Dover Gourmet Corp. v County of Nassau
Annotate this CaseDecided on April 24, 2020
Supreme Court, Nassau County
Dover Gourmet Corporation, Plaintiff-Petitioner,
against
County of Nassau and NASSAU COUNTY DEPARTMENT OF PARKS, RECREATION & MUSEUMS, Defendants-Respondents.
612941/19
Dover Gourmet Corporation v. County Of Nassau, Nassau County Department Of Parks, Recreation And Museums
Plaintiffs/Petitioners
DOVER GOURMET CORPORATION
CIAFFA, MICHAEL ANTHONY on 09/18/2019FORCHELLI DEEGAN TERRANA LLP
Defendants/Respondents
County of Nassau
VAN DER WAAG, ROBERT FREDERICK on 05/06/2020ROBERT FREDERICK VANDERWAAG ESQ. KRETZING, LAUREL ROW on 11/20/2019Office of the Nassau County AttorneyBERGSTROM, IAN JOSEPH on 11/20/2019Office of the Nassau County Attorney
Nassau County Department of Parks, Recreation and Museums
VAN DER WAAG, ROBERT FREDERICK on 05/06/2020ROBERT FREDERICK VANDERWAAG ESQ.KRETZING, LAUREL ROW on 11/20/2019Office of the Nassau County AttorneyBERGSTROM, IAN JOSEPH on 11/20/2019Office of the Nassau County Attorney
Vito M. DeStefano, J.
The following papers and the attachments and exhibits thereto have been read on the verified complaint/petition, motions and cross motion:
Notice of Petition (Mot. Seq. No.01) 1
Answer 2
Notice of Motion (Mot. Seq. #02) 3
Affirmation in Support 4
Statement of Material Facts 5
Affidavit in Support 6
Affirmation in Support 7
Memorandum of Law in Support 8
Notice of Cross Motion (Mot. Seq. #03) 9
Affirmation in Opposition to Cross Motion 10
Affidavit in Support of Cross Motion 11
Affidavit in Support of Cross Motion 12
Affirmation in Opposition to Motion and in Support of Cross Motion 13
Affirmation in Opposition to Cross Motion and in Further Support of Motion 14
Response to Statement of Facts 15
Affidavit in Opposition to Cross Motion and in Further Support of Motion 16
Affidavit in Reply 17
Notice of Motion (Mot. Seq. # 4) 18
Affirmation in Opposition 19
Reply Affidavit 20
Introduction
In this so-called hybrid action and Article 78 proceeding, the Plaintiff-Petitioner, Dover Gourmet Corporation ("Dover"), seeks a declaration that its license agreement with Defendant-Respondent County of Nassau, which granted Dover exclusive rights for food services and catered events at County Park facilities, was extended by the County through December 31, 2021. Dover also seeks a judgment pursuant to CPLR Art. 78, setting aside the County's [*2]termination of the license agreement as arbitrary and capricious, as well as a permanent injunction prohibiting the County and Defendant-Respondent Nassau County Department of Parks, Recreation & Museums ("Parks or Parks Department"), from issuing or pursuing requests for proposals ("RFPs") respecting catering and food concessions at County parks through 2021.[FN1]
The County and Defendant-Respondent Nassau County Department of Parks, Recreation & Museums answered the petition making objections in points of law with respect to the Article 78 proceeding and moves, inter alia, for summary judgment declaring that it lawfully terminated the license agreement and otherwise seeks dismissal of Dover's claims, severing and continuing the County's counterclaim for damages for breach of the license agreement.
Dover cross-moves for partial summary judgment, inter alia, declaring that the license agreement was extended through December 31, 2021 and a determination that the County's termination of the license agreement for convenience was arbitrary and capricious.
Dover also moves for an order pursuant to CPLR 6301 and 6311 enjoining the County from, inter alia, interfering with its license rights pending the conclusion of the proceedings.
The petition, motions and cross motion are determined as follows.
Factual and Procedural Background
It is undisputed that following a resolution adopted by the Nassau County Legislature on December 21, 2009, and authorized by the Nassau County Executive, the County Executive executed a License Agreement on January 5, 2010 granting Dover the right to provide exclusive catering operations for various County parks and facilities under the jurisdiction of the Parks Department. The license agreement recited a commencement date of January 1, 2010 and termination date of December 31, 2019 and gave an option to extend the term for an additional two-year period by mutual agreement of the parties.
Under the terms of the agreement, Dover was required to pay the greater of a fixed yearly amount of $90,000 or a percentage of monthly catering receipts. The amounts payable by Dover under this agreement were, in fact, based on the percentage of Dover's monthly receipts, which exceeded the fixed yearly amount. In this regard, from 2010 through 2019, the amounts remitted [*3]by Dover to the County each year exceeded $100,000, with the lowest amount being $157,604.20 and the highest amount being $332,929.72. The agreement also provided that Dover would make certain capital improvements at County facilities.
Other relevant portions of the license agreement are as follows:
3.2 Termination for Convenience by Parks. Notwithstanding any language contained herein, this License is terminable at will by the County in its sole and absolute discretion, at any time, which termination shall not be exercised in an arbitrary or capricious manner. Such termination shall be effective thirty (30) days after written notice is sent to Licensee. Parks, the County, its employees and agents shall not be liable for damages to Licensee in the event that this License is terminated by Parks as provided for herein. In the event such notice is not given, this License shall terminate as described in Section 3.1 of this agreement.
3.3 Termination for Cause. Parks may terminate this License for cause as follows:
(a) Should Licensee breach or fail to comply with any of the provisions of this License, any federal, state or local law, rule, regulation or order affecting the License or the Licenses Premises with regard to any and all matters, County may in writing order Licensee to remedy such breach or comply with such provision, law, rule, regulation or order, and in the event that Licensee fails to comply with such written notice within thirty (3) days from the receipt thereof, subject to unavoidable delays beyond the reasonable control of Licensee, then this License shall immediately terminate. If said breach or failure to comply is corrected, and a repeated violation of the same provision, law, rule, regulation or order follows thereafter, County, by notice in writing, may revoke and terminate this License, such revocation and termination to be immediately effective on the mailing thereof.
