Opinion
DOCKET NO. A-2724-14T3
04-27-2015
BRAHMA CONSTRUCTION CORP., Plaintiff-Appellant, v. EAST BRUNSWICK PUBLIC SCHOOLS a/k/a EAST BRUNSWICK BOARD OF EDUCATION and DOBTOL CONSTRUCTION, LLC, Defendants-Respondents.
Stephen P. Winkles argued the cause for appellant (Tesser & Cohen, attorneys; Mr. Winkles and Matthew D. Lakind, on the brief). Matthew J. Giacobbe argued the cause for respondent East Brunswick Board of Education (Cleary, Giacobbe, Alfieri, Jacobs, LLC, attorneys; Robin T. McMahon, of counsel and on the brief). Robert T. Lawless argued the cause for respondent Dobtol Construction, LLC (Hedinger & Lawless, LLC, attorneys; Mr. Lawless, on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Messano, Ostrer and Hayden. On appeal from Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-261-15. Stephen P. Winkles argued the cause for appellant (Tesser & Cohen, attorneys; Mr. Winkles and Matthew D. Lakind, on the brief). Matthew J. Giacobbe argued the cause for respondent East Brunswick Board of Education (Cleary, Giacobbe, Alfieri, Jacobs, LLC, attorneys; Robin T. McMahon, of counsel and on the brief). Robert T. Lawless argued the cause for respondent Dobtol Construction, LLC (Hedinger & Lawless, LLC, attorneys; Mr. Lawless, on the brief). PER CURIAM
This is a public bidding case. By leave granted, plaintiff Brahma Construction Corporation (Brahma) appeals from the trial court's denial of preliminary injunctive relief in an action in lieu of prerogative writ challenging the award of a school construction contract. Brahma contends that the trial court unreasonably denied its request to stay the contract defendant East Brunswick Board of Education (Board) awarded to defendant Dobtol Construction, LLC (Dobtol). Because we conclude that the trial court did not abuse its discretion in finding that Brahma failed to demonstrate, by clear and convincing evidence, a likelihood of success on the merits of its claim and thus was not entitled to temporary injunctive relief, we affirm.
I.
The record establishes that on October 27, 2014, the Board solicited bids for a construction project to renovate its maintenance building. The specifications called for a single bid by a general contractor. On December 9, 2014, the Board opened nine bids. The lowest bidder was Dobtol with a total bid of $4,416,000. The next lowest bidder was Brahma with a total of $4,473,775. Brahma did not file a bid protest. On December 18, 2014, the Board awarded the contract to Dobtol.
On January 16, 2015, Brahma filed a complaint in lieu of prerogative writ along with an order to show cause seeking a preliminary injunction against the Board and Dobtol. Brahma sought to restrain the parties from proceeding with work on the construction contract until its case had been adjudicated.
In its complaint, Brahma alleged that Dobtol's bid was materially defective in two respects: (1) Dobtol's steel subcontractor, J.G. Schmidt Steel (JGS) would exceed its aggregate unfinished work authorization amount if awarded the work from Dobtol and (2) JGS was not AISC certified, which purportedly was a requirement for the steel subcontractor in the bid documents.
American Institute of Steel Construction.
Brahma's contentions were based on the following facts. Dobtol's bid proposal named JGS as its steel subcontractor. As required, Dobtol submitted JGS's notice of classification and aggregate limit from the Department of Treasury's Division of Property Management and Construction (DPMC). JGS had an aggregate rating limit of $3,300,000. JGS certified that at the time of the bid, it had $3,236,080 in uncompleted contracts, leaving $63,920 before the aggregate rating limit was reached. JGS certified that, if hired for this project, it would not exceed its aggregate limit.
In its certification to the trial court on review, Dobtol certified that JGS had quoted $43,500 for the work Dobtol wanted performed on the project. However, JGS's written quote for that amount referenced an unrelated project and no quote for this project was contained in Dobtol's bid proposal. Dobtol emphasized that the schedule of values approved by the Board for the steel work was only $59,000, which was still below JGS's aggregate limit. Brahma produced a price quote from JGS for this project for $129,900 although the intended recipient was not identified. Dobtol certified that it had never seen the $129,900 quote and never received such an estimate from JGS.
At oral argument Brahma's counsel stated that Brahma received a fax of the JGS bid although it did not solicit it.
