Ernest Bock & Sons-Dobco Pennsauken Joint Venture v. Township of Pennsauken

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-3684-22

ERNEST BOCK & SONS-

DOBCO PENNSAUKEN

JOINT VENTURE, APPROVED FOR PUBLICATION

November 30, 2023

Plaintiff-Appellant, APPELLATE DIVISION

v.

TOWNSHIP OF

PENNSAUKEN and

TERMINAL

CONSTRUCTION

CORPORATION,

Defendants-Respondents.

_____________________________

Argued October 30, 2023 – Decided November 30, 2023

Before Judges Gilson, Berdote Byrne and Bishop-

Thompson.

On appeal from the Superior Court of New Jersey,

Law Division, Camden County, Docket No.

L-1878-23.

John F. Palladino argued the cause for appellant

(Hankin Sandman Palladino Weintrob & Bell,

attorneys; John F. Palladino and Colin G. Bell, on the

brief).

Richard Wayne Hunt argued the cause for respondent

Township of Pennsauken (Parker McCay, PA,

attorneys; Richard Wayne Hunt and Sean T. Fannon,

on the brief).

Nicholas J. Zaita argued the cause for respondent

Terminal Construction Corporation (Peckar &

Abramson, PC, attorneys; Nicholas J. Zaita and Brian

Christopher Glicos, on the brief).

The opinion of the court was delivered by

BISHOP-THOMPSON, J.A.D.

This appeal presents an issue of first impression — whether a joint

venture formed for the sole purpose of bidding on a public contract is required

to be registered as a contractor under the Public Works Contractor Registration

Act (PWCRA), N.J.S.A. 34:11-56.48 to - 56.57, at the time of the bid

submission. Ernest Bock & Sons, Inc. and Dobco, Inc. Pennsauken Joint

Venture (Joint Venture) appeal from a July 28, 2023 order upholding the

Township of Pennsauken’s (Township) decision to reject its bid and award the

contract to the next lowest responsible bidder, Terminal Construction

Corporation (Terminal). Having considered the governing principles and the

applicable statutes, we hold that the PWCRA applies to a joint venture and

requires registration at the time of bid submission to local governments.

Accordingly, we affirm the trial court's order.

I.

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On March 23, 2023, the Township solicited sealed bids for the "New

Public Library and Municipal Complex" (Project) pursuant to the Local Public

Contracts Law, N.J.S.A. 40A:11-1 to - 60 (LPCL). The LPCL governs public

contracts with local governments, including any county, municipality, and

non-State "board, commission, committee, authority[,] or agency" other than a

board of education. N.J.S.A. 40A:11-2(1). Local governments must grant a

contract to the "lowest responsible bidder." N.J.S.A. 40A:11-4. The "lowest

responsible bidder or vendor" means the bidder: (a) whose response to a

request for bids offers the lowest price and is responsive; and (b) who is

responsible. N.J.S.A. 40A:11-2(27). "'Responsive' means conforming in all

material respects to the terms and conditions, specifications, legal

requirements, and other provisions of the request." N.J.S.A. 40A:11-2(33).

The Township's notice to bidders included detailed bid specifications

and numerous forms, which were required to be completed and submitted as

part of any bid. The bid submissions were due on May 4, 2023 at 10:30 a.m.

The Township issued two addendums to the bid notice, which were received

by Joint Venture on April 19 and May 2, 2023.

The notice informed bidders that compliance with the business

registration law, N.J.S.A. 52:32-44, was required as set forth in the bid

specifications. The notice further advised bidders the "Township Council

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reserve[d] the right to reject all bids or to waive minor informalities as may be

permitted by law."

The Township also included supplementary general conditions to the

notice. Section 13.8.1 notified each bidder compliance with the Prevailing

Wage Act (PWA), N.J.S.A. 34:11-56.25 to - 56.47, was required.

Relevant to this appeal, subsection 13.8.1.2 of the bid specifications

explained that the PWCRA, which "became effective April 11, 2000[,] . . .

require[d] that all contractors, . . . register with the New Jersey Department of

Labor and Workforce Development [DOL] at the time of bidding or engaging

in public works contracts that exceed the prevailing wage threshold."