(b) The following shall constitute events of default for which this License may be terminated on one-day notice: (I) appointment of any receiver of Licensee's assets; (ii) the making of a general assignment for the benefit of creditor's; (iii) the occurrence of any act which operates to deprive Licensee permanently of the rights, powers, and privileges necessary for the proper conduct and operation of the License; (iv) the levy of any attachment or execution which substantially interferes with Licensee's operations under this License and which attachment or execution is not vacated, dismissed, stayed or set aside within a period of sixty days; (v) should Licensee be the subject of any proceeding under which all or any part of its assets may be subject to seizure, forfeiture or divestiture; and/or (vi) should any principal of Licensee be convicted of a crime involving moral turpitude. Nothing contained in paragraphs (a) or (b) above shall be deemed to imply or to be construed to represent an exclusive enumeration of circumstances under which County may terminate this License.
* * *
V. Right to Audit
5.1 Parks, the Comptroller and other duly authorized representatives of the County shall [*4]have the right, during business hours, after giving the Licensee twenty four (24) hours advanced written notice, to examine or audit Licensee's Records to verify Gross Receipts as reported by the Licensee. Notwithstanding the requirement for twenty-four (24) hour advance notice with respect to access to the Licensee's Records for the purpose of audit, Parks, the Comptroller or other duly authorized County representative reserves the right to conduct, and Licensee hereby permits, periodic "spot" inspections of the Licensed Premises at any time during business hours for the purpose of inspecting any equipment used by Licensee, including, but not limited to, cash registers and recording machines, and all reports or data generated from or by the equipment and to include health code and regulatory inspections, maintenance inspections and quality assurance inspections. Licensee shall cooperate fully and assist Parks, the Comptroller or other duly authorized representative of the County in any inspection, examination or audit thereof. In the event that the Licensee's Records, including supporting documentation, are situated at a location fifty (5) miles or more from the County, the Records must be brought to the County for examination and audit or Licensee must pay food, board and travel costs incidental to two (2) auditors conducting such examination or audit at sail location.
* * *
XVII ASSIGNMENT, AMENDMENT, WAIVER, SUBCONTRACTING
17.1 This Agreement and the rights and obligations hereunder may not be in whole or part (I) assigned, transferred or disposed of, (ii) amended, (iii) waived, or (iv) subcontracted, without the prior written consent of the County Executive or his or her duly designated deputy (the "County Executive"), and any purported assignment, other disposal or modification without such prior written consent shall be null and void. The failure of a party to assert any of its rights under this Agreement, including the right to demand strict performance, shall not constitute a waiver of such rights.
17.2 It shall be a condition to the consent of the County Executive to any assignment or subcontract that the Person to or with whom or which such assignment or subcontract is made agrees in writing that, except as provided in the following sentence with respect to amounts payable by the County, such Person shall be bound by the terms and conditions of this Agreement as though an original party hereto. Unless the action being approved is an assignment of every right and obligation of the Licensee under this Agreement, (I) the Licensee shall remain responsible for the full performance of its obligations under this Agreement, and (ii) no amounts payable by the County under this Agreement shall be or become payable by the County to any Person other that the Licensee.
* * *
XX. NO ARREARS OR DEFAULT
20.1 The Licensee is not in arrears to the County upon any debt or contract, and it is not [*5]in default as surety, contractor, or otherwise upon any obligation to the County, including any obligation to pay taxes to, or perform services for or on behalf of, the County.
It is significant to note that the license agreement was approved and then executed pursuant to Nassau County Charter. The provisions of the charter relevant to this matter are as follows:
102. The County Legislature. The legislative power of the county shall be vested in the County Legislature which, except as otherwise provided in this act with respect to the powers and duties reserved to the County Executive, shall have and exercise all the powers and duties of the county together with all the powers and duties which now, or may hereafter be conferred or imposed on the County Legislature by laws applicable to such county not inconsistent with this act. The County Legislature shall also have such other powers and duties as are provided by this act. * * *
103. Specific powers.
8. review and approve, to the following extent and in the following manner, through its Rules Committee, personal service contracts proposed to be entered into by the County Executive. Personal service contracts are contracts for professional and other technical services which are not subject to the competitive bidding requirements under Section 2206 of the County Government Law of Nassau or section 103 of the General Municipal Law. Contracts that are so characterized shall be included in this definition, even if they are otherwise denominated. A determination that a person, firm or entity, or affiliated person, firm or entity is uniquely qualified to perform the services required under a personal service contract shall not be solely based on the facts and circumstances that said person, firm or entity or affiliated person, firm or entity has had an historic or continuing relationship with the county in providing said service or a similar service. a) Except as otherwise provided in this subsection, without a resolution approved by the Rules Committee of the County Legislature, any personal service contract, professional service contract, and similarly characterized contract, memoranda or agreement shall be limited to an expenditure of one thousand ($1,000) dollars and a term of one (1) year.
* * *
702. Purchasing and Inventory Duties: Competitive Bids
In case of an emergency, upon the recommendation in writing by the Commissioner or his designee setting forth the nature of the emergency, the County Executive may authorize the Commissioner or his designee to immediately purchase in the open market the necessary materials, supplies, equipment or services in connection with the operation, renovation and maintenance of county facilities or equipment, notwithstanding that the emergency purchase may involve the expenditure of more than ten thousand dollars. Any emergency purchase made pursuant to this section shall be limited to the amount and term deemed necessary in the sole [*6]direction of the Commissioner or his designee to remediate the emergency. If such contract involves an expenditure of $100,000 or more, a resolution ratifying the act of the Commissioner awarding the contract shall be introduced to the County Legislature for consideration at its next available legislative meeting in accordance with the rules of the County Legislature. In addition, at the time such ratifying resolution is called at all committee meetings and the legislative meeting, the Commissioner, or his designee, must appear before the County Legislature and justify the expenditure. Without a resolution passed by the County Legislature, any contract executed by the Commissioner or his designee which is exempt from the public notice requirements and the bid procedures of this section by reason of an emergency shall be limited to a term of one (1) year and to expenditure equal to $100,000 plus any funds expended to remediate the emergency prior to the legislative meeting at which such ratifying resolution was voted upon.
