Title: Meccon, Inc. v. Univ. of Akron

State: ohio

Issuer: Ohio Supreme Court

Document:

[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as 
Meccon, Inc. v. Univ. of Akron, Slip Opinion No. 2010-Ohio-3297.] 
 
 
NOTICE 
This slip opinion is subject to formal revision before it is published in 
an advance sheet of the Ohio Official Reports.  Readers are requested 
to promptly notify the Reporter of Decisions, Supreme Court of Ohio, 
65 South Front Street, Columbus, Ohio 43215, of any typographical or 
other formal errors in the opinion, in order that corrections may be 
made before the opinion is published. 
 
SLIP OPINION NO. 2010-OHIO-3297 
MECCON, INC. ET AL., APPELLEES, v. UNIV. OF AKRON, APPELLANT. 
[Until this opinion appears in the Ohio Official Reports advance sheets, it 
may be cited as Meccon, Inc. v. Univ. of Akron,  
Slip Opinion No. 2010-Ohio-3297.] 
Public-works contracts — Competitive bidding — Damages to unsuccessful 
bidder for public authority’s violation of law in awarding contract — Bid-
preparation costs. 
(No. 2009-0950 — Submitted January 26, 2010 — Decided July 21, 2010.) 
APPEAL from the Court of Appeals for Franklin County, No. 08AP-727,  
182 Ohio App.3d 85, 2009-Ohio-1700. 
__________________ 
SYLLABUS OF THE COURT 
When a rejected bidder establishes that a public authority violated state 
competitive-bidding laws in awarding a public-improvement contract, that 
bidder may recover reasonable bid-preparation costs as damages if that 
bidder promptly sought, but was denied, injunctive relief and it is later 
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determined that the bidder was wrongfully rejected and injunctive relief is 
no longer available. 
__________________ 
 
CUPP, J. 
{¶ 1} The question before us is whether bid-preparation costs may be 
recovered as damages by a bidder who establishes that its bid on a public-
improvement project was wrongfully rejected because the public authority 
awarding that contract failed to comply with state competitive-bidding laws.  We 
conclude that reasonable bid-preparation costs may be recovered if the rejected 
bidder promptly sought but was denied a timely injunction to suspend the public-
improvement project pending resolution of the dispute and a court later 
determines that the bidder was wrongfully rejected by the public authority but 
injunctive relief is no longer available because the project has already been started 
or is completed under a contract awarded to another bidder.  Therefore, we affirm 
the judgment of the court of appeals and remand the matter for further 
proceedings before the Court of Claims. 
{¶ 2} According to the complaint of Meccon, Inc. and Ronal Bassak, 
appellees (“Meccon”), the University of Akron proposed to award plumbing, fire-
protection, and heating, ventilation, and air-conditioning (“HVAC”) contracts for 
public-improvement work in its football stadium.  Meccon submitted a bid for the 
separate HVAC project, as did other contractors.  Another contractor, S.A. 
Comunale, submitted four bids: one for each of the stand-alone fire-protection, 
plumbing, and HVAC contracts and a combined bid to perform all three contracts. 
{¶ 3} When the bids were opened, S.A. Comunale’s combined bid was 
the lowest of the combination bids submitted.  S.A. Comunale’s bid was $1.2 
million less than the next-lowest combination of bids.  S.A. Comunale was also 
the low bidder for each of the stand-alone fire-protection, plumbing, and HVAC 
contracts.  Meccon submitted the second-lowest bid for the HVAC work. 
January Term, 2010 
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{¶ 4} Thereafter, S.A. Comunale withdrew its combined bid and its 
stand-alone plumbing bid.  The university awarded the stand-alone fire-protection 
and HVAC contracts to S.A. Comunale.  After the university rebid the stand-
alone plumbing contract and S.A. Comunale was once again the low bidder, S.A. 
Comunale also won that contract. 
{¶ 5} Meccon alleges that the university’s award to S.A. Comunale of 
the three stand-alone contracts, after S.A. Comunale had withdrawn both its 
combined bid and its plumbing bid, was in violation of the university’s own 
“Instructions to Bidders” documents and comparable provisions within Ohio 
statutes.  Meccon filed suit in the Court of Claims, seeking a temporary 
restraining order, a declaratory judgment, preliminary and permanent injunctive 
relief, damages for its bid-preparation costs, and any other appropriate legal and 
equitable relief resulting from the university’s failure to award the HVAC 
contract to Meccon. 
{¶ 6} In response, the university filed a motion to dismiss for lack of 
subject-matter jurisdiction.  It argued that disappointed bidders were entitled only 
to injunctive relief and that Meccon’s claim for bid-preparation costs and other 
money damages was not cognizable.  The Court of Claims granted the 
university’s motion, concluding that only the court of common pleas had 
jurisdiction because Meccon’s remaining claim was only for equitable relief.  On 
the same basis, the Court of Claims also denied the motion for a temporary 
restraining order, denied all other motions as moot, and dismissed the complaint. 
{¶ 7} Meccon appealed to the Tenth District Court of Appeals, and the 
court reversed the Court of Claims with respect to the jurisdiction question.  182 
Ohio App.3d 85, 2009-Ohio-1700, 911 N.E.2d 933.  The court concluded that 
disappointed bidders can recover bid-preparation costs and that because such 
costs are monetary damages, the Court of Claims does have subject-matter 
jurisdiction to hear all of Meccon’s claims.  Id. at ¶ 26.  The court also determined 
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that Meccon’s argument that the Court of Claims erred when it failed to consider 
Meccon’s motion for a temporary restraining order was moot.  Id. at ¶ 27, 29.  We 
accepted the university’s appeal under our discretionary jurisdiction.  122 Ohio 
St.3d 1502, 2009-Ohio-4233, 912 N.E.2d 107.1 
{¶ 8} The university contends that Cementech, Inc. v. Fairlawn, 109 
Ohio St.3d 475, 2006-Ohio-2991, 849 N.E.2d 24, controls the disposition of this 
case.  In Cementech, a public authority solicited bids for a public project.  In the 
process of awarding the contract, the public authority unlawfully rejected 
Cementech’s bid.  The trial court awarded to Cementech bid-preparation costs but 
denied lost profits.  Cementech appealed the trial court’s order limiting damages 
to the bid-preparation costs.  The appellate court reversed and allowed the lost 
profits. 
{¶ 9} In reversing the appellate court, this court held: “When a 
municipality violates competitive-bidding laws in awarding a competitively bid 
project, the rejected bidder cannot recover its lost profits as damages.”  Id. at 
paragraph one of the syllabus.  The holding was founded on the principle that 
“punishing government entities through lost-profit damages to rejected bidders in 
effect punishes the very persons competitive bidding is intended to protect — the 
taxpayers.”  Id. at ¶ 12.  We also explained that the purposes of competitive 
bidding, which are to prevent excessive costs and corrupt practices and to provide 
open and honest competition in bidding for public-improvement contracts, clearly 
militate against allowing lost-profit damages to wrongfully rejected bidders.  Id. 
at ¶ 9.  Allowing such damages harms taxpayers by forcing the taxpayers to bear 
extra costs, which include both the unjustifiably higher prices paid to the 
wrongfully chosen bidder for the public contract and, if awarded, the damages 
                                                 
