Opinion ID: 1219228
Heading Depth: 1
Heading Rank: 2

Heading: The Public Procurement Act Case

Text: After the County had awarded a contract to AEGIS to construct and operate the proposed landfill, Concerned Taxpayers filed a second bill of complaint. In this pleading, they allege that the County's contract with AEGIS is void, because the County did not comply with the requirements of the Virginia Public Procurement Act, Code §§ 11-35 to-80 (the Procurement Act). Specifically, Concerned Taxpayers allege that the County and the Board negotiated and contracted with AEGIS although AEGIS' proposal was not responsive to the RFP; that the Board failed to negotiate with two or more offerors, or to find in writing that AEGIS was the only fully qualified offeror; that the Board failed to conduct competitive sealed bidding in order to procure construction; that the contract violated the Procurement Act's prohibition against design-build contracts; and that the contract allowed AEGIS to engage in waste treatment and disposal practices that specifically were prohibited by the RFP. In addition, Concerned Taxpayers named as defendants, in their individual capacities, three members of the Board (the Individual Supervisors) who acted as the so-called majority faction in granting the CUP and in negotiating with and awarding the contract to AEGIS. Concerned Taxpayers allege that, in doing so, the Individual Supervisors acted illegally and authorized unlawful expenditures of taxpayer-generated County funds. Concerned Taxpayers asked the trial court to order the Individual Supervisors to make restitution personally, jointly and severally for all such unlawful expenditures of public funds as they have authorized in pursuit of the illegal negotiations and award of this illegal contract. The trial court sustained the defendants' demurrers and dismissed the bill of complaint. In addition, the trial court granted the Individual Supervisors' request for sanctions against Concerned Taxpayers and their attorneys, pursuant to Code § 8.01-271.1. Concerned Taxpayers contend that the trial court erred in ruling that they lack standing to bring suit for enforcement of the provisions of the Procurement Act. They argue that the Procurement Act does not expressly preclude such a challenge. In addition, Concerned Taxpayers maintain that they have a common law right of action as taxpayers to petition for restraint of a local government's unlawful and unauthorized expenditure of public funds. We disagree and hold that the trial court correctly ruled that the Concerned Taxpayers do not have standing under either the Procurement Act or the common law. `[When] a statute creates a right and provides a remedy for the vindication of that right, then that remedy is exclusive unless the statute says otherwise.'  Vansant & Gusler, Inc. v. Washington, 245 Va. 356, 360, 429 S.E.2d 31, 33 (1993) (quoting School Bd. v. Giannoutsos, 238 Va. 144, 147, 380 S.E.2d 647, 649 (1989)). The Procurement Act confers certain rights and obligations upon citizens of the Commonwealth, nongovernmental contractors, and governmental entities. W.M. Schlosser Co. v. Board of Supervisors, 245 Va. 451, 456, 428 S.E.2d 919, 922 (1993). These rights and obligations did not exist in the common law and were created through the statutory scheme of the Procurement Act. The Procurement Act also provides remedies for individuals or entities who have been denied rights conferred by the Act. Remedies for the violations alleged by Concerned Taxpayers are contained in Code §§ 11-63 through -70. These sections permit only bidders, offerors, and contractors, within the meaning of the Act, to invoke those remedies by protesting an award, initiating administrative procedures, or bringing an action to challenge a decision to award a contract. The Procurement Act does not provide a right of action to those not involved in the bidding and procurement process. Since Concerned Taxpayers are not among those afforded remedies under Code §§ 11-63 through -70, they do not have standing to challenge the Board's alleged violations of the Procurement Act. Nevertheless, Concerned Taxpayers contend that they have a common law right as taxpayers to bring suit to restrain the Board from exceeding its powers in a way that will injuriously affect taxpayers. Citing Gordon v. Board of Supervisors, 207 Va. 827, 830, 153 S.E.2d 270, 273 (1967), and Roper v. McWhorter, 77 Va. 214, 217 (1883), Concerned Taxpayers argue that taxpayer standing exists when officials have purported to exercise powers beyond those the legislature has conferred expressly or by necessary implication. Gordon, 207 Va. at 832, 153 S.E.2d at 274. They contend that the Board exceeded its powers because it legally could not contract for the services at issue without following the procedures mandated by the Procurement Act. The bill of complaint, however, does not allege acts by any of the defendants that exceed their powers. Local governing bodies are expressly authorized to enter into contracts relating to waste disposal facilities. Code §§ 15.1-28.01 and 15.1-28.02; see also Concerned Residents of Gloucester County v. Board of Supervisors, 248 Va. 488, 498-99, 449 S.E.2d 787, 793 (1994). Further, a violation of the Procurement Act does not render void the contract between the governing body and contractor. Instead, the Procurement Act provides that if an award of a contract is found to have been arbitrary or capricious, the performance of the contract may be enjoined or the public body may declare the contract void upon a finding that this action is in the best interest of the public. Code § 11-66(B) (emphasis added). Therefore, we conclude that Gordon and Roper are not applicable and that there is no common law right of action here because, even if the defendants had violated any provision of the Act, as alleged, such violation would not void their authority under the Act to award a contract. Concerned Taxpayers next contend that the trial court erroneously awarded sanctions based on the claims they asserted against the Individual Supervisors. First, they assert that the trial court already had lost jurisdiction in the case when it entered the sanctions order. Alternatively, they argue that the trial court abused its discretion in awarding sanctions. The record shows that, in its order of January 3, 1994, dismissing