Recitation, as required by CPLR 2219(a), of the papers considered in the review of this motion: Papers/Numbered Petitioner’s Order to Show Cause with Accompanying Affidavits, Memoranda and Exhibits 1 Respondent’s Verified Answer with Accompanying Affidavits, Memoranda and Exhibits 2 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 Mental Health and 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 Mental Health and 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 trained staff, failure to maintain adequate supervision of students, and the program exceeding classroom limits.” In addition, DOE declared the MOHDC non-responsible in a letter dated December 3, 2019 for failure to correct violations in another site.1 The court independently accessed the violations issued to the Farragut Ave site on the web.2 The “latest inspection results” state that as a result of an initial annual inspection dated May 20, 2021, the DOB found that a “critical; violation” existed requiring correction within two weeks and a reinspection — exits and other egress areas not provided with required signage in violation of Admin Code. 47/59a… The violation was subsequently corrected. The Performance Summary stated that over the past three years this program had 100 percent of annual inspections with violations in contrast with a city wide average of 24 percent. By inspection dated January 28, 2020, the DOB found the following “minor” violation — “Staff failed to obtain proof of immunization…required staff immunizations were not submitted to child care services”; the violation was corrected. By inspection dated October 2, 2019, the DOE found the following minor violation: “Child care service staff identified/acting as group teachers do not meet the required qualifications of the position. ” By inspection dated August 6, 2019, the DOB noted that all violations had been corrected. During the Initial Annual Inspection dated April 2, 2019, the DOE found two Public Health Hazards violations requiring immediate correction and one critical violation requiring correction within two weeks. The two Public Hazard Violations were “ constant and competent supervision provided by adequate staff for children,” and “teacher to child ratios maintained in Group child care program.” The Critical Violation was that child care service failed to maintain a minimum of 30 square feet per person. Reinspection was required and fines were pending. The Inspection dated December 20, 2018, denoted “Reinspection Required; Fines Pending,” based on the DOE’s finding of a critical violation requiring correction within two weeks — “Qualified Group Teacher Not designated to cover for Education Director. Permittee failed to Notify Department of separation from service.” This violation was also subsequently corrected. In response to other matters raised in the Dispute Letter, James wrote that communications sent to MOHDC regarding its requests for proposals (“RFP”) contained “numerous express conditions precedent to the award of a contract.” He found the Dispute Letter’s “strongest indictment of DOE’s rescission decision” — the uncontroverted email of operational analyst Flora Ernest, who oversaw the Farragut Ave UPK program and who wrote that DOE’s “decision to rescind the extension letter was a mistake” to be “neither persuasive nor relevant to the matter at hand.” Flores ‘s e mail neither addressed or rectified DOHMH violations. In sum, Education Law §3602-ee(9) required DOE to ” take into account any record” of violations of health and safety codes and /or licensure or registration requirements in the contract process. MOHDC had accrued “ numerous DOHMH violations over the years” and six violations at the subject site after the last extension. Despite being given given ample opportunity to address said violations, Edwards failed to do so. The DOE individuals (Ernest and McKay) who praised MOHDC had no authority to make an award or vendor responsibility determination. Based upon the above, James found that DOE demonstrated they had a rational basis not to extend MOHDC’s contract. Finally, Article 1(b) of the Contract granted DOE sole discretion re extensions and hence the contractual right to not extend the contract per its June 5th letter The Instant Article 78 Proceeding Petitioner claims that the April 29 letter constituted a binding promise to extend the terms of its existing contract to provide UPK services for the 2020-2021 year, that it detrimentally relied upon the letter in expending money to prepare for that school year, and that the DOE’s decision was arbitrary and capricious. Petitioner sought an order reversing the DOE’s June 5, 2020 “rescission” decision and directing that the contract be extended to the 2020-2021 school year. It also argued that it had corrected all existing violations at the time its request for renewal was being considered, and that the DOE was barred from considering any past violations which it had corrected and resulted in the DOE extending its contract for two years from 2018-2019. In reviewing DOE’s determination, the court must ascertain whether it was “arbitrary and capricious,” and made “without sound basis in reason or regard to the facts.” Mtr. of Murphy v. NY. State Div. of Hous. & Community Renewal, 21 NY3d 649, 652, (2013); Mtr. of KingRubie v. Wambua, 141 AD3d 589, 589-590 (2d Dept. 2016). The standard of judicial review in an Article 78 proceeding is “whether the 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” Mtr of Wilson v. New York City Dept. of Hous. Preserv. & Dev., 145 AD3d 905, 907 (2d Dept. 2016). Courts must “examine whether the action taken by the agency has a rational basis, and will overturn that action only where it is taken without