NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A-2007-20
UNITED SERVICES, INC.,
Plaintiff-Respondent,
v.
CITY OF NEWARK,
Defendant-Appellant. _______________________
Argued March 15, 2023 – Decided December 2, 2024
Before Judges Accurso, Vernoia and Firko.
On appeal from the Superior Court of New Jersey, Chancery Division, Essex County, Docket No. C- 000221-18.
Raymond M. Brown argued the cause for appellant (Pashman Stein Walder Hayden, PC, attorneys; Raymond M. Brown and Rachel E. Simon, of counsel and on the briefs).
Gabriel H. Halpern argued the cause for respondent (Pinilis Halpern, LLP, attorneys; Gabriel H. Halpern, on the brief).
The opinion of the court was delivered by ACCURSO, P.J.A.D.
Defendant City of Newark appeals from a $4,338,498.90 judgment in
this long-running public bidding dispute between the City and plaintiff United
Services, Inc., the City's former janitorial services provider. The General
Equity judge entered the judgment "as a matter of equity" finding that
"Newark understood at the time that it chose to bring the janitorial services in-
house that it still had obligations" under the court's preliminary injunction. As
there was no legal basis for entry of the court's interlocutory mandatory
injunction requiring Newark to continue its relationship with United, and the
Local Public Contracts Law, N.J.S.A. 40A:11-1 to 40A:11-60, does not
provide for an award of damages against the City, and because the General
Equity judge failed to follow the maxim that "equity follows the law," In re
Est. of Shinn, 394 N.J. Super. 55, 67 (App. Div. 2007), we reverse.
This dispute has a long history, which we detail at some length in order
to place the trial court's decision, and ours, in context. United Services won a
two-year set-aside contract for minority- and women-owned businesses to
provide janitorial services to the City in 2008. Following the expiration of that
contract, the company continued to provide janitorial services to the City under
a series of emergency contract extensions, the last of which expired in 2013.
A-2007-20 2 In the spring of 2016, the City solicited bids for a new janitorial services
contract. United claimed that when the bids were opened, it had the low bid,
although the City never undertook a bid-conformity analysis of any of the bids.
See Hillside v. Sternin, 25 N.J. 317, 324 (1957) (explaining "[t]he significance
of the expression 'lowest bidder' is not restricted to the amount of the bid; it
means also that the bid conforms with the specifications"). Dissatisfied with
its own specifications, which it determined incentivized bidders to provide
fewer workers working less hours, resulting in lower bids than the City had
anticipated, the City rejected all the bids, and determined to substantially
revise the specifications pursuant to N.J.S.A. 40A:11-13.2(d). United sued to
enjoin Newark from rebidding the janitorial contract, and to compel the City to
award the contract to United as the low bidder.
In August 2016, Newark's Municipal Council passed a resolution
authorizing the use of competitive contracting under N.J.S.A. 40A:11-4.1 to
procure custodial services, and the City issued a competitive contract request
for proposals. United filed an order to show cause in the Law Division to
enjoin Newark from either soliciting or accepting bids through the competitive
contracting process. Judge Vena signed the order to show cause with
temporary restraints in accordance with the customary practice in a public
A-2007-20 3 bidding dispute. See Palamar Constr., Inc. v. Pennsauken, 196 N.J. Super.
241, 244 (App. Div. 1983); Sellitto v. Borough of Spring Lake Heights, 284
N.J. Super. 277, 282 (App. Div. 1995); Waste Management of New Jersey,
Inc. v. Morris County Mun. Utils. Auth., 433 N.J. Super. 445, 449 (App. Div.
2013); Ernest Bock & Sons-Dobco Pennsauken Joint Venture v. Twp. of
Pennsauken, 477 N.J. Super. 254, 262 (App. Div. 2023). See also cf. Barrick
v. State, Dep't of Treasury, Div. of Prop. Mgmt. & Const., 218 N.J. 247, 263
(2014) (observing "an unsuccessful bidder, who does not promptly seek a stay
of a lease bid award under Rule 2:9-8 when appealing an award determination,
acts at his, her, or its peril".)
On the return date for the preliminary injunction, Judge Vena dissolved
the temporary restraints and denied a preliminary injunction staying Newark
from proceeding to rebid the contract. He rejected United's claim that Newark
would not suffer any harm by the entry of a preliminary injunction because
United continued to provide janitorial and maintenance services to the City,
albeit without a contract and at emergency rates. Moreover, the judge found
United had failed to demonstrate a likelihood of success on the merits given
the City had a statutory right to reject all bids pursuant to N.J.S.A. 40A:11-
A-2007-20 4 13.2(d), and the bid specifications were thereafter lawfully revised. See Crowe
v. De Gioia, 90 N.J. 126, 132-35 (1982).
We granted United's motion for leave to appeal and reversed Judge
Vena's denial of United's application for a preliminary injunction finding he
should have applied a more "flexible" approach to his consideration of the
Crowe factors. United Servs., Inc. v. City of Newark, No. A-2117-16 (App.
Div. Apr. 17, 2017) (slip op. at 4) (United Servs. I).1 "[P]erceiv[ing] no harm
to any of the parties by reinstating the stay," the court concluded "the
balancing of the equities involved militate[d] in favor of injunctive relief." Id.
at 11. We remanded the case to Judge Vena, continuing our "order enjoining
Newark from making any award of the contract . . . until resolution of the
underlying complaint." Ibid. We did not address United's emergency contract
extension and certainly did not enter a mandatory injunction requiring the City
to continue its relationship with United. See Davidovich v. Israel Ice Skating
Fed'n, 446 N.J. Super. 127, 160 (App. Div. 2016) (emphasizing "[a] mandatory
1 Although the Rules do not ordinarily allow us to cite an unpublished opinion, we do so here pursuant to the exception in Rule 1:36-3 that permits citation "to the extent required by res judicata, collateral estoppel, the single controversy doctrine or any other similar principle of law." See Badiali v. N.J. Mfrs. Ins. Grp., 429 N.J. Super. 121, 126 n.4 (App. Div. 2012), aff'd, 220 N.J. 544 (2015). As already noted, the history of this long-running dispute provides the necessary context for our decision here. A-2007-20 5 injunction is 'an extraordinary remedy that is only granted sparingly by the
courts'" (quoting Trinity Indus. v. Chicago Bridge & Iron, Co., 735 F.3d 131,
139 (3d Cir. 2013))). The Supreme Court denied the City's motion for leave to
appeal but asked the trial court "to expedite the disposition of plaintiff's
complaint." United Servs., Inc. v. City of Newark, 233 N.J. 117 (2017).
