Case Title: BAKER v STATE

Citation: 

Docket Number: 85-011

State: montana

Court: Montana Supreme Court

Date: 1985-10-09T00:00:00Z

Document:
No. 8 5 - 1 1 I N THE SUPREME COURT OF THE STATE OF MONTANA 1 9 8 5 JOHN R. BAKER, d/b/a J . R . BAKER CONSTRUCTION, P l a i n t i f f and A p p e l l a n t , STATE OF MONTANA, MONTANA STATE BOARD OF EXAMINERS, GOVERNOR TED SCHWINDEN, SECRETARY OF STATE J I M WALTERMIRE, and ATTORNEY GENERAL MICHAEL T . GREELY, as m e m b e r s thereof, and MORRIS BRUSETT, D i r e c t o r of t h e D e p a r t m e n t of A d m i n i s - t r a t i o n , D e f e n d a n t s and R e s p o n d e n t s . APPEAL FROM: D i s t r i c t C o u r t of t h e F i r s t J u d i c i a l D i s t r i c t , I n and for t h e C o u n t y of L e w i s & C l a r k , T h e H o n o r a b l e G o r d o n B e n n e t t , Judge presiding. COUNSEL OF RECORD: F o r A p p e l l a n t : L a r r y W. M o r a n , B o z e m a n , M o n t a n a For R e s p o n d e n t s : A l l e n C h r o n i s t e r , A s s t . A t t o r n e y G e n e r a l , H e l e n a , M o n t a n a S u b m i t t e d on B r i e f s : A p r i l 4 , 1 9 8 5 D e c i d e d : O c t o b e r 9 , 1385 F i l e d : OCT 9 1985 - --- C l e r k M r . J u s t i c e John Conway H a r r i s o n d e l i v e r e d t h e Opinion o f t h e Court. T h i s i s an a p p e a l from an o r d e r e n t e r e d i n t h e D i s t r i c t Court o f t h e F i r s t J u d i c i a l District, i n and f o r t h e County o f Lewis and C l a r k , d i s m i s s i n g t h e a p p e l l a n t ' s complaint f o r f a i l u r e t o s t a t e a claim. The s u i t was d i s m i s s e d on t h e ground t h a t p l a i n t i f f lacked s t a n d i n g t o sue. T h i s a p p e a l r a i s e s i m p o r t a n t q u e s t i o n s concerning s t a n d i n g , and t h e s t a t u t e s r e g u l a t i n g a c c e p t a n c e o f b i d s and award o f p u b l i c works c o n t r a c t s . The t r a n s a c t i o n i n v o l v e d r e s u l t e d from t h e i s s u a n c e by t h e S t a t e o f Montana, D i v i s i o n o f A r c h i t e c t u r e and Engineering o f an i n v i t a t i o n f o r b i d s f o r t h e c o n s t r u c t i o n o f t h e N a t i o n a l Guard Armory i n Harlowton, Montana. Bids were r e c e i v e d on J a n u a r y 18, 1984. J. R. Baker C o n s t r u c t i o n , h e r e i n a f t e r Baker, submitted a b i d f o r $420,740 and E d s a l l C o n s t r u c t i o n Company, h e r e i n a f t e r E d s a l l , submitted a b i d f o r $420,300, a d i f f e r e n c e o f $440. Raker p r o t e s t e d E d s a l l ' s b i d on t h e a l l e g a t i o n t h a t E d s a l l was working beyond t h e c o n t r a c t t i m e on a n o t h e r p u b l i c works p r o j e c t and was t h e r e f o r e i n e l i g i b l e t o b i d on a p u b l i c p r o j e c t by v i r t u e o f s e c t i o n 18-2-311, M C A and s e c t i o n 37-71-203, MCA. A h e a r i n g was h e l d b e f o r e t h e Board o f Examiners on March 1 3 , 1984. The Board o f Examiners denied t h e p r o t e s t and awarded t h e b i d t o E d s a l l a s t h e low b i d d e r . I n D i s t r i c t Court Baker sought t o have t h e a c t i o n of t h e S t a t e i n g r a n t i n g t h e b i d t o E d s a l l d e c l a r e d i l l e g a l a s a v i o l a t i o n o f s e c t i o n 18-2-311, M C A and s e c t i o n 37-71-203, MCA . Baker f u r t h e r r e q u e s t e d t h a t t h e D i s t r i c t C o u r t d e t e r m i n e t h a t Baker was t h e lowest r e s p o n s i b l e b i d d e r and was e n t i t l e d t o t h e award o f t h e c o n t r a c t . Baker sought recovery f o r l o s t p r o f i t s , bidding c o s t s , l i t i g a t i o n c o s t s and a t t o r n e y ' s f e e s . Defendants f i l e d a motion t o d i s m i s s f o r f a i l u r e t o s t a t e a claim upon which r e l i e f can be granted. The District Court granted t h e motion. It i s from t h a t o r d e r t h a t Baker appeals. The d e c i s i v e i s s u e i n t h i s appeal i s