# FILED
February

28, 1997 Cecil W. Crowson Ap pellate Cou rt Clerk J. HAROLD SHANKLE, ) ) Plaintiff /Appella nt, ) Appeal No.

) 01-A-01-9609-CH-00387 v. ) ) Bedford Chancery THE BEDFORD COUNTY BOARD OF ) No. 20,492 EDUCATION, THE B EDFORD COUNTY ) BOARD OF COMMISSI ONERS, THE ) PUBLI C BUIL DING AUTHORI

TY OF ) BEDFORD COUNTY, and THE SCHOOL ) COMPANY, ) ) Defend ants/Appe

llees. )

COURT OF APPEALS OF TENNESSEE MIDD LE S EC TION AT N AS HVILLE

APPEAL FROM THE CHANCERY COURT FOR BEDF ORD COUNTY AT SHELBYVI

LL E, TENNESSEE

THE HONORABLE F . LEE RUSSELL , CHANCELLOR

GREGORY L . C ASHI ON JOHN W . HEACOCK AUBREY B. HARW ELL, JR. Manier, Herod , Hollabaugh Ne al & H arwe ll & S mith 2000 First Uni on Tower 150 fourth Av enue Nort h, Su it e 2200 150 Fou rth Av enue No rth Nashvi ll e, Tenn esse e 37219 Nashvi ll e, Tenn esse e 37219 ATTORNEYS FOR PL AIN TIF F/ APPEL LANT

JOHN T. BOBO HARRIS A. GILBERT Bobo, Hunt & Bobo CHARL ES W. BONE 202 First national Bank Building KEITH C. DENNEN P. O. Box 169 Wyatt, Tarrant & Combs Shel byvi ll e, Tenn esse e 37160-0169 1500 Nashvill e City Center ATTOR NEY F OR THE COUNTY 511 Union Street COMMISS ION OF BEDFORD COUNTY, Nashvi ll e, Tenn esse e 37219 TENNESS EE, THE BOARD O F EDUCA TION OF B EDF ORD COU NT Y, TE NN ESSE E and ATTORNEYS FOR THE SCHOOL THE PUBLI C BUI LDI NG AUTHORI TY OF COMPANY , L. L.C. BEDFORD COUNTY, TENNESS EE

AFFI RMED AND REMANDED

SAMUEL L. LEWIS, JUDGE1 In their jo int stipulatio ns, the p arties d escrib ed the “cons truction mana ger” m ethod as follow s: Pursu ant to the cons tru cti on manag er met hod, t he Board s erves as i ts own gen eral contract or con tracting d irectly with su bco ntracto rs and supp liers. T he B oard hires a c onstru ction m anag er to manage the projec t an d super vis e th e cons tru cti on on beh alf of t he Board. The cons tru cti on man ager is n ot pa id on a “cos t-plus” b asis, but is inste ad p aid a se t fee for its ser vices. P ursuan t to the “construct

ion manager method,” the Board co ntinues t o bear the risk of cost overruns although the Board has greater control because the Board is contracting dir ectly wi th the subcontract ors and the suppliers. -2-



## OPINION
This is an appeal

by plai ntiff/app ellant, J . Harol d Shankle Co mpany, Inc., from the decisi on of the Be dford Count y Chan cery

Court gra

nting de fen dants/ appellee s’ motion for sum mary judgm ent. Th e case inv olved the c onstruction and applicati on of the Publ ic Building Authority Act of 197 1 (“t

he Act”) , Tenne ssee Code Annotated

sections 12- 10-101 to 12- 101-124.

The facts of

this case are very

compl icated; ho wever, t he parties entered joint stipulations which ea se the under standing of the ca se. The relevant parties a nd participa nts include: plaintiff/appellant, J. Har old Shankle Company, Inc. (“Shankle”); defendant

