MONMOUTH CONSTRUCTION, L.L.C. v. THE BOROUGH OF RED BANK, et al.

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-4571-05T34571-05T3

MONMOUTH CONSTRUCTION, L.L.C.,

Plaintiff-Appellant,

v.

THE BOROUGH OF RED BANK and

SANTORINI CONSTRUCTION, INC.,

Defendants-Respondents.

________________________________________________________________

 

Argued March 8, 2007 - Decided April 4, 2007

Before Judges Lefelt and Parrillo.

On appeal from the Superior Court of New

Jersey, Law Division, Monmouth County,

Docket No. L-990-06.

Raymond Springberg argued the cause for

appellant.

Thomas Hall argued the cause for

respondent Borough of Red Bank

(Pringle, Quinn & Anzano, attorneys;

Mr. Hall, of counsel and on the brief).

Anthony J. Belkowski argued the cause

for respondent Santorini Construction

(Hedinger & Lawless, attorneys; Robert T.

Lawless, on the brief).

PER CURIAM

In this appeal, plaintiff Monmouth Construction, L.L.C., contends that Judge Lehrer erred when he dismissed Monmouth's verified complaint, which contended that defendant Santorini Construction, Inc. submitted a non-responsive bid for defendant Borough of Red Bank's library renovation project and therefore Santorini should not have been declared the lowest responsible bidder. We reject this contention and affirm.

Monmouth advances the following three arguments in support of its appeal. (1) The bidding documents were informally corrected to change Alternate 6, site work, from "delete" to "add." Nevertheless, Santorini bid "delete $21,000," thereby giving it the option of rescinding the bid because of its "mistake." Accordingly, Monmouth argues Santorini's site work bid should have been invalidated as unresponsive by the trial court. (2) The Borough arbitrarily and capriciously eliminated Alternate bids 2 and 5, when acceptance of these bids would have made Monmouth the lowest bidder. (3) The Borough's architect and the library committee controlling the project manipulated the process post-bid to avoid a responsibility hearing, N.J.S.A. 40A:11-4(a)(b)(c), because the architect was biased against Monmouth. We address each of these arguments in turn.

I.

Despite there being no site work specified for the base bid, the bid form contained a space in the base bid section for "Site Work." In that "Site Work" space, Santorini entered a bid of $24,000 and Monmouth "$0." Alternate 6 was to provide "site work, as shown on drawing," and noted that under the base bid there was "no site work on west side of site." Though the printed bid document marked that item as "DELETE," the Borough advised all prospective bidders that the item was intended to be "ADD." Accordingly, Monmouth crossed out DELETE on the bid document and wrote "ADD," bidding "+$28,325." Santorini, however, did not cross-out "DELETE" on the bid document and bid "$21,000." Accordingly, if Alternate 6 was accepted by the Borough, as it was, the bids for site work were Monmouth $28,325 and Santorini $3,000 ($24,000 - $21,000).

The competitive bidding process was not designed to protect "the individual interests of the bidders, but rather [to advance] the public interest in securing the most economical result by inviting competition in which all bidders are placed on an equal basis, thereby guarding against favoritism, improvidence, extravagance and corruption." Twp. of River Vale v. R.J. Longo Constr. Co., 127 N.J. Super. 207, 215 (Law Div. 1974). To this end, "no material element of the bid may be provided after bids are opened." George Harms Constr. Co. v. N.J. Turnpike Auth., 137 N.J. 8, 37 (1994). To permit post-bid changes would be to allow "room for manipulation and fraud if after bids were rendered a bidder could clarify its bid or express which figure it intended to use depending on the other bids presented." Colonnelli Bros. v. Vill. of Ridgefield Park, 284 N.J. Super. 538, 542-43 (App. Div. 1995), certif. denied, 143 N.J. 327 (1996); see also Suburban Disposal, Inc. v. Twp. of Fairfield, 383 N.J. Super. 484, 494 (App. Div. 2006) (overturning the contract award where lowest bidder after the bids were opened defined its "no-bid" entry as a bid of $0).

An "unbalanced bid," which is a bid that contains nominal prices for some work and enhanced prices for other work, is permissible absent collusion or fraud. Frank Stamato & Co. v. City of New Brunswick, 20 N.J. Super. 340, 344 (App. Div. 1952). See also Riverland Constr. Co. v. Lombardo Contracting Co., 154 N.J. Super. 42, 46 (App. Div. 1977) (finding a bid of one cent per cubic yard for certain work not "inherently evil or destructive of fair and competitive bidding"), aff'd, 76 N.J. 522 (1978); Turner Constr. Co. v. N.J. Transit Corp., 296 N.J. Super. 530, 538 (App. Div. 1997) (finding a bid of zero dollars permissible absent evidence of collusion or fraud).

"Every contractor may apply his own business judgment in the preparation of a public bid, and his willingness to perform one of the items for a nominal amount is but his judgmental decision in an effort to underbid his competitors." Riverland Constr. Co., supra, 154 N.J. Super. at 47. That is what happened here.

Although there is no case that has considered a negative bid when a positive amount was requested, we see no reason to preclude such a bid provided the bidder will be bound by the negative bid. See Cardell v. Twp. of Madison, 54 N.J. 151 (1969), rev'g on dissent, 105 N.J. Super. 604, 605 (App. Div. 1969) (finding that "municipal taxpayers . . . were entitled to the benefit of the lower bid" and rejecting the bidder's claimed mistake when its bid of $873,350 was not significantly lower than the next lowest bid of $898,810).