sound basis in reason or regard to the facts.” Mtr. of JP & Assoc. Corp. v. N.Y.S. Div. of Hous. & Community Renewal, 122 AD3d 739 (2d Dept. 2014). “[A]n administrative agency’s construction and interpretation of its own regulations and of the statute under which it functions is entitled to the greatest weight.” Tommy & Tiny, Inc. v. Dept of Consumer Affairs, City of NY, 95 AD2d 724 (1st Dept 1983). Its interpretation of the regulations it administers is “entitled to deference, and must be upheld if reasonable.” Mtr. Of Wilson, supra, 145 AD3d at 907; Mtr of AAC Auto Serv. v. N.Y.S. Dept. of Motor Vehs., 2016 NY Misc. LEXIS 456, *5-6 (Supt. Ct. Bx. Co. 2016). The courts should defer to the agency “absent an arbitrary and capricious regulation or interpretation of said regulations” Id. See, Lamar Adv. of Penn, LLC v. City of New York, 2020 NY Misc. LEXIS 10432 (Sup. Ct., NY Co 2020). A court can only ask whether the determination is rational and not an abuse of discretion, or a violation of the agency’s legal duty. Mtr of Hilbertz v. City of NY, 64 Misc 3d 697, 727 (Sup. Ct., Kings Co. 2019). Where an initial decision by an agency official is reviewed by an administrative appeal unit within the agency, its interpretation of the regulations under which the agency operates will be upheld by the courts, “so long as the interpretation is neither irrational, unreasonable nor inconsistent with the governing statute” Mtr of Peyton v. New York City Bd. of Stds. & Appeals, 36 NY3d 271,280 (2020); Toys “R” Us v. Silva, 89 NY2d at 418-419 [1996) (The BSA, comprised of five experts in land use and planning, is the ultimate administrative authority charged with enforcing the Zoning Resolution (see, NY City Charter §§659, 666)) Its interpretation of the statute's terms must be "given great weight and judicial deference." See, Kreslein v. Perales, 204 AD2d 942, 943 (3d Dept 1994). An agency's determination is deemed arbitrary and capricious if it has evaluated the facts using a standard that deviates from that which is expressly set forth in the statutes and regulations, as such a deviation betrays a lack of "sound basis in reason" for the determination. James v. Been, 55 Misc 3d 631, 633 (Sup. Ct. Kings Co. 2017),. See, Mtr. of ACME Bus Corp. v. Orange County, 28 NY3d 417, 425 (2016) (award of city contract under General Municipal Law §104-b is arbitrary and capricious if municipality evaluates a proposal using a standard which deviates from a standard expressly set forth in the request for proposal). A court may overturn an administrative action where it is "taken without sound basis in reason" or "regard to the facts." Mtr. Of Hilbertz, supra, 64 Mis. 3d at 727 citing to Mtr of Wooley v. New York State Dept. of Correctional Servs., 15 NY3d 275, 280 [2010]. However, where the petitioner has not shown that the municipal agency in any way deviated from the standards set forth in the statutes and regulations, its determination may not be deemed “arbitrary and capricious.” James, supra, 55 Misc 3d at 635. Pursuant to Education Law §3602-ee(7), UPK contracts shall only be awarded to programs that comply with the rules and requirements as set forth in Education Law §3602-e. Under the UPK Law, as set forth in Education Law §3602-ee(2), all pre-k providers must demonstrate quality on eight factors: (a) curriculum; (b) learning environment, materials and supplies; (c) family engagement; (d) staffing patterns; (e) teacher education and experience; (f) facility quality; (g) physical well-being, health and nutrition; and (h) partnerships with non-profit, community and educational institutions. Mtr. of DeVera v. Elia, 32 NY3d 423, 429 (2018). Pursuant to Education Law §3602-ee(9), the renewal process for UPK contracts must take into account “any record of violations of health and safety codes and/or licensure or registration requirements.” When used in a statute, the word “any” means “all” or “every” and “imports no limitation.” People v. Silburn, 31 NY3d 144, 155 (2018); Kimmel v. State of New York, 29 NY3d 386, 393 (2017). Accordingly, the DOE was authorized to consider past violations, with no time limitation, in determining whether to renew a UPK contract In deciding not to renew the UPK contract in the instant matter, the DOE adhered to its statutory duty, set forth in Education Law §3602-ee(9), to take into account “any record of violations of health and safety codes and/or licensure or registration requirements.” The DOE’s dispute resolution letter of September 16, 2020 explained that “MOHDC incurred six health code violations across four Department of Mental Health and Hygiene (“DOHMH”) inspections at its Farragut road location since July 1, 2018, with the two most recent violations occurring during the 2019-2020 school year.” In addition, said letter explained that petitioner had a history of safety violations, including “lack of qualified trained staff, failure to maintain adequate supervision of students, and the program exceeding classroom limits.” The DOE’s adherence to Education Law §3602-ee(9) was ipso facto reasonable. The court acknowledges that different divisions of the DOE sent out conflicting messages to petitioner on April 29th since the email appeared to unequivocally extend the contract and led Edwards to accept the offer, whereas the April 29, 2020 letter contained a contingency clause. However, even the email referred to the accompanying letter, thus putting Edwards on notice that the renewal of his contract for the 2021 school year was subject to the following condition contained in paragraph four: “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.” As such, petitioner’s claim that the April 29th letter constituted a binding extension contract to