/appe l lee, The Public Building Authority (“the Authority”); defendant/appellee, the Board of Education for Bedford County (“the Board” ); d efendant/appellee, the County Comm ission for Bedford Co unty (“the Com mission”); defendant /ap pellee, The Scho ol Com pany, L.L. C. (“the Com pany” ); H and M constructi on Co. (“ H & M”); the Buildin g Comm ittee (“the Comm

itte e”); Educational Facilities Services, L.P. ( “EFS”); R . Gregory Hinote; an d Mark Gil l. Hinote is the Chief Manager of theCompa

ny and w as a lim

ited partn er inEFS as o f March 1 995.
Prior to 1994, the Board determined that it was ne cessary

to renovat

e and construct additions to certain s chools (“th e Proje ct”). T he Board d ecided to u se the “cons truction

manager” m

ethod 1 for the construction of the Project as opposed to the “har d” bi d meth od. Duri ng 1994, the Board re ceived se veral pro posals for constructi on manager servi ces. Sh ankle did not submit a p roposal to serve as constructi on manager. In Oct ober 1994, the Board met a nd awarded the cont act to H & M. In January 1995, the Board created the Com mittee to oversee th e constructi on. The pl ace and time o f the meeting was reported in the Shelbyville Times-Gazette.-3-

In March 1995 , the Boa

rd heard a propos al from Gill and Hinote in the ir roles as repre sentatives of EFS. Their proposal included alternat ives to the “

hard” bid metho d and the “construction manager” metho d. The t ime a nd place of

the meeting was reportedin the Shelbyville Times -Gazette . In June 1995, the Company m

ade a presenta tion to the Comm

ittee with respect

to non-traditional m

ethods of de veloping schools. In July , the Com p any m ade a sim

ilar pre sentation to the Boar d. The Compa ny made yet a nother pre sentation on

6 Septem ber 1995 to the Co mmission ’s Budget and F

inance Com

mitte e. The

presenta tion covere d the advantages of using a Public Building A

uthority to develop schools. After the presentation, the Budget and Finance C omm

ittee re comm

ended that the Com

miss ion endors e the use of a Public Building Authority for the Project. T hese presentations were all made at public meetings which were reported in the Shelbyville Times -Gazette

.
On 12 Septem

ber 1995, t

he Com panymade

a detaile d presenta

tion on the
use of a P ubl ic Bu ild ing aut hor ity t o the C omm ission at its regular public m eeting. The place and time of the m eeting was reported in the Shelbyville Times -Gazette

. After the prese ntation and t

he attorney-cli ent session, the Com missio n endorsed t

he creation of a publicbuilding auth ority to develop sc hools and to r enov at e existing schools including the

Projec t. In addi tion , the Co mmission endo rsed t he Compa ny’s participa tion in t his altern ate method. In Octobe r 1995, the

Comm ission adopte d a resolution

approving the creatio n of the Aut hority. The plac e and tim e of the m eeting
was reported in the Shelbyville Times -Gazette

. The minutes of the m eeting describe the Aut hority’s respon sibilit y as follows: “[t]o meet at leas t once, annu ally, t o contractwith a third party (The School Com pany) to support the construction, repair, and improvement of

public b uilding s, structu res, and facil ities.”

On 17 October

1995, the m

embe rs of the pr

oposed Auth ority held a jo int public meetin g with the C ommittee. At the meeting, the Authority , the Comm ittee, and t he Company discussed the Com pany’s proposal. The place a nd time o f th e meet ing was reported in the Shelbyville Times -Gazette . On 26 O ctobe r, the Board met to consider the execution of an agreement with the Com pany. Hinote, acting on behalf of the Company, provided copies of proposed contracts between the Board and the Authority

and betwe en the Aut

hority and the Com

pany. The place and

time of the meeting was reported in the Shelbyville Times -Gazette

.-4-

On 30 October

1995, at 11: 31 a.m ., an a

pplication t

o create and incorporate the Authority

pursuant to the Ac t was fil ed with the Secret ary of

State. The Secretary granted acorporate ch arter to the Authority on 30 October. At 6 :0 0 p .m. t hat same d ay, the Bo ard held a

meeting and appr

oved the con

tract bet ween it a

nd the Aut hor ity. At 7:00 p. m., the Author ity hel d a publi c me eting . The A uthority approved the contra

ct betw een it and the Com pany a nd the contract betw een the Board and the Authority . The c ontrac t betwee n the Author ity and the Com pany provided a guaran tee ag ainst cost o verruns in the form of a guara

nteed maximu m price. The contract also provided that the Company pay liquidated damages for each day the construct

ion continued pa st the guaranteed co mplet ion date. The plac e and ti me of both meetings werereported in the Shelbyville Times-Gazette on 27 October 1995

. The parties executed both contacts on 19 December 19 95 . On th is same day, the parties t

ermi nated the c ontract between the Board an d H & M wi th H & M’s consent.

