Opinion
DOCKET NO. A-3209-15T2
02-03-2017
THE DRS GROUP, TRACY A. MARKOVIC and LEONARD ROGLIERI, Plaintiffs-Respondents, v. COUNTY OF UNION, Defendant-Respondent, and FOVEONICS IMAGING TECHNOLOGIES, INC., Defendant-Appellant, and COUNTY BUSINESS SYSTEMS, INC. and FILEBANK, INC., Defendants.
Maeve E. Cannon argued the cause for appellant (Stevens & Lee, P.C., attorneys; Ms. Cannon and Patrick D. Kennedy, of counsel and on the briefs; Wade D. Koenecke, on the briefs). Rosalba L. Comas, First Deputy County Counsel, argued the cause for respondent County of Union (Robert E. Barry, Union County Counsel, attorney; Ms. Comas, on the brief). Richard D. Trenk argued the cause for respondents The DRS Group, Tracy A. Markovic, and Leonard Roglieri (Trenk, DiPasquale, Della Fera & Sodono, P.C., attorneys; Mr. Trenk, of counsel and on the brief; Mark Y. Moon, on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION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. Before Judges Ostrer and Vernoia. On appeal from the Superior Court of New Jersey, Law Division, Union County, Docket No. L-2681-15. Maeve E. Cannon argued the cause for appellant (Stevens & Lee, P.C., attorneys; Ms. Cannon and Patrick D. Kennedy, of counsel and on the briefs; Wade D. Koenecke, on the briefs). Rosalba L. Comas, First Deputy County Counsel, argued the cause for respondent County of Union (Robert E. Barry, Union County Counsel, attorney; Ms. Comas, on the brief). Richard D. Trenk argued the cause for respondents The DRS Group, Tracy A. Markovic, and Leonard Roglieri (Trenk, DiPasquale, Della Fera & Sodono, P.C., attorneys; Mr. Trenk, of counsel and on the brief; Mark Y. Moon, on the brief). PER CURIAM
Plaintiff The DRS Group (DRS) filed a complaint challenging a Union County Board of Chosen Freeholders' (County) resolution awarding a public contract to defendant Foveonics Imaging Technologies, Inc. for the provision of document image scanning services. Plaintiff claimed the award violated N.J.S.A. 40A:11-24(a) because defendant's contract bid expired prior to the County's adoption of the resolution. The County asserted the contract award was proper because defendant consented to an extension of its bid pursuant to the County's request.
The Law Division judge held a plenary hearing, found there was insufficient credible evidence supporting the County's determination that defendant consented to an extension of its bid, concluded the contract award was therefore arbitrary, capricious, and unreasonable, and entered an order voiding the resolution awarding the contract to defendant. Because we are satisfied the court applied the correct legal standard and its findings are supported by substantial credible evidence in the record, we affirm.
I.
The evidence before the Law Division showed that in April 2015, the County issued an invitation to bid for a document image scanning services contract. Interested parties were required to submit bids by April 16, 2015. In accordance with N.J.S.A. 40A:11-24(a), the invitation stated the County "shall award the contract or reject the contract within 60 days; except that the bids of any bidders who consent thereto may, at the request of the County be held for consideration for such longer periods as may be agreed." Absent any agreed upon extensions of time, the bids expired on June 15, 2015.
On April 16, 2015, the County received four bids. Defendant's bid of $149,602.50 was the lowest. Plaintiff's bid was second lowest at $234,225. County Business Systems, Inc. and Filebank, Inc. also submitted bids.
Plaintiff protested defendant's bid and, in response, the County conducted a due diligence investigation, requesting additional documents and information from plaintiff and defendant, and conducting site inspections of their respective facilities. At some point, however, the County recognized its investigation would not be completed by June 15, 2015, the date plaintiff's and defendant's bids expired.
On June 4, 2015, the County conducted a site visit at defendant's offices. Robert Rising, defendant's vice-president, testified that the County requested an extension of defendant's bid during the site visit. Gregory DeTommaso, defendant's vice president of sales, testified that the County's representatives told him and Rising a sixty-day extension request could be expected.