2206. Execution of Contracts. All contracts except for the purchase of supplies, materials, equipment and services in connection with the operation, renovation and maintenance of county facilities or equipment shall be made and executed by the County Executive. Notwithstanding the aforesaid provisions of this section, maintenance contracts applicable to the Department of Public Works shall be made and executed by the County Executive and the County Executive may delegate to any of his deputies the authority to make and execute, on behalf of the county, contracts which are the subject of this section provided he shall file with the clerk of the County Legislature a written authorization indicating therein the extent of such delegation. Any such authorization shall remain in effect during the term of the County Executive or until the County Executive files a written revocation with the clerk of the County Legislature. Whenever any such contract involves the expenditure of more than twenty thousand dollars, except contracts for personal services, the contract shall be let to the lowest bidder by sealed bids or proposals made in compliance with public notice published at least once in the official newspapers at least five days prior to the day on which sealed proposals are to be opened except that such contract may be awarded to a bidder other than the lowest responsible bidder, as aforesaid, where such other bidder maintains a place of business in the County of Nassau or in an adjoining municipality and submits a bid not exceeding ten percent more than the otherwise lowest responsible bidder. The bids or proposals shall be opened publicly by the County Executive, one of his deputies or such other person, as the County Executive may designate, in the presence of the Comptroller or his designee, provided that if the Comptroller or his designate, in the presence of the Comptroller or his designee, provided that if the Comptroller or his designee after due notice fails to attend, the County Executive or his designee may proceed as if he were present. The successful bidder must give security for faithful performance of his contract, the adequacy and sufficiency of which shall be approved by the Comptroller. No bid shall be accepted from, or a contract awarded to, any person who is in arrears to the county upon debt or contract or who has defaulted as surety or otherwise upon any obligation to the county. No contract shall be executed by the County Executive or one of his deputies in the name of the County until the same has been approved as to form with the clerk of the County Legislature and the Comptroller together with a copy of any ordinance, other than the annual appropriation ordinance, upon which the right to make such contract rests. The awarding of any contract exceeding $100,000 shall be subject to the approval of the Rules Committee of the County Legislature. Notwithstanding the foregoing provisions of this [*7]section or any general, special or local law to the contrary, in the case of emergency, the County Executive, by written declaration setting forth the nature of the emergency, may dispense with the requirements for public notice and the taking of bids notwithstanding that the contract may involve the expenditure of more than twenty thousand dollars. Any emergency purchase made pursuant to this section shall be limited to the amount and term deemed necessary in the sole discretion of the County Executive to remediate the emergency. If such contract involves an expenditure of $100,000 or more, a resolution ratifying the act of the County Executive or authorized Deputy County Executive awarding the contract shall be introduced to the County Legislature for consideration at its next available Legislative Meeting in accordance with the Rules of the County Legislature. In addition, at the time such ratifying resolution is called at all Committee Meetings and the Legislative Meeting, the County Executive must appear before such Committee(s) and the County Legislature to justify the expenditure. Without a resolution passed by the County Legislature, any contract executed by the County Executive or authorized Deputy County Executive which is exempt from the public notice requirements and the bid procedures of this section by reason of an emergency shall be limited to a term of one (1) year and to an expenditure equal to $100,000 plus any funds expended to remediate the emergency prior to the Legislative Meeting at which such ratifying resolution was voted upon. Without a Resolution passed by the County Legislature, any open services contract executed by the County Executive or authorized Deputy County Executive shall be limited to an expenditure of one hundred thousand ($100,000) dollars and to a term of one (1) year. In addition, without a resolution passed by the County Legislature, no person, firm, entity, principal or any firm or entity or affiliated person, affiliated firm, affiliated entity or affiliated principal of any firm or entity shall, in any year, be awarded open services contracts by the County Executive or authorized Deputy County Executive the aggregate amount of expenditures under which exceed three hundred thousand ($300,000) dollars. (Emphasis added)
Dover began to provide food services and to operate concessions and vending machines and remit funds to the County pursuant to the license agreement. As will be discussed, one of the County's contentions is that during term of the Agreement through December 2019 and continuing to the present date, Dover has owed and still owes substantial amounts to the County.
On April 12, 2016, former Chief Deputy County Executive Rob Walker sent a letter to Dover stating:
Thank you very much for discussing the recent problems the county has faced with the underutilization of Old Bethpage Village Restoration Barn and the lack of food and beverage services at the newly built Twin Rinks Facility at Eisenhower Park.
Pursuant to our conversations the cost of construction to build akitchen servicing area and other needed equipment would not be feasible within the current contract. It is within the best interest of the county to provide food and beverage for the patrons of the Ice — Facility and increase revenue opportunities with events at the barn. With that in mind, the County hereby exercises its rights under Paragraph 17.1(ii) and paragraph 3.1 of the License Agreement between the County of Nassau and Dover Gourmet Corporation to extend the Contract to [*8]December 31st, 2021.
It is our continued hope that the delivery of outstanding services to our residents will continue and we thank you for taking the risk of investment in capital at both these facilities.
Subsequently, audits conducted by the County Comptroller in 2016 and 2017 found that Dover "did not timely remit monthly license fees to the Parks Department, under reported cash sales resulting in loss of revenues to the County, did not performance required Capital Improvements and did not comply with reporting requirements" (Kretzig Affirmation, at p.3, citing to Comptrollers' Reports: Exhibits "E" and "F" thereto).
By letter dated January 24, 2019, the County advised that it intended to terminate the subject license agreement, along with another license agreement applicable to Nickerson
Beach, on December 31, 2019, and would issue an RFP from successor concessionaires beginning January 2, 2020. The letter further states:
The County is providing this extended notice to Dover, then, in an effort to afford Dover the opportunity to resolve various issues under the Agreements that are identified below, all so as to enable Dover to participate in the upcoming solicitation.
Parks hopes that Dover will be a vendor in good standing eligible to participate in the anticipated RFP process. Importantly, however, there are certain outstanding issues, as detailed in the Comptroller's audit of the License Agreement between the County and Dover, dated December 12, 2016 (the "Audit"), the Comptroller's review of Dover'scompliance with the Living Wage Law, dated November 29, 2017 (the "Review") and the letter from to Parks to Dover, dated July 23, 2018 (the "I etter"), that would appear to jeopardize Dover's participation unless the matters, highlighted below, are resolved to the County's satisfaction.
(A) The Audit revealed that although Dover was required to perform capital improvements, totaling $325,000 ($175,000 pursuant 10 the General Agreement and $150,000 pursuant to the Nickerson Agreement), Dover has only substantiated $29,365 of capital improvements, leaving a balance of $295,635. All capital improvements must be completed to the County's satisfaction by June 1, 2019. In the event that the required amount is not expended by Dover, a check must be submitted to the County for the difference of actual expenditures and the $325,000 in capital improvements required under the contracts. Please note that the County will allow the amount expended in the Twin Rinks build-out to he used as part of the capital improvement requirements.