In addition, we cannot interpret Santorini's site work bid as evidence of an obvious mistake, fraud, or collusion. No one questions the Borough's interpretation of Santorini's bid, which required the Alternate 6 bid of $21,000 to be subtracted from the base bid of $24,000. Santorini made no attempt to change or qualify its bid after the bids were opened, and does not now contend its bid was a mistake that would have warranted rescission. Instead, Santorini argues, in its brief, that it strategically bid in the manner it did to obtain the contract, and we need not speculate on the consequences that might have ensued had the Borough not accepted Alternate 6.

Furthermore, the overall bid does not seem unrealistic and impossible to complete at the bidded price. The parties' final price for the base contract plus all of the alternates that were accepted by the Borough differed by only $338. Consequently, we agree with the trial court that Santorini's site work bid was strategic and realistic, and we find, as did the trial court, that the bid was responsive.

II.

Alternate 2 was to "[r]eplace existing exterior windows on the north wall of first floor with new insulated glass windows." Santorini bid $36,000 and Monmouth bid $25,658. Alternate 5 was to "[a]dd folding partition in Meeting Room on lower level." Santorini bid $8,700 and Monmouth bid $8,666. However, the Borough eliminated Alternates 2 and 5.

Monmouth argues the reasons the Borough advanced for eliminating Alternates 2 and 5 were arbitrary and capricious. The evidence before the trial court indicated, however, that the Borough eliminated Alternate 2 to keep the overall costs of the project down. According to the Borough, this cost-saving was possible because the existing windows of the library's north wall were not leaking and no construction in that area necessitated their replacement at this time. The record before the trial court also included evidence supporting the Borough's position that it eliminated Alternate 5 because of a fire danger. The Borough Administrator, in his capacity as fire marshal, recognized that such a partition would segregate a portion of the room from exterior exits, compromising occupants' safety in case of fire.

After considering the deposition testimony and the oral arguments of the parties, the trial court concluded that "[t]he Borough had a reasonable basis for choosing the alternates that it did." Judge Lehrer specifically found "that [the] selection of alternates reflects sound business judgment and does not bespeak any avoidance of the underlying purposes of the public bidding requirements."

"There is a prima facie presumption that the power and discretion of governmental action has been properly exercised." Miller v. Passaic Valley Water Comm'n, 259 N.J. Super. 1, 14 (App. Div.), certif. denied, 130 N.J. 601 (1992). A "trial court may not in the exercise of its judicial function substitute its judgment for that of the governmental body being challenged." Id. at 15. A municipality's actions "can only be overturned if shown to be arbitrary, capricious or an abuse of discretion." Marvec Constr. Corp. v. Twp. of Bellevillle, 254 N.J. Super. 282, 292 (Law Div. 1992) (finding that municipalities are free to reject all bids where valid "economic concerns" provide "good cause" for the rejection). Indeed, municipalities are even free to decide for good cause that it would "be unwise to proceed with the project." Gannett Outdoor Co., Inc. v. City of Atlantic City, 249 N.J. Super. 217, 221 (App. Div. 1991).

With regard specifically to bid alternates, a public entity's choice to reject or accept alternates is discretionary and upheld even if such choices ultimately favor certain bidders. Seacoast Builders Corp. v. Jackson Twp. Bd. of Educ., 363 N.J. Super. 373, 380 (App. Div. 2000). A "public entity can favor a bidder by its choice of contractual alternates." Ibid. That is in fact what happened here. We agree with Judge Lehrer that the Borough's actions were not arbitrary or capricious but instead demonstrated an appropriate exercise of business judgment.

III.

Finally, Monmouth contends, in essence, that the reasons Red Bank gave for eliminating Alternates 2 and 5 were pretextual. Monmouth argues that the Borough's true motivation was to avoid awarding the contract to Monmouth because of the Borough architect's prejudice against the company and favoritism toward Santorini.

However, the architect lacked the authority to select alternates or make the final decision on the bids. As the Borough's agent, he also was required to disclose his personal knowledge of the bidding companies and share his professional expertise with the town. Problems with Monmouth's work on other municipal projects were publicized in the local newspaper, and the architect and at least two other library committee members read those articles. We agree with Judge Lehrer's conclusion that ensuring the Borough was aware of these adverse facts did not amount to corruption or favoritism, especially considering that the architect reported both favorable and unfavorable reviews of Monmouth's prior work.

To determine the responsiveness of Santorini's bid and the reasons for the Borough's rejection of Alternates 2 and 5, Judge Lehrer conducted a summary proceeding. See R. 4:67. The deference we accord judge's findings from such a proceeding differs from our approach to summary judgment decisions. In summary judgment actions, we apply the same review standard as the trial court. Graziano v. Grant, 326 N.J. Super. 328, 338 (App. Div. 1999). Findings from summary proceedings, however, are entitled to the usual deference we accord trial judge findings derived from evidentiary proceedings. See O'Connel v. N.J. Mfrs. Ins. Co., 306 N.J. Super. 166, 172-73 (App. Div. 1997), appeal dismissed, 157 N.J. 537 (1998). Accordingly, we are bound by Judge Lehrer's factual findings regarding the reasons for the Borough's acceptance of the Santorini bid. See Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974).

In any event, our separate review of the record convinces us, as it did Judge Lehrer, that the Borough rationally assessed its needs, utilizing the various resources at its disposal, and lawfully exercised its discretion in selecting the contract alternates that would result in the most appropriate contract for this project. Consequently, we reject Monmouth's appeal seeking either damages or reversal of the Santorini contract award.

Affirmed.

 

(continued)

(continued)

10

A-4571-05T3

 

April 4, 2007