Deposition testimony of Michael Yuska, the County's qualified purchasing agent, was read into the record during the plenary hearing. He testified that whenever the County needed an extension of bids, county counsel would send the bidders a written form requesting the extension about five days before the initial bid deadline. Yuska did not recall a verbal request for a sixty-day extension being made to defendant's representatives during the June 4, 2015 site visit.
Defendant's owner, Michael DeTommaso, was not present during the site visit. He testified that on June 10, 2015, he called defendant's counsel, who was on vacation, and directed that he "please send in anything that would grant" the County's bid extension request. Defendant's counsel testified that he spoke with Michael DeTommaso on either June 9 or 10, 2015, and DeTommaso said the County requested a sixty-day extension of defendant's bid during the June 4, 2015 site visit. Defendant's counsel said Michael DeTommaso insisted that he send correspondence to the County granting the extension.
On June 11, 2015, the Union County Counsel's Office, on behalf of the County, sent letters by email to plaintiff and to Michael DeTommaso for defendant "request[ing] an extension of [their respective] bid[s] for a period of sixty (60) days . . . [to] August 16, 2015." The notice included a form, which permitted the parties to indicate whether the request was granted or denied. The letter requested that the form be completed and returned "as soon as possible." Plaintiff returned the form on June 12, 2015, stating it consented to the requested extension.
On June 12, 2015, defendant's counsel was still on vacation. His office sent a June 12, 2015 letter, which counsel dictated to his secretary, to county counsel. In pertinent part the letter stated the sixty-day period to award the contract had expired, there was no request made for an extension of the bids, and the County must award the contract to defendant.
Later on June 12, 2015, defendant's counsel's secretary sent an email, which counsel had dictated, to county counsel. The email stated it "shall serve to correct the letter" sent earlier that day and that the correct date for the expiration of the bids was June 16, 2015. The email also stated that "we have granted the extension however have not heard anything from the County as to the extension."
Although not pertinent to the disposition of the pending appeal, this was in error. Defendant's bid otherwise expired on June 15, 2015.
Defendant's counsel testified he could not recall if the language in the email stating "we have granted the extension" referred to the County's June 11, 2015 letter requesting the extension or the verbal request for an extension Michael DeTommaso told him on June 10, 2015, had been made during the June 4, 2015 site visit. Defendant's counsel testified he could not recall when his office received the County's June 11, 2015 letter request for the extension.
There was, however, no evidence showing defendant's counsel or his office received the County's June 11, 2015 extension request prior to his June 12, 2015 email. The extension request was addressed to Michael DeTommaso and he testified he believed he first saw it on June 19, 2015. There was no evidence DeTommaso discussed the extension request with, or forwarded it to, defendant's counsel, who was copied on the County's email. In a letter dated June 18, 2015, to county counsel, defendant's counsel stated that his office received the extension request on June 17, 2015.
Thus, the evidence established defendant's counsel's June 12, 2015 email could not have been, and was not, sent in response to the County's June 11, 2015 extension request. Nevertheless, the County accepted defendant's counsel's June 12, 2015 email as defendant's consent to the requested sixty-day extension of defendant's bid.
The County continued its due diligence investigation over the weeks following its receipt of the email. On June 16, 2015, defendant's counsel sent a letter to County Counsel suggesting DRS should be disqualified as a bidder because of an alleged conflict of interest, and threatening to file suit to compel an award of the contract to defendant.
On June 18, 2015, defendant's counsel sent correspondence to county counsel referencing for the first time the June 11, 2015 bid extension request, and expressly rejecting the request on defendant's behalf. Defendant's counsel stated:
I have now received a copy of a request to extend the [b]id dated June 11, 2015[,] received in my office on the 17th . . . You
state in the June 11[] [email] to my client, Mr. DeTommaso, "we anticipate by that date the County will have resolved the matter[."] Before my client will agree to an extension, I must first have a response to my letters (copies attached) and secondly, what is it that the County is trying to resolve? I'm in the dark. I need to know what is transpiring and why is the [b]id not being awarded now that the [sixty] days has passed without any extension . . . Therefore, we will not agree to an extension until such time as your office has complied with my requests for information and moreover, explain why the County needs more time to "resolve the matter[."]
