Title: City of Green River v. Debernardi Const. Co., Inc.

State: wyoming

Issuer: Wyoming Supreme Court

Document:

City of Green River v. Debernardi Const. Co., Inc.1991 WY 117816 P.2d 1287Case Number: 91-26Decided: 09/10/1991Supreme Court of Wyoming
CITY OF GREEN RIVER, WYOMING, A WYOMING MUNICIPAL CORPORATION, 
APPELLANT (DEFENDANT),

v.

DEBERNARDI CONSTRUCTION 
CO., INC., APPELLEE (PLAINTIFF).

Appeal from the District 
Court, SweetwaterCounty, Jere Ryckman, 
J.

Ford T. Bussart of 
Greenhalgh, Bussart, West & West, Rock Springs, for appellant.

John T. Pappas of Western 
Law Associates, P.C., Lander, for appellee.

Before THOMAS, 
CARDINE, MACY and GOLDEN, JJ., and BROWN, Ret. J.

BROWN, Justice, 
Retired.

[¶1.]     AppellantCity of Green River (Green River) appeals the trial 
court's determination that its preference policy is in contravention of public 
policy and Wyoming law.

[¶2.]     The issues stated by 
Green River are:

     Is a policy enacted by 
the governing body of a City which lets a contract to a responsible, certified 
resident of the City making the lowest bid if the certified resident's bid is 
not more than ten percent (10%) higher than that of the lowest responsible 
nonresident bidder violative of § 16-6-102, W.S. 1977?

     Is such a local 
preference violative of any provisions of either the Wyoming Constitution or the 
United States Constitution?

     Is the City of 
Green River's 
preference policy defective because it was not implemented by 
ordinance?

[¶3.]     Appellee submits an 
additional issue for consideration:

     Was the Davis 
Construction bid rendered invalid by the inclusion of a change-order provision 
in the event of adverse site conditions?

[¶4.]     We affirm.

[¶5.]     On August 23 and 30, 
1990, Green River published Notice to Bidders 
calling for proposals for the installation of a water main and appurtenances. 
The project was to be funded by the Sweetwater County Joint Powers Board. The 
notice provided that a five percent preference would be given to Wyoming contractors in 
accordance with W.S. 16-6-102 (July 1990 Repl.). No mention was made of any 
additional preference.

[¶6.]     All funds to be 
expended by the Joint Powers Board for labor, equipment and materials on the 
project were to be generated exclusively and directly by imposition of fees upon 
users of the water distribution system in Green 
River. Incorporated into the user rate paid by each consumer of 
water within Green River is a fee which is collected by Green River and remitted to the Joint Powers Board for 
deposit into a capital improvements fund. That fund is segregated, to be drawn 
upon by Green River for capital improvements to the distribution system which 
Green River leases from the Joint Powers Board. 
When the project involved here was scheduled, the governing body of Green River requested from the Joint Powers Board a 
drawdown from the City's capital improvements fund. No monies attributed to any 
other source were to be expended on this project. At the time of submitting its 
bid, appellee, DeBernardi Construction Company of Rock 
Springs (DeBernardi), had neither a place of business in Green River nor a city business license, as required by 
the purchasing policy for those seeking preference.

[¶7.]     Bids were submitted by 
DeBernardi in the amount of $32,665 and Davis Construction of Green River 
(Davis) in the amount of $35,773. On September 4, 1990, Davis, although the 
higher bidder, was declared the successful bidder due to a ten percent 
preference in favor of Green River businesses which had been adopted as a part 
of Green River's purchasing policy. This was reflected by the minutes of a 
meeting of the Green River governing body on 
July 19, 1988.

[¶8.]     On September 13, 1990, 
DeBernardi filed a complaint against Green River and Davis alleging that Davis' bid contained patent flaws rendering it 
invalid and that the bid was awarded in contravention of statute. DeBernardi 
requested injunctive relief in the form of a temporary restraining order and 
preliminary injunction. DeBernardi claimed that it would suffer immediate and 
irreparable harm if Davis were permitted to 
proceed, that it had no adequate remedy at law, and that the harm outweighed any 
loss to Davis. 
DeBernardi additionally sought a declaratory judgment directing Green River to 
award the project to it as provided by Wyoming 
law and to declare Green River's ten percent local preference invalid as it was 
contrary to Wyoming law and the due process and 
equal protection provisions of the Wyoming and United States Constitutions, and 
it was against public policy. A motion for temporary restraining order was 
granted on September 13, and the motion for preliminary injunction was set for 
hearing.

