Truk Away of Rhode Island, Inc. v. Macera Bros. of Cranston, Inc.

• Decision Date: 22 June 1994
• Docket Number: No. 92-634-A,92-634-A
• Parties: TRUK AWAY OF RHODE ISLAND, INC., et al. v. MACERA BROS. OF CRANSTON, INC., et al.
• Court: Rhode Island Supreme Court

Page 811

643 A.2d 811

TRUK AWAY OF RHODE ISLAND, INC., et al. v. MACERA BROS. OF CRANSTON, INC., et al.

No. 92-634-A.

Supreme Court of Rhode Island.

June 22, 1994.

Charles J. McGovern, Philip Noel, Robin Main, McGovern, Noel & Benik, Providence, for plaintiff.

Robert J. Sgroi, Warwick, Mark A. Pogue, Edwards & Angell, Providence, Joseph Rameaka, Gelfuso & Lachut, Cranston, for defendant.

OPINION

WEISBERGER, Acting Chief Justice.

This case comes before us on an appeal by Macera Bros. of Cranston, Inc. (Macera), from a judgment of the Superior Court that enjoined the awarding of a contract to Macera for the removal of trash (sanitation contract) from the city of Warwick. Macera was awarded the contract by the city council as the lowest responsible bidder after consideration by various agencies of the city that presented varying recommendations to the city council. The civil action seeking injunctive relief had been brought by Truk Away of Rhode Island, Inc. (Truk Away), an unsuccessful bidder, and by David J. Wilson, one of the owners of Truk Away and a resident of the city of Warwick, who joined in the action in his capacity as a taxpayer. The trial justice granted injunctive relief but did not order the awarding of the contract to Truk Away. The judgment required that all bids be rejected and that the contract be readvertised. Following the readvertising of the contract, both Macera and Truk Away submitted bids, but Truk Away was the successful bidder. We reverse the judgment. The facts of the case insofar as pertinent to this appeal are as follows. Most of these facts are taken from the decision of the trial justice.

In March of 1992 the city of Warwick invited sanitation contractors to bid on a citywide sanitation contract. This procedure was initiated as part of an effort to privatize the removal of trash from the city. The bid opening date was set for April 17, 1992, and a mandatory prebid conference was set for April 1, 1992. After the prebid conference was held, an addendum to the specifications was issued on April 3, 1992. After the bid openings on April 17, 1992, it was found that six prospective vendors had filed bids. Only the bids of Macera and Truk Away are pertinent to this appeal. Macera submitted a primary bid and one alternate bid. Truk Away submitted a primary bid and four alternate bids. Only the alternate bids are in dispute.

The trial justice specifically found that Truk Away's first alternate bid was not the lowest responsible bid because it failed to respond to the bid specifications in several respects. The specifications called for weekly rubbish and recycling collections, and the Truk Away bid responded in part by proposing monthly recycling collections. Furthermore the Truk Away bid contained proposals in violation of city ordinances in that its proposal for the placing of rubbish containers and the size of rubbish containers (95 gallons as opposed to 32 gallon containers) were in violation of specific ordinances (§ 8-16 and § 8-17 of the Warwick Code). Moreover, Truk Away had included a cost-of-living adjustment factor (COLA) for the second through fifth year of the contract. This inclusion made the bid figure uncertain as opposed to a fixed figure. In summary the trial justice found that Truk Away's first alternate bid was not the lowest responsible bid because it failed to respond to the bid specifications. Similarly, the trial justice found Truk Away's second alternate bid lacking in that it violated § 8-16 and § 8-17 of the Warwick Code and contained a COLA for the second through fifth years of the contract. The trial justice also found that Truk Away's two other alternate bids "clearly" did not constitute the lowest responsible bid.

In respect to the Macera alternate bid, the trial justice found "that this bid came the closest to being the lowest responsible bid." He went on to state:

"However there are several inconsistencies in this bid that has [sic ] raised a serious doubt in the Court's mind whether this bid is, in fact, acceptable. First we have the technical violation of a 6 a.m. starting time when the specifications and the statute clearly say 7 a.m. as a starting time. At first blush this would appear to be an immaterial variance, especially since the City ordinances grant some authority to the Director of Public Works to permit an earlier starting time.

