Court Opinion

ID: 4304575
Source: CourtListenerOpinion
Date Created: 2018-08-16 19:09:03.015647+00
Date Added: 2024-06-11T14:26:54.234893
License: Public Domain

IN THE SUPREME COURT OF MISSISSIPPI

                               NO. 2017-CA-00008-SCT

HEMPHILL CONSTRUCTION COMPANY, INC.

v.

CITY OF CLARKSDALE, MISSISSIPPI

DATE OF JUDGMENT:                          11/28/2016
TRIAL JUDGE:                               HON. LINDA F. COLEMAN
TRIAL COURT ATTORNEYS:                     CHRISTOPHER SOLOP
                                           CURTIS D. BOSCHERT
                                           LYNN PATTON THOMPSON
                                           KIMBERLY TAFT PURDIE
COURT FROM WHICH APPEALED:                 COAHOMA COUNTY CIRCUIT COURT
ATTORNEYS FOR APPELLANT:                   CHRISTOPHER SOLOP
                                           LYNN PATTON THOMPSON
ATTORNEY FOR APPELLEE:                     CURTIS D. BOSCHERT
NATURE OF THE CASE:                        CIVIL - OTHER
DISPOSITION:                               REVERSED AND REMANDED - 08/16/2018
MOTION FOR REHEARING FILED:
MANDATE ISSUED:

      EN BANC.

      RANDOLPH, PRESIDING JUSTICE, FOR THE COURT:

¶1.   The City of Clarksdale (“City”) solicited sealed bids for a public construction project.

The City received sealed bids from Landmark Construction Company, GCI (“Landmark”),

and Hemphill Construction Company, Inc. (“Hemphill”). When unsealed, both bids

exceeded the project’s allocated funds by more than ten percent. Rather than rebidding the

contract, the City conditionally awarded a contract to Landmark, dependent upon the City’s

obtaining additional public funds to match Landmark’s bid. The City’s actions were not
provided for in the public bidding laws. Accordingly, we reverse the judgment of the

Coahoma County Circuit Court and remand the case to the trial court.

                      FACTS AND PROCEDURAL HISTORY

¶2.    In February 2015, the City issued an Advertisement for Bids for the 2014 Community

Development Block Grant (“CDBG”) Wastewater Improvements – Contract #1 (Equipment

and Controls). The Advertisement called for the City to receive written, sealed bids at the

Clarksdale Public Utilities Commission (“CPU”) up to and until 1:30 p.m. on May 27, 2015,

at which time any bids would be opened publicly and would be considered by the City at the

next meeting of the Board of Mayor and Commissioners of the City.

¶3.    The sealed bids were opened on May 27, 2015, and the Certified Tabulation of Bids

revealed Landmark’s lump-sum bid was $924,527 and Hemphill’s lump-sum bid was

$953,800.

¶4.    Twelve days later, the City held a meeting. The June 8, 2015, minutes of the City

reflect that Bill Coker, the City’s grant consultant on the project, presented the Certified

Tabulation of Bids, which showed that Landmark’s bid, combined with the lowest bid on

Contract 2: Solid Waste–Denali Water Solutions, LLC– exceeded the project budget by more

than ten percent, specifically, $216,182.1 Coker advised the City that the Mississippi

Development Authority would consider increasing CDBG funds by $75,000, and that the

Clarksdale Public Utilities Commission (“CPU”) would increase its matching funds by an

       1
         The CDBG Wastewater Treatment Improvements Project was broken into two
contracts: Contract # 1: Equipment and Controls, and Contract # 2: Solid Waste. This
appeal concerns Contract # 1 only.

                                             2
additional $141,182. Coker recommended that the City accept the lowest bids for each

Contract, contingent upon the funding increase.          The City then accepted Coker’s

recommendation and decided to award Contract # 1 conditionally to Landmark, dependent

upon the aforementioned increased funding. The minutes of the City reflect that there had

been no consideration of the City’s statutory authority to accept either bid.

¶5.    On June 19, Hemphill protested the award to Landmark. The City responded to

Hemphill on July 9, stating that the City disputed Hemphill’s claims, and advised that the

contract had been awarded to Landmark.

¶6.    On July 13, Coker informed the City that the additional CDBG and CPU funding had

been acquired.   The City then granted the Mayor permission to execute the Mississippi

Development Authority Modification on Wastewater Treatment Plant Contract, which

modified the budget by increasing it to $216,182. That same day, the City authorized the

Mayor to execute a Notice of Award to Landmark.