[¶9.]     On October 2, 1990, a 
preliminary injunction was granted and Green River was enjoined from either 
awarding a contract for the project or entering into a contractual relationship 
with Davis. The 
district court, in a letter opinion dated November 1, 1990, stated that the 
bidding preference policy of Green River violated Wyoming public policy and 
law according to W.S. 16-6-102. The court subsequently granted a declaratory 
judgment on November 30, 1990. This appeal followed.

[¶10.]  In its letter opinion, the trial court 
identified five issues.1 However, the court stated that the 
issues could be narrowed and the case decided with reference to two 
issues:

     I. Is Green River's 
10% preference violative of Wyoming law and public policy as expressed in W.S. § 
16-6-102 (1979) [sic]?

     II. Was Davis' bid 
rendered invalid by inclusion of a change-order provision in the event of 
adverse site conditions?

[¶11.]  The statute provides in part:

     (a) If a contract is 
let by the state, any department thereof, or any county, city, 
town, school district, community college district or other public 
corporation of the state for the erection, construction, alteration 
or repair of any public building, or other public structure, or for making any 
addition thereto, or for any public work or improvements, the contract 
shall be let, if advertisement for bids is not required, to a resident of the 
state. If advertisement for bids is required the contract shall be let to the 
responsible certified resident making the lowest bid if the certified resident's 
bid is not more than five percent (5%) higher than that of the lowest 
responsible nonresident bidder.

W.S. 16-6-102 (emphasis 
added).

[¶12.]  The trial court's comprehensive and 
well-reasoned opinion letter stated in part: 

     A straightforward 
reading of W.S. § 16-6-102 (1979) [sic], Wyoming's statutory provision pertaining to resident 
preferences, clearly demonstrates that the State never contemplated City 
preference policies as adopted by Green River. 
In fact, the language of the statute clearly indicates the State's intent to 
bring the actions of municipal corporations within its purview.

* * * * * *

The constitutionality of 
§ 16-6-102 was first raised in 1963 in an Opinion of the Wyoming Attorney 
General, (49 Op. Att'y Gen. 236 (1963)), and resolved in Galesburg Construction 
Company, Inc. of Wyoming v. Board of Trustees of Memorial Hospital of Converse 
County, 641 P.2d 745 (Wyo. 1982).

The Wyoming Supreme Court 
reasoned that "[b]y giving Wyoming corporations 
a handicap in bidding on public contracts, the statute in essence increases the 
likelihood that a Wyoming corporation will be awarded the 
contract. When contracts are awarded to Wyoming corporations, as opposed to 
out-of-state corporations, local industry is encouraged. This . . . strengthens 
. . . the state and local economy - the primary interest is that of 
the public. * * * The money payable under the contract is more likely to 
remain within the state, and enhance the tax base of state and local 
government." Id. at 750 [Emphasis added].

The statute leaves no 
doubt that the legislature intended to embrace local government in its 
preference scheme, and Galesburg substantiates the notion that the 
legislation was written in the public interest and not for proprietary 
convenience. It is difficult to see how Green 
River's preference policy can be reconciled with a statute which has 
already conferred the benefit on municipalities and set the preference at a 
percentage deemed reasonable. It is also difficult to understand how Green River can claim that its preference is purely 
proprietary. W.S. § 16-6-102 was clearly referred to in Galesburg as a general law 
promoting the public's interest in a strong state economy.

* * * * * *

Since an activity of a 
municipality is presumed to be governmental rather than proprietary (Savage v. 
Town of Lander, 309 P.2d 152, 154 (Wyo. 1957)), and since Galesburg explained 
that legislating in the area of economic preference was governmental rather than 
proprietary, it is fair to say that Green River was attempting to create law in 
an area already preempted by the state legislature.