"Next we have the more serious problem, that is the inexplicable difference between a figure in the bid and contract form of $7,891,680 and the total program cost of $8,345,115. This Court heard no testimony from the Defendant, Macera Brothers, to explain this discrepancy in their bid, nor did it hear any explanation from the Chairman of the Finance Committee as to why it recommended the higher figure to the City Council as the lowest responsible bid. I should say parenthetically that, quite frankly, if the City Council had awarded this bid on the basis of the figure that was contained in the bid form, $7,891,680, the result of my decision would have been different. The Macera alternate bid properly made an offer to purchase the existing equipment from the City for $285,000 as distinguished from Truk Away which made no firm offer for the equipment. Among other things, that is one of the bid specifications that was very, very unclear as to what a potential bid should have been. My recollection of the language is that the specifications suggested that the successful bidder would then negotiate with the City and reach a mutually acceptable agreement. That is not the way to put out a bid that would result in a firm figure."

The trial justice makes reference to a base bid of $7,891,680. The final bid recognized in the resolution awarding the contract was $8,345,115. It should be noted that the earlier bid did not include condominium pick up. The overall figure of $8,345,115 constituted the total program cost for sanitation, recycling, and condominium services as set forth in Macera's cost proposal. It appears that when these figures were analyzed, there was a discrepancy of $9,820 between the apparent cost of services and the amount awarded to Macera by the city. In all likelihood this discrepancy would have been eliminated by a postaward agreement, just as the starting time was changed from 6 a.m. to 7 a.m.

The trial justice was also critical of the Macera bid because it contained a provision requiring that the city would help the contractor in any way possible to "alleviate the situation if it could not, for any reason, be able to operate because of a strike." The testimony presented to the court suggested that the city did not intend to honor this provision in any event because it was selling its sanitation trucks to the successful bidder and, therefore, would be unable to be of assistance in the event of a strike. It should, however, be noted that the original contract had provided that an interruption of service because of a strike would not constitute a breach of the contract. A later addendum eliminated this provision.

It was for these reasons that the trial justice concluded that the Macera bid did not conform to the specifications and addenda issued by the city and, therefore, should not have been declared the lowest responsible bid.

The trial justice rejected allegations by Truk Away that it was improper for Councilman C. Kenneth Wild, Jr., to attempt to negotiate in his capacity as chairman of the Finance Committee in order to clarify certain portions of the bid, such as the 6 a.m. starting time, and held as a matter of law that there was no merit to such allegations.

The trial justice also seemed to be critical of a report made by the department of public works that favored Truk Away without indicating the failure of Truk Away to respond to the requirements of the specifications. He also stated that he could not understand (1) why the "strongly-worded" language of the city solicitor contained in his memorandum to finance director Christine N. Tague on June 26, 1992, recommending that all bids be rejected and rebid because of complicated formulas in determining comparable services and (2) why the request of the finance director to reject all bids for the same reason were totally ignored. The city solicitor's memorandum was introduced as plaintiffs' exhibit No. 24 and reads as follows:

"In response to your inquiry as to the potential litigation exposure pertaining to the privatization of sanitation services, it is my opinion that the City has real potential financial exposure surrounding these bids due to the complicated formulas in determining comparable service versus cost. Based upon the potential exposure, I would recommend that all bids be rejected and rebid. However, in the rebidding process, specifications should be more defined as to comparable service and associated cost."

The foregoing statement indicates the sensitivity of the city solicitor to the possibility of litigation arising out of possible misunderstanding of the specifications and the responses thereto by the two principal competitors. It is naturally appropriate for a city solicitor to seek to avoid litigation. It is not the obligation of the city council in the performance of its functions to accept the advice of the city solicitor without question or modification. We might suggest that the rejection of bids (as occurred in this case) would not necessarily have avoided litigation even at the point when the city solicitor's letter was written. The most effective time for the city solicitor to have raised questions about the specifications was prior to the time that the contract and specifications were issued to potential bidders.

INJUNCTIVE RELIEF

The trial justice recognized that standards to be followed by the judiciary were contained in Paul Goldman, Inc. v. Burns, 109 R.I. 236, 283 A.2d 673 (1971), and in the seminal case of Gilbane Building Co. v. Board of Trustees of State Colleges, 107 R.I. 295, 267 A.2d 396 (197...