Preview:

a2893-08.opn.html
Original Wordprocessor Version
(NOTE: The status of this decision is Unpublished.) Original Wordprocessor Version
This case can also be found at *CITE_PENDING*.
(NOTE: The status of this decision is Unpublished.)
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-2893-08T32893-08T3
CIOFFI'S TOWING SERVICE, INC.,
Plaintiff-Appellant,
v.
BOROUGH OF COLLINGSWOOD and HELMRICH
TRANSPORTATION SYSTEMS, INC.,
Defendants-Respondents.
Argued October 15, 2009 - Decided
Before Judges Axelrad and Fisher.
On appeal from the Superior Court of New Jersey, Law Division, Camden County,
Docket No. L-3706-08.
William J. Pollinger argued the cause for appellant (William J. Pollinger, P.A., attorneys;
Mr. Pollinger, on the briefs).
Taironda E. Phoenix argued the cause for respondent Borough of Collingswood (Brown
& Connery, attorneys; Mr. Joseph M. Nardi, III and Ms. Phoenix, on the brief).
Daniel A. Bernardin argued the cause for respondent Helmrich Transportation Systems,
Inc.
PER CURIAM
This appeal involves a dispute between two competing bidders for a municipal contract to provide towing services.
The successful bidder's proposal indicated it was in possession of two wreckers despite the specifications' mandate
that three wreckers were required. We conclude the municipality could not waive this material nonconformity and,
therefore, reverse the dismissal of the complaint and remand for judgment in favor of plaintiff, the next lowest
file:///C|/Users/Peter/Desktop/Opinions/a2893-08.opn.html[4/20/2013 3:38:59 PM]




a2893-08.opn.html
bidder.
The critical facts in this case are neither complicated nor in dispute. Plaintiff Cioffi's Towing Service, Inc., and
defendant Helmrich Transportation Systems, Inc., are operators of towing businesses. In 2008, defendant Borough
of Collingswood (the municipality) sought bids on a three-year contract to provide towing services. The request for
bids contained a list of "minimum standards" that all bidders "shall be required" to meet. Among those minimum
standards was the mandate that the operator "must maintain" the following equipment:
-- "One heavy duty wrecker - over 10 ton capacity";
-- "One medium duty wrecker - 10 ton capacity";
-- "One light duty wrecker - 4 ton capacity"; and
-- "One flat bed truck"
The request for bids also indicated that the municipality reserved "the right to reject any or all proposals and to
waive any immaterial informalities as may be permitted by law."
The municipality received three bids. The lowest bidder was disqualified for reasons not relevant here. Helmrich was
the next lowest bidder. Helmrich's list of equipment, however, revealed it had only two wreckers, not the three
wreckers required by the bid specifications. Notwithstanding this discrepancy, the municipality awarded the
contract to Helmrich. Upon learning this, plaintiff immediately requested that the municipality rescind the award
because Helmrich did not indicate it had the specified equipment, and did not supply a certified land survey and a
certificate of good standing, as also required by the bid specifications. The municipality's administrator deemed the
lack of a certified land survey and certificate of good standing to be immaterial and then sought out the chief of
police's view regarding the adequacy of Helmrich's equipment. The chief of police concluded that "[a]lthough
[Helmrich's] equipment list does not reference a medium duty towing vehicle, the equipment listed is sufficient to
serve the [municipality's] needs for towing services based upon my familiarity with the frequency of calls for such
services." As a result, the municipality rejected plaintiff's request that the contract with Helmrich be rescinded.
Plaintiff immediately filed this action, seeking a judgment invalidating the municipality's contract with Helmrich
and awarding the contract to plaintiff. The matter was scheduled for a plenary hearing on the return date of an
order to show cause, but the parties agreed upon a submission of the undisputed facts and no live testimony was
presented. A week after hearing the argument of counsel, the trial judge rendered an oral decision in which she
held that the discrepancies between the bid specifications and Helmrich's proposal were immaterial and that the
municipality's waiver of those discrepancies did not adversely affect the goals of competitive bidding because there
file:///C|/Users/Peter/Desktop/Opinions/a2893-08.opn.html[4/20/2013 3:38:59 PM]