Additionally, "[n]o [c]ontractor shall bid on any contract for public work as

defined in section 2 of P.L.1963, c.150 (C.34:11-56.26) unless the [c]ontractor

is registered pursuant to this Act."

On May 10, Ernest Bock & Sons, Inc. and Dobco, Inc. signed a joint

venture agreement, forming Joint Venture for the specific purpose of bidding

on, and if awarded, performing construction of the Project. Its bid included a

statement of corporate ownership that identified the entity as a "JV

partnership," the bid bond, consent of surety, acknowledgement of addenda,

and subcontractor form as required by N.J.S.A 40A:11-23.2. Joint Venture,

however, did not submit a PWCRA registration certificate. Instead, it

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submitted individual PWCRA registration certificates for Ernest Bock & Sons,

Inc. dated April 2, 2022 and Dobco, Inc. dated May 3, 2022.

On May 11, the Township received and opened four bids, which

disclosed Joint Venture was the lowest bidder and Terminal was the second

lowest bidder. The Township forwarded both bids to its solicitor for

compliance review and responsiveness to the bid specifications.

Five days later, on May 16, Terminal submitted a letter to the Township

protesting Joint Venture's bid, contending there were material defects related

to the statement of ownership and the specialty subcontractor certification

forms. Terminal further contended Joint Venture's bid should be rejected

because it was nonresponsive and not responsible; and therefore, Terminal was

the lowest responsible bidder. A dispute emerged between Terminal and Joint

Venture regarding whether the defects in Joint Venture's bid were material,

and if so, whether the bid should be rejected.

In a June 14 letter from the DOL to the Township's solicitor, the DOL

explained Joint Venture, as a bidder on the Project, would be "subject to the

provisions of the PWA and the PWCRA." The DOL further explained "to bid

or work on a project covered by the PWA, the bidder must be registered with

the [DOL] under the [PWCRA]." According to the DOL, Joint Venture "ha[d]

never been registered with the [DOL] to perform such work[,] and because it

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ha[d] already bid on this project[,] it may be held in violation of the law."

Further, Joint Venture's "performance of any work on this project while

unregistered would constitute an additional violation of the law."

On June 15, the Township adopted Resolution No. 2023:215 awarding

the contract to Terminal. The Township's resolution stated, in pertinent part:

WHEREAS, the apparent low bid of [Joint Venture],

in the amount of $27,285,000[], per the advice of

Township counsel, contained material defects

requiring the rejection of the bid as nonresponsive,

including JV's failure to provide proof of [] JV's

registration under the [PWCRA] . . . and as set forth in

the [b]idding [s]pecifications; and

WHEREAS, the [DOL] has advised Township counsel

that the Department's position is that the JV is

required to be registered under the Act in order to bid

on, and perform work for, this Project; and

WHEREAS, counsel for the Township then reviewed

the second low bid, submitted by [Terminal] for

$27,490,000[], and determined that Terminal's bid is

compliant in all material, non-waivable respects.

Six days later, on June 22, Joint Venture registered as a contractor under

the PWCRA. Shortly thereafter, on June 30, 2023, Joint Venture filed a

verified complaint in lieu of prerogative writs and declaratory judgment

against the Township and Terminal, seeking to enjoin and to overturn the bid

award to Terminal.

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On July 6, 2023, the trial court issued temporary restraints prohibiting

the Township from proceeding with the bid award. The Township, joined by

Terminal, filed an application to dissolve the temporary restraints.

At the hearing, Joint Venture argued that, although the joint venture was

not registered under the PWCRA at the time the bid was submitted, each

individual business entity that would be doing the work was registered under

the PWCRA. The LPCL neither mandated registration nor imposed the

additional requirement of registration under the PWCRA because registration

is not one of the five "mandatory items" for bid submission. It also argued that

Joint Venture was eligible to perform work on the Project based on the DOL

letter because the agency could not disqualify a bid under the LPCL but could

impose sanctions. Lastly, Joint Venture pointed to a 2019 Schools

Development Authority (SDA) project awarded to bidders Terminal and

Dinallo Construction Corporation (Dinallo), as an unregistered joint venture.