whether Baker lacked s t a n d i n g t o b r i n g t h i s a c t i o n . The s t a t u t e governing t h e award o f c o n s t r u c t i o n c o n t r a c t s provides: " (1) For t h e c o n s t r u c t i o n o f a b u i l d i n g c o s t i n g more than $25,000, t h e department o f a d m i n i s t r a t i o n s h a l l : " ( c ) . . . under t h e s u p e r v i s i o n and with t h e approval o f t h e board o f examiners, s o l i c i t , a c c e p t , and reject b i d s and award a l l c o n t r a c t s t o t h e lowest q u a l i f i e d b i d d e r considerTng conformity with s p e c i f i c a t i o n s and t e r m s and reasonableness o f b i d amount. I' Section 18-2-103 (c) , MCA. (Emphasis added. ) The s t a t u t e s f u r t h e r s t a t e t h a t : ". . . A p u b l i c c o n t r a c t o r , a s defined i n 37-71-101, who h a s been awarded a c o n t r a c t by t h e s t a t e o f Montana o r any board, commission, o r department t h e r e o f o r by any board o f county commissioners o r by any c i t y o r town c o u n c i l o r agency t h e r e o f f o r t h e c o n s t r u c t i o n o r r e c o n s t r u c t i o n o f a p u b l i c work and i s working beyond t h e c o n t r a c t t i m e ( i n c l u d i n g any a u t h o r i z e d t i m e e x t e n s i o n s ) s h a l l n o t submit any a d d i t i o n a l b i d s o r proposals o r e n t e r i n t o any a d d i t i o n a l c o n t r a c t w i t h any p u b l i c agency o f t h e s t a t e o f Montana, county, o r c i t y t h e r e o f u n t i l he has completely executed t h e c o n t r a c t upon which he i s working beyond c o n t r a c t t i m e and a l l supplemental agreements t h e r e t o . ". . . A p u b l i c c o n t r a c t o r s h a l l n o t be considered t o be working beyond c o n t r a c t t i m e i f t h e d e l a y i s caused by an a c c i d e n t o r c a s u a l t y produced by physical cause which i s n o t preventable by human f o r e s i g h t , i.e., any of t h e misadventures termed an ' a c t of God. ' " S e c t i o n s 18-2-311 and 18-2-312, MCA. Section 37-71-203, MCA provides: ". . . A l l b i d s and p r o p o s a l s f o r t h e c o n s t r u c t i o n o f any p u b l i c c o n t r a c t p r o j e c t s u b j e c t t o t h e p r o v i s i o n s o f t h i s c h a p t e r s h a l l c o n t a i n a statement showing t h a t t h e b i d d e r o r c o n t r a c t o r i s d u l y and r e g u l a r l y l i c e n s e d hereunder and i s n o t p r e s e n t l y working beyond t h e c o n t r a c t t i m e , i n c l u d i n g a u t h o r i z e d t i m e e x t e n s i o n s , on any p r e v i o u s l y awarded p u b l i c c o n t r a c t p r o j e c t . The number and c l a s s o f such l i c e n s e t h e n held by such p u b l i c c o n t r a c t o r s h a l l appear upon such b i d o r proposal, and no c o n t r a c t s h a l l be awarded t o any c o n t r a c t o r u n l e s s he i s t h e h o l d e r o f a l i c e n s e i n t h e c l a s s within which t h e value o f t h e p r o j e c t s h a l l f a l l a s h e r e i n provided and u n l e s s t h e p u b l i c c o n t r a c t o r h a s completely executed any previous c o n t r a c t upon which he has worked beyond c o n t r a c t t i m e . " Baker a s s e r t s t h a t government agencies must abide by t h e bidding s t a t u t e s and where a v i o l a t i o n o f a s t a t u t e o r r e g u l a t i o n g i v e s an advantage t o one b i d d e r t h e c o u r t s should allow t h e aggrieved b i d d e r a r i g h t o f recovery. Baker f u r t h e r maintains t h a t by i n v i t i n g o f f e r s , and r e p r e s e n t i n g t h a t t h e y w i l l be considered pursuant t o t h e competitive bidding s t a t u t e s , an implied c o n t r a c t e x i s t s between t h e government and t h e b i d d e r s t h a t t h e government w i l l c o n s i d e r b i d s f a i r l y and h o n e s t l y w i t h i n t h e s t a t u t o r y procedures. Baker cannot base h i s p l e a f o r r e l i e f on c o n t r a c t theory. It