provide UPK services for the 2020-2021 year is without merit because a conditional commitment does not create a binding contract where the conditions are not satisfied. Munson v. Germerican Assocs., 224 AD2d 670, 671 (2d Dept. 1996). See also, Lindenbaum v. Royco Property Corp., 165 AD2d 254, 258 (1st Dept. 1991) (a “conditional commitment” is an “oxymoron to the extent that the failure of the condition renders the obligation voidable and, therefore, nonbinding”). To the extent that petitioner argues that it detrimentally relied on the April 29 letter as a commitment to renew, such reliance was unreasonable since the letter specifically set forth the conditions for renewal which petitioner did not satisfy, namely, health and safety checks, of which petitioner had knowledge. Furthermore, petitioner’s claim that the principal of promissory estoppel bars the DOE from discontinuing the contract is without merit because the elements of a cause of action based upon promissory estoppel are not satisfied; i.e., a clear and unambiguous promise and reasonable and foreseeable reliance by the party to whom the promise is made. Zuley v. Elizabeth Wende Breast Care, LLC, 126 AD3d 1460, 1461 (4th Dept. 2015); AHA Sales, Inc. v. Creative Bath Prods., Inc., 58 AD3d 6, 20-21 (2d Dept. 2008). Petitioner alternatively argues that respondent should be equitably estopped from refusing to renew the contract because petitioner’s decision to spend money on preparing for the upcoming school year was based upon the misleading information contained in the April 29 letter. However, the doctrine of equitable estoppel generally can only be invoked against a governmental agency in the “rarest of cases” New York State Medical Transporters Ass’n v. Perales, 77 NY2d 126, 130 (1990); Wilson v. Neighborhood Restore Hous., 129 AD3d 948, 949 (2d Dept. 2015). “Exceptional circumstances” include “wrongful or negligent conduct” or “misleading nonfeasance,” which “induces a party relying thereon to change his position to his detriment resulting in manifest injustice.” Laws Constr. Corp. v. Town of Patterson, 135 AD3d 830, 831 (2d Dept. 2016). See also, Matter of B & v. Contr. Enters., Inc., 148 AD3d 1479, 1482 (3d Dept. 2017); Mtr.of Regan v. DiNapoli, 135 AD3d 1225, 1228 (3d Dept. 2016) (showing of fraud, misrepresentation, deception, or similar affirmative misconduct, along with reasonable reliance thereon give rise to an exception). It is well established that “erroneous advice by a governmental employee” or agency does not give rise to an exception against the general rule that equitable estoppel may not be invoked. Wilson, supra, 129 AD3d at 168; Mtr of Village of Fleishmanns, 77 AD3d 1146, 1148 ( 2d Dept. 2010). Even were the court to accept petitioner’s argument that DOE assured him that his contract would be renewed, mistaken information transmitted by an agency to an applicant does not give rise to an exception, as tit does not rise above the level of “erroneous advice.” Wilson, supra, 129 AD3d at 949. See, Barrett Japaning, Inc. v. Bialobroda, 190 AD3d 544 (1st Dept. 2021) (an agency’s adherence to its procedural rules that reconsideration applications must be filed by mail or hand delivery is rational, and the agency is not bound by any “administrative error” on the part of its staff in its acceptance of Barrett’s noncompliant filings). In Mtr. of Beck v. Walker, 286 AD2d 996, 996 (4th Dept 2001), the court rejected petitioner’s argument that he was no longer a probationary employee, but rather a tenured employee at the time of his termination and that his termination therefore violated Civil Service Law §75. The Department of Corrections letter of January 1997 informing petitioner that his probationary period expired in March was in error because it failed to comply with directive No. 2219, which required that the probationary period be extended one workday for every workday he missed, thus extending his probationary period to June Although the Dept of Corrections never informed petitioner of the extension of his probation, it was not bound by its erroneous calculation of probation because it was based upon an administrative error, and there was not evidence that it engaged in affirmative “misleading conduct” which would support a finding of equitable estoppel. Here, any administrative mistake by DOE was much less prejudicial or serious to petitioner than the actions taken by the Department of Corrections in Beck, as the DOE immediately notified petitioner on the same day — April 29th — that the extension of his contract was contingent upon compliance with the rules and regulations, Petitioner was well aware that he had incurred violations between 2018 — 2020. Furthermore, as opposed to Beck, where the governmental agency never cured its mistake by writing a follow up notice, here, the DOE explicitly informed Edwards by letter dated June 5, 2020, 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.” Based upon the above, the DOE is not estopped from rescinding its qualified offer to renew petitioner’s a contract to MOHDC to operate a UPK. Hearing Officer James determination, upon administrative review, that Education Law §3602-ee(9) required DOE to ” take into account any record” of violations of health and safety codes and /or licensure or registration requirements in the contract process, that MOHDC had accrued “ numerous DOHMH violations over the years” and six violations at the subject site after the last extension, was supported by the record. His determination that DOE demonstrated it had a rational basis not to extend MOHDC’s contract was not arbitrary or capricious and is upheld by this Court. This constitutes the decision and order of the Court. Dated: December 10, 2021