Between 27 July 1995 and 30 October 1995, no one otherthan the Co mpany appeared before either the C omm ission , the Board, or the Authority to make a pr oposal in regard

to the Pro

ject. Moreover , no one othe r than the C ompany requested an opp ortuni ty to a ppear and submit

a proposal . The C omm ission, the Board, or the Aut

hority did not, how ever, m

ake an expr

ess invitat

io n for re ceipt of proposals with res pect to the Projec t. Betw een 30 Oc tober and 19 Decem ber 1995, Shankle did not appea

r or reque st an opportu nity to a ppear bef

ore eithe r the Commis sio n, th e Bo ard , or t he Au tho rit y.
On 19 December 1995, the Com pany executed

a n agreement with an architectural and engineering firm for their services on the Project. InJanuary 1996, the Compa

ny exe cuted agr

eements with H

& M to ser

ve as the general con

tractor for the construction of Phase I of the Project and the preconst ruction work associated withPha se II of the Pr

oject. The const

ruction of the Proj ect began thereaf ter. T he contractprovided that the p arties woul d complete all n ew c onstructi on on 29 July 1996 and allother wor

k no later t

han 2 September

1996. The

re have be en no change orders approved or

submit ted that a lter e ither the g uarantee d maxi mum price or compl etion date

as of 8 May

1996.-5-

On 1 March 1996, Shankle filed a dec lara tor y judgm ent action

in the Chancery Court for

Bedford County. It alleged that appellees violated Tennessee law when they f

orme d t he A uthority

and awar

ded public c ontracts t

o the Com

pany without competitive biddi ng or a publicinvitation for proposals. The parties entered into numer

ous joint st

ipulation settling all f

actual iss ues. Thu s, both parties filed motions for summary judgm ent. After

hearing oral argum

ent, the chanc ellor fil ed a
me mora ndum opinion gran

ting appelle es’ m

otion for su mmary j udg ment. Thereafter , the chancellor entered final judgm ent in favo r of appel lees on 18 July 1996. Shankle filed a ti mely

notice of a

ppeal.

Shank le’s first and second issue s ar e “[ w]het her the Pu

blic Buildi ng Autho rityAct of 1971 , T.C.A. § 12-10-10 1, et seq. , exclude s public build in g authorities from

all Tenne ssee state

and local l aws, inc luding com petitive bi dding statutes” and “[w] hether the 1995 Amendments to the Public Building Authority Act create an except

ion to the co mpeti tive bidding s tatutes. ” Both issue s involve the statutory construction of the Act; therefore, we a ddress them together.

The courts of t

his State have set out the rules of statutory construct ion on
numer ous occasions. Clearly , the pri mary purpose of statutory

cons t ruction is t

o ascerta in and give effect to th e legislat ure’s intent

. Federal Express Corp. v. Tennessee State Bd. Of Equal ization , 71 7 S.W .2d 873, 874 (T enn. 1986) . Courts must “determ ine the legislative intent, whenever possible, from the plain la

nguage of the statute.” Wilson v. Johnson C ounty , 879 S.W.2d 807, 809 (Tenn. 1994). Moreover, courts must look to the statute in its entirety presuming “ the leg i slature intended that every word used in a statute would have a purpose and would convey meaning.” Cohen v. Cohen , N o. 01S01-9510- CV-00185, 1996 WL 520312, at * 3 (Tenn. 1996).

In passing the Act, the

Genera l Assem bly exp ressed its concern o ver the critical state of pu blic bui ldings i n Tennessee

. Tenn. C ode Ann. § 12-10-102( a), (b) (1992). The Ass embly

foundthat: 1) public buildings in the State of Tennessee are “inadequate and outmoded”; 2) faciliti es are not “ade quate to m

eet the ne eds of the growing population” ; 3) public r ecords an d other do cume nts are hou sed in “poorly protected and overc rowded spa ces”; 4) th e s hortage of adequate buildings has-6-

seriously impai red the gove

rnme nt’s abi lity toprovide edu cation al services ; 5) the health, safety , and we lfare of the citiz ens of the S tate is adv ersely affe cted by

the serious deficienci es in thes e buildi ngs. Id. § 12-10-1 02(a). Given the se findings, the General Assem

bly aut horized “ the incorporation in

the several counties, cities, and towns in this state of public co rporation s to finance, acquire, erect, own, operate, maint ain, lease, and/or

dispose of public buildings, structures, and facilities.” Id. The General Assembly then gave the public corporations the formal name of public buildin g authori ties. Id. § 12-10-103 (Supp. 1996).

