Court Opinion

ID: 9514838
Source: CourtListenerOpinion
Date Created: 2023-08-06 22:52:02.213799+00
Date Added: 2024-06-11T09:06:21.520896
License: Public Domain

VON WALD, Circuit Judge
(dissenting).
[¶ 32.] I respectfully dissent from the majority’s holding on its decision to remand for a trial on the issue of foreseeability (section D), and on the holding regarding remedies under a void contract (Section E). I agree with and concur on the majority’s holding regarding the unconstitutionality of the city ordinance (section C). I address only sections D and E.
Circumstances Not Reasonably Foreseeable
[¶ 33.] Did the trial court err in holding the use of change orders violated SDCL 5-18-18.3?
[¶ 34.] This Court’s review of summary judgments is indeed familiar. Summary judgment is authorized “if the pleadings, depositions, answers to interrogatories, *275and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” SDCL 15-6-56(c).
[¶ 35.] In this case, after both sides had conducted their written discovery, each side made separate motions for summary judgment. A hearing was held on these motions. At the conclusion of the hearing, Mills asked for leave of court to amend its answer to include the issue of equitable estoppel, which the court granted. The memorandum decision entered by the court included the issue of equitable estoppel.
[¶ 36.] The issue of “foreseeability” is the only fact Mills claims is disputed. While generally “foreseeability” is a fact question, I believe that under the record of this case that “foreseeability” is clearly a matter of law for the court to determine. It can be determined by considering the evidence in the record in light of the statute and the contract between the parties; the construction of the statute and the contract are questions of law that may be determined by a court on summary judgment. See Auto-Owners Ins. Co. v. Hansen Hous. Inc., 2000 SD 13, ¶ 10, 604 N.W.2d 504, 509; see also Ward v. Midcom, Inc., 1998 SD 10, ¶ 9, 575 N.W.2d 233, 236.
[¶ 37.] SDCL 5-18-18.3 then provided: Any amendment or change order to an existing construction contract need not be bid if ... the change or extra work is necessitated by circumstances not reasonably foreseeable at the time the underlying contract was let and the change or extra work is necessary to the completion of the project.
(emphasis added). The circuit court focused on this statute when deciding whether the change orders should have been let out for bids. Mills contends SDCL 5 — 18— 18.3 should be interpreted to include unexpected opportunities and not just unexpected difficulties. That argument is antithetical to the plain meaning of the statute. This statute’s parameters for change orders are clear and unambiguous.
[¶ 38.] City and Mills argue an exception should be made for “unexpected opportunities” that may arise. City contends that because the project bid from Mills came in far below projected cost, City should be able to use the money not spent on the initial bid to enhance the project by change orders. The enhancements included paving the south parking lot (change order # 1) and making tenant improvements (change order # 12). Neither of these changes were “necessary” to the completion of the project that was let out on bid.
[¶ 39.] The term “necessary” does not equate with the term “opportunity.” The statute makes an exemption provision for necessary items, but specifically provides in SDCL 5-18-3 for changes to the project that may be defined as opportunities.9 An opportunity is not, by definition, necessary to the completion of the project. If the planners wanted to make provisions for expected (or unexpected) opportunities, they could have let alternate bids for the project. If City and Mills knew that these changes were going to be made at some *276point in the future, they were not unexpected and were reasonably foreseeable at the time the underlying contract was let.
[¶ 40.] Mills testified by affidavit to the fact that the changes were foreseeable to the project planners and architects. It stated that “[a]s initially conceived, the research building was intended to house tenants, and the south parking lot was intended to be paved.” These two changes were not part of the project that was let out for bid. Yet, they were foreseeable changes that would be made in the future. Neither change was necessary to the completion of the project.