On June 19, 2015, Michael DeTommaso completed and sent the form that was annexed to county counsel's June 11, 2015 bid extension request. The form stated defendant consented to the requested extension.
The County subsequently completed its due diligence investigation and on July 10, 2015, informed defendant's counsel it was satisfied with defendant's bid and intended to award defendant the contract. On July 16, 2015, the Board adopted a resolution awarding the contract to defendant as the lowest responsible bidder.
Plaintiff filed a complaint and order to show cause in the Law Division challenging the contract award. Plaintiff argued the award was invalid because defendant did not consent to the extension of its bid prior to the June 15, 2015 expiration date. The Law Division judge entered the order to show cause, temporarily enjoined the award of the contract to defendant, and scheduled the matter for a hearing.
During the plenary hearing the County entered into a stipulation that it accepted defendant's counsel's June 12, 2015 email as defendant's consent to the County's extension request. The County, however, did not present any evidence explaining the basis for its conclusion defendant's counsel's email constituted acceptance of the extension request.
Following the hearing, the judge issued a written opinion. The judge explained the issue presented was "whether the County acted in an arbitrary, capricious, or unreasonable manner when it determined that [defendant] provided timely consent to extend the bidding period for a specific period of time." The judge considered the evidence presented during the plenary hearing, made credibility determinations and findings of fact, and determined there was "overwhelming evidence" defendant failed to consent to an extension of its bid for a specified period of time prior to the June 15, 2015 expiration date as required under N.J.S.A. 40A:11-24(a).
The judge first determined there was insufficient credible evidence the County made a verbal request for a sixty-day extension during the June 4, 2015 site visit. The judge relied on Yuska's testimony that he did not recall a request being made and that the typical procedure for obtaining an extension was a request would be made by county counsel. The judge also noted the absence of any reference to the purported verbal request in any of the correspondence between county counsel and defendant's representatives.
The judge rejected defendant's counsel's June 12, 2015 email as a "definitive expression of consent" because it used the term "granted," which the judge found "evidence[d] prior consent," and "there [was] no evidence to support any prior consent by [defendant] to the June 11[] request." The judge relied on defendant's counsel's correspondence following the June 15, 2015 deadline as additional evidence the June 12, 2015 email was not intended as consent to a sixty-day extension. The judge also concluded that even if the email was intended to provide consent, it was insufficient because it did not provide "express consent for any specific period of time as required by N.J.S.A. 40A:11-24(a)."
The judge determined the County acted in an arbitrary, capricious, and unreasonable manner by awarding the contract to defendant because there was insufficient credible evidence supporting the County's determination that defendant provided timely consent to a sixty-day extension of its bid. The judge issued an order voiding the County's resolution authorizing the contract award. This appeal followed.
Defendant filed a motion for a stay of the court's order and for acceleration of this appeal. We denied the motion for the stay and granted the motion for acceleration.
II.
Plaintiff's challenge to the contract award was founded upon the sole contention that defendant failed to consent to a sixty-day extension of its bid prior to June 15, 2015, the date defendant's bid otherwise expired. The parties agree defendant must have consented to the extension of its bid prior to June 15, 2015, to have permitted the County's award of the contract to defendant under N.J.S.A. 40A:11-24(a). See Burroughs v. Bd. of Chosen Freeholders of the Cty. of Camden, 181 N.J. Super. 492, 501 (Law Div. 1981) (holding N.J.S.A. 40A:11-24(a) requires that consent for an extension of bids must be "requested and obtained . . . prior to the expiration of the 60-day period").
On appeal, defendant argues the judge failed to apply the correct legal standard in his review of the County's decision awarding the contract. Defendant claims the judge should have deferred to the County's finding that defendant consented to the extension request, erred by making independent findings of fact and credibility determinations and deciding the issue on an expanded record, and erroneously substituted his judgment for that of the County. The question of whether the Law Division applied the correct standard of review is a question of law and thus this court's review is plenary. ERG Container Servs., Inc. v. Bd. of Chosen Freeholders, 352 N.J. Super. 166, 173 (App. Div.) (citing Manalapan Realty L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995)), certif. denied, 174 N.J. 546 (2002).