The Genera

l A ssemb l y gran

ted the publi c building authorities extensive powers. See id

. §§ 12-10 -109, -118 to -122 (1992 & Supp. 1996). These powers exceeded those of ci ties and co unties and enabled publi c bui lding author ities to
accom plish goals beyond the capabilities of either the city or the c oun ty. F or example, public buildi ng authorities enable small governmental entities to fund and buildlarge scale p rojects joint ly. See id. § 12-10-120 ( 1992). A lso, publicbuilding authorities enable a city or a county to iss ue bonds without a p ublic refere ndum. Id. § 12-10-122. Overal l, the use of public bu ild ing au thorities enables cit ies and counties to construct projects using the most advantageous methods available.

The language of

particular relevance to the issue s before t he court is found in Tennesse e Code Annotate d secti ons 12-10-122 and 12-10-124. The General Assem bly enacted T ennessee C ode Annota ted sectio n 12-10-122 a s part of t he original Act in 1971 and has not s een fit to amend it since that time. Tennessee Code Annotated

section 12- 10-122 provides, in par t: Projec ts may

be acquir ed, purc hased, c onstructed , recons tructed, impro ved, bettered and extended and bonds maybe issued under this chapter for such purposes , notwi thstanding that any other general, special or local law may provide f

orthe acquis ition, purchase, construct

ion, rec onstruction , im

provem ent, betterm

ent and extension of

a like proj ect, or the issuanc e of bonds f o r like purposes, and without reg ard t o the requirements, rest rictions, limit ations or other pr

ovisions cont ai ned in any other gene

ral, special or local law. Id. The Ge neral As sembl y enac ted Tenne ssee Code Annotate d section

12-10-124 in 1995. Thi s section pr

ovides, in part: (b) An authority

in the operation, m

aintenanc e, and ro utine-7-

repairs of a projec t ma y purc ha se goods, supplies and services which are gene

rally sold to the

public by adve

rtised pri ce withou t the necessity

of competitive bidding; provided, thatno purchase shall exceed five thousa

nd dollars ( $5,000.00) or

any la rger lim it as shall be allowe d for such p urchases under the regulations of a munic ipal corporation with which the

authority has contra

cted. (c) An author

ity m ay con tract fo r service s by publ i c invitation for propos als. Suc h contrac ts ma y be f or a peri od of three (3) y ears. P

rofessiona

l service s on “a

t-will” basis m ay be contracted by an i nterview proc ess. Constructi on contrac ts for design-buil d or for remodeling and maintenance may be by pu blic invitation f

or proposal s as well

as by c ompet

itive bid. Id. § 12-10-124(b), (c) (Supp. 1994).

Shankle argues that Tennessee Code Annot ated sect ion 12-10-122 doe s not g rant pu bl ic b ui ld in g au th ori ti es p len ary p owe r su ch t hat th ey may c omp letel y disregard all laws including co mpeti tive bidding l aws. It is Shan kle’s c ontention

that anyother inte

rpretati on would cr

eate a conflic t betwee n sections 12 -10-122 and 12- 10-124. Specifi cally , Shankle argues tha

t the secti on 12-10- 124(b) implies that public building auth orities w ere subj ect to the competitive bidding laws whenthe Act
was enac t ed, beca

use it exem

pts certa in activiti es from

competitive biddi ng. Likewise, Shankle argues thatsection 12- 10-124(c) is mer e surplusag e if sect

ion 12- 10-122 exem

pt s public b uilding author ities fro m all

restric tions. In o ther wor ds, it is Shankle’ s argum

ent that se ction 12-10-124(b) and (c) were unnecessary if the Act
as enacted exempt

ed public bui lding author ities fro m law s such as co mpeti ti ve bidding statutes.

We can not agree. Shankle’s argum ents completely over

loo k the plain
meaning of the language in section 12-10-1 2 2 and forc e a constr uction base d on language added to the Act twenty-four y ears after its enactm

ent. It i s the opinion o f this court that the plain language of s ections 1 2-10-122 and 12-10-124 can be read together w ithout confl ict and wi thout forc ing any mea ning.

