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La Gondola, Inc. v. City of Providence

Supreme Court of Rhode Island

June 17, 2019

La Gondola, Inc.
v.
City of Providence, by and through its Treasurer James J. Lombardi, et al.

          Providence County Superior Court (PC 15-1779) Associate Justice Michael A. Silverstein

          For Plaintiff: Thomas M. Dickinson, Esq.

          For Defendant: Jillian H. Barker, Esq. Harris K. Weiner, Esq.

          Present: Suttell, C.J., Goldberg, Flaherty, Robinson, and Indeglia, JJ.

          OPINION

          WILLIAM P. ROBINSON, III ASSOCIATE JUSTICE

         The plaintiff, La Gondola, Inc. (La Gondola), appeals from a September 14, 2016 judgment entered after a bench trial in Providence County Superior Court, which judgment was in favor of the defendants, the City of Providence (the City), the Rhode Island Zoological Society (the Zoo), P.G.S., Inc., and various municipal officials.[1] The case concerns the awarding of a concessions contract for concessions at Carousel Village in Roger Williams Park, which is located in the City of Providence. On appeal, La Gondola contends that the trial justice erred in: (1) "concluding that the [bidding] process was free of corruption, bad faith, and/or an abuse of discretion;" (2) holding that a certain amendment to the contract at issue, which dealt with the operation of a trackless train, was not enforceable; and (3) denying La Gondola's "contractual interference claim." (Internal quotation marks omitted.)

         For the reasons set forth in this opinion, we affirm the judgment of the Superior Court.

         I. Facts and Travel

         Roger Williams Park is a spacious and inviting public space owned by the City of Providence. Situated on four hundred and thirty-five acres, it contains numerous public attractions such as the Roger Williams Park Zoo, Carousel Village, and the Dalrymple Boathouse (the Boathouse).[2] This case involves a dispute over the concessions contract for Carousel Village, which contract the City ultimately awarded to the Zoo, rather than to La Gondola. We begin by addressing what La Gondola alleged in its March 1, 2016 third amended complaint (the complaint), and we will then proceed to relate the testimony presented at trial.

         In its complaint, La Gondola stated that it operated concessions at the Boathouse in Roger Williams Park pursuant to a concessions contract, the initial term of which will expire on May 16, 2021. The complaint further stated that La Gondola also operated concessions at Carousel Village pursuant to a concessions contract with the City, the initial term of which ended on April 30, 2015, "with an additional five year term that was to expire on April 30, 2020 if the rent was mutually agreed upon by the City and LaGondola prior to April 30, 2015."

         At some point during the pendency of the latter contract, La Gondola purchased a trackless train, which would serve as an attraction at Carousel Village. The complaint alleged that, on January 30, 2014, after the train was purchased, La Gondola and the City entered into an "Amendment to the Carousel Village Lease" (the Train Amendment), which stated that La Gondola would "remain exclusive provider of all train rides within Roger Williams Park and Zoo under this or any other current contract with the City of Providence within Roger Williams Park and Zoo."

         The complaint went on to relate that, at the time period at issue, a contract which existed between the Zoo and the City for the operation of the Zoo was set to expire on June 30, 2015. It was further stated in the complaint that Robert McMahon, the Superintendent of the City of Providence Department of Parks & Recreation, who recommended that the City award the Carousel Village concessions contract to the Zoo, was also an ex-officio member of the Zoo's Board of Trustees, which Board was involved in negotiating a new contract between the City and the Zoo.[3] (La Gondola gives great weight to that uncontested fact in its argument before this Court.) The complaint proceeded to state that the City informed the Zoo that it was going to reduce its annual payments to the Zoo by $300, 000 beginning in fiscal year 2015. It then alleged that the Zoo agreed to the reduction "so long as the City provided the [Zoo] with other sources of revenue" and that the parties discussed the Zoo operating the concessions at Carousel Village and the Boathouse. The complaint pointed to specific communications from Doctor Jeremy Goodman, the Executive Director of the Zoo, to Mr. McMahon and Alan Sepe, the Director of Operations for the City, indicating that the City had "verbally committed" to granting the Zoo the Carousel Village concessions contract. See Part III.A.2, infra.

