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IN RE: the Application of LUNATI PAVING & CONSTRUCTION OF NY, INC., Plaintiff/Petitioner, For a Judgment Under Article 78 of the CPLR, v. SUFFOLK COUNTY WATER AUTHORITY and Laser Industries, Inc., Defendants/Respondents.

No. 6728–2016.

Decided: November 16, 2017

Donald Leo & Associates, P.C., Islandia, for Plaintiff. Timothy J. Hopkins, Esq., Oakdale, for Deft SC Water Authority.

Upon the reading and filing of the following papers in this matter: (1) Notice of Petition, dated July 11, 2016, and supporting papers; (2) Verified Answer and Return, dated August 10, 2016, and supporting papers, including Memorandum of Law; (4) Reply Affirmation by the plaintiff, dated August 19, 2016, and supporting papers; and now

UPON DUE DELIBERATION AND CONSIDERATION BY THE COURT of the foregoing papers, the motion is decided as follows: it is

ORDERED that the application by notice of petition (001) of petitioner, Lunati Paving & Construction of NY, Inc., which seeks an order pursuant to CPLR Article 78, annulling the determination of the respondent, Suffolk County Water Authority (“SCWA”), to not award work under a certain public contract to petitioner as the purported lowest bidder, and directing SCWA to award said contract to the petitioner, is hereby denied; and it is further

ORDERED that counsel for SCWA shall promptly serve a copy of this Order via First Class Mail upon all parties, or their attorneys if represented by counsel, and shall promptly thereafter file the affidavit(s) of such service with the Suffolk County Clerk.

In this Article 78 proceeding, the petitioner, Lunati Paving & Construction of NY, Inc. (“Lunati”) alleges that since it was the lowest bidder, the respondent SCWA's decision to award the subject contract to co-defendant/respondent, Laser Industries, Inc., was arbitrary and capricious, and without a rational basis. The contract at issue, Contract No. 7311 (“the Contract”), involved replacement of concrete and bituminous patches, concrete curbs and concrete sidewalk restoration. After proper implementation of the bid process, SCWA opened the bids for the Contract and read them aloud on January 20, 2016. It is undisputed that Lunati was the apparent lowest bidder for the Group III portion of the Contract at issue.

By letter dated February 5, 2016, however, SCWA notified the Lunati that although Lunati was the lowest bidder, SCWA would recommend a determination of “non-responsibility” as to Lunati for the Contract, on the basis of Lunati's unsatisfactory performance under a prior contract, Contract No. 7049, which consisted of substantially the same scope of work as that for Contract No. 7311. This documented unsatisfactory performance under the prior contract consisted of Lunati's delays on completion of work orders, as well as unprofessional conduct and behavior of Lunati's personnel in its performance under the prior contract. The record includes various correspondence between SCWA and Lunati, and documented examples of Lunati's poor performance under the prior contract. These examples include the State of New York having barred SCWA from performing work on State roads based on Lunati's poor performance under the prior contract. Consequently, SCWA had to reassign to another contractor work that Lunati failed to perform in accordance with the prior contract specifications.

Before awarding the Group III portion of Contract No. 7311 to another bidder, SCWA gave Lunati several opportunities, in-person and in writing, to address the issues that had arisen under the prior contract, which, in turn, gave rise to the recommendation of “non-responsibility” to Lunati for the current Contract. After evaluating Lunati's (late) written response, SCWA Board Members passed a Resolution rejecting the bid of Lunati as a non-responsible bidder, and awarded the Group III portion of the Contract to co-defendant/respondent, Laser Industries, Inc. Petitioner, Lunati, then brought this Article 78 petition, alleging that SCWA's decision was arbitrary and capricious, and lacked a rational basis.

