REALTY APPRAISAL COMPANY VS. CITY OF JERSEY CITY, ETC.(L-5899-13, HUDSON COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE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-4339-15T1

REALTY APPRAISAL COMPANY,

Plaintiff-Respondent,

v.

CITY OF JERSEY CITY, a Municipal
Corporation of the State of New Jersey,

Defendant-Appellant.

Argued May 17, 2017 – Decided June 13, 2017

Before Judges Fuentes, Simonelli and Carroll.

On appeal from the Superior Court of New
Jersey, Law Division, Hudson County, Docket
No. L-5899-13.

Marguerite M. Schaffer argued the cause for
appellant (Shain, Schaffer & Rafanello, P.C.,
attorneys; Ms. Schaffer, of counsel and on the
briefs; Sarah E. Fitzpatrick and Xiaosong Li,
on the briefs).

Philip Elberg argued the cause for respondent
(Medvin & Elberg, attorneys; Mr. Elberg and
Samuel R. Bloom, on the brief).

PER CURIAM
 Defendant City of Jersey City (the City) awarded a contract

to plaintiff Realty Appraisal Company to conduct a revaluation of

all real property in the City after plaintiff submitted the lowest

bid. Following a bench trial, the trial court found that the City

breached the contract. The court granted plaintiff $984,511 in

damages, pre-judgment interest of $46,519.55, and $114,786 in

counsel fees and costs.

In this appeal, the City argues that: (1) the contract was

illegal and against public policy due to a conflict of interest

created by plaintiff's employment of the City's former Business

Administrator; (2) plaintiff's deficient ownership disclosure form

rendered the Contract invalid; (3) post-bid modifications

invalidated the contract; (4) the trial court erred in finding

that the City acted in bad faith in terminating the contract; (5)

the damage award was improperly calculated; and (6) the trial

court erroneously quashed certain trial subpoenas. Having

considered defendant's arguments in light of the record and

applicable legal standards, we affirm.

I.

On February 8, 2010, the Jersey City Committee for Revaluation

(the committee) held an initial meeting to discuss a plan for the

tax revaluation. During this initial meeting, then-City Business

Administrator Brian O'Reilly announced his intention to recuse

2 A-4339-15T1
himself from the process. O'Reilly had worked for the City for

over two decades in various roles, including Business

Administrator and Tax Assessor.

On March 26, 2010, then-mayor Jerramiah Healy requested

formal authorization from the Hudson County Board of Taxation to

conduct a revaluation. Thereafter, on April 30, 2010, the Board

of Taxation ordered the City to conduct a revaluation of all City

properties after determining that its property assessments

distributed the tax burden inequitably and unconstitutionally.1

Eduardo Toloza served as City Tax Assessor at the time of the

Board of Taxation's revaluation order. Toloza testified at trial

regarding the need for the revaluation, noting that some City

residents paid far less than their fair share of property tax, and

others far more, as property values in downtown Jersey City

appreciated at a quicker rate. This disparity grew for decades

before the City undertook the revaluation process. As a result,

the City's coefficient of deviation as calculated by the Division

1
A tax revaluation ordered by a county board of taxation, as here,
involves reappraising each parcel of real property within a
municipality. See N.J.A.C. 18:12A-1.14. A tax revaluation may
be ordered to comply with the statutory requirement that "all
property . . . shall bear its full and just share of taxes."
N.J.S.A. 54:3-13.

3 A-4339-15T1
of Taxation was the highest of any municipality in New Jersey, and

its ratio of assessment to true value was among the lowest.

The Director of the Division of Local Government Services

authorized the City to use "competitive contracting"2 to award the

contract, pursuant to the Local Public Contracts Law, N.J.S.A.

40A:11-1 to -51. Revaluation companies are regulated by the

Division of Taxation pursuant to N.J.A.C. 18:12-4.2, and must be

approved by the Division of Taxation on an annual basis. N.J.A.C.

18:12-4.4(a). One such company is plaintiff, which has conducted

revaluations in New Jersey since 1951, and is the only revaluation

company with an office in Hudson County. According to its bid,

plaintiff has conducted multiple revaluations of municipalities

in Hudson County in recent years, including a revaluation of the

City in 1965.

O'Reilly testified that, in January or February 2010, he

recused himself from any involvement in the revaluation process.

He stated he did this because he did not "want to have any post-

employment restrictions" following his contemplated retirement

from the City. In addition to informing Toloza of his recusal,

2
Competitive contracting is a process by which municipalities
"establish[] weighting criteria and evaluat[e] proposals . . .
[thereby] finding that a specific proposal is the most
advantageous, price and other factors considered[.]" N.J.A.C.
5:34-4.3(d).

4 A-4339-15T1
O'Reilly also told Dominick Pandolfo, the mayor's chief of staff;

Kevin Lyons, an aide to the mayor who worked on the budget and

personnel committee; and the revaluation committee itself.

O'Reilly testified he was "not involved . . . one iota" with

the revaluation committee, because he was aware of the potential

for a conflict of interest. O'Reilly conceded that, while still

Business Administrator, he asked assistant Business Administrator

John Mercer to serve on the revaluation committee. However, he

made it clear to Mercer that he was recusing himself from the

revaluation process entirely and that Mercer was not to speak to

him about the committee's work. Eventually, the committee was

comprised of seven City employees, including: Toloza; Mercer; Mary

Ann Murphy, the Assistant Corporation Counsel; Jeff Wenger, a

planner in the Department of Housing, Economic Development, and

Commerce; Donna Mauer, Jersey City Chief Financial Officer;

Michele Hennessey, a Tax Assessor; and Roxanne Mays, a Tax

Assessor.