Unfortunately, discovery on remand "proceeded at a snail's pace."
United Servs., Inc. v. City of Newark, No. A-2769-17 (App. Div. Oct. 9, 2019)
(slip op. at 1) (United Servs. II). Judge Vena eventually granted summary
judgment to Newark finding it had a statutory right to reject all bids to
substantially revise its specifications, N.J.S.A. 40A:11-13.2(d), and to employ
competitive contracting in lieu of public bidding, N.J.S.A. 40A:11-4.1 and
N.J.S.A. 40A:11-4.3(a). The judge dismissed the complaint in February 2018,
noting in his comprehensive written opinion that United had "been awarded 14
months of no-bid, emergency contracts as a result of the ongoing litigation and
the enjoinment of [Newark's] ability to procure janitorial services" through
competitive contracting.
United appealed, arguing Judge Vena erred in granting summary
judgment to the City because there were genuine disputes of fact over the
City's reasons for rejecting all the bids. Id. at 2. In October 2019, we agreed
A-2007-20 6 with Newark that the appeal was moot because the 2016 bid solicitation was
only "for a two-year contract, meaning that had the court voided the rejection
of all bids and awarded the contract to plaintiff as the lowest responsible
bidder, the agreement would have terminated more than one year ago." Id. at
7.
We noted that had United "won the contract award in 2016, [it] would
have had to perform the contract for approximately $1.8 million per year, i.e.,
the amount of its bid." Id. at 8. Instead, as a result of our stay prohibiting
Newark from bidding out a new contract, United had "been performing under
successive no-bid emergency contracts of approximately $4.25 million per
year." Ibid.
We rejected United's claim that the case was not moot because it was
entitled to its counsel fees, and damages, the latter presumably for having
performed the work at 2008 emergency pricing levels. 2 Ibid. Leaving aside
there is no provision for the award of counsel fees under the Local Public
Contracts Law, and the law is well-settled "that 'an aggrieved bidder is not
entitled to damages,'" we found United "hard-pressed to argue that it suffered
2 It appears from our record that United was actually performing the work at a rate thirty-two percent higher than its 2008 rates. A-2007-20 7 financial damages by performing the contract under emergency extensions that
provided payments more than twice the amount of [its] 2016 bid." Id. at 8-9
(quoting Suburban Disposal, Inc. v. Twp. of Fairfield, 383 N.J. Super. 484,
495 (App. Div. 2006)).
In the meantime, Newark had again tried to re-bid the contract for
janitorial services. It issued a request for proposals under the competitive
contracting statutes in the spring of 2018, breaking the 2016 janitorial services
contract into eight smaller contracts, each of which covered a limited group of
specific municipal properties and required the bidders to commit to minimum
staffing levels and hours. In December, the City Council proposed a resolution
authorizing the City's qualified purchasing agent to enter into the eight
contracts with the bidders selected, one of which was United, providing for a
two-year contract term in a total amount for all eight contracts not to exceed
$4,695,113.22, with an option to renew for an additional year.
United filed a complaint and proposed order to show cause with
temporary restraints in the Chancery Division before a different judge to block
Newark from awarding the bids and entering into contracts with the successful
bidders. In its amended complaint, United alleged fraud, collusion, that the
awards were ultra vires, that Newark failed to follow the model evaluation
A-2007-20 8 criteria set forth in N.J.A.C. 5:34-4.2, failed to evaluate the proposals in a fair
and reasonable manner, and that the failure to award all the contracts to United
was part of a pattern engaged in by the mayor and the City of "remov[ing]
most or all Hispanic employees from significant leadership positions after
coming into power" in 2014, violating the New Jersey Law Against
Discrimination, N.J.S.A. 10:5-1 to -49, the New Jersey Civil Rights Act,
N.J.S.A. 10:6-1 to -2, and the Federal Civil Rights Act, 42 U.S.C. § 1983, and
demanded a jury trial.3 The Chancery judge signed the order to show cause
but denied temporary restraints.
We granted United's emergent application for a temporary stay and
summarily reversed the trial court's order denying temporary restraints. We,
thus, stayed the City from entering into contracts with the winning bidders
before the trial court could hear United's application for a preliminary
3 Even leaving aside the request for a jury trial, United's bid challenge was obviously misfiled in the Chancery Division, General Equity Part because the primary relief sought, albeit a permanent injunction, was legal under the Local Public Contracts Law. Bid challenges are properly brought in the Law Division pursuant to Rule 4:69 as actions in lieu of prerogative writs to challenge municipal action — as United plainly understood in 2016 when it filed its prerogative writs action challenging the 2016 bid process. See Palamar Const., Inc. v. Pennsauken Twp., 196 N.J. Super. 241, 244 (App. Div. 1983). A-2007-20 9 injunction continuing that relief pending resolution of its bid challenge. Our
order provided as follows:
Contrary to the extensive briefing by the parties, the only issue before this court is the trial court's refusal to temporarily stay the contract award pending decision on plaintiff's application for a preliminary injunction where the court will assess the likelihood of plaintiff's success on the merits of its bid challenge in accordance with the competitive contracting in lieu of public bidding sections of the Local Public Contracts Law, N.J.S.A. 40A:11-4.1 to -4.5. See Weidner v. Tully Environmental, Inc., 372 N.J. Super. 315 (App. Div. 2004).
As a bidder's right to such temporary relief pending a court's review of the merits of the challenge on an application for a preliminary injunction is well settled, see M.A. Stephen Const. Co. v. Rumson, 125 N.J. Super. 67, 74 (App. Div. 1973), we reverse the denial of temporary restraints.