As to the AISC certification issue, the bid specifications required all steel fabricators and installers to be AISC certified. There is no dispute that JGS was not, although JGS's application for certification was pending at the time. Dobtol certified that JGS planned to use a certified fabricator from North Carolina, and attached JGS's correspondence with the project architect supporting this assertion. Dobtol also certified that JGS had applied for AISC certification in steel erection, and attached correspondence regarding JGS's application. Dobtol further certified that if JGS was not AISC certified by the appropriate time, it would demand that the steel be installed by a certified firm.
After hearing argument, on January 28, 2015, the court issued its decision and order denying Brahma's request for a preliminary injunction. In reaching its decision, the court considered the factors set forth in the landmark case of Crowe v. De Gioia, 90 N.J. 126 (1982), with particular focus on the third factor, which requires proof of a reasonable probability of success on the merits.
As to the first claimed material defect, the court noted that the parties dispute whether JGS's work would put it over the DPMC cap. Dobtol certified that it had never received a $129,000 bid from JGS, the scope of work it planned to use JGS for was less than $59,000, and JSG could perform within its aggregate unfinished work authorization. The court observed that the sole evidence Brahma produced to support its claim that JGS's quote to Dobtol was for $129,000 was a quote JGS submitted to an unidentified party. The court concluded that Brahma had "not presented sufficient evidence for the court . . . to determine that there was a material defect of JGS's bid with regards to the aggregate limit." Hence, the judge determined that Brahma had not proved by clear and convincing evidence a reasonable probability of success on the merits.
On Brahma's second alleged material defect, the court held that there was no requirement, either in the bid documents or the case law, that the listed subcontractor be AISC certified. The court found no bid defect since under the applicable law, the listed subcontractor could further subcontract the work requiring AISC certification to a certified contractor. The court also accepted Dobtol's assertion that JGS planned to use an AISC certified firm out of North Carolina for the fabrication, as required. Thus, the court held that Brahma had not met its burden of demonstrating a material defect by clear and convincing evidence and had not established a likelihood of success on the merits on this issue.
Consequently, the trial court denied preliminary relief and declined Brahma's request to issue a stay of the contract pending appeal. Brahma filed a motion for leave to appeal the denial of preliminary injunctive relief. We granted Brahma's motion, issued a stay pending appeal, and accelerated this appeal.
II.
We begin with a review of the applicable legal principles that guide our analysis. Contracts for public schools are governed by the Public Schools Contracts Law, N.J.S.A. 18A:18A-1 to -59. Under that law, if the cost of a contract exceeds the "bid threshold," the board of education is obligated to award the contract to the "lowest responsible bidder after public advertising for bids and bidding therefor, except as is provided otherwise in this chapter or specifically by any other law." N.J.S.A. 18A:18A-4(a). The statute defines "lowest responsible bidder" as the bidder "(1) whose response to a request for bids offers the lowest price and is responsive; and (2) who is responsible." N.J.S.A. 18A:18A-2(t). "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. 18A:18A-2(y).
Public bidding laws are intended to "secure for the taxpayers the benefits of competition and to promote the honesty and integrity of the bidders and the system." In re Protest of the Award of On-Line Games Prod. & Operation Servs. Contract, Bid No. 95-X-20175, 279 N.J. Super. 566, 589 (App. Div. 1995). The laws are to be "'construed as nearly as possible with sole reference to the public good. Their objects are to guard against favoritism, improvidence, extravagance and corruption; their aim is to secure for the public the benefits of unfettered competition.'" Ibid. (quoting Keyes Martin & Co. v. Dir., Div. of Purchase & Prop., 99 N.J. 244, 256 (1985)). The conditions and specifications of a bid "must apply equally to all prospective bidders; the individual bidder cannot decide to follow or ignore these conditions[.]" Hall Constr. Co. v. N.J. Sports & Exposition Auth., 295 N.J. Super. 629, 635 (App. Div. 1996). Moreover, any material departure from the bid specifications renders a bid non-conforming and invalid. Ibid. Although minor or inconsequential discrepancies and technical omissions can be waived, material conditions cannot be waived by the contracting authority. Meadowbrook Carting Co. v. Borough of Island Heights, 138 N.J. 307, 314 (1994).
Hence, in cases involving public bidding, the trial court must review a public body's determination as to whether a bid was conforming to determine whether its decision was arbitrary, unreasonable, or capricious. On-Line Games, supra, 279 N.J. Super. at 590. One legitimate inquiry in reviewing a public body's decision on whether a bid was conforming is whether there is substantial evidence in the record to support the conclusion. Waste Mgmt. of N.J., Inc. v. Union Cnty. Utils. Auth., 399 N.J. Super. 508, 525-26 (App. Div. 2008). In general, an appellate court gives deference to the factual findings of a trial court, while reviewing the trial court's legal conclusions de novo. D'Agostino v. Maldonado, 216 N.J. 168, 182-83 (2013). However, in the case of a trial judge's decision to grant or deny preliminary injunctive relief, the appellate court reviews the decision for an abuse of discretion. Rinaldo v. RLR Inv., LLC, 387 N.J. Super. 387, 395 (App. Div. 2006).