After the City committed to the revaluation in 2010, the

committee held several meetings to discuss, plan for, and organize

the process. It conducted an initial meeting on February 8, 2010,

as well as subcommittee meetings on February 23, 2010; February

24, 2010; March 1, 2010; March 23, 2010; March 26, 2010; and April

14, 2010. Although these meetings occurred before O'Reilly

5 A-4339-15T1
retired, he attended only the initial February 8, 2010 meeting,

for the limited purpose of announcing his intent to recuse himself

from the revaluation process. Toloza testified that thereafter

O'Reilly was not involved in the revaluation process, nor did he

attempt to influence the constitution of the committee or its

decisions.

O'Reilly retired from his employment with the City as Business

Administrator on July 31, 2010. In October 2010, O'Reilly began

working part-time for plaintiff at a rate of $75 per hour.

Plaintiff requested that O'Reilly assure there would be no conflict

of interest concerning its work with the City should plaintiff

hire him. O'Reilly sought a legal opinion from then-Jersey City

Corporation Counsel, William Matsikoudis, as to whether the City's

"Revolving Door Ordinance," Jersey City Municipal Code sections

33-1 and -3, precluded him from working on plaintiff's projects

that involved the City. The Ordinance provides, in pertinent

part:

No employee of the city, whether paid or
unpaid, shall for a period of one (1) year
after leaving employment receive compensation
from any person, firm or entity in relation
to any case, application, project or matter
with which the employee was directly concerned
or in which the employee directly participated
or with respect to which the employee had
access to special knowledge or information
during the employee's employment with the City
of Jersey City.

6 A-4339-15T1
 [Jersey City Municipal Code § 33-1.]

Notably, Section 33-3 of the Ordinance allows former employees to

engage in private employment or activities that Section 33-1 would

otherwise prohibit if either the head of the affected department

certifies in writing that the former employee's activities or

employment would serve the interest of the city, or the corporate

counsel provides written approval. Jersey City Municipal Code

§33-3.

Matsikoudis advised "it is apparent that [O'Reilly] has not

participated in the business of the [revaluation] committee or

influenced any actions thereof." He concluded that O'Reilly's

employment with plaintiff would not violate the "Revolving Door

Ordinance," writing:

Based upon the facts provided,
[O'Reilly's] lack of involvement with [the
City's] property tax revaluation project is
apparent. Thus, I am of the opinion that
[O'Reilly is] not in violation of Section 33-
1 . . . of the [Jersey City] Municipal Code
if [he] should become employed by a property
tax revaluation firm under contract with the
City of Jersey City, even if such employment
were to occur within a year of [O'Reilly's]
retirement.

Neil Rubenstein, one of plaintiff's principals, indicated that the

company relied on Matsikoudis' opinion that hiring O'Reilly would

not violate any conflict of interest rules.

On November 10, 2010, the City issued its Request for

7 A-4339-15T1
Proposals (RFP) seeking bids for the revaluation contract. Four

firms, including plaintiff, submitted bid proposals.

In its proposal, plaintiff highlighted the benefits of

O'Reilly's employment. Section 3.4 of plaintiff's Executive

Summary noted O'Reilly "brings tremendous knowledge and

experience" and he would be "instrumental in valuing a variety of

Jersey City properties" due to his expertise in the area involving

"recently built and tax abated properties." It also highlighted

the fact that O'Reilly dealt with plaintiff during his time working

for the City, noting that, "[i]n 2001, [plaintiff] was engaged by

[O'Reilly] to inspect, measure and prepare property record cards

for the major long term tax abated properties, including the

[Newport Mall]."3

Section 3.9 of plaintiff's proposal identified O'Reilly as

the person responsible for phases of the revaluation such as public

education and neighborhood delineation. Section 3.14 stated

O'Reilly's role would include working on "Public Education, Tax

Map Review, Neighborhood Delineation, Tax Exemptions, Sales

Analysis, and Project Management."

Plaintiff included a "Corporation or Partnership Statement"

in its bid proposal as required by N.J.S.A. 40A:11-4.4(d) and the

3
O'Reilly testified that he served as tax assessor from 1999-
2003.

8 A-4339-15T1
terms of the RFP. Plaintiff certified that it only had two

principals holding an interest of ten percent or greater in the

company, Stanley Rubenstein and Robert Rubenstein.

Plaintiff's ultimate bid price was $3,150,000, which was

approximately $2,000,000 below the next lowest bid. Neil

Rubenstein testified that only he, Stanley, Robert, and Steven

Rubenstein were involved in determining the bid amount. O'Reilly

was not involved, and all information used in plaintiff's bid

calculation was based on public knowledge that was available to

all bidders.

Plaintiff also made a presentation to the City before a

decision was made on its proposal. O'Reilly attended the

presentation, but not as a negotiator in the bidding process. He

testified he attended only because "the committee wanted a staff

meeting with the principals and the folks that are going to be

doing the work to ensure . . . [that everyone] was on the same

page."

On February 9, 2011, the City passed Resolution No. 11-806

by a vote of five to two, thereby awarding the revaluation contract

to plaintiff. The only council members voting "no" were Steven

Fulop and Nidia Lopez, with Fulop apparently expressing concern

over O'Reilly's potential conflict of interest. In October 2011,

plaintiff terminated O'Reilly for violating company policy.

9 A-4339-15T1
 Toloza testified that the contract completion date was

delayed for a year. The delay was attributable to the City's own

internal problems, specifically its failure to deliver updated tax

maps to plaintiff. Toloza indicated plaintiff was not at fault

for the delay, which the City's designated representative,4 Robert

Kakoleski, confirmed. Moreover, every fact witness called at

trial, including those presented by the City, confirmed that, as

of June 2013, the revaluation was on schedule to be completed by

the extended deadline.

