LANCASTER DEVELOPMENT INC v. JOAN McDONALD

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Supreme Court, Appellate Division, Third Department, New York.

LANCASTER DEVELOPMENT, INC., et al., Appellants, v. JOAN McDONALD, as Commissioner of Transportation, et al., Respondents.

516540

Decided: December 26, 2013

Before:  Rose, J.P., Spain, Garry and Egan Jr., JJ. Couch White, LLP, Albany (Jeremy M. Smith of counsel), for appellants. Eric T. Schneiderman, Attorney General, Albany (Owen Demuth of counsel), for respondents. Adams Bell Adams, PC, Rochester (Anthony J. Adams Jr. of counsel), for The National Black Chamber of Commerce, Inc. and others, amici curiae.   Brown & Weinraub, PLLC, Albany (Patrick E. Brown of counsel), for New York Building & Construction Trades Council, AFL–CIO, amicus curiae.

MEMORANDUM AND ORDER

Calendar Date:  November 19, 2013

Appeal from an amended judgment of the Supreme Court (Zwack, J.), entered January 17, 2013 in Albany County, which, in a combined proceeding pursuant to CPLR article 78 and action for declaratory judgment, granted respondents' motion to dismiss the petition/complaint.

In 2011, respondent Department of Transportation (hereinafter DOT) solicited bids to reconstruct Exit 122 of State Route 17 in the Town of Wallkill, Orange County and, in conjunction therewith, elected to include a project labor agreement (hereinafter PLA) in the bid specifications for the project.1  Although petitioner Lancaster Development, Inc., a nonunion shop, submitted the lowest bid, DOT declared Lancaster's bid to be “informal” based upon Lancaster's refusal to abide by the terms of the PLA.2 In response, Lancaster commenced a combined CPLR article 78 proceeding and action for declaratory judgment to challenge the inclusion of the PLA in the 2011 bid.   Supreme Court (Teresi, J.) declared that the subject PLA violated the competitive bidding laws and directed that the project be rebid.

In June 2012, DOT rebid the project as directed, and the bid specifications again included a PLA—one that was based upon a recently commissioned labor/cost analysis.   Lancaster elected not to submit a bid and, instead, together with petitioner Empire State Chapter of the Associated Builders and Contractors, Inc. and petitioner Lori Florian, commenced this combined CPLR article 78 proceeding and declaratory judgment action seeking to challenge DOT's inclusion of a PLA in its 2012 bid specifications.   Respondents moved to dismiss contending, among other things, that petitioners lacked standing.   Supreme Court (Zwack, J.) granted respondents' motion, and this appeal by petitioners ensued.

To establish standing, Lancaster was required to demonstrate that it “suffered an injury in fact, distinct from that of the general public[,] ․ [and] that the injury claimed falls within the zone of interests to be protected by the statute challenged” (Matter of Transactive Corp. v New York State Dept. of Social Servs., 92 N.Y.2d 579, 587 [1998];  see Society of Plastics Indus. v County of Suffolk, 77 N.Y.2d 761, 772–774 [1991];  see also Matter of Ricket v. Mahan, 97 AD3d 1062, 1063 [2012] ).   This it failed to do.   As a starting point, inasmuch as the harm purportedly suffered by Lancaster was occasioned not by its failure to secure the winning bid for the project (compare Maraia v. Orange Regional Med. Ctr., 63 AD3d 1113, 1115 [2009] ) but, rather, by its entirely voluntary decision to forgo submitting a bid at all, we are not persuaded that Lancaster has suffered an injury in fact distinct from that of the public at large.   Moreover, even assuming that Lancaster met this aspect of the standing test, it is clear that any economic injury or lost business opportunity suffered by Lancaster does not fall within the zone of interests to be protected by the competitive bidding statutes (see Matter of Transactive Corp. v New York State Dept. of Social Servs., 92 N.Y.2d at 587–588), which were designed to “protect[ ] ․ the public fisc by obtaining the best work at the lowest possible price” and prevent “favoritism, improvidence, fraud and corruption in the awarding of public contracts” (Matter of New York State Correctional Officers & Police Benevolent Assn., Inc. [New York State Dept. of Civ. Serv.], 70 AD3d 240, 243–244 [2009] [internal quotation marks and citation omitted];  see Matter of Conduit & Found.   Corp. v Metropolitan Transp.   Auth., 66 N.Y.2d 144, 148 [1985] ).   Such statutes are not intended to benefit individual bidders (see Matter of Conduit & Found.   Corp. v Metropolitan Transp.   Auth., 66 N.Y.2d at 148;  Matter of New York State Ch., Inc., Associated Gen. Contrs. of Am. v New York State Thruway Auth., 207 A.D.2d 26, 30–31 [1994], affd 88 N.Y.2d 56 [1996] ), and “[t]he fact that certain nonunion contractors may be disinclined to submit bids” where, as here, a PLA is included in the contract specifications does not preclude competition such that the “competitive bidding mandate” is offended (Matter of New York State Ch., Inc., Associated Gen. Contrs. of Am. v New York Sate Thruway Auth., 88 N.Y.2d 56, 71 [1996] ).   We therefore conclude that Lancaster failed to demonstrate that it has standing under the traditional two-prong test (cf.   Matter of Transactive Corp. v New York State Dept. of Social Servs., 92 N.Y.2d at 587–588).