We express no view on the merits of any continued stay, which will rest on the trial court's view of plaintiff's likelihood of success on the merits of its bid challenge. See Meadowbrook Carting Co., Inc. v. Borough of Island Heights, 138 N.J. 307, 315 (1994). We do not retain jurisdiction.
On the return date of the order to show cause as to why a preliminary
injunction should not enter, United's counsel argued "[i]f the court does not
grant the preliminary injunction it renders the local public contracts law
meaningless and it says, Newark you can do whatever you want. Whether it's
A-2007-20 10 arbitrary, capricious, it doesn't matter." He argued, contrary to controlling
precedent, that a deviation "doesn't necessarily have to be material" if the City
failed to follow its own process in evaluating the bids making the selections
arbitrary, that the award smacked of "favoritism, extravagance, improvidence
and corruption," that United was prejudiced by not having discovery, and that
the City improperly interviewed bidders after the bids were submitted .
And although acknowledging the bidder awarded two of the eight
contracts had a conforming bid, counsel rhetorically asked "how come they
only get two contracts? Why? Because [the City] picked whoever they
wanted to pick and that's making a mockery of the regulations, the evaluation
criteria and this process." Counsel conceded that "even under [his]
calculations," he couldn't argue United was "entitled to all of the bids," but
thought "that they might be entitled to another two or three subsections of the
bids" based on his contention that the process was flawed.
Anticipating the City's argument that United's application was simply a
pitch to continue "operating under a bloated emergency extension," United's
counsel contended the court could "fashion an equitable remedy," in that the
company was prepared, if the court granted the preliminary injunction, "to go
forward" while the injunction remained pending "[u]nder the terms and
A-2007-20 11 conditions of the [request for proposals]" at a savings of $619,000.00 to the
City of Newark. "So, their complaint about how much it's going to cost if
[United] stays there or that we want to stay there or the bloated contract is
resolved." Counsel offered no argument as to why staying Newark from
entering new contracts pursuant to the 2018 bid awards would have any effect
on whether the City continued to use United to provide janitorial services in
the City's buildings.
Assistant Corporation Counsel for the City countered that United clearly
failed to understand the competitive contracting process freed the City from
having to simply accept the lowest bid, allowing it the discretion to consider
among the conforming bids which was most advantageous to the City, price
and other factors considered. He contended the City's post-bid opening
interviews with the evaluation committee was an important part of the process
and expressly included in the request for proposals (a point United's counsel
was forced to concede). Counsel argued United had employed a scattershot
approach that failed to identify specific deviations in the bids that would be
considered material under the case law. He also maintained that United's
contention that the awards were based on "political favors" was simply a
rehash of the same scurrilous and unsupported allegations United made in the
A-2007-20 12 2016 bid challenge, adding: "[w]e all know what the ultimate outcome of that
case was. There was no proof then. There's no proof now." Counsel
contended United doesn't "care if they win this case. They don't care. All they
want is for you to stop the contract from going forward."
After hearing argument, the General Equity judge entered the
preliminary injunction on the record. The judge began by noting the status of
the case:
I entered an order to show cause. I denied temporary restraints. I was reversed on that application. The Appellate Division entered temporary restraints and then sent it back to us for determination on the preliminary injunction hearing and whether or not there would be a likelihood of success on the merits.
Although we had dismissed the 2016 challenge as moot only four
months before, noting how much more money United had received from the
City by its unsuccessful bid challenge than had it been awarded the contract ,
United Servs. II, slip op. at 3, the judge declined to take "the history of the
case" into account.4 "As the judge [understood] it, [she was] just being asked
4 It is not clear from the transcript whether the court and counsel for United were aware of our disposition of United's appeal of Judge Vena's decision on United's 2016 challenge. In its brief to the trial court, United represented that the prior appeal was "presently pending" in this court, and that it was "presently providing janitorial services to the City of Newark pursuant to an
A-2007-20 13 to decide whether or not the process that was utilized" to solicit and evaluate
the "contract bids that was conducted in the late fall of 2018, whether or not
that process was appropriate." Reviewing "the specific relief that was
requested on behalf of the current contract holder, or the — the contract has
terminated many years ago, but by [United] which has been providing the
janitorial services by way of an emergency contract for many years," the judge
noted that in addition to a "preliminary and permanent injunction enjoining
Newark from awarding" the contracts, United also sought "an order
maintaining the status quo and continuing [United] in place as the janitorial
services provider."
The judge announced she was "going to enter a preliminary injunction in
this matter because [she] believe[d] there remain[ed] questions about the
process that was followed for the request for proposal and the evaluation of the
[bids] in the case." That led to the following colloquy with counsel:
Ass't Corp. Counsel: I just want to make sure I understand the — very clearly what the scope of the injunction is. My understanding is, right now we were not — we're not going to be able to award this contract.
emergency contract extension, and thereafter a preliminary injunction imposed by the Appellate Division," neither of which was accurate. The second of the statements was simply untrue. A-2007-20 14 The court: Today.
Ass't Corp. Counsel: Today or any time forward until there's a resolution. But, I'm concerned about something that requires Newark to maintain the status quo of its present condition, present contract. There is no contract with United Services.
The court: Well, what's it doing right now?
Ass't Corp. Counsel: We're paying United Services under — because we've been in litigation. But, there's no injunction. There's no — there's nothing. We've just been paying them hoping to get this resolved by way of this competitive contract. But, . . . we can't award under this competitive contract, but there is "no hold the status quo" that's going to order the city to keep things going the way they are today. I mean that's not part of this application. I mean if the city entered into an emergency contract [with someone else] tomorrow, [the] city enters into an emergency contract tomorrow. You know, they wanted an injunction from the Appellate Division six months ago before this case was filed to maintain the status quo on their contract and the Appellate Division said no and that was because of the 2016 contract. [5] This application is to stay the award.
The court: That's what I'm doing.
5 On June 19, 2018, we denied United's application to file an emergent motion to prevent Newark from accepting bids on the 2018 procurement, finding no risk of any harm, much less irreparable harm, to United's "claim to a right to a contract as the alleged lowest responsible bidder during the prior bidding process." On June 29, 2018, we denied United's application to enjoin the award of the 2018 contracts pending resolution of its appeal from Judge Vena's final decision denying its 2016 bid challenge. A-2007-20 15 United counsel: And maintain the status quo. Which is where we are today. He wants to change it.