Fulop was elected mayor in May 2013. On June 25, 2013, he

suspended work on the contract. In a letter to then-Jersey City

Business Administrator Jack Kelly, Fulop explained his decision

as follows:

As you know, [the City] contracted in
February [] 2011, with [plaintiff] to perform
a City-wide revaluation. Originally, that
contract called for the revaluation to be
completed by December [] 2012. Substantially
behind schedule, the contract date has now
been extended until May [] 2014.

From the start there have been grave
concerns regarding the manner in which
proposals for the revaluation contract were
reviewed and recommended by the
Administration. Not the least of those
concerns involves the role played by the
City's prior Business Administrator who, after

4
See R. 4:14-2(c) (authorizing an organization to "designate one
or more officers, directors, or managing agents, or other persons
who consent to testify on its behalf").

10 A-4339-15T1
 leaving the City, became employed by
[plaintiff].

In addition, there have been concerns
raised about the impact of hurricane Sandy on
property value and [whether] this impact
dictates nullification of any assessments
already undertaken and starting the process
over again. Similarly, concerns about
methodology and the fact that the process has
taken an excessive amount of time resulting
in property values changing while the
revaluation is taking place call into question
the validity of any report that might be
produced.

. . . .

Given the performance to date of
[plaintiff] I request that you immediately
direct that [plaintiff] suspend all work under
this contract until such time that you and my
Administration can conduct a thorough review
of the contract procurement process,
[plaintiff's] performance, and the efficacy of
pursuing a revaluation of the City in the
current economic environment.

On July 5, 2013, Kelly sent an email to Toloza informing him

that plaintiff would not be paid for any work on the contract

performed after June 30, 2013. Thereafter, no representative from

Fulop's administration ever met with Toloza or plaintiff to discuss

a review of the contract or its suspension.

Section 7.9 of the RFP contained a "termination for

convenience" provision that stated:

Should a dispute arise, and if, after a
good faith effort at resolution, the dispute
is not resolved, either party may terminate

11 A-4339-15T1
 the contract by providing sixty (60) days
written notice to the other party.
Regardless, the City reserves the right to
cancel the contract by providing sixty (60)
days written notice to the Revaluation Firm.

In its April 14, 2016 decision, the trial court determined

that Section 7.9 constructively applied to the City's termination

of plaintiff's services, even though the City did not provide the

requisite notice. The court additionally found the City's

termination of the contract was in bad faith. Consequently, the

court awarded plaintiff lost profits, which it deemed the "normal

measure of damages[.]"

Neil Rubenstein testified that, at the time Mayor Fulop

suspended the contract, plaintiff was owed $270,000 for work that

was completed and had been billed to the City but never paid.

Additionally, plaintiff claimed retainage damages of $250,000.

Neil Rubenstein noted plaintiff saved $185,489 as a result of

defendant's termination of the contract. In its April 14, 2016

decision, the court found Rubenstein's testimony credible and

awarded plaintiff $984,511. The court calculated this damage

award by deducting the amount plaintiff saved ($185,489) and the

amount it was already paid ($1,980,000) from the $3,150,000

contract amount.

The court memorialized its decision in an April 26, 2016

judgment, which also awarded plaintiff $46,519.55 in pre-judgment

12 A-4339-15T1
interest. On May 9, 2016, plaintiff filed a motion seeking counsel

fees and litigation expenses based on the City's rejection of a

pre-trial $750,000 offer of judgment. On June 3, 2016, the court

awarded plaintiff $114,786 in counsel fees and expenses pursuant

to Rule 4:58-2(a). This appeal followed.

II.

Our analysis of the issues presented on appeal is framed by

well-settled standards:

Final determinations made by the trial court
sitting in a non-jury case are subject to a
limited and well-established scope of review:
"we do not disturb the factual findings and
legal conclusions of the trial judge unless
we are convinced that they are so manifestly
unsupported by or inconsistent with the
competent, relevant and reasonably credible
evidence as to offend the interests of
justice[.]"

[Seidman v. Clifton Sav. Bank, S.L.A., 205
N.J. 150, 169 (2011) (alteration in original)
(quoting In re Tr. Created By Agreement Dated
Dec. 20, 1961, ex rel. Johnson, 194 N.J. 276,
284 (2008))].

"[W]e do not weigh the evidence, assess the credibility of

witnesses, or make conclusions about the evidence." Mountain

Hill, L.L.C. v. Twp. of Middletown, 399 N.J. Super. 486, 498 (App.

Div. 2008) (quoting State v. Barone, 147 N.J. 599, 615 (1997)),

certif. denied, 199 N.J. 129 (2009). "[I]n reviewing the factual

findings and conclusions of a trial judge, we are obliged to accord

13 A-4339-15T1
deference to the trial court's credibility determination[s] and

the judge's 'feel of the case' based upon his or her opportunity

to see and hear the witnesses." N.J. Div. of Youth & Family Servs.

v. R.L., 388 N.J. Super. 81, 88 (App. Div. 2006) (citing Cesare

v. Cesare, 154 N.J. 394, 411-13 (1998)), certif. denied, 190 N.J.

257 (2007). Our task is not to determine whether an alternative

version of the facts has support in the record, but rather, whether

"there is substantial evidence in support of the trial judge's

findings and conclusions." Rova Farms Resort, Inc. v. Inv'rs Ins.

Co., 65 N.J. 474, 484 (1974); accord In re Tr. Created By

Agreement, supra, 194 N.J. at 284. Legal conclusions, however,

are reviewed de novo. Manalapan Realty v. Twp. Comm. of the Twp.

of Manalapan, 140 N.J. 366, 378 (1995).

III.

A.

The City first argues, as it did before the trial court, that

the contract is illegal and violates public policy due to a

conflict of interest created by plaintiff's employment of

O'Reilly, the City's former Business Administrator. The City

further contends that, even if O'Reilly abstained from working

with the revaluation committee, "the potential for him to have

influenced the process . . . was real." Plaintiff in turn submits

there is no evidence in the record demonstrating that O'Reilly

14 A-4339-15T1
influenced the committee in any way, and that O'Reilly had no

divided interests either before or after he retired that would

create a conflict of interest.