         In relating the factual background of this case, the complaint went on to state that, in November of 2014, Mr. McMahon met with Cynthia and Allen Days (Cynthia Days being the President of La Gondola and Allen Days being both her husband and also a person affiliated with the corporation) to discuss the possible five-year extension of the concessions contract for Carousel Village and the need for capital improvements to Carousel Village. The Days wanted a contractual extension for a period greater than five years if they were to agree to pay for the needed capital improvements. The complaint stated that Mr. McMahon told the Days that such an extension would have to be the subject of a request for proposal. Accordingly, the complaint indicated that, on December 15, 2014, the Board of Contract and Supply approved a "Request For Proposals For Operation Of Carousel Village At Roger Williams Park" (the RFP).

         The RFP provided for a ten-year contract with a minimum rent bid of $95, 000. It also included required capital improvements totaling $156, 000; those improvements included a restroom renovation to, among other things, convert the conventional toilet system into a waterless Clivus Multrum System, which is a composting toilet system. Two addenda were ultimately added to the RFP. The first addendum made certain changes to the scope of needed capital improvements, the cost of which then totaled $241, 000. The second addendum made the contract be one of twenty, rather than ten, years in duration; and it extended the time period for completion of the capital improvements from two years to three and a half years.

         Importantly, the RFP also stated that "[t]he Parks Department reserves the right to accept or reject any or all proposals received as a result of this request, or to cancel in part or in its entirety this proposal if it is in the Parks Department best interest to do so." Section 6.7 of the RFP further provided that "[t]he City reserves the right to accept other than the highest value proposals, to reject any or all proposals, and to waive any of the requirements of the bid selection procedures explained in this document."

         According to the complaint, P.G.S., Inc. submitted a proposal for $292, 435, which was an amount less than the required minimum bid (viz., the minimum rent of $95, 000 plus capital improvements of $241, 000). La Gondola submitted a bid of $525, 569, which committed it to performing all of the required capital improvements. The Zoo submitted a bid of $591, 000, which bid met the $241, 000 required for capital improvements that were listed in the RFP but did not include the capital improvement relative to the installation of the Clivus Multrum System.[4] For that reason, La Gondola alleges that the Zoo's bid was unresponsive to the RFP. The complaint proceeded to state that Mr. McMahon recommended that the City accept the Zoo's bid and that the Board of Contract and Supply so voted. Ultimately, on August 21, 2015, the City and the Zoo entered into a concessions contract for Carousel Village, which will expire in 2035.

         The complaint contained six counts. We relate in detail only those counts with which we are concerned in this appeal. Count One requested a declaratory judgment to the effect that: (1) the Zoo's bid was not responsive to the RFP; (2) the Zoo's bid materially deviated from the specifications of the RFP; (3) the City engaged in favoritism in selecting the Zoo's bid; (4) the City colluded with the Zoo in selecting the Zoo's bid; (5) the City predetermined that it was going to select the Zoo's bid; (6) "the City acted corruptly or in bad faith, or so unreasonably or arbitrarily as to be guilty of a palpable abuse of discretion;" (7) the concessions contract between the City and the Zoo was void; (8) La Gondola's bid was responsive; (9) La Gondola's bid "should be selected as the successful bid for the RFP;" (10) the Zoo should be ordered to vacate Carousel Village; and (11) La Gondola should be awarded the operation of the concessions at Carousel Village. Count Two sought a writ of mandamus "directing the City to award the RFP to LaGondola and * * * to enter into a contract with LaGondola for the Carousel Village" concessions. Count Three sought a declaratory judgment with respect to the fact that the contract eventually entered into between the Zoo and the City for the Carousel Village concessions provided the Zoo the exclusive right to operate rides and concessions at Carousel Village, allegedly in contravention of the Train Amendment (see supra). Specifically, La Gondola requested a declaration that: (1) the Train Amendment was valid and enforceable; (2) the concessions contract between the Zoo and the City was void and unenforceable "to the extent that it conflicts with LaGondola's rights under [the Train Amendment] and the Boathouse [concessions contract];" (3) the concessions contract between the City and the Zoo exceeded the geographical limitations set forth in the RFP; (4) La Gondola can operate its train within two hundred feet of Carousel Village; and (5) the Zoo may not operate a trackless train in Roger Williams Park and Zoo. Count Six alleged intentional interference with prospective contractual relations.[5]

         A trial ensued on all counts in the complaint over eight days in March and April of 2016. We relate below the salient details of what transpired at the trial.

         A. The Testimony of Robert McMahon

         Robert McMahon testified that he had been the Deputy Superintendent of the City of Providence Parks & Recreation Department from 1986 to 2008 and then Superintendent from 2008 until his retirement in 2015. He stated in the course of his testimony that the Parks & Recreation Department oversees Roger Williams Park and that, as Superintendent, his direct superior was Alan Sepe, the Director of Operations for the City. He testified that, in his capacity as Superintendent, he served as an "ex officio member" of the Zoo's Board of Trustees and that, while he was not a voting member, he might "sometimes weigh in on zoo renovations [and] proposed projects that were being considered."

         It was Mr. McMahon's testimony that, on occasion, when awarding a contract, bidders "still might get the bid" even "if they didn't completely match every specification or requirement;" he added that that would be "[b]ecause some of the RFPs were discretionary in nature and involved discretion in terms of awarding the bid." He stated that, if a bidder "met substantially all the requirements of the RFP but did not meet one of them, there would be discretion involved in awarding that bid."

         It was further Mr. McMahon's testimony with respect to the trackless train that La Gondola had performed "some renovations" to a nearby tunnel for use with respect to the train rides. He added that he had read and signed the Train Amendment.

         It was further his testimony that the City's $300, 000 reduction in funding to the Zoo was "not a negotiation[.]" He further stated that, after that reduction became known, Dr. Goodman stated that "they would need to look at all other concessions operating in the park to see whether they could take them over and offset the loss" and that Dr. Goodman was interested in Carousel Village and the Boathouse. Mr. McMahon stated in his testimony that he told Dr. Goodman that those two concessions were already under contract; his testimony reflects the fact that he told Dr. Goodman multiple times that the Carousel Village concessions were under contract. He added that, despite having been advised of that fact, Dr. Goodman proposed including the Carousel Village concessions in the Zoo's new contract with the City.

         In the course of testifying with respect to an October 23, 2014 email which he had received from Dr. Goodman, Mr. McMahon stated that the Zoo accepted the loss in revenue from the City "[b]ecause they felt that the city was going to continue to work with them to provide them additional revenue opportunities." He further stated that, in response to an October 8, 2014 email, he told Dr. Goodman that there was a "loophole" in the concessions contract with La Gondola with respect to Carousel Village; he testified that he "realized that the [2020] end date of the [La Gondola] contract with [respect to] Carousel Village was just an option, if it * * * was to go beyond 2015." He added that that option "had to be exercised by both parties."

         It was Mr. McMahon's subsequent testimony that he met with the Days in early November of 2014 and told them that the Carousel Village concessions contract would "probably be going out to bid again with an RFP that incorporated capital improvements into the work of the RFP." He added that the Days were "disappointed" but that they did not offer "any other kind of proposal." Mr. McMahon stated that he did not simply recommend an extension of La Gondola's contract for the Carousel Village concessions beyond the five-year option, which longer extension the complaint alleged La Gondola had requested; he added that he did not make such a recommendation because he "felt the capital improvements and the rent were going to far exceed what [La Gondola was] going to be offering." With respect to the five-year extension option on La Gondola's Carousel Village concessions contract, Mr. McMahon testified that, in October of 2014, he asked the Days for their rent proposal and did not receive a formal response until March of 2015.

         It was Mr. McMahon's subsequent testimony that he prepared the RFP. He also stated that it was his understanding that Section 6.7 of the RFP allowed the City to waive particular requirements relative to the bid selection process. With respect to the Zoo's resulting bid, Mr. McMahon testified that the omission of the composting toilet "was a relatively minor item compared to all of the other items in the bid." It was his testimony that the Zoo's bid, "in totality," exceeded La Gondola's bid.

         On cross-examination, Mr. McMahon testified that no one from the City administration told him to issue the RFP and that he decided to do so on his own, in consultation with Karen Gomez, the Department of Parks & Recreation's "fiscal person." He stated that, in recommending that the Zoo be awarded the contract, he took into account the fact that the Zoo "submitted a superior bid with respect to dollars," while, in contrast to the Zoo's bid, "the Days didn't propose [to] start paying rent until year 11." He further stated that the Zoo's bid offered "the best financial deal" for the City.

         B. The Testimony of Dr. Jeremy Goodman

         Doctor Goodman testified that it was in December of 2013 or January of 2014 when he first became aware of a "problem" with the City's funding of the Zoo "as far as the city's desire to alter the agreement to try to decrease payments." He further stated that, at a meeting attended by several of the Zoo's board members, Mr. McMahon, and Mr. Sepe in March or April of 2014, he expressed a desire "to take over revenue generating opportunities in the park;" he added that Carousel Village, the park's concessions, boating, and a ropes course were all mentioned. He stated that the "only discussion at that moment was to explore those concessions and their availability," although he acknowledged later in his testimony that there was a discussion about incorporating the Carousel Village concessions into the new lease agreement between the Zoo and the City. He added that he believed that Mr. Sepe asked Mr. McMahon to look into whether or not there was an "out clause" in the contract between the City and La Gondola with respect to the Carousel Village concessions.

         La Gondola also points to the following testimony by Dr. Goodman with respect to the Zoo's response to the decrease in City funding: "[W]e also stated that we would need potential revenue generating opportunities in the park and desired to have a new agreement put into place, you know, in exchange for taking a $300, 000 cut from what the city owed us."

         Doctor Goodman further testified that, from his perspective, he was engaged in negotiations to press for the Carousel Village concessions being incorporated into the Zoo's new lease, stating that the concessions "were something that we had desired to have, so we kept on insisting." He also stated that Mr. McMahon told him in the Summer of 2014 that the Carousel Village concessions contract would have to go out to bid.

         Importantly, Dr. Goodman testified on cross-examination that no one from the City, including Mayor Elorza, Mr. Sepe, or Mr. McMahon, had promised the Zoo the Carousel Village concessions contract prior to the final award of the bid. He added that he "had a certain lack of trust with [Mr.] McMahon," because he was afraid that Mr. McMahon "was doing everything in his power to try to keep the Carousel Village with the current vendor * * *."

         C. The Testimony of Alan Sepe

         Alan Sepe testified that, typically, if a bid did not meet the specifications of the RFP, "you'd look at the next bidder * * *." However, he further stated that he considered the "financial aspect" of the Zoo's bid to be "whole" despite the fact that it did not include the Clivus Multrum System, since the bid did include the same amount of money for capital improvements as was requested in the RFP-"they just had a different opinion as far as where the money should go." He further testified on cross-examination that the City's funding to the Zoo was reduced before the Carousel Village concessions even went out to bid. It was also his testimony on cross-examination that, to his knowledge, no one from the City guaranteed any concessions to the Zoo.

         D. The Testimony of Allen Days

         Allen Days testified that La Gondola began operating a trackless train at Carousel Village in early April of 2013. He further testified that La Gondola invested about twenty thousand dollars in renovating an existing tunnel for the trackless train ride. It was his testimony that he requested the inclusion of the Train Amendment in La Gondola's Carousel Village concessions contract in December of 2013. He added that he was never asked to sign the Train Amendment by anyone from the Parks & Recreation Department and that he did not believe he needed to sign it for it to be effective.

         According to the testimony of Mr. Days on cross-examination, La Gondola did not respond until March 23, 2015 to the City's October 2014 request for a rent proposal for the potential five-year extension of La Gondola's Carousel Village contract with the City because, after consultation with an attorney, that rent proposal was to be La Gondola's "fallback position."

         Subsequent to the completion of the bench trial, on August 12, 2016, the trial justice issued a written decision. He declined to render the declaratory judgments sought by La Gondola in Counts One and Three of the complaint. He declined to issue the writ of mandamus requested in Count Two, and he entered judgment in favor of the Zoo on Count Six, which had alleged intentional interference with prospective contractual relations. On September 14, 2016, judgment entered to that effect. La Gondola filed a timely notice of appeal.

         II. Standard of Review

         We have stated that "[a] decision to grant or deny declaratory or injunctive relief is addressed to the sound discretion of the trial justice and will not be disturbed on appeal unless the record demonstrates a clear abuse of discretion or the trial justice committed an error of law." Kayak Centre at Wickford Cove, LLC v. Town of Narragansett, 116 A.3d 250, 253 (R.I. 2015) (internal quotation marks omitted).

         What is more, this Court applies "a deferential standard of review with respect to the factual findings of a trial justice sitting without a jury in a civil case." B.S. International Ltd. v. JMAM, LLC, 13 A.3d 1057, 1062 (R.I. 2011). "[W]e will not disturb factual findings unless the record shows that the findings are clearly wrong or unless the trial justice overlooked or misconceived material evidence on a controlling issue." Id. (internal quotation marks omitted); see also Muschiano v. Travers, 973 A.2d 515, 521 (R.I. 2009) (stating that, in reviewing the writ of mandamus granted by the Superior Court, we "apply our usual standard of review to the findings of the trial court"). However, "[o]n questions of law * * * our standard is one of de novo review." Kayak Centre, 116 A.3d at 253.

         III. Analysis

         A. The Trial Justice's Determination of Lack of Corruption, Bad Faith, or Abuse of Discretion

         1. The Decision of ...


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