Ass't Corp. Counsel: I may not [be] able to award this contract to anybody because there are flaws in the contract, but that has nothing to do with the present circumstances that are in the City of Newark. And if the mayor . . .
The court: What are you proposing [counsel]?
Ass't Corp. Counsel: I don't . . . propose this. I'm the litigation attorney. But if the mayor wants to change the status quo of the contract today or tomorrow . . . we have no contract anymore with United Services. And this is the proposal. [A]nd there is nothing in this application to say we've got to keep it going to United Services under a four million dollar deal. That's not what this case is about. This is about the award of a flawed RFP. Period.
The court: Okay. Thank you. . . .
United counsel: This — he wants to change the status quo. The purpose of the preliminary injunction is to maintain the status quo. I made an offer earlier to them, which — which they don't want to take up, which they could save a lot of money and they don't want to do that. So, the status quo is whatever's been going on for the last five years.
The court: But, it's not going to last because we're
United counsel: I understand that.
The court: going to have a hearing very, very quickly on this and it all may change.
A-2007-20 16 United counsel: That okay. [T]hat's fine with us, your honor. I mean this doesn't . . . .
The court: I want you to think both of you about a resolution that's within —
Ass't Corp. Counsel: There are other bidders that are awardees. I can't settle the case. They'll be suing the City of Newark. Your honor, I have no —
The court: Unless I find [counsel] that the process was flawed and then you have to re-do the process.
Ass't Corp. Counsel: Agreed.
The court: So, I'm asking you to please think creatively here because we're dealing with public contracts and I realize we're constrained. But, you as attorneys have methods of resolving cases, so that you don't have to put this all back out to bid or you don't have to open yourself up to lawsuits from these other contractors. There are ways of doing it and I trust that [United's counsel] is also going to be reasonable in his approach.
United counsel: I have made numerous suggestions but they all have been rejected. Of ways I thought ....
Ass't Corp. Counsel: I understand your honor's ruling. I don't have any — I'm not asking for any kind of reconsideration. I just want to make sure that what is being enjoined is what's being enjoined. And that is our awarding of this contract has been enjoined because of the flaws.
A-2007-20 17 The court: And while you —while it's been enjoined by the Appellate Division you've been continuing the emergency contract of [United]. Is that right? Yes.
Ass't Corp. Counsel: Not because we've been enjoined to do so.
The court: Okay. You're being enjoined to do so.
Ass't Corp. Counsel: I hear you now.
That hearing took place on February 8, 2019. The City did not seek
leave to appeal the preliminary injunction entered on March 20, 2019, ordering
"that pending the final disposition of this matter, or further order of this court,
the parties shall maintain the status quo regarding the retention of [United] as
the janitorial and maintenance service contractor for Newark under the present
terms of service and payment."
In November 2019, the City determined to abandon the 2018
procurement and prepare to take its janitorial services in-house, which counsel
for the City claims was motivated, in part, by United's unceasing efforts to
prevent it from bidding out new janitorial services contracts. 6 In December
6 It is unclear to us why this bid challenge was still pending eighteen months after it was filed. See Barrick, 218 N.J. at 264 ("Contractual matters in which the State and its public entities engage must proceed with alacrity. The bidding administrative process is premised on prompt identification, review, and correction of any contracting process errors"). Although United claims the
A-2007-20 18 2019 the City removed the matter to the District Court after the filing of the
amended complaint, which added the federal civil rights allegations.
Following the entry of outside counsel for the City, it moved to dismiss the
complaint in federal court in light of its decision to move its janitorial services
in house, or to remand the case to State court.
While that application was pending, the City filed an order to show
cause in the District Court in late February 2020, at the start of the pandemic,
seeking to be allowed to clean City buildings "with in-house janitorial staff to
abate the existing health and safety risks found there" and dissolving the
preliminary restraints entered by the General Equity judge "requiring the City
to use [United's] services to clean" those buildings. United filed a cross-
motion to hold the City in contempt for violating the March 20, 2019
preliminary injunction, seeking sanctions and counsel fees.
City stonewalled discovery, it included in its appendix, presumably as proof, a request for admissions it asserts went unanswered by the City with 54 requests — each asking the City to admit a specifically named person with an Hispanic surname in the City's employ resigned, was transferred or was replaced by a Black person. Those allegations were based on a 2019 complaint filed in the Law Division by Newark's former superintendent of public works following his termination, alleging the current administration "was engaged in an illegal and concerted effort to remove Hispanic employees from their positions and replace them with African Americans." We fail to see what those allegations have to do with whether there were material deviations in the bids of those contractors who were awarded contracts in the 2018 procurement. A-2007-20 19 At argument on those applications on March 16, counsel for United
argued the City was engaged in "a shameless attempt . . . to use the
Coronavirus, a national emergency, to oust [his] client out of its contract,
which it couldn't do in state court when it tried. We have a preliminary
injunction." Attempting to ascertain the facts, the judge asked United's
counsel:
The court: Under your current contract you have a contract to clean, sanitize, eight buildings. Is that correct now?
United counsel: No. Forty — all of the [municipally owned] buildings in the City of Newark.
The court: All of the buildings?
United counsel: All of the buildings. Yes, . . . the preliminary injunction covers all of the buildings, your honor.
City counsel: [United's counsel's] correction is important. They do not have a contract. They are performing pursuant to injunction. . . . It is an important correction. They are not functioning pursuant to a contract. They are functioning pursuant to injunctive relief, which is why we came here.
Counsel for Newark addressed the court's concerns about the absence of
federal jurisdiction, explaining that while the City's motion to dismiss or
remand to State court remained pending, the only court from which the City
A-2007-20 20 could seek relief was the District Court, stating he "want[ed] to not be in a
position where [his] client [was] in contempt of an injunction."