¶7.    Hemphill filed a Bill of Exceptions in the Circuit Court of Coahoma County pursuant

to Mississippi Code Section 11-51-75 (Rev. 2012), appealing the City’s July 13 decision to

award the contract to Landmark. Hemphill argued, inter alia,2 that the City had violated

Mississippi Code Section 31-7-13 by awarding the contract to Landmark, because the bids

submitted exceeded the allocated funds by more than ten percent. Mississippi Code Section

31-7-13(d)(iv) provides that:

       2
        Hemphill also argued that it met the requirements for preference under Section 3 of
the Housing and Urban Development Act of 1968; therefore, the City was required to award
Hemphill the contract. The circuit court found that Hemphill was not entitled to Section 3
preference. Hemphill does not appeal that determination.

                                              3
       if the lowest and best bid is not more than ten percent (10%) above the amount
       of funds allocated for a public construction or renovation project, then the
       agency or governing authority shall be permitted to negotiate with the lowest
       bidder in order to enter into a contract for an amount not to exceed the funds
       allocated.

Miss. Code Ann. § 31-7-13(d)(iv) (Supp. 2017) (emphasis added). Hemphill argued that the

City had violated this statute by securing additional funding after the bids were opened

because the bids were more than ten percent of the total budget, and, therefore, the City could

not negotiate or enter into a contract with Landmark. Hemphill also argued that, even though

there is no precise caselaw addressing Section 31-7-13, there are Attorney General public-

bidding opinions advising municipalities that they are prohibited from securing additional

funds after bids have been opened to negotiate or enter into a contract with a bidder whose

bid exceeds the project funds by more than ten percent. See Op. Miss. Att’y Gen. 2012-

00195 (April 20, 2012); Op. Miss. Att’y Gen. 98-0764 (Dec. 23, 1998). Finally, Hemphill

argued that the City’s decision to award the contract to Landmark was arbitrary and

capricious.

¶8.    After a hearing, the circuit court held that the City’s award of the project to Landmark

did not violate state law, finding that:

       [t]he purpose of [Mississippi Code Section] 31-7-13(d)(iv) is to allow a
       governmental entity to negotiate with the lowest bidder to bring the bid within
       the amount of funds allocated. In this case Clarksdale did not negotiate with
       Landmark. Clarksdale obtained additional funds from the MDA and the
       CPUC to meet the lowest bid. The bid laws do not prohibit this, accordingly,
       Clarksdale’s actions were not improper.

       ...

                                              4
       From a policy perspective, the State Legislature has left the decision on when
       to rebid construction projects with the local governing authorities. [Mississippi
       Code Section] 31-7-13 does not prohibit Clarksdale from obtaining or
       allocating additional funds to meet the lowest bid and since it does not,
       Clarksdale’s award of the Contract to Landmark was not improper.

¶9.    It is from this Order that Hemphill appeals. Hemphill requests that this Court reverse

and remand for a trial on damages.

                                           ISSUES

¶10.   Hemphill frames the issue on appeal as follows:

       Whether the circuit court erred in not finding that Clarksdale violated
       Mississippi Code Annotated Section 31-7-13 when the bids submitted by
       Landmark and Hemphill in response to its Advertisement for Bids exceeded
       the allocated/budgeted funds by more than ten percent (10%) and rather than
       rejecting these bids and re-advertising, Clarksdale elected to secure additional
       funding and awarded the contract to Landmark.

¶11.   Hemphill also argues that the City’s decision to award the contract to Landmark was

arbitrary and capricious. The first issue is case-dispositive.

                                STANDARD OF REVIEW

¶12.   “Our analysis begins with a determination of the scope of review. Municipalities have

only such powers as are expressly granted or necessarily implied by statutes. Such powers

are to be construed most strongly against an asserted right, if the right is not clearly given.”

Hemphill Constr. Co., Inc. v. City of Laurel, 760 So. 2d 720, 723 (Miss. 2000) (citing City

of Jackson v. McMurry, 288 So. 2d 23 (Miss. 1974)). When the public bid laws do not

expressly provide for the action taken by the municipality, the question becomes whether

such action is “necessarily implied.” Id. Only if the municipality’s action was necessarily

implied by the statute is the municipality’s action entitled to deference. Id.

                                               5
¶13.   For questions of law, a municipal board’s decision is reviewed de novo. Nelson v.

City of Horn Lake ex rel. Bd. of Aldermen, 968 So. 2d 938, 942 (Miss. 2007) (citing A &

F Props., LLC v. Madison Cty. Bd. of Supervisors, 933 So. 2d 296, 300 (Miss. 2006)).

“Likewise, this Court applies a de novo standard of review to matters regarding statutory

interpretation.” Weiner v. Meredith, 943 So. 2d 692, 694 (Miss. 2006).