In general, the petitioner has the burden of proving the allegations of his or her petition in a proceeding commenced pursuant to CPLR Article 78 (see Stanton v. Town of Islip Dept. of Planning and Development, 37 AD3d 473, 829 N.Y.S.2d 596 [2d Dept 2007]; Poster v. Strough, 299 A.D.2d 127, 752 N.Y.S.2d 326 [2d Dept 2002] ). Where the Article 78 record fails to support petitioner's allegations of bad faith, malice or disparate treatment by the respondent, denial of the petition is warranted (see Stanton v. Town of Islip Dept. of Planning and Development, 37 AD3d 473; Int'l Innovative Tech. Group Corp. v. Planning Bd. of Town of Woodbury, 20 AD3d 531, 799 N.Y.S.2d 544 [2d Dept 2005] ).

Pursuant to Pub. Auth. Law § 1077(3), the “carrying out of [SCWA's] powers, purposes and duties are in all respects for the benefit of the people of the county of Suffolk and the state of New York, for the improvement of their health, welfare and prosperity and that the said purposes are public purposes and that the authority is and will be performing an essential governmental function in the exercise of the powers conferred upon it” by statute. With regard to contracts awarded by SCWA, PAL § 1088 provides, in relevant part:

All contracts, or orders, for work, material or supplies performed or furnished in connection with construction shall be awarded by the authority pursuant to resolution. Such contracts, or orders, for work, material or supplies needed for any particular purpose involving an expenditure of more than five thousand dollars shall be awarded only after inviting sealed bids or proposals therefor ․ If the authority shall not deem it for the interest of the authority to reject all bids, it shall award the contract to the lowest bidder, unless the authority shall determine that it is for the public interest that a bid other than the lowest bid should be accepted (emphasis added).

Under the statutes requiring competitive bidding in the letting of public contracts, an administrative agency or municipality should consider a bidder's skill, judgment and integrity in determining the responsibility of a bidder, and where good reason exists the low bid may be disapproved (see AAA Carting and Rubbish Removal, Inc. v. Town of Southeast, 17 NY3d 136, 927 N.Y.S.2d 618 [2011]; DeFoe Corp. v. New York City Dept. of Transp., 87 N.Y.2d 754, 642 N.Y.S.2d 588 [1996] ). Neither the low bidder nor any other bidder has a vested property interest in a public works contract (see Matter of Conduit & Found. Corp., 66 N.Y.2d 144, 495 N.Y.S.2d 340 [1985] ).

Indeed, a municipal entity's discretion to reject a bid based upon a contractor's past work practices and prior inadequate performance of a public works contract constitutes a rational basis upon which the municipality may conclude that the contractor was not the lowest responsible bidder (see Toussie v. County of Suffolk, 26 AD3d 506, 809 N.Y.S.2d 573 [2d Dept 2006]; Mid–State Industries Ltd. v. City of Cohoes, 221 A.D.2d 705, 633 N.Y.S.2d 238 [3d Dept 1995] ). Furthermore, a municipality's determination that an entity is a “non-responsible” bidder can be disturbed only if no rational basis exists for its conclusion, or where action is taken without sound basis in reason or regard to the facts (see Stone v. Farr, 135 AD3d 775, 23 NYS3d 317 [2d Dept 2016]; National Compressor Exchange, Inc. v. New York City Transit Authority, 127 AD3d 867, 7 NYS3d 342 [2d Dept 2015] ).

Here, Lunati has failed to meet its burden of proving that SCWA's determination that Lunati is a “non-responsible” bidder was arbitrary and capricious, or without a rational basis (see Stanton v. Town of Islip Dept. of Planning and Development, 37 AD3d 473, 829 N.Y.S.2d 596 [2d Dept 2007] ). Lunati's past inadequate performance on Contract No. 7049 constitutes a rational basis upon which SCWA determined that Lunati was not the lowest responsible bidder (see Toussie v. County of Suffolk, 26 AD3d 506, 809 N.Y.S.2d 573 [2d Dept 2006] ).

Based upon the foregoing, Lunati's petition is denied in all respects.


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