(B) Dover owes S44,456.22 through May 31, 2018, plus penalties, late fees and interest, for the failure to include tile 20% administration fee charged to third parties as part of its gross revenues, rather, deducting them as a gratuity. It has been both independently demonstrated, and admitted by Dover, that the administration fee was never a gratuity.
(C) Pursuant to Section 4 of the Agreements, Dover is requiredto submit [*9]certified Annual Income and Expense Statements and a signed and verified annual summary of gross receipts. To date, this has never been done. Please submit Dover's 2016 and 2017 Certified Annual Income and Expense Statement and a signed Annual Summary of Gross Sales Receipts for 2016 and 2017 as they relate to business conducted pursuant to the Agreements.
(D) The yearly Operating Schedules required under Section 8.5 of the Agreements must be submitted, To date, the Operating Schedules have never been submitted. This includes, but is not limited to, the parks being serviced, the facilities within each park, other services being provided within each park that is part of the Premises, days und hours of operation for each park and a list of requests made by Parks and/or third parties for specific services and evidence that such services were provided.
(E) A certification that Dover has complied with Section 8.2 of the Agreements, stating that no Dover employee is on either the New York State Sexual Registry or the State Central Registry for Child Abuse and Maltreatment must be submitted. To date, this certification has never been supplied to Parks. The certification must be on Dover letterhead, signed by an authorized officer, and contain the following language:
[balance of (E) omitted from the within decision and order]
(F) As stated in the Review, Dover has failed to provide payroll and timekeeping records to identify employees who performed work on County Premises. A list of employees who currently work on County contracts, together with the hours worked and hourly or salaried pay rate must be submitted.
We appreciate your making the County aware of purporting to extend the General Agreement. Even if Mr. Walker's letter of April 12, 2016 can serve to extend the current Agreement, the County nevertheless has the authority to terminate the Agreements on thirty days' written notice pursuant to Section 3.2 of each referenced Agreement.
Accordingly, please be further advised that at the conclusion of a successful RFP process, the County will exercise its right to terminate and will issue a formal notice of termination.
Kindly provide the required documentation payments and capital improvements as soon as possible so as to demonstrate Dover's compliance with both the Agreements and the Living Wage Law.
According to the County, in August 2019, the County Attorney was advised that Dover
had failed to make timely payments to Nassau Community College ("NCC") under an agreement
to provide vending machine services with the college and that the agreement had terminated
leaving a balance due to NCC in the amount of $213,925.92. An action was commenced
against Dover to recover this amount; the action is presently being litigated before the undersigned, with dispositive motion pending decision.
In September 2019, the County sent another letter to Dover confirming its intention to terminate the subject license agreement effective December 31, 2019, the purported two-year extension being invalid and in, any event, because of exercise of the license's termination for convenience clause.
Dover corresponded with the County in September 2019, asserting that the County had no right to terminate the license agreement, which was properly extended; that the County had, in any event, ratified the extension by accepting the financial benefits offered by Dover.
According to the County, subsequent discussions between the parties were held culminating in the instant litigation.
The pleadings
Dover's pleading, which is denominated "Verified Petition/Complaint" contains the following three causes of action:
AS AND FOR A FIRST CAUSE OF ACTION49. The validity of the two-year extension of the License Agreement granted by the County in its April 12, 2016 letter to Dover presents a justiciable controversy, within the jurisdiction of this Court, that should be adjudicated promptly to stabilize and clarify the relations between the parties.
50. Dover has no adequate remedy at law.
51. A declaratory judgment should be issued, declaring that the term of the License Agreement does not expire until December 31, 2021, and that Plaintiff-Petitioner retains the right to operate and manage food services and catering at the Licensed Premises through and including December 31, 2021.
AS AND FOR A SECOND CAUSE OF ACTION52. The County's determination, dated September 4, 2019, that it had "elected" not to exercise its "option" to extend the term of the License Agreement beyond December 31, 2019, was and is arbitrary and capricious, and was issued in bad faith.
53. The County's determination should be vacated, annulled and set aside pursuant to Article 78 of the CPLR.
AS AND FOR A THIRD CAUSE OF ACTION54. The County's issuance of the RFP violates the County's obligation of good faith and fair dealing with respect to Plaintiff-Petitioner's rights as concessionaire and licensee under the terms of the two-year License Agreement extension.
55. The County's issuance of the RFP has caused or will cause irreparable harm to Plaintiff-Petitioner in the operation of its business and its ability to perform its services at the Licensed Premises (including but not limited to The Barn) throughout the remaining term of the License Agreement.
56. Plaintiff-Petitioner has no adequate remedy at law.
57. A permanent injunction should be issued, restraining and enjoining Defendants-Respondents from soliciting proposals or acting upon existing solicitations for food services and catered events at the Licensed Premises during the remaining term of the License Agreement.
The County's Answer contains, inter alia, objections in points of law, affirmative defenses and a counterclaim for breach of the license agreement alleging that Dover owes it an amount exceeding $200,000 in unpaid license fees. The affirmative defenses assert that the license agreement was properly terminated pursuant to the termination for convenience clause rendering moot the issue of the "alleged contract extension" and that the purported extension was void as a matter of law.
The motions
The parties have served two motions and a cross motion, which are addressed herein. In motion sequence number 2, the County moves "pursuant to CPLR 3212 and CPLR §7804[f], granting defendants-respondents summary judgment dismissing the plaintiff-petitioner's verified complaint/petition * * * and severing and continuing the counterclaim."
More specifically, the County argues that: Dover's cause of action for declaratory relief is moot given that the County terminated the license agreement for convenience; the Walker letter purporting to exercise the option and extend the license agreement was ineffective as it was not approved by the County Legislature; because Dover was in arrears to the County, as determined by County Comptroller audits, any alleged extension was invalid under the County Charter; termination of the license agreement was not arbitrary or capricious; and the claim for injunctive relief must be dismissed because there is no merit to Dover's claims and Dover cannot demonstrate serious or irreparable harm or that it cannot be made whole by an award of money damages.
In motion sequence 3, Dover cross-moves for an "order pursuant to CPLR 2215 and 3212(e) granting partial summary judgment * * * (a) declaring that plaintiff-petitioner Dover Gourmet Corporation received a lawful and binding extension of its License Agreement for food services and catering at Nassau County parks from the County of Nassau's Chief Deputy County Executive, extending the term of Dover's license until December 31, 2021; (b) declaring that the [*10]License Agreement extension granted to Dover by the County of Nassau did not require separate legislative approved to be binding and effective; (c) determining that the County's termination of Dover's license "for convenience" was and is arbitrary and capricious and issued in bad faith; and (d) granting such other and further relief as a just and proper."
