Lord Electric Co. v. Litke

122 Misc. 2d 112, 469 N.Y.S.2d 846, 1983 N.Y. Misc. LEXIS 4083
CourtNew York Supreme Court
DecidedOctober 28, 1983
StatusPublished
Cited by6 cases

This text of 122 Misc. 2d 112 (Lord Electric Co. v. Litke) is published on Counsel Stack Legal Research, covering New York Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Lord Electric Co. v. Litke, 122 Misc. 2d 112, 469 N.Y.S.2d 846, 1983 N.Y. Misc. LEXIS 4083 (N.Y. Super. Ct. 1983).

Opinion

OPINION OF THE COURT

Harold Tomprins, J.

Petitioner commenced this CPLR article 78 proceeding seeking an order prohibiting respondents Robert M. Litke (Litke), Commissioner of the Department of General Services, and Lawrence Yermack (Yermack), First Deputy Commissioner of the Department of Transportation, from taking any action on their purported rescission of contracts awarded to petitioner. Petitioner also attacks a Board of Responsibility determination that petitioner is not a “responsible” bidder and requests that the court declare valid the contracts awarded to petitioner.

On April 7, 1983, it was announced that petitioner Lord Electric Company (Lord) was the low bidder on two contracts for the maintenance of street lighting equipment in [113]*113Brooklyn and Queens. The Department of General Services notified Lord on May 9, 1983 of the award of these contracts. Lord was to commence service under the contracts on July 1, 1983.

On June 6,1983, Lord was notified by the Department of Transportation of the award of a Staten Island computerization contract.

By letter dated June 22, 1983, Litke on behalf of the Department of General Services notified Lord that the awards of street lighting contracts had been rescinded. Litke based the rescission upon a Federal Grand Jury indictment of Lord and some of its executives on bid rigging charges in Seattle, Washington. The purported rescission letter also notified Lord that the Department of General Services Board of Responsibility would convene to determine Lord’s “responsibility” to receive the street lighting contracts.

After a hearing in which Lord, through its representatives, refused to answer any questions concerning the indictment, the Board of Responsibility unanimously found Lord to be not responsible to receive the award of the street lighting contracts. Based upon this determination Yermack on behalf of the Department of Transportation notified Lord that the Staten Island computer contract was also being rescinded.

Lord contends that Litke and Yermack had no jurisdiction to rescind contracts already awarded and further that the Board of Responsibility acted in excess of its jurisdiction in convening to determine responsibility after an award had already been made. Petitioner also alleges that the finding of no responsibility being based solely upon the indictment was an error of law, and without a rational basis.

Respondents assert that the rescissions of the awards were within the jurisdiction of the Departments of General Services and Transportation. They argue that the Board of Responsibility, being charged with the responsibility of maintaining the integrity of the public contracting process, had the authority to convene any time up to registration and certification of a contract with the comptroller’s office.

[114]*114Respondent also contends that the remedy of prohibition does not lie since the action complained of has already taken place and prohibition is not available to review action but only to prevent it.

Petitioner challenges two aspects of the Board of Responsibility action on the Department of General Services contracts. First it contends that the board was without authority to pass upon their responsibility after the contract had been awarded.

There is a well-established body of case law holding that upon award of a public contract a binding contract between the bidder and the awarding agency is established (Lynch v Mayor, 2 App Div 213; Beckwith v City of New York, 121 App Div 462; Mansfield Contr. Corp. v Lindsay, NYLJ, Feb. 21, 1973, p 19, col 6, affd 41 AD2d 925). Thus, it has been held that the fact that the contract has not been executed or that the comptroller has not registered the contract would not be fatal to the formation of a contract (Beckwith v City of New York, supra).

However, the bidder’s remedy is not to compel the awarding agency to execute or perform the contract awarded. Mandamus does not lie to compel a municipality to perform a contract. (Mansfield Contr. Corp. v Lindsay, NYLJ, Feb. 21, 1973, p 19, col 6, affd 41 AD2d 925.) The bidder has a remedy at law for breach of the contract. (Ann., 3 ALR3d 864, 872; Simpson and Duesenberg, 6 Encyclopedia of NY Law, Contracts, § 210, p 44.)

The formation of a contract does not preclude the awarding agency from convening a Board of Responsibility to determine whether the agency should perform the contract. Although the responsibility of a bidder should be determined prior to the award of a contract, the awarding agency is not without authority to convene a board after the award where, as here, certain facts have come to light after award of the contract which may directly affect the bidder’s responsibility. Thus, respondent Litke had the authority to convene a Board of Responsibility to inquire as to the responsibility of petitioner in light of the indictment. This finding is entirely consistent with the broad mandate given to Boards of Responsibility to protect the public interest and the integrity of the bidding process. The [115]*115only case cited for the proposition that no such authority exists is not controlling. In Supreme Elec. Corp. v Schwartz (Supreme Ct, NY County, index No. 14286/82) the court made note of the contention by petitioner there that the board did not have the authority to convene after the notice of award had been sent to petitioner but stated that petitioner had not established that this practice violated section 318-A of the Regulations of the Board of Estimate. The court then went on to deny the petition in view of petitioner’s permanent disqualification from bidding.

Other cases where determinations of Board of Responsibility or the Board of Estimate were challenged involved situations where the board determined that a contract should not be awarded because of lack of responsibility (see Matter of Industrial Scrap Processing Corp. [City of New York], NYLJ, Aug. 13, 1981, p 4, col 2; Abco Bus Co. v Macchiarola, 52 NY2d 938, revg on dissenting opn of Hopkins, J., 75 AD 2d 831; Matter of Dairymen’s League Co-op. Assn. v Perrini, 54 Misc 2d 400; Matter of Zara Contr. Co. v Cohen, 23 AD2d 718; Matter of Kayfield Constr. Corp. v Morris, 15 AD2d 373). These cases are unlike the one at bar where the contract was awarded with the Board of Responsibility convening after the award was purportedly rescinded by the awarding agency.

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Bluebook (online)
122 Misc. 2d 112, 469 N.Y.S.2d 846, 1983 N.Y. Misc. LEXIS 4083, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lord-electric-co-v-litke-nysupct-1983.