Counsel, emphasizing that public health officials had declared there
were already persons sick with the virus in the City and that it would spread
exponentially throughout the community, sought "from this point forward
without prejudice to [United] to do our own cleaning." Counsel explained the
City was proposing to use its "crews which consist of companies under
emergent contracts specifically with trained personal to deal with [the]
Coronavirus and our personnel, meaning city personnel who have also been
trained, be allowed to clean the buildings of Newark for the duration of this
emergency without prejudice to any of the other issues that are before you. "
Counsel repeated that the City was not there "to argue about money," as
"[t]hat will abide the court's final decision." Counsel stated several times that
whether United "get[s] paid during this interim or not is something you or
another judge will decide. We don't seek [to] prejudice [United] . . . now in
their standing." "All we are saying is, without prejudice to them, without
raising the issue of money, give us the right to clean our buildings for which
we were elected to be responsible."
A-2007-20 21 Although continuing to express doubts over its jurisdiction to decide the
matter, the court acknowledged the City's responsibility in light of the public
health crisis "to make sure things are being done thoroughly and properly."
Accelerating the return date on the pending motion to dismiss or remand, the
court remanded the case to state court without ruling on the parties' emergent
applications. The City locked United out of its buildings and took over
janitorial services on March 16, the same day as the hearing.
In May 2020, Newark filed a motion to dismiss United's complaint as
moot, and United cross-moved to hold the City in contempt, impose sanctions
of $15,000 per day, based on its monthly billings to the City of $450,000, from
the date of the lockout until United "is restored to its position in accordance
with the" preliminary injunction and that it continue to be paid at that rate until
the end of the injunction, and recover its counsel fees. The General Equity
judge heard argument on the motions on July 31. Counsel for the City
contended the case was moot because the 2018 contracts that formed the basis
of United's complaint no longer existed as "[t]he City has moved away from
that very structure to in-house provision of these services." Counsel also
pointed out that from the entry of the preliminary injunction through February
2021, the City had paid United $8,434,370.75, notwithstanding the City
A-2007-20 22 Council had only appropriated $4,695,113.22 for all eight contracts over the
two-year contact period.
Counsel acknowledged the City's disagreement with the court's entry of
the preliminary injunction but emphasized the City had abided by it. Counsel
explained the City had moved the cleaning in-house at the start of the
pandemic, without prejudice to United's rights under the preliminary
injunction, emphasizing "[t]he payment issue abides" the court's ruling. That
led to the following colloquy between the court and the City's counsel:
The court: What about the issue of the fact that that was done pending litigation?
City counsel: Well it was done without prejudice. [United] will be paid until you say stop. So, [United] is not prejudiced. We are doing what we think is best for the City of Newark in terms of capacity and long- range efficiency, and effective cleaning of the buildings in light of what has happened. So, Newark is doing that. It has the right to do it. It is aware of Your Honor's order so it knows it is obligated to pay [United] until you say stop. And we've come in today to say stop.
The court: Stop on December 31st, 2020, for example, then what you're saying is you did this with the understanding that the City of Newark is going to be responsible until perhaps the injunction would — would end or the — the presumed contracts would end.
A-2007-20 23 City counsel: We are responsible to pay until you say stop. We are — our prayer is that you stop today. We recognize why you might take the date as significant. We disagree with that, but we respect it. The reason we disagree is we think having eliminated the very contract which is the very foundation of their local public contract case, and having paid them twice what they could have made had they won the entire award, enough is enough. If you say it stops December 25 2020, we'll abide by your order subject to whatever happens in the Appellate process.
The judge then asked counsel for United its position "on the fact that
Newark concedes that it is to pay [United] what it's fairly due under the
injunction."
So for example, if I felt that fairly under the circumstances the contracts would've gone through December of 2020, although [United] was only meant to get one contract, but if your client prevailed in this action and is able to prove to me that the other contractors, the other six contractors would not have gotten the contracts because the process was flawed, we then have to presumably establish that the new process would have gone 100% to [United]. You would have quite a burden. But let's say that you met that burden, how would this go beyond December 31st of 2020?
United's counsel replied that the 2018 contracts likely would not have
been signed for months, but "giv[ing] Newark the benefit of the doubt that they
signed the contract as soon as they did the award at the meeting in January ," he
argued the two-year contract would run through January 2021. Counsel added,
A-2007-20 24 however, that the parties were in a "strange situation because the City says
well, we'll pay you. I guess they're paying us as a result of the violation of the
injunction. Because generally under the Local Public Contracts Law you . . .
we're not supposed to get damages. But I guess Newark is conceding we can
get damages."
Although allowing United's counsel to argue on contempt and attorneys'
fees, the judge expressed her concern
that this case has gone on beyond a reasonable time for the issue at hand. And that really it's time for the matter to be resolved in fairness to everybody. And it seems to me that there is a very obvious way for that to happen . . . . But the fact that Newark is on the record now both before [the federal judge] and before myself representing that it fully intends to pay the amounts that are fairly due your client under the injunctive relief. I don't know where your client is going beyond that [counsel].
Counsel for United finally conceded his client would never be entitled to
anything beyond the injunction continuing until what would have been the end
of the contract, December 31, 2020, although arguing "the Court might be
entitled to impose sanctions and have penalties paid into the court" for
Newark's violation of the injunction. Counsel for the City reiterated its
commitment to abide by whatever the court ordered and its position that
A-2007-20 25 United had already received twice what it would have been entitled to had it
won the 2018 contracts and "shouldn't be paid another dime."
In making her ruling, the General Equity judge began by recapping her
understanding of the 2016 litigation, saying: "[t]he Appellate Division had
entered an injunction in that matter, during which time [United] continued for
two years to provide janitorial services under what had started as an
emergency contract in 2010, as I understand it." Continuing with the history
of this matter, the judge noted the entry of the preliminary injunction in
February 2019, and that United "continued to provide the janitorial services
pursuant to that preliminary injunction," and for which it had been paid, but
for a few late invoices, until Newark locked United out on March 16, 2020.
The judge found
The City of Newark has represented now twice before a federal district court judge and before me that when it made the decision to take the janitorial services in- house and not to proceed with the request for proposals, the awards of contract in this matter, that it had intended to continue to pay [United] pursuant to my injunction until this court determined that . . . payments were no longer due.