To determine whether to issue temporary injunctive relief, we analyze the factors set forth in Crowe. Garden State Equality v. Doe, 216 N.J. 314, 320 (2013). The party seeking relief has the obligation to demonstrate each of the Crowe factors by clear and convincing evidence. Waste Mgmt., supra, 399 N.J. Super. at 519-20. The factors for the court to consider are: (1) whether a party would suffer irreparable harm if relief is not granted; (2) whether the claim rests on settled law and has a reasonable probability of success on the merits; and (3) whether balancing the hardships to the parties demonstrates that greater harm would result from not issuing the stay than if it were issued. Garden State, supra, 216 N.J. at 320. However, if the moving party seeks only to preserve the status quo, then "the court may place less emphasis on a particular Crowe factor if another greatly requires the issuance of the remedy." Ibid. (quoting Brown v. City of Paterson, 424 N.J. Super. 176, 183 (App. Div. 2012)). In cases where the public interest is affected, the court must also balance the public interest in addition to the other factors. Id. at 321 (quoting McNeil v. Legis. Apportionment Comm'n, 176 N.J. 484, 484 (2003)).
Regarding the first Crowe factor, damages may not be obtained in a public bidding case, even if the contract is erroneously awarded. Delta Chem. Corp. v. Ocean County Utils. Auth., 250 N.J. Super. 395, 400 (App. Div. 1991). See also M.A. Stephen Constr. Co. v. Rumson, 125 N.J. Super. 67, 76 (App. Div.) ("To permit the low bidder to recover damages would simply twice penalize the public."), certif. denied, 64 N.J. 315 (1973). "Harm is generally considered irreparable in equity if it cannot be addressed adequately with money damages." Crowe, supra, 90 N.J. at 132-33. Here, there is no adequate remedy at law, and this factor weighs in favor of granting preliminary injunctive relief.
As to the Crowe factor of likelihood of success on the merits, Brahma claims it demonstrated this likelihood because two material defects made Dobtol an unresponsive bidder. We examine these claims not for their ultimate merit, but for whether there was a reasonable probability of success on the merit of the claim. Waste Mgmt., supra, 399 N.J. Super. at 520-21.
Brahma first argues that Dobtol's bid was not responsive because the steel subcontractor was not AISC certified, which it maintains was a material and non-waivable condition of the bid specifications. Brahma relies on the bid specification's requirement for each contractor to certify that during the term of construction "the contractor will have in place a suitable quality control and quality assurance program and an appropriate safety and health plan." Brahma contends that Dobtol's failure to have AISC certified subcontractors violates this requirement. Additionally, Brahma argues that JGS's certification that it had these programs in place was false because it was obligated to have AISC certification, but did not. In contrast, Dobtol and the Board maintain that no requirement exists in law or in the specifications for the subcontractor to have AISC certification.
Our review of the record leads us to the firm conclusion that the bid documents cannot reasonably be construed to require AISC certification of the steel subcontractor. The only requirement was that steel fabricators and installers have AISC certification. The judge credited Dobtol's uncontradicted certification that JGS planned to subcontract the fabrication to an AISC certified firm from North Carolina, which was supported by a statement from JGS to the project architect. Additionally, while JGS planned on having AISC certification at the time of installation, if it did not, Dobtol certified it would require JGS to subcontract that work out to an AISC certified installer. Further, the bid documents contained no prohibition against the named subcontractor subcontracting part of the work.
The record reflects that Brahma sent questions to the architect on November 11, 2014, asking in relevant part "[d]o steel fabricators and installers need to be AISC Certified?" In response, the Board issued "Addendum Number 01" on November 17, 2014, answering Brahma's question, "Yes."
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Moreover, N.J.S.A. 18A:18A-18(b) clearly contemplates that a named subcontractor is permitted to further subcontract work within its classification. Significantly, such sub-sub-contractors do not need to be named in the bidding documents. Ibid. Thus, Brahma has identified no legitimate prohibition to Dobtol and JGS's compliance with the bidding specification through their planned route of subcontracting installer and fabrication work to an AISC certified firm not named in the bidding documents. Under the circumstances of this case, we are satisfied that Dobtol's listing of a non-AISC certified subcontractor for structural steel work did not constitute a deviation from the bid specifications, and that the trial court's decision finding that this was not a material defect was reasonable.