The applicable standard for a court's review of a decision to award a public contract is well established. A governmental entity's decision to award a public contract is "reviewed under the ordinary standard governing judicial review of administrative agency final actions." Barrick v. State, 218 N.J. 247, 259 (2014); see also In re Online Games Contract, 279 N.J. Super. 566, 590 (App. Div. 1995). The reviewing court will not reverse the entity's decision unless it is demonstrated to be "arbitrary, capricious, or unreasonable, or [] not supported by substantial credible evidence in the record as a whole." Barrick, supra, 218 N.J. at 259 (quoting In re Stallworth, 208 N.J. 182, 194 (2011)) (alteration in original); Palamar Constr., Inc. v. Pennsauken, 196 N.J. Super. 241, 250 (App. Div. 1983). The standard is applicable regardless of whether the decision "followed a quasi-adjudicative hearing" or "an assessment of the relevant submissions and standards" by the public entity. Barrick, supra, 218 N.J. at 259.
Application of the standard does not permit the reviewing court to substitute its judgment for that of the public entity. Id. at 260; see also Palamar, supra, 196 N.J. Super. at 250 (holding in challenge to a municipality's award of a public contract that "[i]t is not the function of the reviewing court to substitute its judgment for that of the municipality's governing body"). In Barrick, the Court explained that a court's
inquiry is limited to: (1) whether the [public entity's] action violated the legislative policies expressed or implied in [the Local Public Contract Law]; (2) whether the evidence in the record substantially supports the findings on which the [public entity's] actions were premised; and (3) whether in applying the legislative policies to the facts, the [public entity] clearly erred in reaching a conclusion that could not reasonably have been made on a showing of the relevant factors.
[Barrick, supra, 218 N.J. at 260 (quoting In re Carter, 191 N.J. 474, 482 (2007)).]
Application of the arbitrary, capricious, and unreasonable standard required the judge to sift through the record to determine if there was sufficient evidence that substantially supported the County's determination that defendant consented to a sixty-day extension of its bid prior to June 15, 2015. See In re Proposed Quest Acad. Charter Sch. of Montclair Founders Grp., 216 N.J. 370, 386-87 (2013). Here, the record was developed during the Law Division proceeding without objection from the parties.
Defendant argues the judge erred by not basing his decision solely on the record before the County and by considering the evidence presented during the plenary hearing. Although defendant and the County argued to the court there were no fact issues requiring resolution at a plenary hearing, they did not contend the judge's determination must be based solely on the record before the County. We therefore decline to consider defendant's argument because it was not "properly presented to the trial court" and does not "go to the jurisdiction of the trial court or concern matters of great public interest." State v. Robinson, 200 N.J. 1, 20 (2009) (quoting Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 234 (1973)).
In addition, there is no evidence the County had a record before it supporting its determination defendant consented to the bid extension. The County did not conduct a hearing on the issue and neither defendant nor the County requested a remand for the development of a record supporting the County's determination that defendant timely consented to the extension request. Defendant and the County did not produce any evidence showing that the record considered by the County supported its determination. Instead, they relied on the stipulation that the County accepted defendant's counsel's email as consent to the request extension and the evidence developed during the court proceeding.
We reject defendant's and the County's reliance upon the representations of county counsel during oral argument before the Law Division and on this appeal to support or explain the County's determination. Although we have no reason to question county counsel's veracity or representations, they do not constitute admissible evidence upon which the Law Division judge could, or we can, properly rely. State v. Land, 435 N.J. Super. 249, 271 (App. Div. 2014) (explaining that "what lawyers say is not evidence"). --------
We are convinced the judge correctly determined a plenary hearing was required because there was a fact issue as to whether there was substantial credible evidence supporting the County's determination defendant's counsel's email constituted consent to the County's extension request. The development of the evidentiary record was required to permit the court's review of the County's determination under the arbitrary, capricious, or unreasonable standard.