1.  At this stage of the proceedings, the only question presented to this court is the availability of 
money damages.  The questions pertaining to the legality of the awarding of the contracts at issue 
have not been addressed. 
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established by the disappointed bidder that did not perform the work, including 
lost profits, which are often speculative and significant.  Id.  In that setting, we 
concluded that injunctive relief and the resulting delays in commencing the 
project serve as a sufficient deterrent to a public authority’s violation of 
competitive-bidding laws.  Id. at ¶ 11. 
{¶ 10} According to the university, Cementech holds that bid-preparation 
costs and other money damages cannot be recovered by a rejected bidder for a 
public project and that injunctive relief is the only available remedy.  The 
university further asserts that since the remaining relief requested in Meccon’s 
action is equitable, the Court of Claims has no jurisdiction over that claim and the 
Court of Claims properly granted the university’s motion to dismiss.  
Correspondingly, the university argued before the appellate court that Meccon’s 
appeal to that court was also moot because injunctive relief requested by Meccon 
had been denied earlier in the proceedings. 
{¶ 11} The issue of whether bid-preparation costs could be recovered by a 
wrongfully rejected bidder was not answered in Cementech.2  Upon consideration 
of the arguments in this case on the availability of reasonable bid-preparation 
costs as damages, we decline to extend the holding in Cementech to this 
circumstance. 
{¶ 12} We reach this conclusion because the reasons articulated in 
Cementech for denying recovery of lost profits as damages do not carry over to 
the circumstances in which bid-preparation costs are sought after denial of a 
timely application for injunctive relief.  A significant distinguishing factor in 
those circumstances is the lack of any other remedy for a public authority’s 
wrongful conduct.  If, for instance, a rejected bidder alleges that a public authority 
failed to comply with competitive-bidding laws and promptly seeks injunctive 
                                                 