Following oral argument on July 28, 2023, the trial court denied Joint

Venture's application for a preliminary injunction and granted the Township

and Terminal’s application to dissolve the temporary restraints but stayed its

ruling pending appeal. The trial court concluded Joint Venture is a form of

partnership under the public bidding laws and was required to be registered

under the PWCRA at the time the bid was submitted to the Township. Citing

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Fliegel v. Sheeran, 272 N.J. Super. 519, 524 (App. Div. 1994), the trial court

noted "[t]he numerous cases which have applied partnership principles to joint

ventures are reflective of the fact that in current usage, 'joint venture' refers to

a particular kind of partnership, one for a limited purpose or for a limited

duration, which like all other types of partnerships are subject to the uniform

partnership law." Further, the trial court concluded the Township's rejection of

Joint Venture's bid and the award to Terminal was not arbitrary, unreasonable,

or capricious.

We granted Joint Venture's motion to stay the award of the contract

pending appeal. This accelerated appeal ensued.

II.

We review the trial court's legal conclusions and issues of applicability

and interpretation of the public contract and local finance laws de novo. See

In re Ridgefield Park Bd. of Educ., 244 N.J. 1, 17 (2020). We use a deferential

standard of review for governmental decisions in bidding cases. 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). "The standard of review on

the matter of whether a bid on a local public contract conforms to

specifications . . . is whether the decision was arbitrary, unreasonable[,] or

capricious." Ibid. (citing Palamar Constr. v. Twp. of Pennsauken, 196 N.J.

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Super. 241, 250 (App. Div. 1983); Stano v. Soldo Constr. Co., 187 N.J. Super.

524, 534 (App. Div. 1983)). If a public entity's decision is grounded rationally

in the record and does not violate the applicable law, it should be upheld. Ibid.

In the context of public bidding, the "function of [the trial c]ourt is to

preserve the integrity of the competitive bidding process and to prevent the

misapplication of public funds." Marvec Constr. Corp. v. Twp. of Belleville,

254 N.J. Super. 282, 288 (Law Div. 1992); see also Barrick v. State, 218 N.J.

247, 258-59 (2014); In re Jasper Seating Co., Inc., 406 N.J. Super. 213, 222

(App. Div. 2009).

We begin our analysis by acknowledging the well-established principles

governing public bidding disputes. "[T]he statutory rule in New Jersey is that

publicly advertised contracts must be awarded to 'the lowest responsible

bidder.'" Meadowbrook Carting Co. v. Bor. of Island Heights & Consol.

Waste Servs., 138 N.J. 307, 313 (1994) (quoting N.J.S.A. 40A:11:6.1); see

also N.J.S.A. 40A:11-4(a). To be responsive, bids must not materially deviate

from the specifications and requirements set forth by the local contracting unit.

Meadowbrook, 138 N.J. at 314. "[A]ny material departure invalidates a

nonconforming bid as well as any contract based upon it." Ibid. (citing Twp.

of Hillside v. Sternin, 25 N.J. 317, 323 (1957)).

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The LPCL was created to ensure a fair, public, and competitive bidding

process for the taxpayer's benefit. See generally, N.J.S.A. 40A:11-2(23).

"[T]he statutes authorizing competitive bidding accomplish that purpose by

promoting competition on an equal footing and guarding against 'favoritism,

improvidence, extravagance, and corruption.'" Meadowbrook, 138 N.J. at 313

(citations omitted). The long-established judicial policy in applying the LPCL

is "to curtail the discretion of local authorities by demanding strict compliance

with public bidding guidelines." Ibid. (citation omitted). Consequently,

"[p]ublic bidders should regard the specifications as requiring the submission

of bids on the terms specified." Id. at 324. "Courts should not casually

transform the mandatory requirement in [bid] specifications . . . into a polite

request." Ibid. (citation omitted).

Under these principles, a public contract must be awarded "not simply to

the lowest bidder, but rather the lowest bidder that complies with the

substantive and procedural requirements in the bid advertisements and

specifications." Ibid. (citing Twp. of Hillside 25 N.J. at 324); see also

N.J.S.A. 40A:11-4(a). The bid specifications apply equally to all bidders, and

any material departure from the bid specifications renders bids nonconforming

and invalid. Hall Constr. Co. v. N.J. Sports & Exposition Auth., 295 N.J.