In rejecting the City's argument, the trial judge found that,

while employed by the City, O'Reilly validly "recused himself from

having anything to do with the revaluation, and made this public

knowledge within City Hall." The judge elaborated:

Every witness employed by [the City] and
involved with the revaluation committee . . .
testified clearly and unambiguously that
O'Reilly was not present at any meeting, and
had nothing to do with the revaluation.

. . . .

The evidence at the trial was
overwhelming in that O'Reilly did, in fact,
recuse himself, and had nothing to do with the
City's revaluation process. It must be
remembered that he retired in August of 2010,
and the City did not even release its request
for proposals until November of that year.

The City's argument is that O'Reilly did
impact the revaluation process by placing
people of his own choosing on the City's
revaluation committee before he retired. One
such alleged example is John Mercer.

The obvious fallacy in the City's
argument is that the Business Administrator
would clearly be a member of such a committee.
By seeing to it that the Assistant Business
Administrator took his place, O'Reilly was
simply following through on the recusal.

There's no evidence that O'Reilly
affected Mercer, or that the substitution was

15 A-4339-15T1
 anything other than completely appropriate.

The policy underlying conflicts of interest law aims to ensure

the public's confidence in the workings of the State. See Keyes

Martin & Co. v. Dir., Div. of Purchase & Prop., Dep't of Treasury,

99 N.J. 244, 249 (1985). "The vitality and stability of

representative democracy depend upon the public's confidence in

the integrity of its elected and appointed representatives. . . .

Whenever the public perceives a conflict between the private

interests and the public duties of a government officer or

employee, that confidence is imperiled[.]" N.J.S.A. 40A:9-

22.2(b)-(c). Public contract bidding evokes similar concerns.

Indeed, we have noted that, "[b]oth the public interest and the

public's perception that the bidding process is fair, competitive

and trustworthy are critical components and objectives of our

public bidding statutes." Muirfield Constr. Co., Inc. v. Essex

Cty. Improvement Auth., 336 N.J. Super. 126, 137-38 (App. Div.

2000).

Pertinent to our analysis is the Local Government Ethics Law

(LGEL), N.J.S.A. 40A:9-22.1 to -22.25. The LGEL provides, in

pertinent part, that "[n]o local government officer or employee

or member of his immediate family shall have an interest in a

business organization or engage in any business, transaction, or

professional activity, which is in substantial conflict with the

16 A-4339-15T1
proper discharge of his duties in the public interest[.]" N.J.S.A.

40A:9-22.5(a). The LGEL also provides that

[n]o independent local authority5 shall, for a
period of one year next subsequent to the
termination of office of a member of that
authority: (1) award any contract which is not
publicly bid . . . ; (2) allow a former member
of that authority to represent, appear for or
negotiate on behalf of any other party before
that authority; or (3) employ for compensation
. . . any former member of that authority.

(Emphasis added.)

[N.J.S.A. 40A:9-22.5(b).]

By its terms, N.J.S.A. 40A:9-22.5(a) applies only to current

government officers. We recognized the statutory distinction

between present and former public officials in Cortesini v.

Hamilton Twp. Planning Bd., 417 N.J. Super. 210, 217-18 (App. Div.

2010), certif. denied, 207 N.J. 35 (2011), noting "[m]ost

provisions of [the LGEL] deal [only] with the ethical obligations

of present government officers and employees."

The only subsection of the LGEL that imposes any restrictions

on former employees is N.J.S.A. 40A:9-22.5(b). Id. at 218. Here,

however, even if the revaluation committee is considered an

"independent local authority" within the intent of subsection (b)

(an issue we need not decide), O'Reilly clearly did not violate

5
The term "independent local authority" is not defined in the
statute.

17 A-4339-15T1
this subsection. The committee awarded a contract that was

publicly bid; O'Reilly was not involved in, nor did he appear on

behalf of plaintiff with regard to, the price negotiations; and

the committee did not employ O'Reilly for compensation.

Also relevant to the City's argument is its own "Revolving

Door Ordinance," which was considered in the Matsikoudis opinion

letter. As previously noted, the Ordinance generally prohibits

former City employees, for a one-year period, from working for a

company on a matter in which they: "[were] directly concerned;"

"directly participated," or "had access to special knowledge or

information" while employed by the City. Jersey City Municipal

Code §33-1. However, the Ordinance specifically exempts former

employees where, as here, the City's corporate counsel finds that

the new employment satisfies the City's conflict of interest

requirements and provides written approval. Jersey City Municipal

Code §33-3.

The City contends that the Matsikoudis legal opinion letter

cannot justifiably be interpreted as providing plaintiff and

O'Reilly a "clean bill of health," as the trial court ruled. The

City maintains that O'Reilly was "instrumental in the appointment

of some if not all of [the committee members]." However, simply

put, the City's contention is totally devoid of record support.

18 A-4339-15T1
To the contrary, there is compelling evidence of O'Reilly's proper

recusal in the entire revaluation process.

The City also cites the New Jersey Uniform Ethics Code, which

was adopted by the State Ethics Commission pursuant to N.J.S.A.

52:13D-23, as another conflict of interest provision that O'Reilly

violated. The Uniform Code provides in pertinent part:

For one year after the termination of the
State office or employment of any of the
individuals noted above, he/she shall not
represent, appear for, or negotiate on behalf
of, or agree to represent, appear for, or
negotiate on behalf of any person or party
other than the State with or before any
officer or employee of the State agency in
which he/she served. The provisions of this
subsection shall not apply to any partnership,
firm or corporation in which he/she has an
interest or is employed, or to any partner,
officer, director or employee of such
partnership, firm or corporation. Nothing
contained in this section shall prohibit a
State agency from contracting with a former
State officer or employee to act on behalf of
the State.