Based on the City's representations "that it intends to pay [United] for
the services, and it's understanding that it could be responsible for those
payments through in its position December 31st of 2020, I don't see how any
A-2007-20 26 further claims should survive." The court ruled it did not find Newark in
contempt of the preliminary injunction and would dismiss the case as moot,
but continued, saying
I am going to require that Newark pay [United] through December 31st of 2020, that is the extent of the contract in my opinion that would have been in place had the award been given solely to [United]. And I'm doing that as a matter of equity. I find that Newark understood at the time that it chose to bring the janitorial services in-house that it still had obligations under this injunction.
The judge found Newark had the right, as a matter of public policy, to
break up the janitorial services contract in an "attempt to give a variety of
parties the opportunity to contract with the City and to include diverse parties "
in its contract awards. She found that to be the City's intention in issuing the
2018 request for proposals in "the way it did and weighing the various factors
in it." The judge declined, however, "to make a decision on the issue of the
process that was utilized here based upon the representations made, both by
the City of Newark and by counsel for [United]. I don't see that there's
anything more that [United] would be entitled to under these circumstances."
When counsel for United asked when it could expect payment, counsel
for the City responded that Newark was in the midst of a "fiscal emergency" as
the COVID-19 crisis had rendered the City severely "cash-strapped." The
A-2007-20 27 judge acknowledged that "Newark is in a bind right now," and asked that the
parties attempt to work out payment terms between themselves, "understanding
[counsel] that your client is getting paid for services that it is not providing.
So, essentially it's actually — I shouldn't say this, so in some ways it's being
unjustly enriched because it's not providing the services and it's getting paid
for them." A confirming order followed that provided in part that "[t]he
preliminary injunction entered on March 20, 2019 is hereby DISSOLVED,
upon the condition that Defendant continues to pay Plaintiff under the terms of
the injunction through December 31, 2020, as if the injunction remained in full
force and effect."
The City moved for reconsideration. Newark argued that payment to
United of any monies beyond the $4,695,113.22 appropriated for all eight
contracts violated the Local Public Contract Law's prohibition on damages, the
law on unjust enrichment and was beyond the power of the court to order
pursuant to a preliminary injunction. The judge responded by saying:
The preliminary injunction found that the contracts were not to be awarded. So, relying on those contract amounts is problematic for your client, because I found that the process might have been improper. And that was the reason for my maintaining the status quo. I don't understand the argument that the status quo was the amount of the contracts.
A-2007-20 28 United agreed with the judge that counsel for the City had represented to
the court that United "continue[d] to be entitled to get paid but they don't have
to participate in the process of cleaning." Counsel contended "this case is not
about unjust enrichment. It is about enforcement of your honor's order which
they admittedly violated. And the only issue is whether the court is going to
enforce its order or you're going to allow Newark to do whatever it wants."
United also disputed the City's assertion that the City had paid United more
than it would have received had it won all eight contracts. Relying on a
certification from a United employee with knowledge of the City's account,
counsel represented that United had "only been paid several hundred thousand
dollars on [these] contract[s]. There are other contracts that [United] is being
paid under that weren't the subject of this bid."
Counsel for the City countered that, as United had represented in federal
court, "all the buildings [United] cleans in Newark are pursuant to this
injunction," it was disingenuous for United to argue that it had not received
many times more from the City than it would have had it won all eight
contracts. Counsel for the City added that "the City will comply with those
court orders that are issued by this court subject to its right to appeal. That's
always been our position."
A-2007-20 29 The General Equity judge recounted that "[t]he preliminary injunction in
this matter was entered as a result of my finding that there were questions of
fact regarding the contract process and regarding the purported granting of six
or seven contracts, or eight contracts to various vendors, one of which was
[United]." The judge repeated the terms of the preliminary injunction
memorialized in the order of March 20, 2019, "that pending the final
disposition of this matter or further order of this court, the parties shall
maintain the status quo regarding the retention of [United] as the janitorial and
maintenance services contractor for Newark under the present terms of service
and payment." Finding no basis for reconsideration, the judge concluded:
because the City of Newark chose to take [United] off of the services, but agreed to continue to pay them, I entered an order that [United] should be paid through December 2020, which would have been the extent of any contracts that might have been awarded, notwithstanding my preliminary injunction otherwise.
The judge agreed with the City, however, that the amount United claimed was
owed remained in dispute, directing if the parties were unable to come to
agreement on that figure, United could make a motion for entry of judgment.
The court heard argument on United's motion for judgment on February
11, 2021, nearly a year after United had ceased providing services to the City.
Counsel for United advised the court it was seeking judgment in the sum of
A-2007-20 30 $4,432,612.90, not as "contract damages. What you have in front of you is
ordering Newark to pay as a result of A, their agreement and B, as a result of
the order, the preliminary injunction, entered" by the court. Counsel repeated
that "this is not a calculation of damages in a typical breach of contract case.
This is simply an award of money which they agreed to [pay], which Newark
was supposed to pay in accordance with the preliminary injunction."
Newark countered that United had already received $9,000,000 pursuant
to the court's preliminary injunction and was seeking another nearly
$4,500,000 for ten months of services it did not provide, which would result in
its receiving nearly $13,500,000 pursuant to a preliminary injunction entered
in a bid challenge to contracts worth exactly $4,695,113.22. A dispute over
one municipal building on Williams Street led to the following colloquy
between the court and counsel.
The court: Okay, [counsel] I would like to hear about the Williams Street Building that apparently Newark believes is not part of this contract and you [maintain] that it is?
United counsel: Yeah. Well, your honor, it was not part of this contract. It was part of the work that [United] was always doing. It was subject to the preliminary injunction and in fact —
The court: Part of the R.F.P. was it?
A-2007-20 31 United counsel: It was not part of the R.F.P. That building was not going to be part of the R.F.P. It was one of the buildings [United] was working in and the injunction enjoined them from — required Newark to keep us working in all of the buildings. I do recall and I have to be careful because I'm making a recollection from a long time ago, your honor, that [Assistant Corporation Counsel] was counsel at that time. We had a conversation, it may have been when the order was being entered, [Assistant Corporation Counsel] raised a question in the courtroom, after the argument on the preliminary injunction, about these other contracts and I objected to it and I recall — well and then I do recall that we had a back and forth on the form of order. And that, the final order entered by your honor included all of the buildings, which would have included Williams Street. [Assistant Corporation Counsel] was trying to exclude what he referred to, I think, as germicidal, which is Williams Street.