Super. 629, 635 (App. Div. 1996). A governmental entity is without authority

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to award a contract based on a bid containing a material deviation from the bid

specifications. Meadowbrook, 138 N.J. at 314; see also Terminal Constr.

Corp. v. Atl. Cnty. Sewerage Auth., 67 N.J. 403, 411 (1975). Thus, "a public

entity may not waive any material departure from bid specifications or

requirements of law, and is bound to reject a non-conforming bid with such

defects." Serenity Contracting Grp., Inc. v. Bor. of Fort Lee, 306 N.J. Super.

151, 156 (App. Div. 1997).

The crux of this appeal is whether Joint Venture's omission of the

PWCRA registration certificate was a material deviation from the Township's

bid specifications. In challenging the Township's award to Terminal, Joint

Venture, as the lowest bidder, "must stand or fall on its own entitlement to the

contract." J. Turco Paving Contractor, Inc. v. City Council of Orange, 89 N.J.

Super. 93, 100 (App. Div. 1965) (following William A. Carey & Co. v. Bor. of

Fair Lawn, 37 N.J. Super. 159, 169 (App. Div. 1955) (internal quotation marks

omitted)).

Joint Venture reprises the arguments presented before the trial judge: 1)

there was no material deviation from the Township's bid specifications because

the LPCL does not require registration of joint ventures, 2) the PWCRA does

not bar unregistered entities from performing awarded contracts, 3) after an

award of the contract to Joint Venture, any work it would perform could be

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considered an "additional violation" of the statute subject to fines and

penalties. We reject Joint Venture's contentions.

We first address Joint Venture's status as a legal entity. "[A] joint

venture is an undertaking usually in a single instance to engage in a transaction

of profit where the parties agree to share profits and losses." Wittner v.

Metzger, 72 N.J. Super. 438, 444 (App. Div. 1962) (citations omitted). A joint

venture is simply a single-purpose partnership, or an entity formed for a

limited duration. Fliegel v. Sheeran, 272 N.J. Super. 519, 524 (App. Div.),

certif. denied, 137 N.J. 312 (1994). A joint venture includes "some or all" of

these elements: 1) a contribution by the parties of money, property, effort,

knowledge, skill, or other assets to a common undertaking; 2) a joint property

interest in the subject matter of the venture; 3) a right of mutual control or

management of the enterprise; 4) an expectation of profit; 5) the right to

participate in profits; and 6) limitation of the objective to a single undertaking.

Ibid. at 444 (citations omitted).

We agree with the trial court's reasoning that Joint Venture's status was

akin to a partnership. Here, the undisputed record shows a joint venture was

formed for the sole purpose of bidding on the Project. The Joint Venture

identified itself as a "JV partnership" on the corporate statement of ownership

form and on all bid documents required under N.J.S.A. 40A:11-23. Moreover,

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even if we do not consider Joint Venture a partnership, it is an "other legal

business entity" within the meaning of N.J.S.A. 34:11-56.50.

Additionally, we reject Joint Venture's reliance on the concurrence in

R.C.G. Const. Co., Inc. v. Mayor and Council of Bor. of Keyport, 346 N.J.

Super. 58 (App. Div. 2001), for the proposition that "municipalities have

neither the statutory authority nor the obligation to enforce the PWCRA" and

assuming it was required to be registered under the PWCRA, the bid should

have been awarded to Joint Venture because the DOL was prohibited from

interfering with the contract award. We reject Joint Venture's contentions as

inapposite. In R.C.G., we held that under N.J.S.A. 34:11-56.51, the

subcontractor was required to register before it began performing work on the

project, not before the general contractor submitted its bid proposal. Id. at 64-

65. We also gave deference to the Department of Community Affairs (DCA),

Division of Local Government Services, advisory notices to municipalities

requiring a contractor's submission of a PWCRA registration certificate in

response to bid notices, but not for "all named and known subcontractors." Id.

at 66. Unlike the contractor bidder in R.C.G., Joint Venture was unregistered

when its bid was submitted.

After our decision in R.C.G., the Legislature amended N.J.S.A. 34:11-

56.51 to explicitly provide that "[n]o contractor or subcontractor . . . shall

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engage in the performance of any public work subject to the contract, unless

the contractor or subcontractor is registered pursuant to that act."