[New Jersey Uniform Ethics Code, Feb. 2011,
at p. 11.]

We do not find the City's reliance on the Uniform Code

persuasive. By its express terms, it is limited to "state

agencies," which the City and its revaluation committee are not.

Moreover, plaintiff squarely falls within the Uniform Code's

exception as a "partnership, firm, or corporation" that employed

19 A-4339-15T1
O'Reilly, and hence is not barred under the Code from participating

in the bidding process.

In sum, the record does not support the City's position that

O'Reilly's employment with plaintiff created a conflict of

interest. We find no basis to disturb the trial court's

determination that O'Reilly had nothing to do with the entire

revaluation process while employed by the City, which is supported

by "adequate, substantial, and credible evidence" in the record.

Rova Farms, supra, 65 N.J. at 484.

B.

The City next contends the trial court misapplied applicable

law and mistakenly exercised its discretion in upholding the

validity of the contract despite plaintiff's non-conforming

ownership disclosure statement. Plaintiff responds that the City

failed to raise this issue in a timely fashion. Plaintiff further

submits that any inaccuracy in its disclosure statement was the

result of an innocent oversight and, under the circumstances, was

not material to the bid award.

In its bid proposal, plaintiff included a "Corporation or

Partnership Statement" as required by the RFP and N.J.S.A. 40A:11-

4.4(d). N.J.S.A. 52:25-24.2, which is referenced in N.J.S.A.

40A:11-4.4(d), in turn provides:

No corporation, partnership, or limited

20 A-4339-15T1
 liability company shall be awarded any
contract nor shall any agreement be entered
into for the performance of any work . . .
the cost of which is to be paid with or out
of any public funds . . . unless prior to the
receipt of the bid . . . there is submitted a
statement setting forth the names and
addresses of all stockholders in the
corporation who own [ten] percent or more of
its stock . . . or of all individual partners
in the partnership who own a [ten] percent or
greater interest therein[.]

Plaintiff in its ownership disclosure statement certified it

had only two principals who held an interest of ten percent or

more in the company, Stanley Rubenstein and Robert Rubenstein.

Plaintiff contends this statement is inaccurate because, at the

time plaintiff's proposal was submitted, Neil Rubenstein and

Steven Rubenstein each owned 22.5% of the company. There is no

indication, nor allegation, that this misrepresentation was

intentional or attributable to anything other than an inadvertent

oversight.

In its decision, the trial court rejected the City's position

that plaintiff's failure to reference Neil and Steven Rubenstein's

ownership interests mandated invalidation of the contract.

Relying on Muirfield, supra, 336 N.J. Super. at 133, and

Meadowbrook Carting Co. v. Borough of Island Heights, 138 N.J.

307, 315 (1994), the court found the omissions were immaterial and

of "no significance," stating:

21 A-4339-15T1
 The purpose of ownership disclosure is
to make sure that criminals, untrustworthy
people, individuals banned by law from doing
government business, individuals involved in
competitive bids on the same project, and
individuals involved in a conflict of interest
do not get the contract.

The names of Neil and Steve Rubenstein
appear, literally, several dozen times in the
proposal response. Page 2 of Section 3.17
under company history specifically list[s]
Steven and Neil as the only individuals
actually managing the company. It also points
out that Stanley and Robert joined the company
in 1951, nearly 60 years earlier.

The City knew very well it was [doing]
business with Steve and Neil. The City does
not even suggest that if Steve and Neil were
listed as owners that anything would have
really resulted differently. This is because
there is nothing about them that would have
disqualified them or changed anything.

The City nonetheless argues that the
omission is non-waivable, and thus invalidates
the contract. This is not the law in New
Jersey.

'The bidding noncompliance must be
material in order to be fatal.' Muirfield[,
supra, 336 N.J. Super. at 133].

'A two-part test is used. First, whether
the effect of the waiver would be to deprive
the municipality of its assurance that the
contract would be entered into, performed, and
guaranteed according to its specific
requirements and, second, whether it is of
such a nature that its waiver would adversely
affect competitive bidding by placing a bidder
in a position of advantage over other bidders,
or by otherwise undermining the necessary
standard of competition.' Meadowbrook,

22 A-4339-15T1
 [s]upra, 308 N.J. at 315.

Since the omissions were of no
significance, the two-part test is clearly
passed.

The issue thus presented is whether plaintiff's failure to

comply completely with the ownership disclosure requirement,

specified by the City as a term and condition of the negotiated

proposal, is a material deviation that invalidates plaintiff's

proposal, and therefore its contract. We conclude that, under the

specific facts of this case, it is not.

The underlying purpose of N.J.S.A. 52:25-24.2 is "to ensure

that all members of a governing body and the public be made aware

of the real parties in interest with whom they are asked to

contract." George Harms Constr. Co. v. Borough of Lincoln Park,

161 N.J. Super. 367, 372 (Law Div. 1978). Requiring bidders to

fully disclose ten percent owners serves several purposes: it

ensures that the governing body's members and the public are aware

of the real parties in interest; it enables public officials to

identify conflicts of interest before a public contract is awarded;

and it provides public officials with the information necessary

to assess the capability, financial stability, and moral integrity

of bidders. Ibid.

We agree with the City that, generally speaking, a bidder's

failure to completely disclose ten percent owners undermines the

23 A-4339-15T1
purposes of the ownership disclosure statute and constitutes a

material deviation that renders the offending bid proposal

invalid. Nonetheless, in the present case, the statutory purposes

were not frustrated as a consequence of plaintiff's oversight, as

the trial court correctly concluded. The record makes clear that

the City knew who plaintiff's owners were, and plaintiff made no

effort to conceal their identities or their role in the management

of the company or the revaluation project. Moreover, the City

asserts no viable claim that plaintiff would not have been awarded

the contract had its disclosure statement accurately listed Neil

and Steven Rubenstein's respective ownership interests.