Dover argues that: the license agreement with its two-year extension option, was approved by the County legislature, and was properly extended without need for additional legislative approval; as the license agreement involved no expenditure of public monies, the County Executive or a designee could extend the license agreement without approval of the Rules Committee of the legislature; neither the County's January 24, 2019 letter, which represented that the license agreement "purportedly extended" was being terminated for convenience, nor the County's September 4, 2019 letter, denying the validity of the extension and again citing the termination for convenience clause, asserted termination for cause. In addition, Dover asserts that the County's decision to terminate the license agreement "presents a justiciable issue that may be raised as a defense to Dover's claims in this hybrid declaratory judgment/Article 78 proceeding * * * [which] does not moot Dover's request for a declaratory judgment 'that it retains the right to operate and manage food services and catering at the Licensed Premises'." Dover goes on to assert that "[t]he rights and legal relations of the parties should be clarified and stabilized through issuance of a declaratory judgment."
Regarding its request for partial summary judgment, Dover asks the court to declare that it received a lawful and binding extension of the license agreement and that the absence of separate legislative approval is not a valid defense. Dover argues that the termination for convenience, owing to a change in county administration "with a resultant hostility toward Dover" (Yamali Affidavit at p.5), was arbitrary, capricious and in bad faith, subject to Article 78 review. Dover adds that the County thereafter breached the license agreement by soliciting catering services from other vendors at a county facility (Cross motion at pp.17-18).
In motion sequence number 4, Dover moves asks for a preliminary injunction prohibiting the County from, inter alia, soliciting proposals for the subject concessions and from interfering with the license agreement pending the hearing and determination of the proceeding.
The Court's Determination
Extension of the License Agreement
Dover contends that its license agreement was properly extended by letter from the Chief Deputy County Executive. In this regard, Dover argues that County Charter provisions concerning contracts that require approval of the Rules Committee of the legislature are limited to contracts involving purchases made by the County and are not applicable to contracts which involve payment by a vendor to the County. Dover also asserts that the termination by the County was in bad faith and thus ineffective to terminate the contract under the termination for [*11]convenience clause.
The County asserts that it properly terminated the license agreement pursuant to the termination by convenience clause rendering moot the issue of validity of the extension letter. In any event, the County argues that the purported extension was not valid because it was not approved by the Rules Committee. In addition, because Dover owed monies to the County, no extension was possible under County Charter §2206.
Initially, the court notes that the County's argument that approval of the Rules Committee was required to extend the license agreement is without merit. Section 2206 of the County Charter makes the award of contracts exceeding $100,000 subject to approval of the Rules Committee of the county legislature. Assuming, arguendo, that the contract extension constituted an "award", the term, "contracts exceeding $100,000", is itself vague and open to interpretation. On its face, it could refer to contracts which may be objectively valued, through some unidentified criteria, at greater than $100,000. Conceivably, a contract might exceed $100,000 in value despite the fact that $100,000 is neither paid to nor received by the County. The term could also include all contracts in which $100,000 is paid by the County or $100,000 is received by the County. Alternatively, it may refer exclusively to contracts involving the expenditure of more than $100,000 by the County. This latter interpretation is supported by the license agreement, the County Charter, and legislative history of section 2206 thereof, especially in view of the historical powers reserved for the county executive and the legislature, respectively.
Historically, and, in fact, continuing to the present time, licenses of the type awarded herein have not been subject to the competitive bidding requirements of General Municipal Law § 103, which is a primary focus of section 2206, inasmuch as such licenses do not involve the expenditure of public monies (e.g. B.C.I, Indus. Catering, Inc. v Town of Huntington, 250 AD2d 675 [2d Dept 1998]; NYS Comp Op. 68-115). Section 2206 was amended on June 29, 1998, to add—for the first time, the following provision, which itself had no counterpart in the prior charter and which is the forerunner to the provision under discussion: "The awarding of any contract exceeding $100,000 shall be subject to the approval of the County Legislature."
The purpose of the amendment was described in the memorandum in support of legislation as follows:
This bill provides that where competitive bidding is requires [sic], the authorization of the County Legislature is requires [sic] prior to the awarding of a contract in excess of $100,000. . . .
The provision is also summarized in the memorandum:
SUMMARY OF PROVISIONS:
* * *§ 2. Amends § 2206 of the County Government Law of Nassau County to require the approval of [*12]the County Legislature prior to the awarding of a contract to the lowest responsible bidder if a contract exceeds $100,000.
County Charter § 2206 was again amended October 9, 1998, to read, insofar as relevant to this discussion, as follows: "The awarding of any contract exceeding $100,000 shall be subject to the approval of the Rules Committee of the County Legislature" (Excerpt of 10-09-1998 Fifteenth meeting of Nassau County Legislature).
The purpose of the resolution, set forth in the memorandum in support of legislation for Bill Number 890-98, is as follows:
This bill provides that the awarding of a contract pursuant to competitive bidding shall be subject to the approval of the Rules committee of the County Legislature.
The provision is also summarized in the memorandum:
§ 2. Amends § 2206 of the County Government Law of Nassau County to require the approval of the Rules Committee of the Nassau County Legislature prior to the awarding of a contract to the lowest responsible bidder if a contract exceeds $100,000.
Accordingly, the approval of the Rules Committee of the Nassau County legislature was not required to extend Dover's license as the license agreement was not a "contract exceeding $100,000" in that bids were not required for the license agreement and the County was a recipient of funds thereunder and not a payor. This is true despite the fact that approval of the County legislature was sought in 2016 when the license agreement was entered into initially. Such approval was not needed at the time, in fact. Furthermore, the foregoing discussion assumes, as previously noted, that the award of a contract is equivalent to the extension of an existing contract, which, the court does not, in any event conclude.
