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Mark Hanisco v. Township of Warminster and Solid

January 5, 2012

MARK HANISCO, APPELLANT
v.
TOWNSHIP OF WARMINSTER AND SOLID : WASTE SERVICES, INC. D/B/A J.P.
MASCARO & SONS



The opinion of the court was delivered by: Opinion BY Judge Cohn Jubelirer

Argued: October 19, 2011

BEFORE: HONORABLE BONNIE BRIGANCE LEADBETTER, President Judge HONORABLE DAN PELLEGRINI, Judge HONORABLE RENEE COHN JUBELIRER, Judge HONORABLE ROBERT SIMPSON, Judge HONORABLE MARY HANNAH LEAVITT, Judge HONORABLE P. KEVIN BROBSON, Judge HONORABLE JOHNNY J. BUTLER, Judge*fn1

Mark Hanisco (Hanisco) appeals the January 11, 2010 Order of the Court of Common Pleas of Bucks County (trial court) denying his Petition for Preliminary and Permanent Injunctive Relief (Petition) and dismissing his Amended Complaint.

Hanisco sought to invalidate a two-year extension of a waste services contract between the Township of Warminster (Township) and Solid Waste Services, Inc. d/b/a J.P. Mascaro & Sons (Mascaro) on the grounds that the parties renegotiated the price for the extension thereby triggering the application of the public, competitive bidding requirements of Section 3102(a) of the Pennsylvania Second Class Township Code*fn2 (Code), 53 P.S. § 68102(a).

The parties stipulated to the facts. (Joint Stipulation of Facts and Evidence (Stipulation), R.R. at 189a-202a.) In the fall of 2004, the Township sought bids from private waste haulers to provide waste pickup and disposal services within the Township. (Stipulation at ¶ 1, R.R. at 189a.) The Township‟s Notice to Bidders stated that the proposed waste services contract, to begin on January 1, 2005, should be presented as: (1) a three-year contract with an option for two one-year extensions; or (2) a five-year contract with an option for two one-year extensions. (Stipulation at ¶ 2, R.R. 190a.)

The Township awarded the contract to Mascaro as the lowest responsible bidder and the only bidder (2005 Contract). (Stipulation at ¶¶ 5, 6, R.R. at 190a.)

The Township selected the five-year alternative with the option exercisable by the Township for two one-year extensions. (Stipulation at ¶ 6, R.R. at 190a.) Accordingly, the 2005 Contract would end on December 31, 2009, unless extended by the Township through the exercise of its options. (Stipulation at ¶ 11, R.R. at 191a.) In its final form, the 2005 Contract prices for each year were as follows:

Year Total Amount Unit*fn3 Price Per Month [Unit Price Per Year]

2005 $2,191,224.00 $21.90 [$262.80]

2006 $2,736,000.00 $27.34 [$328.08]

2007 $3,286,000.00 $32.84 [$394.08]

2008 $3,476,992.00 $34.75 [$417.00]

2009 $3,680,008.00 $36.78 [$441.36]

Total $15,370,224.00

Options:

Year Total Amount [Unit Price Per Month] Unit Price Per Year

2010 $3,977,940.00 [$39.76] $477.09

2011 $3,977,940.00 [$39.76] $477.09

(Stipulation at ¶10, R.R. at 191a.)

The parties executed the 2005 Contract on March 24, 2005. (Stipulation at ¶ 8, R.R. at 191a.) In the fall of 2009, with the end of the five-year contract term approaching, the Township began to study the question of whether to exercise the options in the 2005 Contract, or advertise for a new contract. (Stipulation at ¶ 12, R.R. at 192a.) Mascaro and the Township held a telephone conference call on September 18, 2009 and scheduled a meeting for September 25, 2009. (Stipulation at ¶¶ 13 - 17, R.R. at 192a-93a.) The day before the scheduled meeting between Mascaro and the Township, the Township‟s Board of Supervisors (Supervisors) held its regular bi-monthly public meeting, at which it considered the Township‟s waste hauling contract. (Stipulation at ¶ 18, R.R. at 193a.) At the meeting, it was suggested that advertising for a new waste hauling contract should be postponed until after the meeting with Mascaro scheduled for the next day. (Stipulation at ¶ 19, R.R. at 193a.) Additionally, the question arose whether authorizing advertising for bids would impact "the negotiations" scheduled for the next day between Mascaro and the Township. (Stipulation at ¶ 20, R.R. at 193a.) Because there was only a very short window before year-end to conduct a new bid solicitation, the authorization for advertising was considered appropriate. (Stipulation at ¶ 19, R.R. at 193a.) If the Township exercised the options under the 2005 Contract, it would cost $477.09 per per year per unit, but two neighboring townships were paying less than that amount for similar trash and recycling services.*fn4 (Stipulation at ¶¶21, 22, R.R. at 193a-94a.)