Following a plenary hearing, factual findings by a Law Division judge are "binding on appeal when supported by adequate, substantial and credible evidence." Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974); see also Griepenburg v. Twp. of Ocean, 220 N.J. 239, 254 (2015) ("[W]e give deference to the trial court that heard the witnesses, sifted the competing evidence, and made reasoned conclusions"). We review de novo the "trial court's interpretation of the law and the legal consequences that flow from established facts." Manalapan, supra, 140 N.J. at 378.
Based on our review of the record, we are satisfied the judge correctly applied the legal standard. The judge made his findings based on the evidence presented, and determined only whether there was substantial credible evidence supporting the County's determination the June 12, 2015 email constituted consent to the extension request. In doing so, the court did not substitute its judgment for that of the County, but instead properly reviewed the record, found there was insufficient evidence supporting the County's conclusion defendant timely consented to a sixty-day extension of its bid, and determined the County's conclusion was arbitrary, capricious, and unreasonable. Quest Acad., supra, 216 N.J. at 386-87.
We are also satisfied the record before the court amply supports its findings of fact and conclusions of law. The County's determination defendant consented to its request for a sixty-day bid extension was based only upon its receipt of defendant's counsel's June 12, 2012 email. The parties stipulated that county counsel accepted the email as consent to an extension of defendant's bid.
The evidence showed, however, that the email was not sent in response to the County's June 11, 2015 letter, nor could it have been. Defendant's counsel and Michael DeTommaso did not become aware of the letter until June 17, 2015, two days after defendant's bid otherwise expired. Thus, the record supports the judge's determination there was insufficient evidence supporting any reasoned conclusion defendant provided consent to the sixty-day extension in response to the County's June 11, 2015 letter request.
The email's language also supported the court's determination. The email ambiguously stated that defendant had "granted" the extension but then noted defendant had "not heard anything from the County as to the extension." The evidence supports the court's finding that a verbal request was not made during the June 4, 2012 site visit. The County's purchasing agent testified he had no recollection of such a request and that the purported verbal request was inconsistent with the County's typical method of requesting extensions. In addition, Gregory DeTommaso, who was present for the site visit, did not testify an extension request had been made. He testified he was told during the visit that if the contract was not awarded within a week, an extension request could be expected.
Defendant's counsel's statements following June 15, 2015, also undermine any logical conclusion that his June 11, 2015 email constituted defendant's consent to an extension of its bid. On June 18, 2015, defendant's counsel wrote that he received the County's letter request for an extension on June 17, 2015, and stated that the sixty-day period "passed without an extension," and defendant would only agree to an extension if the County complied with defendant's requests for information and supplied an explanation why the County "need[ed] more time."
Defendant's counsel authored the June 12, 2015 email upon which the County solely relied to support its determination defendant consented to the requested extension. Defendant's counsel's June 18, 2015 letter, however, is wholly inconsistent with the County's finding that the email constituted consent to a sixty-day extension of defendant's bid or confirmation defendant previously consented to a request.
Accordingly, the record supports the judge's determination there was insufficient evidence supporting the County's conclusion defendant provided timely consent to a sixty-day extension of its bid prior to June 15, 2015. "A determination predicated on unsupported findings is the essence of arbitrary and capricious action." DeFlaco Instant Towing, Inc. v. Borough of New Providence, 380 N.J. Super. 152, 158 (App. Div. 2005) (quoting Bryant v. City of Atlantic City, 309 N.J. Super. 596, 610 (App. Div. 1998)) (alteration omitted). Lacking substantial credible evidence supporting its determination that defendant timely consented to the extension, the County's award of the contract to defendant was arbitrary, capricious, and unreasonable. Ibid.; see also Constantino v. N.J. Merit Sys. Bd., 313 N.J. Super. 212, 218 (App. Div.) (finding decision arbitrary, capricious, and unreasonable where findings were unsupported by the record, based on "total disregard" of facts, and against the "overwhelming weight" of the testimony), certif. denied, 157 N.J. 544 (1998).
Affirmed. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION