Edwards v. N.Y.C. Dep't of Educ.

74 Misc.3d 290

160 N.Y.S.3d 782

In the Matter of the Application of Raymond S. EDWARDS d/b/a Modern Organization & Human Development Center, Petitioner,

v.The NEW YORK CITY DEPARTMENT OF EDUCATION, Respondent.

Index No. 511176/2020

Supreme Court, Kings County, New York.

Decided on December 10, 2021

Attorney for Petitioner, Leonard W. Stewart, Esq., 32 Court St Ste 707, Brooklyn, NY 11201-4404

Attorney for Respondent, New York City Law Department, 100 Church Street, Rm. 3-236, New York, NY 10007-2601

Katherine A. Levine, J.

This CPLR Article 78 proceeding raises the issue of whether the DOE can be estopped from rescinding a qualified offer to renew a contract to petitioner Modern Organization & Human Development Center ("petitioner," "Edwards" or "MOHDC") to operate a universal pre-kindergarten center ("UPK").

Petitioner had a contract with the New York City Department of Education ("DOE") to provide UPK services at 4718 Farragut Road, in Brooklyn ("Farragut site"). The original contract term ran from July 1, 2015 to June 30, 2018, with the possibility of renewal for up to two years until June 30, 2020. Article 1(b) of the Contract provided: "The Board, at its sole option, may extend the Term of this Agreement for up to a total of two (2) individual years. Such Term extension shall, at the Board's sole option, either be for two (2) one-year periods or one (1) period of two (2) years." The DOE extended the Farragut contract for another two year term from July 1, 2018 through June 30, 2020.

By letter dated February 4, 2020, the DOE informed Edwards that his contract would expire on June 30, 2020 and that the DOE may, at its "sole option" extend the contract for an additional year. However, due to concerns found in a review by the Department of Health and Mental Hygiene ("DOHMH") of the site's "health and safety violations," the DOE would not make a final decision on contract extension until the Spring of 2020. If the Division of Early Childhood Education ("DECE’) found that his program was "meeting programmatic and operational expectations at that time" it would offer a contract extension for the 2020-21 school year, and MOHDC could recruit and pre-preregister students in Spring 2020 after the intent to extend was signed. This statement was reiterated in a follow up email of that same date.

By email dated April 29, 2020, Christopher Minott, contract specialist for Early Childhood Procurement for the DOE, informed Edwards that as per the attached letter his contract for Pre-K would expire and that the letter was "notifying (him) of your contract extension" and that his program would be added to "My School" and would be available for families in mid-May. The email noted that a response was needed by May 5th in order for him to continue his services in the 2021 school year. By email of the same date, Edwards thanked Minott for the contract renewal and advised him that he intended to extend his contract for the 2021 school year.

In the accompanying letter dated April 29, 2020, which referred solely to the contract for services at "SITE ID: KBGP." Ibrahim Rehawi of the DOE's Division of Contracts and Purchasing, notified petitioner that DOE was extending its contract for an additional period of up to one year. The letter further stated that such an extension is granted to "vendors who are currently meeting key instructional and operational quality expectations." The second paragraph requested that Edwards sign and notarize that he agrees to continue providing services in accordance with the same terms and conditions of the current contract, and that said notarized document must be received by May 5th or his current contract would expire on June 30, 2020. However, the fourth paragraph of the letter contained a contingency clause: "Please note that this extension is contingent upon the satisfactory completion of the following: health and safety check; background check; availability of funding; and any other required approvals."

By email dated June 3, 2020, the DOE Pre-K operations analysis, Flora B. Ernest, requested that Edwards complete and submit a budget for his Pre-K program by June 10th. On June 11, petitioner submitted his 2020-21 Pre-K budget. Yet, by letter dated June 5, 2020, the DOE, through Mr. Rehawi, reiterated to petitioner that the contract extension was contingent upon the satisfactory completion of the four factors, that the DOE had sole discretion regarding extensions, and that "based upon the review of all relevant factors, the DOE is declining to exercise its sole right to extend your contract."

Then, by email dated June 5, 2020, Audrey Brown. Instructional Coordinator of DECE thanked petitioner for his team's "flexibility, passion and commitment to serve our children and families" and said that she looked forward to speaking with him on June 8th to discuss school year 2020-21. By email dated June 9, 2020, Ernest Flora of DOE wrote to "Chris" (the last name is unknown) of DOE that he was "very concerned and troubled about the recent occurrences regarding Mr. Edwards’ program" and was "mystified as to why they took this action against Mr. Edwards’ program." He also wrote that petitioner's program is one of the best equipped and better run programs in District 18, and inquired as to why Enrollment called Edwards to inquire whether he had adequate/sufficient space in his schools to accommodate more students

By letter dated June 10, 2020, Edwards requested that Rehawi confirm the basis for the decision to rescind the contract extension since the June 5th letter did not clearly articulate a reason for the same. Edwards contended that the contract was extended to him by letter dated April 29th, which stated that "this extension is offered to vendors who are currently meeting key instructional and operational quality expectations," that he immediately complied with all the necessary follow up documentation and was "shocked" to receive the June 5th letter rescinding he contract extension. He also asked whether this was a final determination or whether there was an administrative appeal in place. Having received no response, petitioner filed the instant Article 78 proceeding claiming that respondent had failed to follow its own Procurement Policy and Procedures which provided for an appeal or dispute resolution process to address contract concerns.

This Court refused to issue a TRO enjoining the Board from enforcing its rescission of the contract and directing that petitioner be permitted to operate its Pre-K during the 2020-21 school year. Rather, by decision dated September 3. 2020, this Court ordered that the parties immediately initiate the administrative review process contained in Section 4-10, "Resolution of Disputes Arising Out Of Contract Administration," of the DOE Procurement Policy and Procedures as it related to the Farragut Center UPK Contract. The Court further directed that after the administrative review, the "DOE must set forth the reasons and basis for its alleged rescission on June 5, 2020 of its previous decision, by letter dated 4/29/2020, to renew the Farragut Center UPK contract for the 2020/2021 school year and indicate whether any violations occurred in the 2019/2020 school year which caused the rescission."

The Administrative Appeal

By letter dated September 16, 2020, David E James, Dispute Resolution Officer of the DOE's Division of Contracts and Purchasing ("James"), first noted that the DOE's April 29th letter indicating its intent to renew the contract was "contingent upon their satisfactory completion of specific conditions including health and safety check; background check; availability of funding; and any other required approvals."

James then summarized the Dispute Letter submitted by petitioner - that the April 29th Notice of Intent letter was written by the DOE after it "apparently [found] that the program met the programmatic and operational quality expectations." Furthermore, the Dispute Letter stated that the DOE had admitted that in issuing the Notice of Intent letter that it had taken into account MOHDC's performance under its contracts in conformance with Education Law § 3602-ee(9). Finally, the Dispute letter asserted that petitioner had "fully and adequately performed under the contract" and thus merited an extension of the contract.

James first found that "DOE made evident" in its April 29th letter, that "there were conditions precedent to the extension," and that until said conditions were met or excused, DOE would be under no duty to extend the contract. By letter dated June 5, 2020 DOE notified MOHDC that it was not going to "exercise [its] sole option to extend the Contract." James pointed to Article 1(b) of the contract which provided that "The Board, at its sole option, may extend the Term of this Agreement for up to a total of two (2) individual years," and that such extension of either one or two years was solely within the Board's discretion.

James then addressed the second item in the Dispute letter - that a reasonable basis for rescission could not be based upon a history of violations. James refuted this contention by pointing to Education Law § 3602-ee(9) which requires that during the contract process, the DOE "shall take into account any record of violations of health and safety codes and/or licensure or registration requirements." Therefore, the Education Law did not restrict DOE to only take into account new records of violations in deciding whether to extend a contract.

James then contradicted MOHDC's assertion that it has operated the Farragut Center "satisfactorily" since 2017 and has not had any other findings of non-responsibility. He found that the "MOHDC had incurred six health code violations across four Department of Health and Mental Hygiene ("DOHMH") inspections since July 1, 2018, with the two most recent violations occurring during the 2019-2020 school year. The safety violation issues included, but were not limited to lack of qualified...