Given the lower rates being paid by nearby municipalities, it was recommended that the Township either try to arrange a better deal with Mascaro at less than the option prices under the 2005 Contract or solicit bids for a new contract. (Stipulation at ¶ 23, R.R. at 194a.) Thus, the Supervisors voted to authorize advertising for new bids only if the meeting planned for the following day with Mascaro did not result in an acceptable reduction in the current option price under the 2005 Contract. (Stipulation at ¶ 24, R.R. at 194a.)

At the next day‟s meeting on September 25, 2005, the Township and Mascaro negotiated a change in the option year prices for 2010 and 2011. Mascaro essentially agreed to freeze the 2009 prices, which reduced the cost from $477 per year per unit to $429.36 per year per household. (Stipulation at ¶ 26, R.R. at 194a.) This would be accomplished by Mascaro preparing an "amendment" to the 2005 Contract establishing a "rebate" that would reflect the proposed price reduction to $429.36, so that Township could exercise the options for years 2010-2011 in the amount of $477.09 as set forth in the 2005 Contract. (Stipulation at ¶ 27, R.R. at 195a.) In all other respects, the 2005 Contract remained the same. This arrangement, consisting of a proposed rebate, would reduce the prices for 2010-2011 by $797,592. The parties memorialized their negotiations in what was termed Amendment No. 1 (the Amendment) to the 2005 Contract.*fn5 (Stipulation, Ex. 15, R.R. at 304a.) At its next regularly scheduled public meeting on October 8, 2009, after reviewing the Amendment, the Supervisors voted to approve it. (Stipulation at ¶¶ 40-43, R.R. at 198a.)

Hanisco, an adult taxpayer residing within the Township, filed a complaint for declaratory judgment against the Township, which was later amended to add Mascaro as a defendant.*fn6 (Amended Complaint, R.R. at 6a-130a.) Hanisco then filed the Petition against implementation of the Amendment and to require the Township to engage in competitive bidding for a new waste services contract. (Petition, R.R. at 131a-43a.) On January 11, 2010, the trial court denied Hanisco‟s request for declaratory and injunctive relief. (Trial Ct. Order, January 11, 2010.) Appellant appealed.*fn7

In its Pa. R.A.P. 1925(a) opinion, the trial court looked at whether the Amendment to the 2005 Contract was a valid extension of the original contract. Relying on its interpretation of precedent, the trial court concluded that the Amendment did not create a new contract because the two-year extension had been contemplated in the original bidding process and the Amendment did not affect the scope or type of services being provided. The trial court approved the rebate, noting that it did not make "common sense" to force the Township to stick to the original bid prices for 2010-2011. The trial court believed that prohibiting the rebate would satisfy Hanisco‟s view of what the law requires, but it would force Township residents to pay more. The matter is now before this Court for our consideration.*fn8

On appeal, Hanisco argues that the privately negotiated price term in the form of a "rebate" created a new contract that was subject to the competitive bidding requirements of Section 68102(a) of the Code.*fn9 53 P.S. § 68102(a). Hanisco contends that the options, the terms of which were set forth in the 2005 Contract, were not exercised in accordance with their original terms by the Township, and that the private negotiations between Mascaro and the Township changed those terms thereby creating a new contract. Hanisco further contends that Mascaro received an advantage over other waste haulers through the private negotiations, which changed the original contract option price, reducing that price so that Mascaro was retained as the Township‟s waste hauler.*fn10 Hanisco also argues, that had the Township advertised for new bids, the Township may have realized an even better price but, because there was no such bidding, it is unknown whether the negotiated price is fair. Therefore, Hanisco argues, the Amendment is illegal and void.

The Township and Mascaro respond that the Amendment is a supplement to the existing contract, not a new contract. They contend that, once a public contract has been lawfully awarded in accordance with competitive bidding to the lowest responsible bidder, a lower price may be negotiated*fn11 and there is no restriction in the Code to prevent the Township from accepting a rebate. They note that the options to extend the 2005 Contract were specified in the original bid solicitation and were a term of the 2005 Contract. They further argue that amendments that are not substantial and are favorable to the taxpayers, such as the Amendment here, are matters ...


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