Court Opinion

ID: 5079877
Source: CourtListenerOpinion
Date Created: 2021-10-01 12:08:11.055768+00
Date Added: 2024-06-11T08:20:10.110351
License: Public Domain

WINTERSHEIMER, Justice,
dissenting.
I must respectfully dissent from the majority opinion because the alternative bid proposals did not prevent fair competition; there was a fair and reasonable procedure from which the local authority could determine the highest and best bidder and the public was not exposed to any arbitrary awards.
The Court of Appeals and the circuit court correctly upheld the grant of the franchise by the Owensboro Riverport Authority because the Owensboro Grain Company did not meet their burden of establishing fraud, collusion or arbitrariness which is necessary to set aside a franchise awarded pursuant to Kentucky Constitution Section 164.
The objector has the burden of proof regarding allegations that the award of a franchise contained untrue statements and that the awarding authority acted arbitrarily or corruptly. . Baskett v. Davis, 311 Ky. 13, 223 S.W.2d 168 (1949). As long as the awarding authority acts neither arbitrarily nor corruptly in rejecting bids that fail to meet its minimum bid requirement, the legislative authority given to the municipal corporation and its concurrent discretion will not be questioned by the Courts. Ber-ea College Utilities v. City of Berea, Ky. App., 691 S.W.2d 235 (1985). See Grover v. City of Irvine, 222 Ky. 366, 300 S.W. 904 (1927).
In the absence of a showing of fraud, collusion, untruth or manifest arbitrariness, the courts shall presume that the municipal authority has not abused its discretion and will not interfere with or otherwise substitute its judgment for the decision of the municipal authority. Such a responsibility lies clearly within the governing authority. Keith v. Johnson, 109 Ky. 421, 59 S.W. 487 (1900). For the purposes of this case, the Owensboro Riverport Authority must be considered as a municipal or governing authority. The circuit judge determined “There is no hint of arbitrariness or corruption in this case.” The Court of Appeals also concluded there was nothing to support the argument that the bidding process was flawed, illegal or invalid in any respect. Accordingly, the circuit judge correctly granted summary judgment in favor of the Riverport Authority, *609and the Court of Appeals properly affirmed that decision.
The language of the bid solicitation indicates that the items covered by the franchise were clearly specified. The public advertisement stated that bids would be received for the leasing of the grain loading facility and the invitation to bid also indicated that the bids were for lease of the grain loading facility. The language was prominently placed at the top of the request form in capital letters. The plain language of these documents indicates that the items covered by the franchise were prominently displayed. The authority did not advertise for one year leases but the request for bids indicated that the one year term was a minimum specification.
K.R.S. 424.140(3) only requires that a description of what is to be bid or sold and a description of any special terms of the sale be enumerated in the specification for bids. Section 164 of the Constitution requires that there be “due advertisement” for the franchise to be granted.
The plain language of the bid solicitation, which established minimum bid terms, shows that there was no discrepancy between the bid specifications and the bid award.
A careful review of the record indicates that Owensboro Grain understood the specifications and that the bid requests were minimum specifications. An exchange of correspondence indicates that the grain company was specifically informed that it could bid an alternative to any of the specifications. The grain company’s own bid shows that it understood that the bid solicitation specified minimum terms. They had the opportunity for a term in excess of one year. All bidders were supplied the same information regarding the request for bid. Any confusion or error should not be attributed to the Riverport Authority.
Minimum bid requirements have been held to be constitutionally acceptable in Berea College Utilities v. City of Berea, supra. Although the specific facts of Berea involve a minimum dollar amount, the holding was not limited to minimum dollar amount specifications. That decision recognized the right of the bidding authority to reject all bids. The language in the opinion “amount or terms” demonstrates that the holding should not be limited to minimum dollar amount bids. Minimum bids are simply a legitimate means by which a governing authority may award a franchise on terms of “fair and reasonable.” The effectiveness of the minimum bid procedure is evident here because both bidders offered on several items to agree to all terms which were more favorable to the Riverport Authority than the minimum specifications which they had earlier agreed to accept. City of Princeton v. Princeton Electric Light & Power Co., 166 Ky. 730, 179 S.W. 1074 (1915) used by the majority, is clearly distinguishable from the present case because it does not even consider the legalities of minimum bid specifications. In Princeton, supra, the due advertisement requirement of the constitution was violated because the term originally specified was not the term granted in the franchise award. In this case, there is no discrepancy between the subject minimum term specification and the ultimate award. Owensboro Grain could have bid for a term in excess of one year but they did not.
It is to be hoped that the results of the majority decision will not produce a chilling effect on the legitimate methods for bidding public contracts in Kentucky. The governing authority should not be required to revert to a rigid or mechanical bidding procedure in which the public authority would have little or no discretion in awarding franchises. Public authorities generally should have broad discretion in determining which bid is the one most nearly meeting the specifications and statutory provisions should not be so strictly construed as to reduce the governing authority to mere ministerial agents because this would defeat the purpose for which they are designed by allowing unscrupulous contractors to defraud the city. Cf. 10 McQuillan, The Law of Municipal Corporations § 29.72 at 490-491, 3rd Edition Revised (1990).
The circuit court and the Court of Appeals correctly interpreted Section 164 of the Kentucky Constitution and properly followed the authority of Berea College Utili*610ties, supra, in upholding the use of minimum specifications for public franchises. There was no hint of wrongdoing in this case. A reviewing court should not presume that the governing authority has abused its discretion and should not substitute its judgment for the decision of the municipal authority in the absence of arbitrariness, corruption, fraud or collusion.
SPAIN, J., joins in this dissent.