                                       DISCUSSION

¶14.   The public-purchase laws concerning bidding requirements neither expressly grant,

nor clearly give, any municipality the power to award a contract, post-bid-opening, to a

bidder whose bid exceeded the allocated3 project funds by more than ten percent, nor the

power to procure additional public funds, post-bid-opening, to award the contract to such

bidder. Since there is no express grant or clearly given authority, the City is left only with

the dubious argument that its ultra vires acts were necessarily implied by statute.

       The term “necessarily implied” is somewhat restrictive. “Necessarily implied”
       refers to a logical necessity and means that no other interpretation is permitted
       by the words of the instrument construed, and it has been defined as an
       implication which yields so strong a probability of intent that any intention to
       the contrary cannot be supposed leaving no room for doubt.

Miss. Pub. Serv. Comm’n v. Columbus & Greenville Ry. Co., 573 So. 2d 1343, 1346 (Miss.

1990) (citing Strong v. Bostick, 420 So. 2d 1356, 1361 (Miss. 1982)). Such an argument is

untenable, for it cannot be argued fairly that its acts necessarily were implied by statute.

¶15.   The City allocated public funds to finance a public construction project. The City then

solicited sealed bids for the project. Landmark and Hemphill submitted sealed bids. It is

       3
     Allocate: “1. To set aside for a special purpose. 2. To distribute according to plan:
ALLOT.” Webster’s II New College Dictionary 30 (2001).

                                              6
undisputed that, after the bids were unsealed, both bids exceeded the original allocated funds

by more than ten percent. Therefore, the City was without statutory authority under Section

31-7-13 to award either bid. Notwithstanding, the City sought and procured additional public

funds for the project, requiring Landmark to hold its bid open, contingent upon the City’s

receipt of additional funding. The City then allotted the original allocated funds, plus the

newly procured public funds, to the project and accepted Landmark’s bid. These steps, taken

after the bids were opened, frustrate the powers expressly granted, clearly given, or

necessarily implied in the public-purchasing laws and render the ten-percent limitation not

only superfluous, but meaningless. “A construction which will render any part of a statute

inoperative, superfluous, or meaningless is to be avoided.” McCaffrey’s Food Market, Inc.

v. Miss. Milk Comm’n, 227 So. 2d 459, 463 (Miss. 1969).

¶16.   Mississippi Code Section 31-7-13(d)(iv) specifically provides that, if the lowest and

best bid is not more than ten percent above the amount of funds allocated for a public

construction project, then governing authority shall be permitted to negotiate with the lowest

bidder in order to enter into a contract for an amount not to exceed the funds allocated.

¶17.   In considering a statute passed by the Legislature,

       the first question a court should decide is whether the statute is ambiguous. If
       it is not ambiguous, the court should simply apply the statute according to its
       plain meaning and should not use principles of statutory construction.
       Whether the statute is ambiguous or not, the ultimate goal of this Court is to
       discern and give effect to the legislative intent.

                                              7
Miss. Ins. Guar. Ass’n v. Cole ex rel. Dillon, 954 So. 2d 407, 412-13 (Miss. 2007) (quoting

Miss. Dep’t of Transp. v. Allred, 928 So. 2d 152, 154 (Miss. 2006)) (internal alterations

omitted).

¶18.   Mississippi Code Section 31-7-13 (d)(iv) is unambiguous. In its plainest terms, the

statute provides that an agency or governing authority (here, the City) shall be permitted to

“negotiate . . . to enter into a contract” if the “bid is not more than ten percent (10%) above

the amount of funds allocated” for the project. (Emphasis added.) Three words/phrases in

this statute are examined: (1) “funds allocated,” (2) “negotiate,” and (3) “enter into a

contract.” Each word and phrase must be read together and given effect. See Morgan v.

State ex rel. Dist. Attorney, 44 So. 2d 45, 49 (Miss. 1950) (“[E]very word, sentence, phrase,

or clause in a statute must be given a meaning, if possible, and this rule is not avoided by the

use of the aid to statutory construction, ‘ejusdem generis.’”). See also McCaffrey’s Food

Market, Inc., 227 So. 2d at 463 (statutes “must be viewed or read as an integrated whole, and

the task of the court is to fit, if possible, all parts of a statute into a harmonious whole.”)

¶19.   The first phrase, “funds allocated,” is included twice in the statute. The term “funds

allocated” is in the past tense and can only refer to funds that already have been allocated,

not funds to allot in the future. The City’s authority to “negotiate . . . to enter into a contract”

was limited by the amounts originally allocated for the project, i.e., before the bids were

opened. Based on the plain and precise language of the statute, the City was without

statutory authority to negotiate, conditionally accept, or enter into a contract with either

Landmark or Hemphill based on the amount of funds that the City had allocated when the

                                                 8
bids were opened. Both bids exceeded the funds allocated for the project by more than ten

percent, both when the bids were made and later opened.

