GRASSO SERVICE CENTER, INC. v. Sepe

962 A.2d 1283, 2009 R.I. LEXIS 13, 2009 WL 89226
CourtSupreme Court of Rhode Island
DecidedJanuary 15, 2009
Docket2007-76-Appeal
StatusPublished
Cited by2 cases

This text of 962 A.2d 1283 (GRASSO SERVICE CENTER, INC. v. Sepe) is published on Counsel Stack Legal Research, covering Supreme Court of Rhode Island primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
GRASSO SERVICE CENTER, INC. v. Sepe, 962 A.2d 1283, 2009 R.I. LEXIS 13, 2009 WL 89226 (R.I. 2009).

Opinion

OPINION

Justice GOLDBERG,

for the Court.

This case came before the Supreme Court on November 3, 2008, on appeal by the plaintiffs, eight automobile-tow operators authorized to do business in the State of Rhode Island and the Rhode Island Public Towing Association, Inc., a Rhode Island corporation that represents the majority of tow operators in Rhode Island (collectively plaintiffs). The plaintiffs appeal from a Superior Court judgment denying their request for declaratory and injunctive relief and dismissing their complaint against the defendants, Alan Sepe (Sepe), in his capacity as acting director of the City of Providence Department of Public Property, the City of Providence Board of Contract and Supply (Board of Contract and Supply), Colonel Dean M. Esserman, in his capacity as chief of police of the City of Providence, and David N. Cicilline, in his capacity as mayor of the City of Providence (collectively defendants). A proposed modification to the police-instigated towing program in the City of Providence (city or Providence) constitutes the genesis of this dispute. For the reasons set forth in this opinion, we vacate the judgment of the Superior Court.

Facts and Travel

Based on its Home Rule Charter, Providence enacted an ordinance that vested the Providence Police Department with the authority to create a list of tow operators for police-instigated towing and storage of vehicles and to adopt pertinent regulations for the program. See Providence Code of Ordinances §§ 15-23 1 and 15-25. 2 In 2003, the Providence Police Department *1285 proposed reforms of its procedures for towing, storing, and disposing of illegally parked vehicles in the city, and, through the Board of Contract and Supply, it issued a Request for Proposals (2008 RFP). The 2008 RFP proposed dividing the city into four zones and assigning two tow operators to each zone. The tow operators would be selected after competitive bidding and for a period of three years, with the possibility of two one-year extensions; the selected tow operators would be the only two tow operators the city used in that zone. To be considered for the program, a tow operator was required to submit a bid proposal that included “a referral fee of no less than 20 [percent] per tow and 10 [percent] per storage,” although higher bids were anticipated.

The plaintiffs filed a complaint in the Superior Court challenging the 2008 RFP and seeking declaratory and injunctive relief. On July 7, 2005, the trial justice granted defendants’ motion for summary judgment, and plaintiffs appealed. However, Providence issued an amended RFP in June 2006 (2006 RFP), thus rendering the appeal moot. This Court dismissed that earlier appeal, but did so “without prejudice to * * * plaintiffs] raising a new challenge to the modified RFP and contracts.” Rhode Island Public Towing Association, Inc. v. Cicilline, No. 2005-273-A. (R.I., filed Nov. 17, 2006) (mem.).

The 2006 RFP was virtually identical to the 2003 RFP in that it proposed to divide the city into four zones with two tow operators designated as exclusive providers in each zone. The 2006 RFP required that each bidder be certified by the Public Utilities Commission (PUC) and submit a bid promising to remit a referral fee to the city of no less than 20 percent of each tow and 10 percent of the storage charges. As in the 2003 RFP, higher bids were anticipated. In response to the 2006 RFP, seventeen bids were submitted, and Sepe then recommended two tow operators for each of the four zones. The Board of Contract and Supply voted to accept Sepe’s recommendations.

On January 22, 2007, plaintiffs filed a complaint in the Superior Court seeking declaratory and injunctive relief. The plaintiffs alleged (1) that the 2006 RFP unlawfully infringed on the regulatory authority of the PUC, (2) that the referral fee constituted an illegal tax, (3) that the 2006 RFP was an “unlawful confiscatory taking and an unlawful denial and abridgment of the constitutional and statutory rights of [p]laintiffs and other unsuccessful bidders similarly situated,” and (4) that the process by which the city sought to implement the 2006 RFP was “arbitrary and capricious and a clear abuse of their discretion.” The plaintiffs also asked the Superior Court to enjoin the city from imple *1286 menting the 2006 RFP and to stay any implementation until the Superior Court made its ruling. The trial justice denied this request.

The parties agreed, pursuant to Rule 65(a)(2) of the Superior Court Rules of Civil Procedure, to consolidate the hearing on the prayer for a preliminary injunction with a trial on the merits. As their only witness, plaintiffs called Sepe, who was involved in formulating both the 2003 RFP and the 2006 RFP. He testified that the zones were established based on the yearly average number of tows in those areas and, according to the witness, the referral fees were imposed to offset the costs of administering the program. Significantly, Sepe offered no figures reflecting the actual administrative expenses and gave a generalized explanation that the program utilized the services of dispatchers, police officers, and clerks. Mr. Sepe also testified that to his knowledge contracts were awarded to those companies deemed qualified by the city that were the highest bidders in their respective zone.

On March 1, 2007, the trial justice issued a written decision denying all relief. He found that the PUC never has sought to regulate municipal tow lists and that the city’s administration of the towing program did not infringe on the PUC’s authority. The trial justice determined that the referral fee would not increase the rate charged to customers; he concluded that, under a plain reading of the statute, it was clear that “the [General Assembly’s] mandate concerning the rates charged and prohibition of rebates or remissions is in reference to the transaction between the tow company and the customer.” (Emphasis added.) The trial justice declared that because a tow operator did not have a constitutionally protected right to be included on a tow list, the 2006 RFP did not create a franchise. Additionally, the trial justice concluded that plaintiffs had failed to prove that the referral fee was an illegal tax because plaintiffs made no showing that the fees were revenue measures and were not designed to offset the costs of administering the towing program. Finally, the trial justice rejected plaintiffs’ argument concerning irregularities in the bid process. On March 19, 2007, plaintiffs timely appealed, and this Court issued a stay of the judgment while the appeal was pending.

Before this Court, plaintiffs challenge the trial justice’s finding that the 2006 RFP and the resulting contracts do not unlawfully infringe on the PUC’s power to regulate tow operators. The plaintiffs also argue that the trial justice erred when he found that awarding exclusive contracts to the successful bidders would not constitute an illegal franchise. Additionally, plaintiffs contend that the trial justice erred when he ruled that the referral fees were allowable because the General Assembly’s prohibitions against refunds and remittances applied to the vehicle owner and not the city. Finally, plaintiffs contend that the referral fees constitute an illegal tax.

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962 A.2d 1283, 2009 R.I. LEXIS 13, 2009 WL 89226, Counsel Stack Legal Research, https://law.counselstack.com/opinion/grasso-service-center-inc-v-sepe-ri-2009.