III.
Brahma next submits that Dobtol's bid had a material defect because JGS would exceed its aggregate rating limit if awarded a contract for the work. When either a contractor or a subcontractor submits a bid for a project, it must also submit a certification that "the award of the subject contract would not cause the firm to exceed its aggregate rating." N.J.A.C. 17:19-2.13(a). Along with this certification, the firm must submit a statement of the current "value and status of its backlog of uncompleted construction work . . . as of the bid due date . . . ." N.J.A.C. 17:19-2.13(a). "A firm shall not be awarded a contract which, when added to the backlog of uncompleted construction work, as shown on Form DPMC 701, would exceed the firm's aggregate rating." N.J.A.C. 17:19-2.13(c). This regulation applies to both contractors and subcontractors in school building bidding situations under N.J.S.A. 18A:18A-18. Advance Elec. Co., Inc. v. Montgomery Twp. Bd. of Educ., 351 N.J. Super. 160, 176 (App. Div.), certif. denied, 174 N.J. 364 (2002).
The aggregate rating limit laws ensure that a bidder is financially qualified to perform the work in addition to its other contracts. See Brockwell & Carrington Contractors, Inc. v. Kearny Bd. of Educ., 420 N.J. Super. 273, 280 (App. Div. 2011); Seacoast Builders Corp. v. Jackson Twp. Bd. of Educ, 363 N.J. Super. 373, 378 (App. Div. 2003) ("[T]he plain intent of the regulation was to insure the bidder's financial responsibility to undertake the work by requiring aggregate-rating compliance both when the bid is submitted and when the contract is awarded."). Significantly, it is a material, non-waivable defect of a bid for a contractor to name a subcontractor who is not qualified by reason of failure to comply with its aggregate rating limit. Brockwell & Carrington, supra, 420 N.J. Super. at 282.
That said, N.J.S.A. 18A:18A-18(b) does not require the submission of a pre-bid quote from a subcontractor before awarding a contract to a contractor. While there is no obligation to submit such a quote, a contractor may not execute a contract with a public entity that will place it over that limit, and a public entity is not authorized to execute that contract. Brockwell & Carrington supra, 420 N.J. Super. at 282. Thus, if JGS's quote put it over its limit, it would be a material breach of the bid specifications.
The trial judge found that the sole piece of evidence of JGS's purported overage - the unsolicited bid to an unspecified bidder - was not sufficient to provide clear and convincing evidence of a likelihood of success on the merits. Clear and convincing evidence produces "a firm belief or conviction as to the truth of the allegations sought to be established, evidence so clear, direct and weighty and convincing as to enable [the factfinder] to come to a clear conviction, without hesitancy, of the precise facts in issue." In re Seaman, 133 N.J. 67, 74 (1993) (internal quotation marks omitted). We find it significant that the bid does not contain a cost estimate breakdown of the work it covered, thereby making it impossible to compare it to the cost of the work Dobtol claims it asked JGS to perform and which resulted in a much lower figure. In light of Dobtol's certification that JGS gave it a quote of $43,200, the approved value schedule suggesting that the work should cost about $59,000, and the unknown cost of the similar work in the unsolicited bid, we cannot find that the trial judge abused his discretion in making this finding. Thus, Brahma did not prove by clear and convincing evidence that it is reasonably likely to prevail on the merits.
Nevertheless, Brahma argues that, regardless of its likelihood of success on the merits, in a balancing of the Crowe factors, the lack of any remedy at law mandates a stay of the proceedings until these issues are fully investigated. For support, Brahma relies on Statewide Hi-way Safety, Inc. v. N.J. Dep't of Transp., 283 N.J. Super. 223 (App. Div. 1995), which stressed the need to carefully weigh all the Crowe factors in determining whether to grant a stay in public bidding cases. Brahma misreads that case. In Statewide Hi-way, the facts were undisputed that the public entity never totaled the elements of the ultimate low bid and did not read the total in public, a clear material deviation that should have resulted in the bid not being awarded. Id. at 232. Although we denied the plaintiff's initial request for a stay, we noted that courts should be "cognizant of the need to grant stays, pending appeal, in cases like this that reflect a statutory deviation from the required bidding process." Id. at 233.
In contrast, the trial court found that Brahma did not provide clear and convincing evidence of a statutory deviation and was not likely to prevail on its claims. Accordingly, we are satisfied that the trial court did not abuse its discretion in balancing the Crowe factors and in denying Brahma's request for temporary injunctive relief.
Affirmed. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION