Court Opinion

ID: 1081240
Source: CourtListenerOpinion
Date Created: 2013-10-09 20:47:28.025831+00
Date Added: 2024-06-11T12:06:21.996570
License: Public Domain

J. HAROLD SHANKLE,                           )
                                             )
          Plaintiff/Appellant,               )           Appeal No.
                                             )           01-A-01-9609-CH-00387
v.                                           )
                                             )           Bedford Chancery
THE BEDFORD COUNTY BOARD OF                  )           No.   20,492
EDUCATION, THE BEDFORD COUNTY                )
BOARD OF COMMISSIONERS, THE                  )
PUBLIC BUILDING AUTHORITY OF
BEDFORD COUNTY, and THE SCHOOL
COMPANY,
                                             )
                                             )
                                             )
                                                                           FILED
                                             )                             February 28, 1997
          Defendants/Appellees.              )
                                                                           Cecil W. Crowson
                                                                          Appellate Court Clerk
                          COURT OF APPEALS OF TENNESSEE

                            MIDDLE SECTION AT NASHVILLE

          APPEAL FROM THE CHANCERY COURT FOR BEDFORD COUNTY

                                 AT SHELBYVILLE, TENNESSEE

                   THE HONORABLE F. LEE RUSSELL, CHANCELLOR

GREGORY L. CASHION
JOHN W . HEACOCK                             AUBREY B. HARW ELL, JR.
Manier, Herod , Hollabaugh                   Neal & H arwell
 & Smith                                     2000 First Union Tower
150 fourth Avenue North, Suite 2200          150 Fourth Avenue No rth
Nashville, Tennessee 37219                   Nashville, Tennessee 37219
ATTORNEYS FOR PLAINTIFF/APPELLANT

JOHN T. BOBO                                 HARRIS A. GILBERT
Bobo, Hunt & Bobo                            CHARLES W. BONE
202 First national Bank Building             KEITH C. DENNEN
P. O. Box 169                                Wyatt, Tarrant & Combs
Shelbyville, Tennessee 37160-0169            1500 Nashville City Center
ATTORNEY FOR THE COUNTY                      511 Union Street
COMMISSION OF BEDFORD COUNTY,                Nashville, Tennessee 37219
TENNESSEE, THE BOARD OF EDUCATION
OF B EDF ORD COU NT Y, TE NN ESSE E and      ATTORNEYS FOR THE SCHOOL
THE PUBLIC BUILDING AUTHORITY OF             COMPANY , L.L.C.
BEDFORD COUNTY, TENNESSEE

                                   AFFIRMED AND REMANDED

                                                                    SAMUEL L. LEWIS, JUDGE
                                                 OPINION

          This is an appeal by plaintiff/appellant, J. Harold Shankle Company, Inc.,
from the decision of the Bedford County Chancery Court granting defendants/
appellees’ motion for summary judgment. The case involved the construction and
application of the Public Building Authority Act of 1971 (“the Act”), Tennessee Code
Annotated sections 12-10-101 to 12-101-124.

          The facts of this case are very complicated; however, the parties entered
joint stipulations which ease the understanding of the case. The relevant parties and
participants include: plaintiff/appellant, J. Harold Shankle Company, Inc.
(“Shankle”); defendant/appellee, The Public Building Authority (“the Authority”);
defendant/appellee, the Board of Education for Bedford County (“the Board”);
defendant/appellee, the County Commission for Bedford County (“the Commission”);
defendant/appellee, The School Company, L.L.C. (“the Company”); H and M
construction Co. (“H & M”); the Building Committee (“the Committee”); Educational
Facilities Services, L.P. (“EFS”); R. Gregory Hinote; and Mark Gill. Hinote is the
Chief Manager of the Company and was a limited partner in EFS as of March 1995.

          Prior to 1994, the Board determined that it was necessary to renovate and
construct additions to certain schools (“the Project”). The Board decided to use the
“construction manager” method1 for the construction of the Project as opposed to the
“hard” bid method.              During 1994, the Board received several proposals for
construction manager services. Shankle did not submit a proposal to serve as
construction manager. In October 1994, the Board met and awarded the contact to
H & M.        In January 1995, the Board created the Committee to oversee the
construction. The place and time of the meeting was reported in the Shelbyville
Times-Gazette.

      1
          In their joint stipulations, the parties described the “construction mana ger” m ethod as follow s:
      Pursuant to the construction manager method, the Board serves as its own general contractor
      contracting d irectly with subco ntracto rs and supp liers. The B oard hires a construction manager to
      manage the project and supervise the construction on behalf of the Board. The construction
      manager is not paid on a “cost-plus” b asis, but is instead paid a se t fee for its services. P ursuan t to
      the “construction manager method,” the Board co ntinues to bear the risk of cost overruns although
      the Board has greater control because the Board is contracting directly with the subcontractors and
      the suppliers.

                                                          -2-
          In March 1995, the Board heard a proposal from Gill and Hinote in their
roles as representatives of EFS. Their proposal included alternatives to the “hard” bid
method and the “construction manager” method. The time and place of the meeting
was reported in the Shelbyville Times-Gazette. In June 1995, the Company made a
presentation to the Committee with respect to non-traditional methods of developing
schools. In July, the Company made a similar presentation to the Board. The
Company made yet another presentation on 6 September 1995 to the Commission’s
Budget and Finance Committee. The presentation covered the advantages of using
a Public Building Authority to develop schools. After the presentation, the Budget
and Finance Committee recommended that the Commission endorse the use of a
Public Building Authority for the Project. These presentations were all made at
public meetings which were reported in the Shelbyville Times-Gazette.

          On 12 September 1995, the Company made a detailed presentation on the
use of a Public Building authority to the Commission at its regular public meeting.
The place and time of the meeting was reported in the Shelbyville Times-Gazette.
After the presentation and the attorney-client session, the Commission endorsed the
creation of a public building authority to develop schools and to renovate existing
schools including the Project. In addition, the Commission endorsed the Company’s
participation in this alternate method. In October 1995, the Commission adopted a
resolution approving the creation of the Authority. The place and time of the meeting
was reported in the Shelbyville Times-Gazette. The minutes of the meeting describe
the Authority’s responsibility as follows: “[t]o meet at least once, annually, to
contract with a third party (The School Company) to support the construction, repair,
and improvement of public buildings, structures, and facilities.”

          On 17 October 1995, the members of the proposed Authority held a joint
public meeting with the Committee. At the meeting, the Authority, the Committee,
and the Company discussed the Company’s proposal. The place and time of the
meeting was reported in the Shelbyville Times-Gazette. On 26 October, the Board
met to consider the execution of an agreement with the Company. Hinote, acting on
behalf of the Company, provided copies of proposed contracts between the Board and
the Authority and between the Authority and the Company. The place and time of the
meeting was reported in the Shelbyville Times-Gazette.

                                          -3-
           On 30 October 1995, at 11:31 a.m., an application to create and incorporate
the Authority pursuant to the Act was filed with the Secretary of State. The Secretary
granted a corporate charter to the Authority on 30 October. At 6:00 p.m. that same
day, the Board held a meeting and approved the contract between it and the
Authority. At 7:00 p.m., the Authority held a public meeting. The Authority
approved the contract between it and the Company and the contract between the
Board and the Authority. The contract between the Authority and the Company
provided a guarantee against cost overruns in the form of a guaranteed maximum
price. The contract also provided that the Company pay liquidated damages for each
day the construction continued past the guaranteed completion date. The place and
time of both meetings were reported in the Shelbyville Times-Gazette on 27 October
1995. The parties executed both contacts on 19 December 1995. On this same day,
the parties terminated the contract between the Board and H & M with H & M’s
consent.

           Between 27 July 1995 and 30 October 1995, no one other than the Company
appeared before either the Commission, the Board, or the Authority to make a
proposal in regard to the Project. Moreover, no one other than the Company
requested an opportunity to appear and submit a proposal. The Commission, the
Board, or the Authority did not, however, make an express invitation for receipt of
proposals with respect to the Project. Between 30 October and 19 December 1995,
Shankle did not appear or request an opportunity to appear before either the
Commission, the Board, or the Authority.

           On 19 December 1995, the Company executed an agreement with an
architectural and engineering firm for their services on the Project. In January 1996,
the Company executed agreements with H & M to serve as the general contractor for
the construction of Phase I of the Project and the preconstruction work associated
with Phase II of the Project. The construction of the Project began thereafter. The
contract provided that the parties would complete all new construction on 29 July
1996 and all other work no later than 2 September 1996. There have been no change
orders approved or submitted that alter either the guaranteed maximum price or
completion date as of 8 May 1996.

                                          -4-
          On 1 March 1996, Shankle filed a declaratory judgment action in the
Chancery Court for Bedford County. It alleged that appellees violated Tennessee law
when they formed the Authority and awarded public contracts to the Company
without competitive bidding or a public invitation for proposals. The parties entered
into numerous joint stipulation settling all factual issues. Thus, both parties filed
motions for summary judgment. After hearing oral argument, the chancellor filed a
memorandum opinion granting appellees’ motion for summary judgment. Thereafter,
the chancellor entered final judgment in favor of appellees on 18 July 1996. Shankle
filed a timely notice of appeal.

          Shankle’s first and second issues are “[w]hether the Public Building
Authority Act of 1971, T.C.A. § 12-10-101, et seq., excludes public building
authorities from all Tennessee state and local laws, including competitive bidding
statutes” and “[w]hether the 1995 Amendments to the Public Building Authority Act
create an exception to the competitive bidding statutes.” Both issues involve the
statutory construction of the Act; therefore, we address them together.

          The courts of this State have set out the rules of statutory construction on
numerous occasions. Clearly, the primary purpose of statutory construction is to
ascertain and give effect to the legislature’s intent. Federal Express Corp. v.
Tennessee State Bd. Of Equalization, 717 S.W.2d 873, 874 (Tenn. 1986). Courts
must “determine the legislative intent, whenever possible, from the plain language of
the statute.” Wilson v. Johnson County, 879 S.W.2d 807, 809 (Tenn. 1994).
Moreover, courts must look to the statute in its entirety presuming “the legislature
intended that every word used in a statute would have a purpose and would convey
meaning.” Cohen v. Cohen, No. 01S01-9510-CV-00185, 1996 WL 520312, at *3
(Tenn. 1996).

          In passing the Act, the General Assembly expressed its concern over the
critical state of public buildings in Tennessee. Tenn. Code Ann. § 12-10-102(a), (b)
(1992). The Assembly found that: 1) public buildings in the State of Tennessee are
“inadequate and outmoded”; 2) facilities are not “adequate to meet the needs of the
growing population”; 3) public records and other documents are housed in “poorly
protected and overcrowded spaces”; 4) the shortage of adequate buildings has

                                         -5-
seriously impaired the government’s ability to provide educational services; 5) the
health, safety, and welfare of the citizens of the State is adversely affected by the
serious deficiencies in these buildings. Id. § 12-10-102(a). Given these findings, the
General Assembly authorized “the incorporation in the several counties, cities, and
towns in this state of public corporations to finance, acquire, erect, own, operate,
maintain, lease, and/or dispose of public buildings, structures, and facilities.” Id.
The General Assembly then gave the public corporations the formal name of public
building authorities. Id. § 12-10-103 (Supp. 1996).

         The General Assembly granted the public building authorities extensive
powers. See id. §§ 12-10-109, -118 to -122 (1992 & Supp. 1996). These powers
exceeded those of cities and counties and enabled public building authorities to
accomplish goals beyond the capabilities of either the city or the county. For
example, public building authorities enable small governmental entities to fund and
build large scale projects jointly. See id. § 12-10-120 (1992). Also, public building
authorities enable a city or a county to issue bonds without a public referendum. Id.
§ 12-10-122. Overall, the use of public building authorities enables cities and
counties to construct projects using the most advantageous methods available.

         The language of particular relevance to the issues before the court is found
in Tennessee Code Annotated sections 12-10-122 and 12-10-124. The General
Assembly enacted Tennessee Code Annotated section 12-10-122 as part of the
original Act in 1971 and has not seen fit to amend it since that time. Tennessee Code
Annotated section 12-10-122 provides, in part:
         Projects may be acquired, purchased, constructed, reconstructed,
         improved, bettered and extended and bonds may be issued under
         this chapter for such purposes, notwithstanding that any other
         general, special or local law may provide for the acquisition,
         purchase, construction, reconstruction, improvement, betterment
         and extension of a like project, or the issuance of bonds for like
         purposes, and without regard to the requirements, restrictions,
         limitations or other provisions contained in any other general,
         special or local law.

Id. The General Assembly enacted Tennessee Code Annotated section 12-10-124 in
1995. This section provides, in part:
               (b) An authority in the operation, maintenance, and routine

                                         -6-
         repairs of a project may purchase goods, supplies and services
         which are generally sold to the public by advertised price without
         the necessity of competitive bidding; provided, that no purchase
         shall exceed five thousand dollars ($5,000.00) or any larger limit
         as shall be allowed for such purchases under the regulations of a
         municipal corporation with which the authority has contracted.
               (c) An authority may contract for services by public
         invitation for proposals. Such contracts may be for a period of
         three (3) years. Professional services on “at-will” basis may be
         contracted by an interview process. Construction contracts for
         design-build or for remodeling and maintenance may be by public
         invitation for proposals as well as by competitive bid.

Id. § 12-10-124(b), (c) (Supp. 1994).

