N.J. SUPERIOR COURT, APPELLATE DIVISION

Waste Management of N.J. Inc. v. Morris County Municipal Utilities Authority

PUBLIC UTILITIES

New Jersey Law Journal

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Waste Management of N.J. Inc. v. Morris County Municipal Utilities Authority, A-2806-12T1; Appellate Division; opinion by Fisher, P.J.A.D.; decided and approved for publication December 16, 2013. Before Judges Fisher, Espinosa and Koblitz. On appeal from the Law Division, Morris County, L-2627-12 and L-2868-12. [Sat below: Judge Weisenbeck.] DDS No. 37-2-2267 [15 pp.]

In this public-bidding matter, the court granted leave to appeal the denial of an interlocutory injunction based solely on the trial judge's determination that plaintiffs were not likely to succeed on the merits.

On July 9, 2012, defendant Morris County Municipal Utilities Authority issued a public notice seeking sealed bids for a five-year contract to operate the two Morris County solid waste transfer stations and to provide related transportation and disposal services. The request for bids mandated, among other things, that bidders "[s]upply...the certified financial statement of the Bidder and/or, if applicable, the Guarantor for each of the three (3) recent fiscal years." This request for bids did not define "certified financial statement."

Plaintiff Covanta 4Recovery, L.P., submitted the lowest bid, defendant Solid Waste Services Inc., d/b/a J.P. Mascaro & Sons, submitted the second-lowest bid, and plaintiff Waste Management of New Jersey Inc. submitted the third-lowest bid. The authority determined that Mascaro submitted the lowest responsible bid.

Waste Management filed a verified complaint and sought entry of an order to show cause. Covanta filed a similar complaint, which included a claim that its bid should not have been rejected and also sought entry of an order to show cause.

On Dec. 12, 2012, the trial judge denied interlocutory injunctive relief, concluding that Waste Management and Covanta failed to satisfy by clear and convincing evidence a likelihood of success on the merits and, consequently, he need not address the remaining factors outlined by the Supreme Court in Crowe v. De Gioia.

Waste Management moved for leave to appeal the denial of its application for interlocutory injunctive relief. Covanta similarly moved for leave to appeal. Mascaro moved for summary judgment, seeking a determination that its bid conformed to the authority's written requirements. In the absence of any legal impediment, Mascaro also began performing under the awarded contract.

On Feb. 26, 2013, an appellate panel granted Waste Management and Covanta's motions for leave to appeal the denial of interlocutory injunctive relief; the panel also stayed further performance of the Mascaro contract. The authority entered into an emergency contract with Mascaro on the same terms as the awarded contract, with its length limited to the emergency's duration.

Held: The judge mistakenly overlooked his authority to impose interlocutory injunctive relief to preserve the parties' positions and subject matter of the suit, even when there are legitimate doubts about plaintiffs' likelihood of success.

The narrow question presented by this interlocutory appeal is whether the trial judge mistakenly exercised his discretion in denying interlocutory injunctive relief.

Summarizing the Crowe factors, the Appellate Division held in Waste Mgmt. of N.J. Inc. v. Union Cnty. Utils. Auth. that issuance of an interlocutory injunction turns on whether "the movant has demonstrated a reasonable probability of success on the merits; that a balancing of the equities and hardships favors injunctive relief; that the movant has no adequate remedy at law and that the irreparable injury to be suffered in the absence of injunctive relief is substantial and imminent; and that the public interest will not be harmed."

Here, in his written opinion, the trial judge correctly identified these as the factors to be applied. The judge then determined that plaintiffs' failure to convince him of the likelihood of success on their claims required denial of interlocutory injunctive relief without consideration of the other factors. This conclusion was erroneous because it overlooks a court's authority to impose interlocutory restraints regardless of doubts about the movants' likelihood of success.

The judge correctly recognized the likelihood-of-success factor was governed by whether there was a factual dispute about the meaning of the bid requirements and the sufficiency of the financial information provided. The judge, having been persuaded to Mascaro and the authority's position after hearing testimony from the parties' experts, determined that plaintiffs had not clearly and convincingly shown they were likely to succeed. For the purpose of considering whether injunctive relief was properly denied, the panel will assume the accuracy of the judge's prediction about plaintiffs' likelihood of success.

That, however, does not end the matter. Here, the judge did not balance the relative hardships; he did not consider the irreparable injury that would follow the injunction's denial; he did not examine whether the denial of interlocutory relief would impair or destroy the subject matter of the suit; and he did not weigh the detrimental impact on the public if a lucrative contract were to be given to a potentially unqualified party before a challenge to the bidding process could be fully and finally adjudicated. These circumstances weighed heavily in favor of interlocutory injunctive relief, and the judge's failure to consider these other Crowe factors constitutes an abuse of discretion warranting intervention notwithstanding the deference owed to the judge's prediction of the likelihood of success.

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