i s a w e l l founded p r i n c i p l e o f c o n t r a c t law t h a t a c o n t r a c t does n o t e x i s t p r i o r t o t h e acceptance o f a b i d by a n agency: " [A]n o r d i n a r y advertisement f o r b i d s o r t e n d e r s i s n o t i t s e l f an o f f e r b u t t h e b i d o r t e n d e r i s an o f f e r which c r e a t e s no r i g h t u n t i l accepted. Even though t h e c h a r t e r of a m u n i c i p a l i t y e x p r e s s l y r e q u i r e s t h a t a c o n t r a c t s h a l l be awarded t o t h e lowest r e s p o n s i b l e b i d d e r , a c o n t r a c t i s n o t formed u n t i l t h e lowest bid is in fact accepted." 1 Williston - on Contracts, S31 (3rd. Ed. 1957). Courts from our sister jurisdictions have likewise held: ". . . in Alaska, as elsewhere, an agency's solicitation of bids is not an offer, but rather a request for offers; no contractual rights based on the content of a bid arise prior to its acceptance by the agency. Beirne v. Alaska State Housing Authority, 454 P.2d 262, 264 (Alaska 1969) .I1 King v . Alaska State Housing Authority (Alaska 1981) 633 P.2d 256 at 261. See also Gulf Oil Corp. v. Clark Cty. (Nev. 1978), 575 P.2d This authority is most persuasive when read in conjunction with the language of this state's bidding statutes. The department was under a statutory obligation to accept the lowest responsible bidder. The Department's solicitation of bids was not an offer. Nor was Baker's response to the solicitation an offer. Because the Department rejected Baker's bid, no contract ever came into existence. As a result, recovery based upon contract theory cannot be had. The policy behind the bidding statute also precludes any finding of standing for Baker to bring the action. The statute's primary function is to benefit the citizens. This premise is stated in 72 C.J.S., supplement, Public Contracts "Competitive bidding statutes are primarily intended for the benefit of the public rather than for the benefit or enrichment of bidders, and consideration of advantages or disadvantages to bidders must be secondary to the general welfare of the public . . . " There are two views expressed as to whether such a person or entity has standing to request the judicial award of the c o n t r a c t o r seek damages from t h e department. In t h e f e d e r a l a r e n a , t h e C i r c u i t Court o f Appeals h a s held t h a t a disappointed b i d d e r has s t a n d i n g under t h e Administration Procedures Act, 5 U.S.C. S702, which provides, "A person s u f f e r i n g l e g a l wrong because of agency a c t i o n , o r a d v e r s e l y a f f e c t e d o r aggrieved by agency a c t i o n w i t h i n t h e meaning o f a r e l e v a n t s t a t u t e , i s e n t i t l e d t o j u d i c i a l review t h e r e o f . " Scanwell L a b o r a t o r i e s , Inc. v. S h a f f e r ( D . C . C i r . 1970) , 424 F.2d 859. This j u r i s d i c t i o n has adopted t h e view t h a t t h e r e i s no such s t a n d i n g and it was s o expressed i n Stuewe v. Hindson (1912), 4 4 Mont. 429, 120 P. 485, i n r u l i n g t h a t no mandamus remedy i s a v a i l a b l e t o t h e unsuccessfu1 bidder. "There was n o t any c o n t r a c t u a l r e l a t i o n e x i s t i n g between him and t h e board, and h i s s t a t u s a s an unsuccessful b i d d e r does n o t make him a p a r t y b e n e f i c i a l l y i n t e r e s t e d . . . The advertisement f o r b i d s is n o t an o f f e r which by acceptance c o n s t i t u t e s a c o n t r a c t . It i s merely an i n v i t a t i o n t o every b i d d e r t o make an o f f e r , which t h e board may a c c e p t , and a c o n t r a c t r e s u l t ; b u t a p a r t y whose o f f e r i s n o t accepted cannot complain o r invoke t h e a i d o f t h e c o u r t s t o compel t h e board t o a c c e p t h i s o f f e r . . . t h e p r o v i s i o n o f law f o r l e t t i n g c o n t r a c t s o f t h i s - - c h a r a c t e r t o t h e lowest b i d d e r i s f o r t h e --- b e n e