Importantly, also, the City did not raise the issue of

plaintiff's inaccurate ownership disclosure statement until some

six years after the contract was awarded, and not until after

plaintiff had undertaken substantial performance. While the City

argues that plaintiff secured an unfair advantage in the bidding

process because it could have asserted this deficiency at any time

to excuse its performance, there is no evidence to suggest that

plaintiff ever intended or sought to do so. Rather, it is the

City that belatedly attempted, for the first time at trial, to

assert this deficiency as a means to invalidate the contract.

Notably, the City did not reference the defective disclosure form

24 A-4339-15T1
when it suspended the contract in June 2013, nor assert it as a

defense in any pleading or its answers to interrogatories.

For similar reasons, we also reject the City's belated

argument that the contract is invalid because plaintiff lacked the

requisite qualifications to bid on it. Article III of the contract

requires that the revaluation firm's "principals shall have five

years of practical and extensive appraisal experience in the

valuations of the four classifications of property." The City

contends that Neil Rubenstein lacks the requisite qualifications

to conduct appraisals of Class 4 properties, one of the four

property classifications, and that the contract should be voided

on this basis.

The City's argument is unpersuasive. First, in his trial

testimony, Neil Rubenstein never confirmed nor denied whether he

possessed the qualification to appraise Class 4 properties. The

City has offered no competent evidence of Neil Rubenstein's alleged

lack of qualification. More importantly, however, the court barred

this evidence during the City's case, along with the evidence

concerning the omission of the names of Neil and Steven Rubenstein

as ten percent owners, due to the City's failure to timely raise

these issues and the resulting prejudice its admission would cause

plaintiff. Instead, the court allowed the evidence solely for

impeachment purposes. We accord substantial deference to the

25 A-4339-15T1
trial judge's discretion on evidentiary rulings, Benevenga v.

Digregorio, 325 N.J. Super. 27, 32 (App. Div. 1999), certif.

denied, 163 N.J. 79 (2000), and reverse only where the judge's

ruling was "so wide of the mark that a manifest denial of justice

resulted." State v. Carter, 91 N.J. 86, 106 (1982). We discern

no abuse of discretion here.

C.

The City next argues that two post-bid modifications to the

contract render it invalid. In considering this contention, we

recognize that bidders, as well as the public entities that solicit

bids, are generally bound by the express terms of the bid proposal.

Suburban Disposal, Inc. v. Twp. of Fairfield, 383 N.J. Super. 484,

492 (App. Div. 2006). "[A]ll bids must comply with the terms

imposed, and any material departure invalidates a nonconforming

bid as well as any contract based upon it." Meadowbrook, supra,

138 N.J. at 314 (citations omitted). On the other hand,

discrepancies that are "minor or inconsequential" do not qualify

as material. CFG Health Sys., LLC v. Cty. of Hudson, 413 N.J.

Super. 306, 315 (App. Div. 2010).

The first post-bid modification cited by the City pertains

to the photograph requirement. Section 4.6 of the RFP (Photograph

Requirements) states, in pertinent part:

The revaluation of all properties must

26 A-4339-15T1
 include a minimum of two (2) color digital
photographs, front and rear, of each
parcel/line item of real property in the City.

Since a sufficient number of photographs
must be taken to review a complex completely,
a front/side photograph must be taken of every
structure on commercial and exempt properties.

Photographs of all vacant parcels are
required.

. . . .

Furthermore, the Firm shall take
additional digital color photographs
necessary to identify and substantiate the
value of a significant or unique valuation
attribute, characteristic or feature,
including accessory structures, that exists on
a property that has a substantial positive or
negative influence on the valuation of said
property. Said photographs shall be properly
and correctly identified.

The contract, on the other hand, provides only that "[a] digital

color photograph shall be taken of the main improvements on each

lot."

Having reviewed the record, we conclude that this contractual

amendment was not a "vehicle for corruption or favoritism," nor

did it discourage or inhibit the fair bidding process in any

meaningful way. See Meadowbrook, supra, 138 N.J. at 314-15.

Rather, relying on CFG Health, supra, 413 N.J. Super. at 315, the

trial court properly determined that the amendment to the

photograph requirement was relatively "minor and inconsequential,"

27 A-4339-15T1
and noted it actually benefitted both parties, that the City agreed

to the bid amendment in the contract, and that the amendment made

practical sense.

The second discrepancy concerns the appraisal manual used in

the valuation process. The RFP provides:

If the Cost Approach is applicable, the
Marshall Swift Valuation Service shall be
utilized in estimating the value. In
addition, the Firm shall supply a valid copy
and [a] one (1) year subscription of the
Marshall Swift Commercial Estimator Software
program to the City Tax Assessor for his use.

The Contract incorporated this requirement from the RFP and

directed that "[t]he Marshall-Swift Valuation manual will be

utilized for the cost approach of class 4 properties." The

contract added, "[t]he use of any other appraisal manual for

valuing real property shall require approval by the Director of

Taxation." Subsequently, on April 26, 2011, the parties executed

an addendum to the contract that provided:

In accordance with the Division of
Taxation revaluation approval, dated March 18,
2011, the contract shall be amended to provide
that the Real Property Appraisal Manual for
New Jersey Assessors, Third (3rd) Edition,
will be used for both residential and class 4
properties (commercial, industrial and
apartment) instead of the Marshall Valuation
Services, which is in the current contract for
class 4 properties.

In its April 14, 2016 oral decision, the court rejected the

28 A-4339-15T1
City's argument that the addendum was an improper post-bid

modification that served to invalidate the Contract. The court

reasoned:

Regarding the cost approach, there are
two different methodologies. One is found in
the Marshall Swift publication, and the other
is found in the Real Property Appraisal Manual
for New Jersey.

