3d 759, 760 [2006]; Ruttura & Sons Constr. Co. v Petrocelli Constr., 257 AD2d 614, 615 [1999]). "A party's mere hope that further discovery will reveal the existence of triable issues of fact is insufficient to delay determination on the issue of summary judgment" (Lambert v Bracco, 18 AD3d 619, 620 [2005]; see also Wyllie v District Attorney of County of Kings, 2 AD3d 714, 717 [2003]; Weltmann v RWP Group, 232 AD2d 550, 551 [1996]). Here, plaintiff fails to state what relevant evidence it hopes to possibly uncover if an opportunity for further discovery is afforded to it so as to justify postponing a determination of this summary judgment motion.
The contracts before the court are clear and unequivocal and are properly interpreted by the court without reference to extrinsic evidence. As the contracts establish, by their terms, the lack of merit in plaintiff's complaint as a matter of law, IAC's motion for summary judgment dismissing plaintiff's complaint must be granted.
This constitutes the decision, order, and judgment of the court.
ENTER,
J. S. C.