[¶ 41.] It also is not unforeseeable that a bid might come in lower than anticipated. The anticipated cost of the Agri-plex building was based upon the average cost of similar projects. This average cost means that some cost estimates will be higher and others will be lower. It is clearly foreseen and anticipated that a bid may come in that is below the average or anticipated cost.
[¶ 42.] “It is settled law in South Dakota that a party to a lawsuit cannot claim the benefit of a version of relevant facts more favorable to his own contentions than he has given in his own testimony.” Connelly v. Sherwood, 268 N.W.2d 140, 141 (S.D.1978). In this case, Mills is held to its testimony that the planners and architects for City foresaw the building finished for tenants and the south parking lot paved. The work described in the contested change orders was not unforeseen as a matter of law.
[¶ 43.] It was undisputed at the time of the hearing on the motion for summary judgment, that these change orders were foreseeable at the time of the project issu-anee, not necessary to the project’s completion, and involved an expense above twenty-five thousand dollars. SDCL 5-18-18.3. These change orders are in direct violation of SDCL 5-18-1910 and were correctly deemed void and of no force and effect. Hoiten v. City of Canistota, 1998 SD 44, ¶ 13, 579 N.W.2d 12.
Void Contracts — Remedies
[¶ 44.] Did the trial court err in rejecting the defense of equitable estop-pel?
[¶ 45.] The circuit court concluded that equitable remedies, in particular the defense of equitable estoppel, was unavailable to Mills because the change orders were void. This decision follows a long line of jurisprudence from this court. See Norbeck & Nicholson Co. v. State, 32 S.D. 189, 142 N.W. 847, 849 (1913) (court denying recovery on theory of quantum meruit due to contract being void and illegal); Carlson v. City of Faith, 75 S.D. 432, 67 N.W.2d 149, 151 (1954) (“[E]quity and the rules of natural justice cannot be applied to ‘interfere in the enforcement of a positive statute enacted for the protection of the public in the safeguarding of public funds.’ ”); Simpson v. Tobin, 367 N.W.2d 757 (S.D.1985) (court denying equitable defenses of laches, estoppel and quantum meruit due to void contract).
[¶ 46.] The majority has determined that the denial of equitable remedies now applies to both sides of a void public contract; that when a contract is determined to be void, the court leaves the parties as they find them. The majority reconciles the past decisions with this one by reasoning that never before has a contractor completely forfeited the entire price of the changes ordered. Also noted is the fact *277that Mills was “ordered” by the City to make these changes, and that City can not now gain a benefit from that order; that City’s hands are not clean.
[¶ 47.] This Court previously ruled that because the contract entered into is against public policy and in violation of law, City must be permitted to recover into the public treasury funds paid out to the contractor. See Sioux Falls Taxpayers Ass’n v. City of Sioux Falls, 69 S.D. 93, 7 N.W.2d 136, 140 (1942) (where a contract was null and void for failure to follow the proper bidding laws, city had no authority to enter into contract or pay contractor). The general rule of illegal contracts is stated succinctly in Norbeck and Nicholson Co., 32 S.D. 189, 142 N.W. 847. The majority cites the passage which says that “the law leaves the parties to illegal contracts where it finds them.... ” Exceptions to this rule must be pointed out as well. “[An] exception is where the parties are not in pari delicto, in which case the party not participating in the wrong may recover his consideration but not the other party.” Id. at 849. In this case Bozied brings this action on behalf of the taxpayers of the City of Brookings as authorized by this Court since 1896 as an exception to the “real party in interest” rule. Stumes v. Bloomberg, 1996 SD 93, 551 N.W.2d 590, 592 (citing State ex rel. Adkins v. Lien, 9 S.D. 297, 299, 68 N.W. 748, 749 (1896)). The taxpayers themselves are not parties to the illegal contracts.
[¶ 48.] Because Brookings taxpayers are not in pari delicto, or equally at fault, with city officials and Mills, it mandates recovery of consideration already paid. The taxpayers, specifically Bozied, gave notice at city council meetings that they believed the actions of City and Mills were illegal. That recognition by the taxpayers does not make them a party to the illegal contract and therefore they should recover those payments made illegally. “The allegation that City and its residents were not harmed but rather profited because of the illegal contract is completely irrelevant.” Himrich v. Carpenter, 1997 SD 116, 569 N.W.2d 568 (citing Norbeck and Nicholson Co., 32 S.D. 189, 142 N.W. 847). Even the best of motives do not give vitality to a contract which is void from its inception.
