Hanover Sand & Gravel, Inc. v. New York State Thruway Authority

• Decision Date: 16 November 1978
• Citation: 410 N.Y.S.2d 381,65 A.D.2d 860
• Court: New York Supreme Court — Appellate Division
• Parties: In the Matter of HANOVER SAND & GRAVEL, INC., Respondent, v. NEW YORK STATE THRUWAY AUTHORITY, Appellant.

Page 381

410 N.Y.S.2d 381

65 A.D.2d 860

In the Matter of HANOVER SAND & GRAVEL, INC., Respondent, v. NEW YORK STATE THRUWAY AUTHORITY, Appellant.

Supreme Court, Appellate Division, Third Department.

Nov. 16, 1978.

Louis J. Lefkowitz, Atty. Gen. (Richard J. Dorsey, Albany, of counsel), for appellant.

Duke, Holzman, Yaeger & Radlin, Buffalo (Barry L. Radlin, Buffalo, of counsel), for respondent.

Before SWEENEY, P. J., and KANE, STALEY, HERLIHY and MIKOLL, JJ.

MEMORANDUM DECISION.

Appeal from a judgment of the Supreme Court, entered September 19, 1977 in Albany County, upon a decision of the court at a Trial Term in a proceeding pursuant to article 78 of the CPLR which adjudged that certain contracts should have been awarded to petitioner and granted petitioner's application for additional disbursements and an additional allowance.

Petitioner was the low bidder to supply winter road abrasives at the Buffalo, Silver Creek and Westfield delivery points along the New York State Thruway for the period of October 1, 1976 to September 30, 1977. Samples of petitioner's product were taken on or about September 29, 1976, but no further information concerning the status of its bid became known until October 27, 1976 when petitioner's president observed sand being transported to the nearby Silver Creek area by a competitor. Upon inquiry at Thruway headquarters, petitioner was advised that its product was not acceptable because the test sample had revealed an excessive moisture content. The results of the Authority's tests were contrary to those submitted by an independent laboratory at petitioner's request. Nevertheless, owing to this excessive moisture content and reports of poor past performance, petitioner's bids were rejected. At the conclusion of this article 78 proceeding challenging such action, Trial Term found that the sampling technique used by the Authority was "unacceptable, non-uniform, unfair and arbitrary." It also disagreed with the Authority's related assertion that poor past performance justified its refusal to accept petitioner's bids, finding an insufficiency of evidence to substantiate that position.

Notwithstanding these adverse factual determinations, the Authority steadfastly maintains that, as an independent and autonomous public corporation, it was not subject to the provisions of section 174 of the State Finance Law requiring an award of contracts for the purchase of materials to the lowest responsible bidder. We agree. The statute is explicitly limited in its application to "a state department or institution" (Matter of Plumbing, Heating, Piping & Air Conditioning Contrs. Assn. v. New York State Thruway Auth., 5 N.Y.2d 420, 185 N.Y.S.2d 534, 158 N.E.2d 238. See also John Grace & Co. v. State Univ. Constr. Fund, 44 N.Y.2d 84, 404 N.Y.S.2d 316, 375 N.E.2d 377). Moreover, since the disputed contracts were not for "construction, reconstruction or improvement," they were not governed by an analogous mandate contained in section 359 of the Public Authorities Law. Consequently, the instant matter fell within the Authority's otherwise unrestricted discretion "to make contracts, and to execute all instruments necessary or convenient" to carry out its purposes (Public Authorities Law, § 354, subd. 7). So long as the exercise of that discretion possessed a rational basis it is beyond judicial review and, in our opinion, the fact that the bid proposals and general specifications referred to a policy of accepting or rejecting bids "in the best interest of the Authority" and making awards "to the lowest responsible bidder, as will best promote the Authority's interest" did not place any special obligation or duty on it. The record plainly discloses that the testing efforts were undertaken in good faith to promote the Authority's interest, as well as that of the general public. The procedures may have been flawed and the results less than perfect, but that alone does not deprive the Authority's action of a rational foundation; it merely establishes that a more careful analysis might have produced a better final decision. In our view the circumstances presented did not merit a finding that the Authority had acted without the proper boundaries of its discretion and, therefore, the petition should have been dismissed. We do not reach or pass on any of the Authority's remaining arguments.

Judgment reversed, on the law and the facts, and petition dismissed, without costs.

SWEENEY, J. P., and KANE and STALEY, JJ., concur.

MIKOLL, J., dissents and votes to modify in a memorandum.

HERLIHY, J., dissents and concurs in the result reached by the dissent.

MIKOLL, Justice (dissenting).

I respectfully dissent. The petitioner was the lowest bidder for delivery of road abrasives for Buffalo and Westfield on an f. o. b. plant and delivery...