2.  There was no cross-appeal filed by the public authority in Cementech questioning the trial 
court’s award of bid-preparation costs.  160 Ohio App.3d 450, 2005-Ohio-1709, 827 N.E.2d 819.   
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relief to delay the public-improvement project pending resolution of the dispute, 
denial of the requested injunctive relief means that determination of the allegation 
of wrongful conduct by the public authority will not take place until much later in 
the litigation.  Under our precedent, once the public-improvement work 
commences or is completed, the rejected bidder will not be able to perform the 
public contract even if the bidder demonstrates that its bid was wrongfully 
rejected.  Cementech, 109 Ohio St.3d 475, 2006-Ohio-2991, 849 N.E.2d 24, ¶ 13. 
{¶ 13} In such circumstances, the wrongfully rejected bidder is left with 
no remedy for the public authority’s unlawful conduct, and injunctive relief will 
no longer serve to deter the public authority’s unlawful conduct.  Thus, we hold 
that when a rejected bidder establishes that a public authority violated state 
competitive-bidding laws in awarding a public-improvement contract, that bidder 
may recover reasonable bid-preparation costs as damages if that bidder promptly 
sought, but was denied, injunctive relief and it is later determined that the bidder 
was wrongfully rejected and injunctive relief is no longer available. 
{¶ 14} By requiring a wrongfully rejected bidder to first seek injunctive 
relief and allowing the bidder to be awarded reasonable bid-preparation costs only 
if erroneously denied timely relief, we are applying a form of the well-established 
principle of mitigation of damages.  For if injunctive relief is timely granted, then 
a wrongfully rejected bidder will have avoided the damages that would otherwise 
flow from the public authority’s wrongful conduct by preventing the improper 
awarding of the contract or by suspending the contract before it has been 
performed to such an extent that the bid award is no longer subject to timely 
correction. 
{¶ 15} However, when the wrongfully rejected bidder pursues injunctive 
relief in a timely and good-faith manner but is erroneously denied the relief by the 
trial court, and the award of the contract to another bidder and the performance by 
that bidder have progressed beyond the point of correction, then the bidder should 
January Term, 2010 
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be able to recover the reasonable cost it incurred in the preparation of its bid.  But 
for the noncompliance with the competitive-bidding laws by the public authority, 
the bid would have been accepted, and the contract would have been awarded to 
the complaining bidder. 
{¶ 16} This rule, together with the rule prohibiting recovery of the more 
speculative lost-profit damages, seems best calculated to strike a balance between 
protecting the public from incurring extra cost due to the misconduct of the public 
authority, ameliorating the damages sustained by the lowest and best bidder in its 
good-faith participation in the competitive-bidding process, and deterring the 
public authority from violations of the competitive-bidding law. 
{¶ 17} The appellate court also recognized the distinction between bid-
preparation costs and lost profits as damages:  
{¶ 18} “There are good public-policy reasons favoring [the recovery of 
bid-preparation costs].  First, without some penalty, there is little deterrent to a 
public entity who fails to follow the competitive-bidding statutes.  Second, 
contractors may be reluctant to bid on public projects when they suspect the 
competitive bidding will not be conducted fairly.  Ultimately, refusal to bid harms 
the public as the pool of qualified bidders shrinks.  Any harm to the public from 
these types of damages is de minimus when compared to the harm to the public 
from recovery of lost profits.  Allowing recovery of bid-preparation costs will 
serve to enhance the integrity of the competitive-bidding process.”  182 Ohio 
App.3d 85, 2009-Ohio-1700, 911 N.E.2d 933, at ¶ 24.  We hold that in 
appropriate circumstances, as delineated above, reasonable bid-preparation costs 
are recoverable as money damages. 
{¶ 19} When Meccon filed its action for money damages and injunctive 
relief against the university, it filed it in the Court of Claims.  The Court of 
Claims has exclusive, original jurisdiction over civil suits that request money 
damages against the state even when ancillary relief, such as an injunction or 
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declaratory judgment, is also sought.  R.C. 2743.03(A)(1) and 2743.03(A)(2); 
State ex rel. Blackwell v. Crawford, 106 Ohio St.3d 447, 2005-Ohio-5124, 835 
N.E.2d 1232, ¶ 20.  Therefore, the Court of Claims had jurisdiction to hear 
Meccon’s claim for bid-preparation costs. 
{¶ 20} Injunctive relief must be promptly sought as a precondition to 
those damages, however.  The university contends that Meccon waited two full 
months after the bids were opened to seek injunctive relief.  Meccon states that it 
requested injunctive relief four business days after it learned that the university 
had awarded the plumbing, fire-protection, and HVAC contracts in violation of 
the state’s competitive-bidding laws.  Whether Meccon was timely in its pursuit 
of injunctive relief satisfying this precondition for an award of its bid-preparation 
costs as damages is a matter that has not yet been addressed by any court.  
Consequently, a remand to the Court of Claims to consider this matter is required. 
{¶ 21} Accordingly, the judgment of the court of appeals is affirmed, and 
the matter is remanded to the Court of Claims for further proceedings. 
Judgment affirmed 
and cause remanded. 
 
PFEIFER, 
LUNDBERG 
STRATTON, 
O’CONNOR, 
O’DONNELL, 
and 
LANZINGER, JJ., concur. 
 
BROWN, C.J., not participating. 
__________________ 
 
Thompson Hine, L.L.P., Peter D. Welin, and Andrew R. Fredelake, for 
appellees. 
 
Richard Cordray, Attorney General, Benjamin C. Mizer, Solicitor General, 
Alexandra T. Schimmer, Chief Deputy Solicitor General, Emily S. Schlesinger, 
Deputy Solicitor, and William C. Becker and Lisa J. Conomy, Assistant Attorneys 
General, for appellant. 
January Term, 2010 
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Schottenstein, Zox & Dunn Co., L.P.A., Stephen L. Byron, Rebecca K. 
Schaltenbrand, and Stephen J. Smith; and John Gotherman, urging reversal for 
amici curiae, Ohio Municipal League, County Commissioner Association of 
Ohio, and Ohio Township Association. 
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