Municipal corporations, 
unlike the state, have no sovereignty. They are creatures of the state, and have 
only such powers as have been granted to them by the state. KN Energy, Inc. v. 
City of Casper, 755 P.2d 207, 210 (Wyo. 1988); Retail Clerks Local 187 AFL-CIO v. 
University of Wyoming, 531 P.2d 884, 887 (Wyo. 1975); State v. Kingham, 420 P.2d 254, 257 
(Wyo. 1966); Smith v. City of Casper, 419 P.2d 704, 706 (Wyo. 1966). Municipalities may exercise only 
such powers as are expressly or impliedly conferred by the state. Implied powers 
are limited to those necessarily arising and reasonably inferred from expressly 
granted powers, and those essential to give effect to expressly granted powers. 
A municipal corporation cannot enlarge or extend powers expressly granted. 
Coulter v. City of Rawlins, 662 P.2d 888, 894-895 
(Wyo. 
1983).

* * * * * *

Green 
River's preference policy 
clearly conflicts with W.S. § 16-6-102 as it stands, and consequently it must be 
stricken as municipal legislation in contravention of the objectives of a valid 
state law. "Legislation by cities and towns must not conflict with statutes 
uniformly applicable to cities and towns, and it must be subordinate and 
subservient to such statutes. Each enactment must be measured in its own right 
to determine if it pertains to a `local affair' and if it is `subject to' 
statutes uniformly applicable." Laramie Citizens 
for Good Government v. City of Laramie, 617 P.2d 474, 483 (Wyo. 
1980).

[¶13.]  Succinctly, the trial court held that 
W.S. 16-6-102 preempted the field of residential preference and Green River's attempt to legislate in the area of 
residential preference conflicted with legislation uniformly applicable to 
cities and towns.2 We agree with that 
determination.

[¶14.]  Cases are legion considering whether or 
not federal statutes have preempted a field to the exclusion of state 
legislation. There are also numerous cases concerning the question whether state 
statutes have preempted a field to the exclusion of municipal action. Most of 
the state/municipal cases involved police powers. In making a determination that 
the state has preempted a field of regulation which the city seeks to enter, we 
look to certain guidelines. In the following case, four guidelines were set 
out:

     First, where the state 
law expressly provides that the state's authority to regulate in a specified 
area of the law is to be exclusive, there is no doubt that municipal regulation 
is preempted.

     Second, preemption of 
a field of regulation may be implied upon an examination of legislative 
history.

Third, the pervasiveness 
of the state regulatory scheme may support a finding of preemption. * * 
*

     Fourth, the nature of 
the regulated subject matter may demand exclusive state regulation to achieve 
the uniformity necessary to serve the state's purpose or interest.

People v. Llewellyn, 401 
Mich. 314, 257 N.W.2d 902, 905 (1977) (citations omitted). For another list of guidelines, see 
Northern States Power Company v. State of Minnesota, 447 F.2d 1143 (8th Cir. 
1971).

[¶15.]  W.S. 16-6-102 does not provide expressly 
that the field of residential preference is preempted by that statute, nor is 
there legislative history to give us guidance. We look therefore, to the other 
two guidelines considered in Llewellyn. The comprehensive nature of W.S. 
16-6-102 is self-evident. It includes "the state, any department thereof, or any 
county, city, town, school district, community college district, or other public 
corporation of the state." The list of entities contained in the statute is 
broad, detailed and appears to be all inclusive.

[¶16.]  If Wyoming's 23 counties, 96 
municipalities, community college districts, school districts and other public 
corporations were free to establish their own economic preference scheme, a 
great deal of uncertainty and confusion would result.

[¶17.]  In its letter opinion, the district court 
explained the ramifications of governmental entities setting their own economic 
preference scheme:

     Green River argues that its preference policy is within 
the delegated powers and sound discretion of the city, regardless of W.S. § 
16-6-102. But it is not difficult to see how the application of such a policy 
could bring about absurd results. From a public policy standpoint, a situation 
could be created in which cities throughout the state were setting widely 
varying preference percentages and attempting to enforce them against 
neighboring cities and other residents of their own counties. This would do 
little for a municipality's economic stability, but much to create increased 
confusion, rivalry and litigiousness in the business community. Certainly, such 
a result was not the intent of the legislature.

[¶18.]  We agree with the district 
court.