Section 2206 also contains a provision that prohibits an award of contracts to any person in arrears to the County. In contrast to the previously discussed language in section 2206, research has not revealed any clear historical legislative limitation in Nassau County or elsewhere on the prohibition against awarding contracts to parties who are in arrears to the County. The court notes that this prohibition has always been part of the laws of Nassau County. It appears that this prohibition may have its origins in near identical prohibitions set forth in the New York City Charter, appearing therein as early as 1848, prohibiting the award of bids or contracts to those in arrears or to "defaulters". Those prohibitions may be related to contracts involving bidding and payments made by the City of New York, but no such limitation is clear either in the body of the statute or elsewhere. The court notes that it could not find any legislative memoranda or recitals suggesting a limitation and further that restrictions against awarding contracts to parties in arrears are commonplace in virtually every state and [*13]municipality.[FN2]
Given the absence of any statutory limitation on the contours of the relevant language, and that section 2206 addresses virtually all types of contracts, without limitation to bid contracts, and further, since the license agreement, in fact, contains an explicit representation by Dover that it was not in arrears at the time it was executed (para. 20.1 thereof), the court cannot conclude that it is inapplicable to license agreements of the type set forth herein. That said, the charter prohibition is expressly limited to the "awarding of contracts", and has no application to the extension of existing contracts that explicitly provide for extensions. Here, the parties entered into an agreement with an extension provision. In 2016, when the parties exercised their option to extend the license agreement, this did not constitute the awarding of a contract but, was rather, an extension as contemplated by the license agreement. Under the circumstances, there was no Charter prohibition that precluded the exercise of such option to extend the license, irrespective of whether Dover was in arrears to the County at the time.[FN3]
Accordingly, summary judgment on the first cause of action for declaratory relief is granted to the extent that the court declares that the County validly exercised its option to extend the license agreement until December 2021. In all other respects, Dover's motion for summary judgment is denied.
Termination for convenience
The County claims that it properly terminated the license agreement pursuant to the termination for convenience clause. Dover alleges in its second cause of action that the County's determination that it elected to not exercise the option was arbitrary and capricious and subject to challenge under CPLR Article 78. In its motion, Dover alleges that the County's termination of the license agreement was arbitrary and capricious and in bad faith in violation of CPLR Article 78.
Initially, the court notes that despite the different characterizations of the relief sought in Dover's pleadings and in Dover's motion, the underlying issue to be addressed, and which is addressed by the parties in their papers, is the propriety of the County's termination of the license [*14]agreement for convenience. Dover has chosen to plead and litigate the termination issue in the context of a claim under CPLR Art. 78 rather than a claim for breach of contract. This election is not without significance given the procedural path of an Article 78 proceeding in comparison to the procedural path of a plenary action. Although it is not entirely clear that an Article 78 proceeding is the correct form of action here, under the circumstances, the court will entertain the proceeding without conversion (CPLR 103[c]).
Ordinarily, violation by a governmental official or agency of a contractual obligation gives rise to a plenary action for violation of the contract, and not to an article 78 proceeding seeking nullification of the governmental decision.
As the First Department held in Matter of Goodstein Constr. Corp. v Gliedman (117 AD2d 170, 176-77, [1st Dept 1986], affd 69 NY2d 930, 931 [1987]):
The reason for this distinction is inherent in the very different nature of the issues presented in a contract action and in an article 78 proceeding. In the usual situation, a claim that a public official or governmental unit has violated a contract will be adjudicated in accordance with traditional rules of contract law. As here pertinent, a claim for article 78 relief necessarily rests upon the quite separate issue as to whether the challenged determination "was made in violation of lawful procedure, was affected by an error of law or was arbitrary and capricious or an abuse of discretion". (CPLR 7803.) The standard for deciding a claim that a governmental action was arbitrary or capricious is "whether there is a rational basis" for the challenged action." (Citation omitted).No doubt there are circumstances in which the same governmental action may constitute a violation of contract and also be of a character that would support a claim for article 78 relief. It clearly does not follow that a contractual violation by a governmental agency or official without more gives rise to such a claim.
A violation of duty by a governmental official or agency may well give rise to a plenary action for breach of the contract, but not to an article 78 proceeding seeking specific performance under guise of mandamus or certiorari (Matter of Corbeau Constr. Corp. v. Board of Educ., 32 AD2d 958).
In Abiele Contr. v New York City School Constr. Auth. (91 NY2d 1, 5-6 [1997]), the Court of Appeals rejected the School Construction Authority's argument that its decision to terminate plaintiff's construction contract was reviewable only in a CPLR Art. 78 proceeding "since the municipal agency had neither statutory nor contractual authority to render a quasi-judicial determination, [and, thus,] * * * was not empowered to issue a final and binding determination of default reviewable only in an article 78 proceeding. Thus, a plenary action sounding in contract is not precluded under the circumstances presented here."
In so holding, the Court stated (Id. at 9-16):
We have recognized that "there are circumstances in which the same governmental action [*15]may constitute a violation of contract and also be of a character that would support a claim for article 78 relief" (Matter of Goodstein Constr. Corp. v Gliedman, 117 AD2d 170, 176 [Sandler, J. P., concurring]), affd 69 NY2d 930). However, the issues presented in a contract action differ significantly from those presented in an article 78 proceeding. When the damage allegedly sustained arises from a breach of the contract by a public official or governmental body, then the claim must be resolved through the application of traditional rules of contract law. On the other hand, when a petitioner asserts that the determination of a governmental body or public official is "in violation of lawful procedure, was affected by an error of law or was arbitrary and capricious or an abuse of discretion" and seeks nullification of same, then an article 78 proceeding is the appropriate vehicle through which the claim may be addressed (CPLR 7803).Thus, where the language of the complaint asserts violations of a plaintiff's rights under a contract and the primary thrust of the allegations is in contract, a plenary action sounding in contract is the appropriate remedy. Stated differently, where the focus of the controversy is on an agency's breach of an express contractual right, or on the agency's violation of the implied obligations of good faith, fair dealing and cooperation, a contract action is the recommended remedy.
A municipal agency's finding that a general contractor has defaulted on its performance under the contract will not bind the general contractor, and foreclose a plenary action, unless the agency is endowed with contractual or statutory authority to render a quasi-judicial, final and binding determination. While defendant correctly notes that judicial review of administrative actions is generally achieved through an article 78 proceeding, the administrative action must, as a prerequisite, be authorized (see, Matter of Foy v. Schechter, 1 NY2d 604, 612, 154 N.Y.S.2d 927, 136 N.E.2d 883; Allied Chem. v. Niagara Mohawk Power Corp., 72 NY2d 271, 276, 532 N.Y.S.2d 230, 528 N.E.2d 153, cert. denied 488 U.S. 1005, 109 S. Ct. 785, 102 L.Ed.2d 777). We conclude that the SCA had neither statutory nor contractual authority to render a binding administrative determination in this case and, thus, Abiele was not precluded from challenging the default finding in a contract action.