The RFP required that the Marshall Swift
publication be followed. The contract, I
believe it was Section E of Article 5,
Paragraph 3, said that any other manual will
[require] the approval of the Division of
Taxation.

When the Division of Taxation approved
the contract on March 8[], 2011, the acting
director attached to the approval letter the
following addendum:

"Please be reminded that the latest costs
schedules and corresponding cost conversion
factors of the Real Property Appraisal Manual
for New Jersey Assessors, third edition, must
be used for all reassessments and
revaluations."

Based upon the clear, and unambiguous
order from the acting director, the contract
was amended on April 26[], 2011, that addendum
signed by [Neil] Rubenstein and Ed Toloza, the
Tax Assessor for Jersey City.

Similar to the attempted renunciation of
its Corporation Counsel, the City now
renounces its Tax Assessor's act in following
the order of the acting director. The [c]ourt
views this argument as merit[]less.

29 A-4339-15T1
 We further note that Michele Hennessey, who drafted the RFP

on behalf of the City, testified that she was directed by Michael

Bryant, the Director of the Division of Taxation, to enter into

the April 26, 2011 addendum. This was because the Division of

Taxation had previously ruled "that [the] Marshall and Swift

[manual] would no longer be used for evaluating Class 4

properties." Accordingly, we find the record amply supports the

trial court's conclusion that use of the amended appraisal manual

does not invalidate the contract.

D.

The City agrees that the trial court properly concluded that

it constructively invoked the termination for convenience clause

when it suspended work under the contract on June 25, 2013. The

City asserts, however, that it did not act with the intent to harm

plaintiff, and for that reason the trial court erred in finding

that it terminated the contract in bad faith. Plaintiff in turn

contends the termination for convenience clause does not limit its

damages because the City never invoked it, and that the trial

court's finding of bad faith is supported by the record and

applicable case law.

A termination for convenience, whether constructive or

otherwise, limits a contractor's recovery to costs incurred, a

30 A-4339-15T1
reasonable profit for the work performed, and termination costs.

Best Foam Fabricators, Inc. v. United States, 38 Fed. Cl. 627, 637

(1997). We addressed the validity of a termination for convenience

clause in Capital Safety, Inc. v. State, Div. of Bldgs. & Constr.,

369 N.J. Super. 295 (App. Div. 2004). Drawing guidance from

federal case law, we stated:

The federal courts have broadly construed
termination for convenience provisions to
authorize termination for any reason that is
in the best interests of the government so
long as the contracting agency does not act
in bad faith. Mere error on the part of the
Government, even if it would constitute
sufficient ground for contractual breach were
the termination clause inapplicable, is
insufficient to overcome the presumption of
regularity inherent in the invocation of the
termination for convenience. In fact, the
federal courts have indicated that in the
absence of bad faith or clear abuse of
discretion the contracting officer's election
to terminate is conclusive.

The federal courts have also held that
the contractors' burden to prove the
Government acted in bad faith . . . is very
weighty. Government officials are presumed
to act in good faith, and it requires well-
nigh irrefragable proof to induce the court
to abandon the presumption of good faith
dealing. The requirement of well-nigh
irrefragable proof . . . sets a high hurdle
for a challenger seeking to prove that a
government official acted in bad faith. This
standard has been equated with evidence of
some specific intent to injure the
plaintiff. Consequently, an ordinary
business decision made for the purpose of
saving the government money does not provide

31 A-4339-15T1
 a basis for a finding of bad faith. Due to
this heavy burden of proof, contractors have
rarely succeeded in demonstrating the
Government's bad faith.

Our Supreme Court has also recognized
that if a breach of contract claim requires a
showing of bad faith, a party may not be held
liable for simply exercising its discretionary
authority under the contract for ordinary
business purposes--reasonably within the
contemplation of the parties. To show bad
faith, the claimant must establish that the
alleged breaching party had an improper
motive. Without bad motive or intention,
discretionary decisions that happen to result
in economic disadvantage to the other party
are of no legal significance.

[Id. at 300-01 (internal citations and
quotation marks omitted).]

In the present case, the trial court found "no clear

precedent" allowing constructive application of the termination

for convenience clause. Ultimately, the court constructively

invoked the clause, essentially "because New Jersey does recognize

termination for convenience clauses, especially in government

contracts." Notwithstanding, the court concluded the City

terminated the contract in bad faith, reasoning:

Based on the evidence in this case, the
[c]ourt finds that the reasons given in the
Mayor-elect's letter6 halting the contract

6
We note for the record that when Steven Fulop sent this letter
to the City Business Administrator, he was only a City
Councilmember. Although Fulop signed the letter as "Mayor-elect,"
this title has no legal significance. It merely denotes the status

32 A-4339-15T1
 were clearly pretextual. There was no
investigation into how the awarding of the
contract was reviewed. There was no
investigation of the impact of Superstorm
Sandy on the revaluation, or the amount of
time involved, or the methodology used in the
performance by plaintiff.

The testimony of many witnesses,
including many [of the City's] employees who
were involved in the revaluation and would
surely have been contacted for any such
investigation, shows there was no such
investigation.

As to the alleged conflict of interest[,]
[t]he City knew from the very beginning, from
its own Corporation Counsel that there was no
conflict of interest. The City's arguments
at trial regarding O'Reilly's placing of
people on the committee were essentially
frivolous.

Most compelling of all, however, is the
inexplicable position of the City, even as of
this moment, not to follow what it knows to
be the correct, legal, and constitutional
mandates and finally have the revaluation.

The [c]ourt is aware that government
officials are presumed to act in good faith,
and that [] well nigh irrefragable proof is
necessary to abandon that presumption.