Although a limited exception indeed has been carved out where the nonbidding entity can demonstrate that it was precluded from submitting any bid at all (see Matter of Kick v. Regan, 110 A.D.2d 934 [1985], lv denied 66 N.Y.2d 601 [1985];  Albert Elia Bldg. Co. v New York State Urban Dev. Corp., 54 A.D.2d 337 [1976] ), these cases are readily distinguishable 3 and Lancaster's attempt to fall within the exception is unpersuasive.   Simply put, neither the alleged illegality of the PLA itself (an issue we do not address) nor its inclusion in the 2012 bid specifications deprived Lancaster of the opportunity to bid on the project.4  Lancaster may have elected not to submit a bid because, as a nonunion shop, it considered the PLA to be inconsistent with its business model and practices or because the inclusion of the PLA otherwise made the project less attractive, but the PLA itself did not preclude Lancaster from bidding altogether—as evidenced by, for example, Lancaster's participation in the prior round of bidding.   Accordingly, Supreme Court properly concluded that Lancaster lacked standing to maintain this proceeding/action.

Petitioners' remaining contentions do not warrant extended discussion.   In light of our determination that Lancaster—as Empire's contractor member—lacks standing in its own right, Empire's organizational standing claim necessarily must fail (see Matter of New York Propane Gas Assn. v New York State Dept. of State, 17 AD3d 915, 916 [2005] ).   Similarly, inasmuch as a review of Florian's affidavit reveals that she is challenging DOT's decision to include a PLA in the underlying contract and not the unlawful expenditure of any funds disbursed pursuant thereto, Supreme Court properly declined to afford her taxpayer standing under State Finance Law § 123–b (see Matter of Vector Foiltec, LLC v State Univ. Constr.  Fund, 84 AD3d 1576, 1578 [2011], lv denied 17 NY3d 716 [2011];  Matter of Humane Socy. of United States v Empire State Dev. Corp., 53 AD3d 1013, 1016 [2008], lv denied 12 NY3d 701 [2009];  compare Saratoga County Chamber of Commerce v Pataki, 100 N.Y.2d 801, 813–814 [2003], cert denied 540 U.S. 1017 [2003] ).   Finally, we agree with Supreme Court that inasmuch as a losing bidder could have commenced suit to challenge the inclusion of the PLA in the bid specifications, petitioners failed to demonstrate the existence of an impenetrable barrier to judicial review (see Matter of Transactive Corp. v New York State Dept. of Social Servs., 92 N.Y.2d at 589;  Matter of Vector Foiltec, LLC v State Univ. Constr.  Fund, 84 AD3d at 1578–1579).   Accordingly, there is no basis upon which to afford petitioners common-law taxpayer standing.

Rose, J.P., Spain and Garry, JJ., concur.

ORDERED that the amended judgment is affirmed, without costs.

ENTER:

Robert D. Mayberger

Clerk of the Court

FOOTNOTES

FN1. “[A] PLA is a prebid contract between a construction project owner and a labor union (or unions) establishing the union as the collective bargaining representative for all persons who will perform work on the project” (Matter of New York State Ch., Inc., Associated Gen. Contrs. of Am. v New York State Thruway Auth., 88 N.Y.2d 56, 65 [1996] )..  FN1. “[A] PLA is a prebid contract between a construction project owner and a labor union (or unions) establishing the union as the collective bargaining representative for all persons who will perform work on the project” (Matter of New York State Ch., Inc., Associated Gen. Contrs. of Am. v New York State Thruway Auth., 88 N.Y.2d 56, 65 [1996] ).

FN2. An “informal” bid is, in essence, a bid that does not conform to the underlying bid specifications..  FN2. An “informal” bid is, in essence, a bid that does not conform to the underlying bid specifications.

FN3. In Kick, we concluded that the corporate petitioner had standing to maintain the subject proceeding because it would have bid on the project had the underlying request for proposal not been withdrawn (see Matter of Kick v. Regan, 110 A.D.2d at 935).   Similarly, in Elia, the Fourth Department permitted the petitioner, a nonbidding entity, to challenge the municipality's decision to award additional work to the successful bidder because the municipality, by awarding such work pursuant to a contract change order, circumvented what otherwise should have been a competitive bidding process, thereby precluding the petitioner from submitting a bid in the first instance (see Albert Elia Bldg. Co. v New York State Urban Dev. Corp., 54 A.D.2d at 341–342)..  FN3. In Kick, we concluded that the corporate petitioner had standing to maintain the subject proceeding because it would have bid on the project had the underlying request for proposal not been withdrawn (see Matter of Kick v. Regan, 110 A.D.2d at 935).   Similarly, in Elia, the Fourth Department permitted the petitioner, a nonbidding entity, to challenge the municipality's decision to award additional work to the successful bidder because the municipality, by awarding such work pursuant to a contract change order, circumvented what otherwise should have been a competitive bidding process, thereby precluding the petitioner from submitting a bid in the first instance (see Albert Elia Bldg. Co. v New York State Urban Dev. Corp., 54 A.D.2d at 341–342).

FN4. Indeed, the PLA expressly provided that “all [c]ontractors ․ shall be eligible to compete for contracts and subcontracts without regard to whether they are otherwise parties to an existing collective bargaining agreement” and, further, precluded the collective bargaining agent from discriminating in job referrals based upon “the applicant's union membership, or lack thereof.”.  FN4. Indeed, the PLA expressly provided that “all [c]ontractors ․ shall be eligible to compete for contracts and subcontracts without regard to whether they are otherwise parties to an existing collective bargaining agreement” and, further, precluded the collective bargaining agent from discriminating in job referrals based upon “the applicant's union membership, or lack thereof.”

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