The SCA relies primarily on terms within the written agreement between the parties which, it claims, granted it the requisite authority to render a final and binding determination. Specifically, the SCA points to section 9.01 of the standard form construction contract, entitled "Termination for Cause," as the source of its power. This provision states, in relevant part, that if"a substantial violation of a material provision hereunder shall have occurred due to the fault of the Contractor and the Contractor shall fail to cure such default within ten (10) days after receipt of Notice from [the SCA] specifying the nature of such default * * * then [the SCA] may, in addition to all other rights [the SCA] may have as provided by law, terminate the Contract by giving not less than ten (10) days' Notice of termination to the Contractor, whereupon the Contract shall be deemed terminated at the end of such Notice period."
Unless statutory language or public policy dictates otherwise, the terms of a written agreement define the rights and obligations of the parties to the agreement (see, Westinghouse Elec. Corp. v. New York City Tr. Auth., 82 NY2d 47, 55, 603 N.Y.S.2d 404, 623 N.E.2d 531).[*16]We have long held that the fundamental objective when interpreting a written contract is to determine the intention of the parties as derived from the language employed in the contract (see, Morlee Sales Corp. v. Manufacturers Trust Co., 9 NY2d 16, 19, 210 N.Y.S.2d 516, 172 N.E.2d 280). Similarly, where the parties have agreed to conduct themselves in accordance with the rights and duties expressed in a contract, a court should strive to give a fair and reasonable *10 meaning to the language used (Aron v. Gillman, 309 NY 157, 163, 128 N.E.2d 284; Sutton v. East Riv. Sav. Bank, 55 NY2d 550, 555, 450 N.Y.S.2d 460, 435 N.E.2d 1075).
The above-quoted contractual provision is an unambiguous statement of the SCA's right to terminate the contract, its obligation to allow the contractor an opportunity to cure once it has concluded that provisions of said contract were breached, and its right to contract with another, at the breaching party's expense, to continue the work. It is a simple default provision. There is no evidence that by agreeing to the language of this provision, Abiele unequivocally declared its intention to surrender substantive or procedural rights to seek redress in a plenary action (see, e.g., Crimmins Contr. Co. v. City of New York, 74 NY2d 166, 171, 544 N.Y.S.2d 580, 542 N.E.2d 1097; Naclerio Contr. Co. v. City of New York, 116 AD2d 463, 496 N.Y.S.2d 444, affd. for reasons stated below 69 NY2d 794, 513 N.Y.S.2d 115, 505 N.E.2d 625).
Two additional cases of significance are Red Apple Child Development Center v Community School Districts Two (303 AD2d 156 [1st Dept 2003] and A.J. Temple Marble & Tile v Long Is. R.R., 256 AD2d 526 [2d Dept 1998]).
In Red Apple Child Development Center v Community School Districts Two (supra), the owner of a private day care and pre-kindergarten facilities commenced an article 78 proceeding against the Board of Education petitioning for an order directing the respondent to enroll students in its educational programs after the respondent had terminated petitioner's contracts to operate its facilities. The Supreme Court granted the petition and found that the respondent improperly terminated the petitioner's contracts without factual or legal justification and without a hearing. The Appellate Division reversed, holding as follows:
It is a well-established principle of law that when a contract affords a party the unqualified right to limit its life by notice of termination that right is absolute and will be upheld in accordance with its clear and unambiguous terms (New York Telephone Co. v. Jamestown Tel. Corp., 282 NY 365, 373; Crown Point Iron Co. v. Aetna Insurance Co., 127 NY 608, 615). "A party has an absolute, unqualified right to terminate a contract on notice pursuant to an unconditional termination clause without court inquiry into whether the termination was activated by an ulterior motive" (Big Apple Car v. City of New York, 204 AD2d 109, 111). Such a termination is enforceable regardless of the cause of termination (A.S. Rampell, Inc. v. Hyster Co., 3 NY2d 369, 382). A contract terminable without cause does not give rise to a protected property interest (see S D Maintenance Co., Inc. v. Goldin, 844 F.2d 962 [2d Cir]), such as would afford the right to a hearing as to the propriety of the termination.
Supreme Court incorrectly read the contract as permitting termination for cause only. Other than the unconditional termination clause, the other pertinent provision as to termination [*17]permitted respondent to cancel the contract on one day's notice if a violation creating a hazardous condition for the students existed. That clause, however, is not the one at issue here. Given the absence of any showing that petitioner's termination was other than contractual pursuant to an unqualified right, petitioner had no right to a hearing (Matter of Farmacia Honeywell v. DeBuono, 275 AD2d 206).
Since respondent's decision to terminate the contract was an exercise of a contractual right not subject to judicial review, the petition must be dismissed. In any event, quite apart from the unfettered right to terminate, the decision to terminate had a rational basis, i.e., the DOH's order revoking petitioner's permits and directing the closing of its facilities, and was not arbitrary, capricious or violative of law. And, as the contract provided, the decision to procure services from other providers rested solely with the CSDs.
The last paragraph does not unequivocally indicate that an Article 78 proceeding is available to challenge a decision to terminate for convenience.
And, in A.J. Temple Marble & Tile v Long Is. R.R. (supra at 527), the Second Department affirmed the dismissal of plaintiff contractor's claims for breach of contract, etc., against the Long Island Rail Road, expressly rejecting the view that an unqualified termination for convenience clause permitted any bad faith inquiry:
Contrary to the plaintiff's contention, "[a] party has an absolute, unqualified right to terminate a contract on notice pursuant to an unconditional termination clause without court inquiry into whether the termination was activated by an ulterior motive" ( Big Apple Car v City of New York, 204 AD2d 109, 111; see also, Division of Triple T. Serv. v Mobil Oil Corp., 60 Misc 2d 720, affd 34 AD2d 618). Accordingly, it was proper for the Supreme Court to grant that branch of the defendant's motion which was for summary judgment dismissing the first cause of action * * *.
Arguably, these cases would support the conclusion that no article 78 review is possible where there is an unrestricted termination for convenience clause. To hold otherwise, especially in view of the A.J. Temple case, would tend to render meaningless the arbitrary and capricious language present in the termination for convenience clause herein. Nevertheless, as noted, Dover has advanced a claim under CPLR Art. 78. The procedural correctness of Dover's election has not been challenged by the County. The instant case arguably presents a situation mentioned in Gliedstine and Abiele in which a government action could form the basis of a breach of contract claim or a claim under Art. 78. That disposition of the issue of the termination's propriety would be largely the same under the circumstances cannot be disputed, in any event, although the procedural path of an Article 78 proceeding and a plenary action are very different, with the latter contemplating mandatory disclosure under Art. 31.