a2893-08.opn.html
was no proof of "fraud, bad faith or collusion surrounding the bid." Judgment was entered dismissing the
complaint.
Because there is no dispute that Helmrich's bid failed to conform to the municipality's stated equipment
requirement, we focus on whether the "specific noncompliance constitutes a substantial and hence non-waivable
irregularity." Twp. of River Vale v. R.J. Longo Constr. Co., 127 N.J. Super. 207, 216 (Law Div. 1974). The Supreme Court
has determined that the test of materiality requires a two-prong analysis:
first, whether the effect of a waiver would be to deprive the municipality of its
assurance that the contract will be entered into, performed and guaranteed according
to its specified requirements, and second, whether it is of such a nature that its waiver
would adversely affect competitive bidding by placing a bidder in a position of
advantage over other bidders or by otherwise undermining the necessary common
standard of competition.
[Meadowbrook Carting Co. v. Borough of Island Heights, 138 N.J. 307, 315 (1994)
(internal quotation marks and citations omitted).]
Materiality is a question of law. Twp. of Hanover v. Int'l Fid. Ins. Co., 122 N.J. Super. 544, 548 (App. Div.), certif.
denied, 64 N.J. 150 (1973). In determining whether a condition is material or inconsequential, our Supreme Court
has distinguished between requirements that lie at the heart of the undertaking and aspects of the bid that may be
waived in "a sensible or practical way." Terminal Constr. Corp. v. Atlantic County Sewerage Auth., 67 N.J. 403, 411
(1975). For example, a bidder's submission of security for its performance is material, but the form of that security
may "vary slightly" from that expressly requested. Ibid. Adhering to this approach, we conclude that Helmrich's
departure from the three-wrecker requirement was not a mere irregularity but a material deficiency. Indeed, the
Supreme Court has held that "conditions requiring detailed description of materials . . . [have] been found to be so
material as not to be the subject of waiver." Ibid. (citing Case v. Trenton, 76 N.J.L. 696 (E. & A. 1909)). See also In re
On-Line Games Prod. & Operation Servs. Contract, 279 N.J. Super. 566, 603 (App. Div. 1995) (holding that a bid to
supply lottery machines was materially defective because the bidder failed to specify, as required, that the
machines contained an electronic advertising screen that could be seen from fifteen feet away).
The materiality of this requirement is patently obvious. An operator's possession of the equipment deemed
necessary to fulfill the municipality's towing requirements is essential to the undertaking. In inviting bids, the
municipality expressly stated that the bidder would be required to have three wreckers, and made that known in
mandatory terms, directing that the operator's bid "shall" meet the minimum requirement of three wreckers of the
various sizes specified. This mandatory requirement could not be waived upon the municipality's later disavowal of
its own specification. To invoke what the Court said in L. Pucillo & Sons, Inc. v. Mayor of New Milford, 73 N.J. 349,
356 (1977), we cannot "transform the mandatory requirement in [the] specifications into a polite request."
file:///C|/Users/Peter/Desktop/Opinions/a2893-08.opn.html[4/20/2013 3:38:59 PM]




a2893-08.opn.html
Consideration of the second prong leads to the same conclusion. The municipality's waiver of the three-wrecker
requirement provided Helmrich with an advantage in the bidding process that strikes at the very heart of the Local
Public Contracts Law, N.J.S.A. 40A:11-1 to -51, which was intended to encourage competition and to guard against
"favoritism, improvidence, extravagance and corruption." L. Pucillo & Sons, Inc., supra, 73 N.J. at 356. See also
George Harms Constr. Co. v. N.J. Tpk. Auth., 137 N.J. 8, 36 (1994); Van Note-Harvey Assocs., P.C. v. N.J. Sch. Dev.
Auth., 407 N.J. Super. 643, 648 (App. Div. 2009). In her decision, the judge found this prong did not apply because
plaintiff failed to provide evidence of "fraud, bad faith or collusion surrounding the bid." That is not the test. Plaintiff
was not required to show actual fraud or corruption but only that the municipality's waiver of the three-wrecker
requirement was "capable of becoming a vehicle for corruption or favoritism, or capable of encouraging
improvidence or extravagance, or likely to affect the amount of any bid or to influence any potential bidder to
refrain from bidding, or which are capable of affecting the ability of the contracting unit to make bid comparisons."
L. Pucillo & Sons, Inc., supra, 73 N.J. at 357 (emphasis added).
There can be no doubt that the three-wrecker requirement could well have discouraged others, who did not
possess that necessary equipment, from bidding, or could have influenced the amount of the bids submitted by
those that did. By permitting Helmrich to skirt the bidding specifications, the municipality created a bidding
procedure that was capable of becoming a vehicle for corruption or favoritism that warrants our intervention.
Meadowbrook Carting, supra, 138 N.J. at 324-25 (holding that by awarding the contract "to one who fails to submit
bids on all terms necessarily creates an inequality in the bidding and an opportunity for favoritism"). We, thus,
conclude that Helmrich's failure to meet the three-wrecker requirement constituted a material discrepancy that the
municipality could not waive.
With Helmrich's disqualification, plaintiff assumes the position of lowest qualified bidder. As a result, plaintiff is
entitled to what it would have received had the municipality properly recognized it was powerless to waive the
nonconformity in Helmrich's bid. Neither Helmrich nor the municipality has argued that plaintiff is not entitled to
this remedy or that the contract should be rebid.
Reversed and remanded for the entry of an order which invalidates Helmrich's contract and which directs the
municipality to enter into a three-year contract with plaintiff on the terms contained in plaintiff's bid. We do not
retain jurisdiction.
Plaintiff indicated at the plenary hearing that it would no longer argue that Helmrich's failure to provide a land
survey and a certificate of good standing constituted nonwaivable deficiencies. Although plaintiff's brief reprises
file:///C|/Users/Peter/Desktop/Opinions/a2893-08.opn.html[4/20/2013 3:38:59 PM]




a2893-08.opn.html
these arguments, in light of our disposition of the appeal we need not determine whether Helmrich's failures to
provide a land survey and a certificate of good standing were material and nonwaivable or whether those
arguments were abandoned and, therefore, no longer cognizable.
The municipality contends that we may only intervene if its actions in waiving the defects in Helmrich's proposal
constituted an abuse of discretion. That argument is not accurate. Although a public entity has the discretion to
waive immaterial defects, it has no discretion to waive material defects. Star of the Sea Concrete Corp. v. Lucas Bros.,
Inc., 370 N.J. Super. 60, 72 (App. Div. 2004); Serenity Contracting Group, Inc. v. Borough of Fort Lee, 306 N.J. Super.
151, 156 (App. Div. 1997), certif. denied, 153 N.J. 214 (1998).
(continued)
(continued)
9
A-2893-08T3
October 26, 2009
0x01 graphic
This archive is a service of Rutgers School of Law - Camden.
This archive is a service of Rutgers School of Law - Camden.
file:///C|/Users/Peter/Desktop/Opinions/a2893-08.opn.html[4/20/2013 3:38:59 PM]

Download a2893-08.opn.pdf

New Jersey Law