Section 12-10-122 c learly

exem pts public bui lding aut

horit ies from

any other general, special , or loca l laws inc luding com

petitive bi dding laws; however , this
exem pt ion only applies to the acquisitio n, purcha se, const ruction, reconstr

uction,-8-

impro veme nt, betterment, or e xtensio n of proj ects. S ection 12-1 0-124(b), on the otherhand, appl ies only to the operation, m

aintenanc e, and ro utine repa ir s of a project

. It is the opinion of this court t

hat these t wo sets of functions a

re separate and distinc t.
Moreover, it is the opi nio n of this court that Shankle’ s impli cation ar

gument is without merit. As previously stated, Shankle argued that it was unnec essary

for the General Assem

bly toenact sec tion 12-10-1 24(b) if pu blic building authorities were
a lready exem

pt from com

petitive bi dding under s ection 12-1 0-122. T he problem

with this argum

ent is that section 12- 10-122 di d not exempt public building authorities from other general, special, or local laws when it cam e to the operation, maintenance,
or routine re

pairs of a projec t. It m

erely exe mpted

them from

competitive biddi ng laws when carrying out the f unctions list

ed in that se ction.

In addition, we can no t agree w ith Shankle’ s argum ent as to section 12- 10- 124(c). It is the op in ion of thi s court tha t section 12 -10-124(c ) sim ply set s forth perm issiblemet

hods of obt ain ing cert ain serv ices . The Asse mbly’s use of “may” instead of “s hall” clearly dem onstrates that the subsection does not restrict the powers of the author

ities. In addi tio n, this inte rpretati on com

plements and expla

ins this court’s reading of section 12-10-122. The subsection is not mere surplusage.
Throughout

its argum ents, Sha nkle extols the me

rits of com

petitive bidding in all government p urchases. Nevert heless, t he me rits of com

petitive bi dding is not
an issue for this court; it is an issue f or the Gener al A ss embl y. In so me circum stances, the Genera l Assem bly has recogniz ed the appr opriatene ss of the use of competitive bidding. In other cas es, such a s with the public building auth orities, th e Asse mbly

has recog nized the a ppropriateness of othe

r methods. Th e determ inationof the more appropriate m ethod is one for the Gen e ral Assembly to make after c onsideringall therelevant circum stances. We thin

k that the pu

rpose of the Act is clear , i.e. , to provid e counties, munic ipalities, and boards of educat ion the
mean s to accom

plish goals that are not available directly to th ose entit ies. The Act empowers public building auth orities w ith the ability to accom plish the pur

poses of the Act. The m

ethod chose n by the

public buildi ng authority

may include co mpeti tive bidding, int

erviews , or negot

iations.-9-

Shank le’s third issue

is “[ w]het

her local newspape

r coverage within Bedford County

satisfie d the notice re quirem ents of the competitive biddi ng laws an d § 124(c) of

the Pub l ic Building Authority Act, despite Defendants’ a dmission that they did not publicl y advertise or s olicit fo r requests for propos als.”

Tennessee Code Annot ated sect ion 12-10-122

empow ers publicbuil ding authorities to take ac tions with r espect to p roject s without regard to the requir

emen ts of any oth er general, spec ial, or l ocal law s. It is the opinion of thi s court tha t the Authority was not bound by o ther com

petitive bi dding statute s. In this case, t he Act enabled the Author

ity to s eek out cont

ract s by metho ds other tha n by com petitive bids. Thus, the

Authority

was not sub

ject tothe notice

provisions of

the com petitive bidding statutes.

Shankle also argue s that the f

irst sente nce of

section 12-10-124(c) required the Au thor ity to m

ake a publi c invitatio n for propos als. Gi ven our pre vious conclusions, we can n ot agree. The language of section 12- 10-124(c) is permissive, i.e., it did not re quire the A uthority to ma ke a publicinvitation.

In view of ou

r resolution of this matter, we need n ot discuss appellee s’ issue of whether Shankle’ s action is ba rred by laches. It result s that the j udgmen t of the t rial cou rt is in all

things aff

irme d and the ca

use is rem

anded to the

trial cour

t for further necessar

y proc eedings. Costs on appe al a re assess ed against plaintiff/appellant, J. Harold Shankle Company , Inc.

____________________________________ SAMUEL L . LEWIS, JUDGE

CONCUR:

_____________________________________ HENRY F. TODD, P.J., M.S.

_____________________________________ WI LL IA M C. K OCH , JR. , J.-10-