[¶49.] While it is commonly said that the law abhors a forfeiture, I must point out that the relief from a forfeiture is still equitable in nature. And therefore, under the majority’s holding that equitable defenses are not allowed with void contracts, the circuit court should be in a position to disallow any relief from forfeiture if the contract is determined to be void. Helm Bros., Inc. v. Trauger, 389 N.W.2d 600, 603 (N.D.1986).
[¶ 50.] Mills’ July 2, 1998 letter to the Agri-plex board confirms Mills was aware of the legal requirements of bidding public contracts and the ramifications of the change orders. From the wording of this letter, it appears Mills attempted to influence the board to execute a change order instead of letting bids on the changes.11 “When parties seek equity in the court, they must do equity, which includes entering the court with clean hands.” Himrich, 1997 SD 116 at ¶ 21, 569 N.W.2d at 573 *278(quoting Shedd v. Lamb, 1996 SD 117, 553 N.W.2d 241, 245). Although the majority has now remanded the matter to the trial court, I would suggest that in view of the record currently before us, perhaps Mills also did not have the cleanest of hands when entering into the change orders. “Contractors who do business with public entities do so at their peril. They are charged with the duty to be familiar with the statutory requirements and to adhere to them.” Hoiten, 1998 SD 44 at ¶ 23, 579 N.W.2d at 17 (quoting Carr v. City of Sioux Falls, 416 N.W.2d 602, 604 (S.D.1987)). Even though Mills and the City both perhaps did gain time and money from executing the change orders in that fashion, that is no excuse for violating the procedures set in place by statute, requiring compliance with the public bidding laws of this state. The forfeiture of all the money paid under the illegal change orders may seem harsh in this instance; but I believe the remedy to the taxpayers is appropriate if the public bidding laws of the State of South Dakota are to have any real meaning- in the future. As one renowned treatise has explained:
The provisions of statutes, charters and ordinances requiring competitive bidding in the letting of municipal contracts are for the purpose of inviting competition, to guard against favoritism, improvidence, extravagance, fraud and corruption, and to secure the best work or supplies at the lowest price practicable, and they are enacted for the benefit of property holders and taxpayers, and not for the benefit or enrichment of bidders, and should be so construed and administered as to accomplish such purpose fairly and reasonably with sole reference to the public interest. These provisions are strictly construed by the courts, and will not be extended beyond their reasonable purpose. Competitive bidding provisions must be read in the light of the reason for their enactment[.]
10 McQuillan, Municipal Corporations (3rd rev. ed. 1999) § 29.29 at 364 (footnotes omitted).
[¶ 51.] With these notes of disagreement from the majority’s opinion, I respectfully give my dissent on those two issues.
[¶ 52.] VON WALD, Circuit Judge, for SAJBERS, Justice, disqualified.

. SDCL 5-18-3 provided in 1997: "If the governing body of any public corporation intends to enter into a contract for the construction of a public improvement which involves the expenditure of twenty-five thousand dollars or more or a contract for the purchase of materials, supplies, or equipment which involves the expenditure of fifteen thousand dollars or more, the governing body of the public corporation shall advertise for bids for the project....”

. SDCL 5-18-19 provides: "It shall be unlawful for any public corporation or its officers to enter into any contract in violation of the terms of this chapter or chapter 5-21, and any such contract entered into shall be null and void and of no force and effect."

. In its letter, Mills urged the Board to act quickly on a number of change orders to avoid time delays and added expense. It urged a change order approach, stating, “You may certainly delay action on these items to include them with your total package approach but that delay will cost extra. Because of the interruption in our work, we will need an answer (signed Change Order) on these items by July 10 to avoid having to add additional $ to cover our extended overhead expense estimated at $825.00 per day for our portion alone.”