United Services Inc. v. City of Newark

NOT FOR PUBLICATION WITHOUT THE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.

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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

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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-

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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.

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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

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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.

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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

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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).

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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

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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

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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

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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

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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.

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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.

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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.

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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.

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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

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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.

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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

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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."

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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

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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.

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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,

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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

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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

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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

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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.

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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."

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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

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$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?

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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.

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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.

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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

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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).

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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").

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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, . . .

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[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,

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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,

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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.

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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

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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.

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