The court: But that was within the preliminary injunction that I entered?
United counsel: Yeah.
The court: Williams Street was in it?
United counsel: Yes, Your Honor.
The court: How do we know that?
United counsel: Only because of the back and — forth — I recall this coming up sometime, somewhere and I remember looking at my e-mails and my correspondence back and forth with [Assistant Corporation Counsel] and I would be more than happy to track that down and provide it to your honor.
A-2007-20 32 The court: How much are we talking about for that portion?
United counsel: $94,000.
The court: Okay. I also don't want to misstate what I believe occurred with the original preliminary injunction but my — what I thought (indiscernible) was that the preliminary injunction would apply to those contracts that [United] had at the time that — that were the subject of the R.F.P. I don't know if that was in the record or not, it's — and so I don't want to misstate it. I'm a little concerned about the Williams Street —
City counsel: Yes, judge and I'm not sure if a preliminary injunction could be ordered as to a property that's not the subject of a litigation and —
The court: Of course.
City counsel: I do have correspondence between [United's counsel] and [Assistant Corporation Counsel], where [United's counsel] confirms germicidal is not part of this litigation.
The court: And that's the $94,000? Okay.
United counsel: Yeah —
Finding United had "established what it would have been paid under
these contracts, pursuant to the preliminary injunction," with the exception of
Williams Street, the court entered judgment for United for $4,338,498.90 for
the monies owed "as a matter of equity" under the preliminary injunction.
A-2007-20 33 Newark appeals, arguing the judgment must be reversed because United
is not entitled to damages under the Local Public Contracts Law, the judgment
unjustly enriches United at the expense of the City's taxpayers, unlawfully
punishes the City for its lawful conduct in deciding to take its janitorial
services in-house, and that requiring the City to pay United through the end of
a contract period that never began at emergency rates far in excess of its bid
rate "as a matter of equity" for violation of the court's preliminary injunction is
unlawful. We agree on all points.
We need not consider whether the General Equity judge was correct to
enter the preliminary injunction staying Newark's ability to enter into the eight
contracts it had determined to award pursuant to its 2018 competitive
contracting procurement based on her "concerns with the process." The record
does not permit resolution of the issue and it is long since moot in any event.
We note only that United was required to demonstrate clearly and
convincingly that it possessed "a reasonable probability of success on the
merits; that a balancing of the equities and hardships favor[ed] injunctive
relief; that [it had] no adequate remedy at law and that the irreparable injury to
be suffered in the absence of injunctive relief [was] substantial and imminent;
and that the public interest [would] not be harmed." Waste Mgmt. of New
A-2007-20 34 Jersey, Inc. v. Union Cnty. Utils. Auth., 399 N.J. Super. 508, 519-20 (App.
Div. 2008) (citing Crowe v. De Gioia, 90 N.J. 126, 132-34 (1982)).
And although we've "held that a court may take a less rigid view in its
consideration of these factors when the interlocutory injunction sought is
designed to merely preserve the status quo," McKenzie v. Corzine, 396 N.J.
Super. 405, 414 (App. Div. 2007), "in some cases, such as when the public
interest is greatly affected, a court may withhold relief despite a substantial
showing of irreparable injury to the applicant." Waste Mgmt., 399 N.J. Super.
at 520. The judge was also, of course, required to give deference to the City's
determination of the qualification of the bidders "because judges are not
entitled to overturn the authorized decisions of municipal bodies unless those
decisions are arbitrary, capricious or unreasonable." Id. at 525. As we've
reminded before, it's not enough to conclude the public entity "acted
imperfectly or, with the aid of hindsight, that it could have been more
thorough," id. at 526, it's whether the entity's decision that a bid conformed to
the specifications "was arbitrary, unreasonable or capricious." In re Protest of
Award of On-Line Games Prod. & Operation Servs. Cont., Bid No. 95-X-
20175, 279 N.J. Super. 566, 590 (App. Div. 1995).
A-2007-20 35 Even had the court appropriately entered the preliminary injunction to
stay the City from moving forward on its 2018 procurement, there was simply
no legal basis to order Newark to continue to have United clean its buildings
while it challenged the bids. Certainly, United never offered one. Counsel's
entire "argument" on the point consisted of his statement that the City
wants to change the status quo. The purpose of the preliminary injunction is to maintain the status quo. I made an offer earlier to them, which — which they don't want to take up, which they could save a lot of money and they don't want to do that. So, the status quo is whatever's been going on for the last five years.
But as Assistant Corporation Counsel explained to the court, United's
2018 bid challenge had nothing whatsoever to do with how the City was then
opting to clean its buildings. A preliminary injunction in a public bidding
dispute is to preserve the subject matter of the suit, that is, the opportunity to
obtain the contract, Waste Management, 433 N.J. Super. at 454, not to allow a
disgruntled bidder to continue its grip on a no-bid extension at emergency
rates. See Twp. of River Vale v. R. J. Longo Constr. Co., 127 N.J. Super. 207,
215 (Law. Div. 1974) (noting "[t]he purpose of competitive bidding for local
public contracts is, as has been frequently reiterated, not the protection of the
individual interests of the bidders").
A-2007-20 36 United didn't have a contract with Newark. Its last emergency contract
extension had expired five years before. Assistant Corporation Counsel
explained the City was under no legal obligation to continue to retain United to
provide the City janitorial services, and the mayor and council had always
been free to enter into an emergency contract for those services with another
provider; it wasn't yoked to United. See N.J.S.A. 40A:11-6; Poling v. Roman,
86 N.J. Super. 484, 490 (Law. Div. 1965).
Assistant Corporation Counsel acknowledged the City had kept United
on during the 2016 litigation, but emphasized the City had done so voluntarily;
"there's no injunction. There's no — there's nothing." When Assistant
Corporation Counsel asked again for clarification of the scope of the
injunction at the end of the hearing, he again acknowledged in response to the
court's question that the City had continued to pay United to perform janitorial
services while Judge Vena's dismissal of United's challenge to the 2016
procurement was on appeal — correcting the General Equity judge's statement
that the City had "been enjoined by the Appellate Division" by stating "[n]ot
because we've been enjoined to do so" — the judge replied "Okay. You're
being enjoined to do so." And with that, Newark was preliminarily enjoined
"pending the final disposition of this matter, or further order of [the] court, . . .