f i t - o f the - p u b l i c , and does n o t - - - confer any r i g h t upon t h e lowest b i d d e r a s such. " (Emphasis added. ) -- The c o u r t noted t h e only s t a n d i n g which Stuewe had i n t h e c o u r t s was a s a taxpayer, and n o t a s an unsuccessful b i d d e r . I n t h e p r e s e n t m a t t e r , Baker f a i l e d t o a l l e g e i n D i s t r i c t Court and on appeal s t a n d i n g a s a taxpayer. The t r i a l c o u r t found a p p e l l a n t d i d n o t have s t a n d i n g under e i t h e r of t h e s t a t u t e s c i t e d i n h i s complaint (S 18-2-311, MCA o r S 37-71-203, MCA) . H e noted t h a t t h e s e two s t a t u t e s w e r e n o t made f o r t h e b e n e f i t o f competing o r l o s i n g c o n t r a c t o r s . They w e r e made f o r t h e p u b l i c and do n o t provide t h e l o s i n g bidder w i t h standing. A s p r e v i o u s l y noted, a taxpayer may have s t a n d i n g i f he can show he h a s been h u r t , b u t i n t h i s c a s e a p p e l l a n t f a i l e d t o a l l e g e he was a taxpayer. Stuewe v. Hindson (1912), 4 4 Mont. 429, 120 P. 485. Baker argues t h a t t h e language o f t h e Montana Adminis- t r a t i v e Procedure A c t i s s i m i l a r t o t h e f e d e r a l Administra- t i v e Procedure A c t . Our A c t is n o t t h e e q u i v a l e n t o f t h e f e d e r a l A c t . S e c t i o n 2-4-702, MCA, r e q u i r e s a person t o have exhausted a l l a d m i n i s t r a t i v e remedies b e f o r e being e n t i t l e d t o j u d i c i a l review. Here, Baker d i d n o t a t t e m p t t o a l l e g e t h e requirements f o r j u d i c i a l review. Most important, t h e complaint was not f i l e d w i t h i n 30 days o f t h e d e c i s i o n o f t h e agency a s r e q u i r e d under S 2-4-702 ( 2 ) , MCA. The complaint h e r e was f i l e d t h r e e months a f t e r t h e f i n a l d e c i s i o n . Ac- c o r d i n g l y , Baker i s n o t e n t i t l e d t o j u d i c i a l review under t h e Montana Administrative Procedure A c t . I n a d d i t i o n , w e have held t h a t t h e d i s c r e t i o n o f t h e agency t o award p u b l i c work c o n t r a c t s t o t h e lowest b i d d e r i s n o t s u b j e c t t o j u d i c i a l review under normal circumstances. S l e t t e n Construction Co. v. C i t y o f Great F a l l s (1973), 1.63 Mont. 307, 516 P.2d 1149; Koich v. Cvar (1941), 111 Mont. 463, 110 P.2d 964. we w i l l n o t make a c o n t r a c t f o r t h e p a r t i e s . Nor is t h i s Court prepared t o v e n t u r e t h a t Baker would have been awarded t h e c o n t r a c t i f E d s a l l was n o t t h e s u c c e s s f u l bidder. I n t h e absence o f any showing o f bad f a i t h , f r a u d , o r c o r r u p t i o n o f t h e Department, t h e e x e r c i s e of d i s c r e t i o n w i l l n o t be d i s t u r b e d . See, Koich, supra. Baker's b i d was n o t accepted by t h e Department. A s a r e s u l t , no contractua 1 r e l a t i o n s h i p a r o s e . Baker has presented no argument upon which a bad f a i t h claim could be based. Nor was t h e r e any proof t h a t t h e Department was a c t i n g i n bad f a i t h . The Department only secured t h e b e s t product a t t h e lowest p r i c e f o r t h e b e n e f i t of t h e taxpayers, n o t t h e bidder. While a p p e l l a n t has s t a n d i n g , h i s l a c h e s prevent h i s being awarded t h e c o n t r a c t . Accordingly, t h e judgment of t h e D i s t r i c t Court i s affirmed. M r . J u s t i c e Frank B. Morrison, Jr., s p e c i a l l y c o n c u r r i n g : I a g r e e w i t h t h e r e s u l t i n t h i s c a s e . P l a i n t i f f h a s n o t s t a t e d a c l a i m f o r r e l i e f e n t i t l i n g p l a i n t i f f t o damages. P l a i n t i f f should have sought j u d i c i a l review p u r s u a n t t o t h e p r o v i s i o n s o f t h e A d m i n i s t r a t i v e Procedure A c t . Having f a i l e d t o do so, p l a i n t i f f i s w i t h o u t a remedy.