          Shankle argues that Tennessee Code Annotated section 12-10-122 does not
grant public building authorities plenary power such that they may completely
disregard all laws including competitive bidding laws. It is Shankle’s contention that
any other interpretation would create a conflict between sections 12-10-122 and 12-
10-124. Specifically, Shankle argues that the section 12-10-124(b) implies that
public building authorities were subject to the competitive bidding laws when the Act
was enacted, because it exempts certain activities from competitive bidding.
Likewise, Shankle argues that section 12-10-124(c) is mere surplusage if section 12-
10-122 exempts public building authorities from all restrictions. In other words, it
is Shankle’s argument that section 12-10-124(b) and (c) were unnecessary if the Act
as enacted exempted public building authorities from laws such as competitive
bidding statutes.

          We can not agree. Shankle’s arguments completely overlook the plain
meaning of the language in section 12-10-122 and force a construction based on
language added to the Act twenty-four years after its enactment. It is the opinion of
this court that the plain language of sections 12-10-122 and 12-10-124 can be read
together without conflict and without forcing any meaning.

          Section 12-10-122 clearly exempts public building authorities from any
other general, special, or local laws including competitive bidding laws; however, this
exemption only applies to the acquisition, purchase, construction, reconstruction,

                                          -7-
improvement, betterment, or extension of projects. Section 12-10-124(b), on the
other hand, applies only to the operation, maintenance, and routine repairs of a
project. It is the opinion of this court that these two sets of functions are separate and
distinct.

            Moreover, it is the opinion of this court that Shankle’s implication argument
is without merit. As previously stated, Shankle argued that it was unnecessary for the
General Assembly to enact section 12-10-124(b) if public building authorities were
already exempt from competitive bidding under section 12-10-122. The problem with
this argument is that section 12-10-122 did not exempt public building authorities
from other general, special, or local laws when it came to the operation, maintenance,
or routine repairs of a project. It merely exempted them from competitive bidding
laws when carrying out the functions listed in that section.

            In addition, we can not agree with Shankle’s argument as to section 12-10-
124(c). It is the opinion of this court that section 12-10-124(c) simply sets forth
permissible methods of obtaining certain services. The Assembly’s use of “may”
instead of “shall” clearly demonstrates that the subsection does not restrict the powers
of the authorities. In addition, this interpretation complements and explains this
court’s reading of section 12-10-122. The subsection is not mere surplusage.

            Throughout its arguments, Shankle extols the merits of competitive bidding
in all government purchases. Nevertheless, the merits of competitive bidding is not
an issue for this court; it is an issue for the General Assembly.               In some
circumstances, the General Assembly has recognized the appropriateness of the use
of competitive bidding. In other cases, such as with the public building authorities,
the Assembly has recognized the appropriateness of other methods.                    The
determination of the more appropriate method is one for the General Assembly to
make after considering all the relevant circumstances. We think that the purpose of
the Act is clear, i.e., to provide counties, municipalities, and boards of education the
means to accomplish goals that are not available directly to those entities. The Act
empowers public building authorities with the ability to accomplish the purposes of
the Act. The method chosen by the public building authority may include competitive
bidding, interviews, or negotiations.

                                            -8-
          Shankle’s third issue is “[w]hether local newspaper coverage within
Bedford County satisfied the notice requirements of the competitive bidding laws and
§ 124(c) of the Public Building Authority Act, despite Defendants’ admission that
they did not publicly advertise or solicit for requests for proposals.”

          Tennessee Code Annotated section 12-10-122 empowers public building
authorities to take actions with respect to projects without regard to the requirements
of any other general, special, or local laws. It is the opinion of this court that the
Authority was not bound by other competitive bidding statutes. In this case, the Act
enabled the Authority to seek out contracts by methods other than by competitive
bids. Thus, the Authority was not subject to the notice provisions of the competitive
bidding statutes.

          Shankle also argues that the first sentence of section 12-10-124(c) required
the Authority to make a public invitation for proposals. Given our previous
conclusions, we can not agree. The language of section 12-10-124(c) is permissive,
i.e., it did not require the Authority to make a public invitation.

          In view of our resolution of this matter, we need not discuss appellees’ issue
of whether Shankle’s action is barred by laches. It results that the judgment of the
trial court is in all things affirmed and the cause is remanded to the trial court for
further necessary proceedings.          Costs on appeal are assessed against
plaintiff/appellant, J. Harold Shankle Company, Inc.

                                            ____________________________________
                                            SAMUEL L. LEWIS, JUDGE

CONCUR:

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

_____________________________________
WILLIAM C. KOCH, JR., J.

                                          -9-
-10-