A-2007-20 37 [to] maintain the status quo regarding the retention of [United] as the janitorial
and maintenance service contractor for Newark under the present terms of
service and payment." The General Equity judge provided no legal basis for
that order, United has not offered any basis on appeal and we cannot think of
one.
We review a trial court's formulation of an equitable remedy only for
abuse of discretion, Sears Mortg. Corp. v. Rose, 134 N.J. 326, 354 (1993),
recognizing that trial judges have broad discretionary power to fashion
equitable remedies appropriate to the particular circumstances at hand. Kaye
v. Rosefielde, 223 N.J. 218, 231 (2015). Although the General Equity judge
may have believed she was only imposing an obligation on the City to refrain
from acting, as was the case in prohibiting the City from proceeding with the
2018 procurement pending final hearing, it is obvious by the further order to
"maintain the status quo regarding the retention of [United] as the janitorial
and maintenance service contractor for Newark under the present terms of
service and payment" that the court had been induced to enter a mandatory
injunction "constitute[ing] a direct entry by the [c]ourt into a significant
discretionary decision in the municipal fiscal area" without any substantive
legal basis. Barney's Furniture Warehouse of Newark, Inc. v. City of Newark,
A-2007-20 38 62 N.J. 456, 470 (1973). See also Rogers Locomotive & Mach. Works v. Erie
Ry. Co., 20 N.J. Eq. 379, 382 (Ch. 1869) ("It is beyond the office of an
injunction to compel the continuous performance of a duty. Injunctions are
granted to restrain, but not to compel an act to be done.").
The judge's comments on the motion to enter judgment that she "thought
. . . that the preliminary injunction would apply to those contracts that [United]
had at the time that . . . were the subject of the R.F.P" and her refusal to
include the $94,000 claimed due for Williams Street in the judgment lead us to
believe she was not aware she had issued a mandatory injunction compelling
the City to continue United as its janitorial services provider for all forty of the
City's buildings at emergency pricing levels, which United's vice president
certified amounted to a monthly cost of $450,000 for an annual bill of $5.4
million.
Regardless of what the judge believed to be the scope of the mandatory
injunction to Newark to retain United as the City's "janitorial and maintenance
service contractor . . . under the present terms of service and payment," it was
obviously improvidently granted. See Bailey v. Schnitzius, 45 N.J. Eq. 178,
184 (E. & A. 1889) (holding "as this form of injunction to accomplish its
purpose must command or coerce the defendants to do certain affirmative acts,
A-2007-20 39 not merely to remain inactive or refrain, it is rarely granted before final
hearing" and "only in case of extreme necessity"). Newark, however, did not
seek leave to appeal the injunction and admittedly received the services, albeit
at emergency pricing, until the date the City locked United out of its buildings
in March 2020.
But we agree with the City that there was no basis for the General Equity
judge to order Newark to pay $4,338,498.90 for services it didn't receive, in
addition to the nearly $8.5 million the City claims it had already paid United
pursuant an improvidently granted preliminary injunction "as a matter of
equity."7 As we noted on United's last appeal in response to its claim for
damages, the law is well settled "that an aggrieved bidder is not entitled to
damages." United Servs. II (slip op at 3) (quoting Suburban Disposal, 383 N.J.
Super. at 495). See also M.A. Stephen Constr. Co., 125 N.J. Super. at 75-76
(reasoning that allowing an aggrieved bidder to recover damages after the
contract work has been performed by another "would simply twice penalize the
public").
7 The City agreed to entry of a $198,410.93 judgment in favor of United for invoices dating back to March 2019. It is not part of this appeal. A-2007-20 40 The General Equity judge failed to acknowledge the ancient maxim that
"equity follows the law." See Shinn, 394 N.J. Super. at 67. Although the
maxim will "not bar the crafting of a remedy not recognized by legislation or
found in the common law, . . . it does prevent the issuance of a remedy that is
inconsistent with recognized statutory or common law principles." Ibid.
Equity may "soften[ ] the rigor of the law," Giberson v. First Nat'l Bank of
Spring Lake, 100 N.J. Eq. 502, 507 (Ch. 1927), but "will not create a remedy
that is in violation" of it. Shinn, 394 N.J. Super. at 67. Ordering Newark to
make payment to United after it took the services United had been providing
in-house, as the trial judge recognized the City had every right to do, because
"Newark understood at the time that it chose to bring the janitorial services in -
house that it still had obligations" under an injunction entered without any
legal basis is not equity, it is unlawful and will not stand.
Finally, we reject United's argument that the City agreed to pay what it
has maintained since the time it was entered was an injunction entered without
legal basis and should be estopped from challenging it on appeal. Having read
the transcripts of each of the hearings, we are wholly convinced the City was
simply expressing its understanding that it was obligated to comply with the
trial court's orders and would pursue its remedies on appeal. Both United and
A-2007-20 41 the General Equity judge appear to have understood Newark's counsel's
arguments as an agreement to settle the litigation by continuing to pay United
at emergency rates through what would have been the end of the 2018 contract
period. This was not a settlement, it was a party doing what parties subject to
court orders they believe were entered erroneously, as this one was, must do —
comply with the trial court's rulings and challenge them on appeal.
United's remaining arguments, to the extent we have not addressed them,
are without sufficient merit to warrant discussion in a written opinion. R.
2:11-3(e)(1)(E).
The judgment in favor of United is reversed in its entirety and the matter
remanded for its cancellation of record and such further proceedings as may be
necessary consistent with this opinion. We do not retain jurisdiction.
Reversed.
A-2007-20 42