Court Opinion

ID: 9348651
Source: CourtListenerOpinion
Date Created: 2022-12-20 14:10:10.949232+00
Date Added: 2024-06-11T16:43:04.323536
License: Public Domain

IN THE COURT OF APPEALS OF NORTH CAROLINA

                                        2022-NCCOA-492

                                         No. COA21-565

                                        Filed 19 July 2022

     Wilson County, No. 20-CVS-1258

     RALPH HODGE CONSTRUCTION COMPANY, Plaintiff,

                   v.

     BRUNSWICK REGIONAL WATER & SEWER H2GO, Defendant.

             Appeal by Plaintiff from order entered 24 June 2021 by Judge A. Graham

     Shirley in Wilson County Superior Court. Heard in the Court of Appeals 3 March

     2022.

             William J. Wolf for the Plaintiff-Appellant.

             Ward and Smith, P.A., by Amy H. Wooten and Donalt J. Eglinton, for the
             Defendant-Appellee.

             DILLON, Judge.

¶1           This case concerns whether the successful bidder on a government contract

     may recover its security deposit when it untimely withdraws its bid.

                                          I. Background

¶2           Defendant is a government agency that solicited bids for the construction of a

     public water supply and treatment system. The procedure for bidding on public

     contract is found in N.C. Gen. Stat. § 143-129 (2020). Under this procedure, bidders
               RALPH HODGE CONSTR. CO. V. BRUNSWICK REG’L WATER & SEWER H2GO

                                         2022-NCCOA-492

                                        Opinion of the Court

     are required to submit a deposit, usually five percent (5%) of their bid. See id. § 143-

     129(b).   Plaintiff bid on the project, depositing the required security deposit of

     $254,241.62, equal to 5% of its bid.

¶3         On 16 July 2020, the “opening of bids” for the project occurred. Plaintiff was

     the lowest bidder on the project by nearly $900,000.          Subsequently, Plaintiff,

     requested to withdraw its bid and receive a refund of the deposit.

¶4         The procedure for withdrawing a bid is found in N.C. Gen. Stat. § 143-129.1,

     which states that a “request to withdraw must be made in writing . . . but not later

     than 72 hours after the opening of bids, or for a longer period as may be specified in

     the instructions to bidders provided prior to the opening of bids.” N.C. Gen. Stat. §

     143-129.1 (emphasis added). Plaintiff, though, did not make its request to withdraw

     its bid until 24 July 2020, over a week after the bids were opened.

¶5         Plaintiff requested a hearing regarding its request to withdraw its bid and for

     the return of its bid deposit. After a hearing on the matter, Defendant issued a

     written ruling denying Plaintiff’s request to withdraw its bid, based in part on the

     untimeliness of the request.

¶6         Plaintiff commenced this action seeking a declaratory judgment as to the rights

     and legal obligations of the parties concerning its request to withdraw. Both parties

     moved for summary judgment. After a hearing on the matter, the trial court entered

     summary judgment in favor of Defendant.
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¶7           Plaintiff timely appealed.

                                      II. Standard of Review

¶8           “Summary judgment is appropriate when ‘there is no genuine issue as to any

       material fact’ and ‘any party is entitled to a judgment as a matter of law.’ ” Builders

       Mut. Ins. Co. v. North Main Constr., Ltd., 361 N.C. 85, 88, 637 S.E.2d 528, 530 (2006)

       (citing N.C. Gen. Stat. § 1A-1, Rule 56(c)). Our Court reviews the trial court's order

       allowing summary judgment de novo. Id. at 88, 637 S.E.2d at 530.

                                            III. Analysis

¶9           Plaintiff initially sought the protections provided by Section 143-129.1, which

       allows a bidder in certain circumstances to withdraw its bid after the bids have been

       opened without forfeiting its deposit. Judge Shirley, though, affirmed in his summary

       judgment order the decision of Defendant that Plaintiff’s deposit was forfeited. On

       appeal, Plaintiff additionally argues that neither Defendant nor Judge Shirley had

       jurisdiction to consider the matter at all, since Plaintiff failed to make its request

       within 72 hours after the bids were opened. For the reasoning below, we conclude

       that Judge Shirley ruled correctly and affirm his summary judgment order.

¶ 10         In 1933, our General Assembly enacted Section 143-129 to require certain

       public contracts to be open to bidding. Our Supreme Court has stated the purpose of

       Section 143-129
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                     is to prevent favoritism, corruption, fraud, and imposition
                     in the awarding of public contracts by giving notice to
                     prospective bidders and thus assuring competition which
                     in turn guarantees fair play and reasonable prices in
                     contracts involving the expenditure of a substantial
                     amount of public money.

       Mullen v. Louisburg, 225 N.C. 53, 58-59, 33 S.E.2d 484, 487 (1945). To ensure a

       competitive bidding process, our General Assembly also required that [n]o contract

       to which G.S. 143-129 applies . . . shall be awarded . . . unless at least three

       competitive bids have been received[.]” N.C. Gen. Stat. § 143-132.