the bill of complaint, the trial court stated that it would reconsider the Concerned Taxpayers' request to file an amended bill of complaint. In that order, the trial court also granted the Individual Supervisors leave to file additional submissions and a Notice of Hearing upon their Motion for Sanctions within twenty-one (21) days after entry of this Order. The Individual Supervisors filed their additional submissions, but not their notice of hearing, within the time specified. By order dated February 10, 1994, the trial court denied Concerned Taxpayers' motion for leave to amend their bill, and stated that it would retain jurisdiction over the Individual Supervisors' request for sanctions. On March 31, 1994, after a hearing, the trial court entered its last order in the case, in which it granted the Individual Supervisors' motion for sanctions and entered judgment against Concerned Taxpayers and their attorneys, jointly and severally, for legal expenses incurred in defending the claim. Concerned Taxpayers contend that the order of January 3, 1994, became a final order when the Individual Supervisors failed to comply with the trial court's direction to file their notice of hearing within 21 days after entry of the order. Citing Bibber v. McCreary, 194 Va. 394, 73 S.E.2d 382 (1952), they argue that if a litigant fails to comply with the terms of an order within the time specified, the litigant is barred from further prosecution of the cause. Based on this authority, they assert that the order of January 3, 1994, remained under the control of the trial court for only 21 days after the date of its entry. Rule 1:1; see also Smith v. Stanaway, 242 Va. 286, 289, 410 S.E.2d 610, 612 (1991). Thus, they conclude, the trial court did not have jurisdiction when it purported to enter the March 31, 1994 order. We disagree. Concerned Taxpayers' argument misconstrues Bibber, which states that further prosecution of an action is barred by a party's failure to amend his motion for judgment, after the trial court has sustained a demurrer, dismissed the case, and granted leave to amend. 194 Va. at 397, 73 S.E.2d at 384. Bibber is inapposite to the present case, because there is no issue presented here of failure to amend a pleading, and timely filing of the Notice of Hearing was not a jurisdictional requirement for further proceedings on the sanctions motion. Moreover, the material facts in this case are unlike those in Smith, because the order of dismissal in that case did not reserve any issues for further consideration. Smith, 242 Va. at 288-89, 410 S.E.2d at 611-12. Here, however, the trial court expressly reserved jurisdiction over the Individual Supervisors' motion for sanctions in the two orders that preceded the final order entered March 31, 1994. Therefore, neither Rule 1:1 nor Smith precludes our consideration of the sanctions issue here. Turning to the merits of this issue, we consider Concerned Taxpayers' contention that the trial court abused its discretion in awarding sanctions. The trial court held, in accordance with Code § 8.01-271.1, that sanctions were appropriate because the allegations made against the Individual Supervisors were not warranted either by existing law or by a good faith argument for the extension, modification, or reversal of existing law. Concerned Taxpayers contend that they reasonably sought an accounting and restitution against the Individual Supervisors in their individual capacities. Concerned Taxpayers argue that an official who has made unauthorized appropriations of funds is not clothed with immunity. Further, citing Burk v. Porter, 222 Va. 795, 798, 284 S.E.2d 602, 604 (1981), and Johnson v. Black, 103 Va. 477, 484, 49 S.E. 633, 635 (1905), they contend that public officials may be compelled to restore public funds that have been illegally diverted. We conclude that Concerned Taxpayers' argument has no merit under the facts presented here. Code § 15.1-7.01 provides that members of the governing bodies of local governmental entities shall be immune from suit arising from the exercise or failure to exercise their discretionary or governmental authority as members of the governing body... which does not involve the unauthorized appropriation or misappropriation of funds. Concerned Taxpayers could not reasonably have believed that the Individual Supervisors' expenditure of funds was an unauthorized appropriation within the meaning of Code § 15.1-7.01, since Code §§ 15.1-28.01 and 15.1-28.02 specifically authorized the Board to disburse public funds in order to procure waste management services. In entering into negotiations with AEGIS and in deciding to procure services from AEGIS, the Individual Supervisors were acting within the realm of their legislative function, and are not subject to personal liability based on their decisions made on behalf of the County. Further, the Procurement Act provides no remedy of restitution in cases where monies have been spent on contracts which are later declared to have been awarded improperly. To the contrary, the Procurement Act specifically provides that in such an instance the performing contractor shall be compensated for the cost of performance up to the time of such declaration. Code § 11-66(B). Concerned Taxpayers' reliance on Burk and Johnson also is misplaced, since those cases, unlike the present appeal, involved allegations that county board members illegally had diverted funds to their own personal benefit. Thus, Burk and Johnson provide no authority for Concerned Taxpayers' request for an order of restitution based on their allegations here, which do not involve illegal diversion of funds. Thus, we hold that the trial court did not abuse its discretion in concluding that the allegations against the Individual Supervisors were not warranted either by existing law or by a good faith argument for the extension, modification, or reversal of existing law. In summary, we will affirm the trial court's judgment in the Public Procurement Act Case. In the Zoning Case, we will affirm that portion of the trial court's judgment dismissing Counts II, IV, and V of the bill of complaint, and we will reverse that portion of the trial court's judgment dismissing Counts I and III and remand the case for further proceedings consistent with the principles stated in this opinion. Affirmed in part, reversed in part, and remanded.