Therefore, under the circumstances, the second cause of action will be considered as pleaded.
To the extent that the County asserts its absolute and unequivocal right to terminate for [*18]convenience, its assertion is without merit as it ignores the restrictive language of the clause. This is to be contrasted with the unrestricted termination for convenience clauses cited in the cases relied upon by the County herein. For example, the termination for convenience clause in A.J. Temple Marble & Tile, Inc. v Long Island R.R. (supra), reads as follows (Defendant Respondent's Brief on Appeal at p.6):
The Railroad shall have the right to terminate the Contract in whole or in part at any time for any reason, irrespective of whether the Contractor is in default, by giving the Contractor written notice to such effect, which notice shall specify the termination date. Upon any such termination, the Contractor shall waive any associated claims for damages, including loss of anticipated profits.
In contrast, the termination for convenience clause herein is neither standard nor unqualified. Accordingly, the principle enunciated in A.J. Temple Marble & Tile v Long Is. R.R. (supra), to wit, that there is an absolute and unqualified right to terminate is simply not applicable at bar.
In view of the competing contentions of the parties regarding the County's termination of the license agreement, a trial of this issue is required.
Dover's claims for injunctive and interim injunctive relief
Dover's third cause of action alleging violations of the duties of good faith and fair dealing demands a permanent injunction restraining the County from soliciting or acting upon proposals for food services at County facilities, and from interfering with Dover's rights during the remaining term of the License Agreement. Dover's motion seeks a preliminary injunction restraining the County from terminating the license agreement and from interfering with its license rights. Dover and the County both move for summary judgment on Dover's third cause of action. The County opposes Dover's motion for interim injunctive relief and argues, inter alia, that injunctive relief is not permissible considering the availability of money damages.
Dover's claim for injunctive relief has not been specifically been made attendant to its CPLR Art. 78 cause of action (see CPLR 7806), but, rather, relates to the implied contractual duties of good faith and fair dealing. The sufficiency of this cause of action has not been challenged except in two respects: the County's alleged unfettered right to terminate for convenience, which the court has indicated is restricted by the arbitrary and capricious limitation in the clause, and the availability of alternative legal, as opposed to equitable, relief. Inasmuch as an explicit breach of contract claim has not been asserted by Dover and no argument has been advanced that this claim is, in truth, a breach of contract cause of action (see eg J Kokolakis Contracting Corp. v Evolution Piping Corp., 46 Misc 3d 544 [Supreme Court Suffolk County 2014]), the court will address only the second contention of the County.
As expressed in the third cause of action and "Wherefore" clause, Dover's demand for a permanent injunction must be dismissed, in part. In this regard, assuming that Dover is [*19]successful in establishing that the termination for convenience was arbitrary and capricious, the license agreement would be valid and Dover's contractual right to continue as licencee would be restored thereby. Conceivably, injunctive relief could be afforded to Dover under CPLR 7806 to prevent the County from soliciting or acting upon proposals for food services based strictly on the wrongful termination. However, nothing would prevent the County from terminating the licence agreement for convenience in the future, provided the termination was not arbitrary or capricious. In other words, the court cannot order the County from refraining to properly exercise its right to termination in the future, which, in effect, would convert a contractual right of the County to an irrevocable obligation (see Restatement of Contracts (2d) § 368 Effect of Power of termination ["Specific performance or an injunction will not be granted against a party who can substantially nullify the effect of the order by exercising a power of termination or avoidance"]). Yet that is precisely what the third cause of action seeks.
Nevertheless, at this juncture, and considering the ability of the court to award injunctive relief as an adjunct to the second cause of action, the court declines to dismiss the claim for injunctive relief, except to the extent that it seeks to enjoin the County from exercising its contractual rights during the remaining term of the License Agreement.
The court notes that the County's assertion concerning the availability of money damages as barring injunctive relief may well be correct; however, in view of the trial that must occur concerning the second cause of action, and the flexible nature of the relief that can be awarded (CPLR 7806), the court will refrain from dismissing the claim for injunctive relief in its entirety.
The motion for a preliminary injunction is denied, Dover failing to establish a likelihood of success on the merits or that the equities balance more heavily in its favor (see eg Town of Carmel v Melchner, 105 AD3d 82 [2d Dept 2013]; Suffolk County Ass'n of Municipal Employees, Inc. v County of Suffolk, 163 AD2d 469 [2d Dept 1990]).
Accordingly, it is Ordered that: the County's motion for summary judgment is granted to the extent that the third cause of action for a permanent injunction, insofar as it seeks to prevent the County from exercising its contractual rights during the remaining term of the agreement, is dismissed; and the motion is otherwise denied in all respects; and, it is
Ordered that Dover's motion for summary judgment is granted to the extent that the Court hereby adjudges and declares that the County extended the license agreement pursuant to its terms; in all other respects, Dover's motion for summary judgment is denied; and, it is
Ordered that Dover's motion for a preliminary injunction is denied, and, it is
Ordered that the attorneys for the parties shall participate in a phone conference on May 21, 2020, at 9:30 a.m. to discuss scheduling a trial on the issue of the termination by the County pursuant to the termination for convenience clause; the counterclaim of the County remains viable.
Dated: April 24, 2020
Mineola, New York
______________________________________
Hon. Vito M. DeStefano Footnotes
Footnote 1: Unless otherwise delineated, the Defendant-Respondents will be referred to herein as "the County."
Footnote 2:The court has conducted extensive research of the prohibition against municipalities from awarding bids or contracts to persons in arrears or in default on obligations to them. There are few cases that address this prohibition although it is contained in countless municipal charters throughout the U.S. which will not be cited here. The prohibition is not discussed, as far as my own research has uncovered, in any treatises. The prohibition must involve the protection of the municipalities from business entanglements with persons who are not reliable— in this regard, the prohibition is likely a lower limit on the authority of municipalities to award contracts to persons who are not "responsible". Although this tends to raise the possibility that the prohibition is related to responsible bidders, there is simply no basis for the court to limit the reach of the statutory prohibition.
Footnote 3:Of course, the existence of arrears could constitute a valid basis to terminate the license agreement.
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