Additionally, the PWCRA unequivocally states "no contractor shall bid on any

contract for public work . . . unless the contractor is registered pursuant to this

act." N.J.S.A. 34:11-56.51. The statute defines a contractor as "a person,

partnership, association, joint stock company, trust, corporation, or other legal

business entity . . . who enters into a contract which is subject to the New

Jersey Prevailing Wage Act." N.J.S.A. 34:11-56.50.

Also, the "Local Finance Notice" issued by the DCA on November 1,

2021 "remind[ed]" municipalities of the PWCRA requirement that contractors

working on public works projects covered under the PWA are to be registered

with the DOL. The notice further advised municipalities that the PWCRA

registration requirement applied to bidding on public works projects, stating:

"A contractor must have its [p]ublic [w]orks [c]ontractor [r]egistration

(PWCR) in place before responding to solicitations for bids on public works

contracts subject to prevailing wage."

Applying those principles to the record, there is sufficient credible

evidence to support the Township's conclusion that Joint Venture's bid was

materially defective and, therefore, non-conforming and nonresponsive. The

Township specified in unambiguous terms a registration certificate was

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required under the PWCRA and business registration law, and the failure to

comply with the statutes would be cause for rejection of the bid "as permitted

by law." Joint Venture was not a holder of a registration certificate.

Therefore, Joint Venture's "non-compliance was substantial and thus non-

waivable"; and as such, no further inquiry was necessary because the bid was

"non-conforming and a non-conforming bid [was] no bid at all." In re Protest,

279 N.J. Super. at 595; see also Hall Constr. Co., 295 N.J. Super. at 685.

We conclude Joint Venture's compliance with the LPCL was one of the

factors in the bid submission requirements of the Township's bidding

specifications and the governing law. Under these facts, we hold registration

was a mandatory requirement; and as such, we do not reach the issue of

whether the PWCRA or the PWA imposes a mandatory registration

requirement on the LPCL. The bid specifications were clear, registration was

required. In effect, Joint Venture asks us to make an exception to the

PWCRA, even though the Township required compliance with the statute. We

decline to do so because local governments need clarity in enforcing the LPCL

and determining compliance with the PWCRA. The Legislature has been

clear.

The Joint Venture, however, argues that its noncompliance was a mere

technicality, and we should not apply the PWCRA as written. We reject this

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argument because if the statute is to be changed, that is the province of the

Legislature. Any other outcome creates uncertainty.

Joint Venture contends that Terminal and Dinallo bid on, and were

awarded, an SDA public works contract as an unregistered joint venture under

the PWCRA. We decline to address this argument because the award of the

SDA contract and the record of that award are not before us. Therefore, we

will not speculate on the facts of that 2019 award and we do not have the

record to hold that the SDA award somehow estopped Terminal from making

the bid challenge in this matter. Moreover, even if Terminal had submitted the

bid as an unregistered joint venture in another matter, in this matter we are

satisfied the joint venture principles and the statutes govern.

As noted above, we concluded Joint Venture did not submit a bid "at

all." Nonetheless, for the sake of completeness, we address Joint Venture's

contention the Township's refusal to vacate the award to Terminal was

arbitrary, capricious, and unreasonable. That argument likewise fails. We

conclude the Township's decision, as set forth in the bid notice, to require all

bidders to comply explicitly with the PWCRA was sound based on the

prevailing law. We see nothing arbitrary, capricious, or unreasonable about

the Township requiring all contractors to submit bids in compliance with the

PWCRA.

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Joint Venture's bid did not meet a material requirement of the bid

specifications; it was not "responsive" and thereby not the "lowest responsible

bidder" under the LPCL. Consequently, the Township acted within its

authority in rejecting Joint Venture's bid and its decision was not arbitrary,

capricious, or unreasonable.

We discern no basis to reverse the trial judge's thoughtful and detailed

ruling that the Township's rejection of Joint Venture's bid and award of the

contract to Terminal was appropriate. We find no mistaken application of the

law or an abuse of discretion.

To the extent we have not otherwise addressed the Joint Venture's

remaining arguments, we conclude they lack sufficient merit to warrant

discussion in a written opinion. Rule 2:11-3(1)(E).

Affirmed. We vacate our August 16, 2023 order staying the trial court's

order pending this appeal.

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