[¶19.]  Green 
River directs our attention to several statutes which it contends 
grant it the power to enact its local preference. With regard to these statutes, 
the trial court in its opinion letter said:

It [Green River] claims 
that W.S. § 15-1-113, Contracts for Public Improvements, grants municipal bodies 
sole discretion to set the criteria by which they will award contracts to 
bidders. § 15-1-113 covers topics including necessity for advertisement of bid, 
notice requirements, bond requirements, and procedure in cases of malfeasance. 
It mentions "sole discretion" only once, stating that the lowest responsible 
bidder will be determined at the sole discretion of the governing body. The 
statute is by no means a general grant of power, but is narrowly tailored to set 
procedural standards. The statute does not enable the municipality to alter the 
status of the lowest responsible bidder by burdening him with additional 
impediments not contemplated by the legislature; it seems only to empower the 
municipality to reject bids for numerous unstated yet commonly understood 
reasons, including failure to conform to specifications, questionable quality of 
goods or services, or unacceptable terms.

     Green River also cites 
W.S. § 15-1-103(a)([xli]), which states that governing bodies of cities and 
towns may adopt ordinances, resolutions and regulations necessary to give effect 
to the powers conferred on them by statute. Green River claims that W.S. § 
15-7-101(a)(iii) empowers it to "[t]ake any action necessary to establish, 
purchase, maintain and regulate a water system for supplying water to its 
inhabitants * * *."

     Defendants seem to 
stretch the language of cited statutes well beyond intended meaning. When read 
for plain meaning, none of the cited passages either expressly or impliedly 
entitle Green River to indulge in carte blanche 
legislation. § 15-1-103(a)(xli) states that municipal corporations may make laws 
necessary to give effect to powers conferred on them by statute, and W.S. 
§ 15-7-101(a)(iii) empowers municipalities to take action necessary to 
maintain water systems. Green River has not 
shown an independent necessity for its 10% preference which adds anything to the 
state's rationale for its 5% preference, and the state preference distinctly 
incorporates the necessities of municipal corporations.

[¶20.]  Green 
River cites several cases in support of the idea that public 
entities may discriminate against nonresidents when dealing with its own 
property. Most of the cases cited involve state preference policies. In a 
case cited by Green River, the city ordinance 
required prior approval of the State Treasurer, which it had received. The Court 
there stated that the facts of the case made it difficult to distinguish between 
state and municipal action. United Building and Construction Trades Council of 
Camden County and Vicinity v. Mayor and Council of the City of Camden, 465 U.S. 208, 104 S. Ct. 1020, 79 L. Ed. 2d 249 (1984). The city ordinance in Camden is vastly different from Green 
River's feeble attempt to provide for a residential preference and 
we have no problem distinguishing it.

[¶21.]  One case cited by Green River upheld a city preference policy. White v. 
Massachusetts Council of Construction 
Employers, Inc., 460 U.S. 204, 103 S. Ct. 1042, 75 L. Ed. 2d 1 (1983). The case was decided under the commerce clause. The Supreme Court 
found no violation of the commerce clause in Boston's executive order that 50 percent of the 
work force on city-funded construction projects must be city residents and made 
its decision based on the market participant/market regulator 
distinction.

[¶22.]  None of the cases cited by Green River are directly on point; therefore, we are not 
persuaded that their rationale should influence our determination in this 
case.

[¶23.]  The trial court's determination that 
Green River's ten percent residential preference policy violates Wyoming law and public 
policy as expressed in W.S. 16-6-102 is

[¶24.]  Affirmed.

FOOTNOTES

1 The five issues 
were:

I. Was Green River 
required to enact its policy by ordinance rather than minute action?

     II. Did Green River's 
failure to publish notice of its 10% preference constitute a denial of due 
process and equal protection under the Wyoming Constitution?

     III. Was Davis' bid 
rendered invalid by inclusion of a change-order provision in the event of 
adverse site conditions?

     IV. Is Green River's preference policy violative of the 
Privileges and Immunities, Equal Protection or Commerce Clauses of the United 
States Constitution?

     V. Is Green River's 
10% preference violative of public policy, despite the fact that all funds for 
the project were solely those of Green 
River?

2 
Green River's ten percent residential 
preference policy was adopted as part of its purchasing policy as reflected by 
its minutes of a meeting July 19, 1988. We do not wish to elevate this suspect 
legislation to the status of an ordinance; however, we are not aware of cases 
discussing the effect of a minute entry as a substitute for an 
ordinance.