The evidence in this trial is clear and
convincing. The City simply does not want a
revaluation, period. Considering [the City's]
status as having, literally, one of the most
unfair tax distribution burdens in the entire
State, coupled with how long overdue the

of a candidate who prevailed in the municipal election, but has
not yet taken the oath office necessary to assume the legal powers
associated with office of Mayor.

33 A-4339-15T1
 revaluation was and still is, this
intransigence certainly constitutes an
improper motive.

In order to pursue this improper
position, the City knew that it would have to
harm an innocent party, that being
[plaintiff], who is simply doing the job it
was hired to do.

Having reviewed the record, we conclude that the trial court's

ruling represents a well-reasoned application of the controlling

law to the evidence presented at trial. Accordingly, we find no

basis to disturb it.

E.

We next address the City's challenges to the damage award.

First, the City contends that expectation damages were not within

the contemplation of the parties, and plaintiff could not

reasonably expect to earn profits for work not completed. In

support of this argument, the City cites the boldfaced clause in

the RFP that states: "[i]t is important to note that pursuant to

N.J.S.A. 40A:5-16, the City is prohibited from paying for goods

or services before they have been provided." However, the City

conveniently omits the next sentence: "Therefore, any proposals

which specify payment upon contract signing will be deemed

unresponsive and rejected."

The City clearly misconstrues the purpose of the Local Fiscal

Affairs Law, N.J.S.A. 40A:5-1 to -50, upon which its argument is

34 A-4339-15T1
based. It is clear from the plain text of N.J.S.A. 40A:5-16 that

the law is intended to guard against preemptive, anticipatory

payments to contractors by public entities, rather than to serve

as a limitation on damage awards.

Next, the City asserts that the trial court's method of

calculating lost profits was erroneous and resulted in a windfall

to plaintiff. The City cites Goldman v. Shapiro, 16 N.J. Super.

324 (App. Div. 1951), to support its position. In Goldman, the

panel stated, in dicta, that "when a contractor has been prevented

from [complete] perform[ance] . . . the measure of . . . damages

is generally[] for the work actually performed[.]" Id. at 327.

The City contends the trial court did not properly apply the

Goldman formula, as it did not make any findings as to the

percentage of the revaluation project that plaintiff completed.

We do not find this argument persuasive.

In Totaro, Duffy, Cannova & Co., L.L.C. v. Lane, Middleton &

Co., L.L.C., 191 N.J. 1 (2007), our Supreme Court set forth the

principles that inform any award of contract damages. As a

threshold matter, the Court explained that "[j]udicial remedies

upon breach of contract fall into three general categories:

restitution, compensatory damages and performance." Id. at 12

(citation and internal quotation marks omitted). The Court noted

that

35 A-4339-15T1
 [e]ach of these contract remedies serves a
different purpose. Restitution returns the
innocent party to the condition he or she
occupied before the contract was executed.
Compensatory damages put the innocent party
into the position he or she would have
achieved had the contract been completed.
Performance makes the non-breaching party
whole by requiring the breaching party to
fulfill his or her obligation under the
agreement.

[Id. at 12-13 (citation omitted).]

The Court further observed that, "[m]ost often, courts award

compensatory damages in a breach of contract action" and that

"[t]he extent of a damage award, and its connection to the breach,

has its origins in English Common Law, arising from the seminal

decision in Hadley v. Baxendale, 9 Exch. 341, 156 Eng. Rep. 145

(1854)[.]" Id. at 13 (citations omitted).

Here, basic principles of contract law control. First,

"'[u]nder contract law, a party who breaches a contract is liable

for all of the natural and probable consequences of the breach of

that contract.'" Ibid. (quoting Pickett v. Lloyd's, 131 N.J. 457,

474 (1993)). Second, "the goal is 'to put the injured party in

as good a position as if performance had been rendered.'" Ibid.

(editing marks omitted) (quoting Donovan v. Bachstadt, 91 N.J.

434, 444 (1982)). Third, "in order to be compensable, 'the loss

must be a reasonably certain consequence of the breach, the exact

amount of the loss need not be certain.'" Id. at 14 (editing

36 A-4339-15T1
marks omitted) (quoting Donovan, supra, 91 N.J. at 445). Fourth,

"mere uncertainty as to the quantum of damages is an insufficient

basis on which to deny the non-breaching party relief." Ibid.

Finally, "'[p]roof of damages need not be done with exactitude[.]'"

Ibid. (alteration in original) (quoting Lane v. Oil Delivery Inc.,

216 N.J. Super. 413, 420 (App. Div. 1987)). Those damages may

include lost profits, so far as they can be determined with a

"reasonable degree of certainty." Stanley Co. of Am. v. Hercules

Powder Co., 16 N.J. 295, 314 (1954) (citations omitted).

Guided by these principles, after ruling that the City had

breached the contract in bad faith, the trial court correctly

determined that plaintiff was "entitled to the normal measure of

damages which is lost profits." Neil Rubenstein presented proofs

supporting plaintiff's damage claim, and the court found his

testimony credible. We discern no basis to disturb the method or

manner by which the court calculated the damage award.

F.

Finally, the City contends the trial court erroneously

quashed trial subpoenas it issued to telecommunications and

internet service providers seeking records regarding

communications between O'Reilly and plaintiff while O'Reilly was

employed as the City's Business Administrator. The City maintains

that the subpoenas were relevant to O'Reilly's credibility, and

37 A-4339-15T1
that the trial court abused its discretion in quashing them. The

trial court noted that the documents sought by the City could have

been obtained during pre-trial discovery. It further determined

that the questionable relevance of the documents was outweighed

by the delay that would ensue from enforcement of the subpoena.

See N.J.R.E. 403. Having reviewed the record, we find the City's

challenge to the trial court's decision to quash the subpoenas

lacks sufficient merit to warrant additional discussion. R. 2:11-

3(e)(1)(E).

Affirmed.

38 A-4339-15T1