¶ 11          Section 143-129 provides that a bid cannot be submitted unless it meets certain

       requirements. Under the statute, bids must be accompanied by a deposit (or bond)

       equal to 5% of the bid amount, sealed when made, and opened together at a specified

       time and place. That same section also contemplates that the entity who sought the

       bids will review all bids at some point after they are opened and “shall award the

       contract to the lowest responsible bidder or bidders.” Id. at § 143-129(b) (emphasis

       added).    That is, the lowest bidder is not necessarily entitled to an award of the

       contract, as the entity may take into consideration “quality, performance and the time

       specified in the proposals for the performance of the contract.” Id. Section 143-129(b)

       provides that the successful bidder forfeits its 5% deposit if it “fails to execute the

       contract within 10 days after the award[.]” All unsuccessful bidders receive a refund

       of their deposit.
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¶ 12         Any bidder has typically been allowed to withdraw its bid prior to the opening

       of the sealed bids without forfeiting its deposit. Prior to 1977, bidders could withdraw

       their bid after the opening of the bids unless the request for bids by the public agency

       included a provision to the contrary. Compare Elliott Bldg. v. Greensboro, 190 N.C.

       501, 130 S.E.200 (1925) (“This is an action at law to recover the money deposited, and

       after acceptance this cannot be done.”) with Muirhead v. Durham, 1 N.C. App. 181,

       160 S.E.2d 542 (1968) (invitation for bids provided that “no bid shall be withdrawn

       for a period of thirty days subsequent to the opening of bids”).

¶ 13         However, in 1977, our General Assembly created a statutory right for a bidder

       to withdraw its bid without forfeiting its deposit in narrow circumstances, by enacting

       N.C. Gen. Stat. § 143-129.1.

¶ 14         On appeal, Plaintiff suggests that it was not entitled to withdraw its bid at all

       after three days; that, therefore, neither Defendant nor the trial court could treat its

       bid as withdrawn; and that since Defendant did not award the contract to Plaintiff,

       Plaintiff was entitled to a refund of its deposit as a non-winning bidder under Section

       143-129. We disagree.

¶ 15         Based on the language in Section 143-129.1, we conclude that a bidder may

       still withdraw its bid from consideration after the 72-hour period and prior to the

       award of the contract but that said bidder forfeits its deposit, even if it could be shown

       that the bidder would not have been the successful bidder. Forfeiture of its deposit
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       is the price the bidder pays for being allowed to remove its bid from consideration.

       That is, the deposit of a withdrawing bidder is forfeited unless the bidder meets the

       requirements of Section 143-129.1.

¶ 16         The first sentence of Section 143-129.1 assumes the general rule to be that a

       bidder withdrawing its bid after the bids are opened but prior to the awarding of the

       contract forfeits its deposit. However, the Section provides an exception to that rule:

                    A public agency may allow a bidder submitting a bid
                    pursuant to G.S. 143-129 . . . to withdraw his bid from
                    consideration after the bid opening without forfeiture of his
                    bid security if . . . .

       N.C. Gen. Stat. § 143-129.1.

¶ 17         Section 143-129.1 establishes a procedure by which a bidder can seek a

       withdrawal of its bid without forfeiting its deposit, but states that a denial by the

       agency (and reviewing court) to this relief “shall have the same effect as if an award

       had been made to the bidder and a refusal by the bidder to accept had been made[.]”

       That is, under the plain language of the statute, it is not a defense to the forfeiture

       that the bidder would not have been the successful bidder. Rather, the language of

       the statute suggests that a bidder loses its deposit if it withdraws its bid from

       consideration by the public agency when the agency reviews all bids. Section 143-

       129.1 expressly states that “[i]f it is finally determined that the bidder did not have
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       the right to withdraw his bid pursuant to the provisions of this section, the bidder’s

       security shall be forfeited.”

¶ 18          We do not agree with Plaintiff’s interpretation that the statutory language

       prevents a bidder from withdrawing its bid before acceptance after 72 hours of the

       opening of the bids. Rather, the language simply suggests that said bidder cannot

       avail itself of the new statutory right to a refund of the deposit where the withdrawal

       is not requested within the 72-hour period. There is nothing in the language of

       Section 143-129.1 which prevents an agency to hold a hearing on a request to

       withdraw even if made after the 72-hour deadline to consider the request. Indeed,

       the Section states that “[i]f a bidder files a request to withdraw his bid, the agency

       shall promptly hold a hearing thereon[.]”

                                          IV. Conclusion

¶ 19          Plaintiff was allowed to withdraw its bid after the opening of the bids but

       before the contract had been awarded. Plaintiff chose to exercise its right to withdraw

       its bid and not have its bid considered. However, since the evidence conclusively

       establishes that Plaintiff’s withdrawal did not comply with the requirements of

       Section 143-129.1, we hold Judge Shirley correctly ruled, as a matter of law, that

       Defendant was entitled to summary judgment.

              AFFIRMED.

              Judges HAMPSON and WOOD concur.