¶20.   Hemphill submitted to the trial court an Attorney General public-bidding opinion that

recognized this principle. While Attorney General opinions are not binding on this Court,

“they certainly are useful in offering guidance to the Court.” Jones Cty. Sch. Dist. v. Dep’t

of Revenue, 111 So. 3d 588, 602 (Miss. 2013) (citing Shelter Mut. Ins. Co. v. Dale, 914 So.
2d 698, 703 (Miss. 2005)) (citations omitted). In 2012, the Attorney General was asked

whether the amount of funds allocated for a project may be determined after bids have been

received. The Attorney General opined that:

       a determination as to the amount of the funds allocated, as contemplated in
       Section 31-7-13(d)(iv), is a factual determination to be made by the public
       entity seeking to procure the construction contract. While there is no specific
       statutory provision directing a public entity as to whether the determination is
       to be made prior to the solicitation of bids or may be made after bids are
       received, such determination as to the amount of funds available for the
       procurement of the proposed construction contract should be made prior to the
       solicitation of bids. In fact, the term “allocated” is in the past tense and
       presumes that the allocation has already been completed.

Op. Miss. Att’y Gen. 2012-00195 (April 20, 2012) (emphasis added). The Attorney General

further opined that only the funds that the public entity contemplated using for the

procurement of the construction contract may be considered to trigger its authority to

negotiate with the lowest and best bidder under Mississippi Code Section 31-7-13(d)(iv).

¶21.   The City unconvincingly counters that Mississippi Code Section 31-7-13 applies only

when the governing authority “negotiates” with the lowest bidder. The City argues that

Mississippi Code Section 31-7-13(d)(iv) does not apply in this case because it “did not

                                              9
negotiate with Landmark nor did it change the plans and specifications set forth in the

Advertisement to allow for negotiations.” The City’s actions belie its words.

¶22.   Clarksdale conditionally accepted Landmark’s bid before awarding Landmark the

contract. Clarksdale’s action required Landmark to keep its bid open if and until (1)

Clarksdale could acquire additional CDBG match funds, (2) Clarksdale could acquire

additional CPU match funds, (3) approval was given by the Mississippi Development

Authority, and (4) the City attorney reviewed and approved the transaction. Despite the delay

created by the City’s conditional acceptance, Landmark reciprocated by leaving its bid open

for an uncertain time. While the City argues that it did not negotiate with Landmark, one

need not modify a construction plan or change advertisement specifications to “negotiate.”

Indeed, “negotiate” is defined as follows: “to transact business,” “to confer with another so

as to come to terms or reach an agreement,” or “to settle or arrange by conferring or

discussing.” Negotiate, Webster’s II New College Dictionary 732 (2001).

¶23.   Assuming arguendo that the City did not negotiate with Landmark, the applicable

statute states that a governing authority “shall be permitted to negotiate with the lowest

bidder in order to enter into a contract for an amount not to exceed the funds allocated.”

Miss. Code Ann. § 31-7-13(d)(iv) (emphasis added). In reading the statute “as an integrated

whole,”4 as we must, it is abundantly clear that the statute does not apply exclusively to

negotiation authority, for the authority to “negotiate” is predicated on the authority also to

“enter into a contract.” Miss. Code Ann. § 31-17-3(d)(iv). Because both bids exceeded ten

       4
           McCaffrey’s Food Market, Inc., 227 So. 2d at 463.

                                             10
percent of the funds allocated, the City had no authority to “negotiate . . . to enter into a

contract” with either bidder.

¶24.   Next, the City argues that, “if the Legislature did not want a municipality to have the

option to obtain additional funding, it would have prohibited it.” The City then asserts that

“it is reasonable to infer” that it had such statutory authority. Such an argument exposes the

invalidity of the actions taken by the City. The City did not have authority to procure

additional funds post-bid-opening, for municipal powers “are to be construed most strongly

against an asserted right, if the right is not clearly given.” Hemphill Constr. Co., Inc, 760
So. 2d at 723. The City unconvincingly urges this Court to hold the opposite, arguing that,

because the right to procure additional funds post-bid-opening was not clearly given, it is

reasonable to infer it had such authority. Such a conclusion directly conflicts with this

Court’s precedent and the body of statutory law that grants municipal entities their public-

purchasing authority.

¶25.   Finally, the City argues that its ultra vires acts were consistent with the principles

behind the public-purchasing laws because it awarded the public contract “to the lowest and

best bidder.” This Court previously has rejected this very same argument. In Hemphill

Construction Co. Inc., Harold West Contractors, Inc., (“West”) submitted the lowest bid for

a construction project and later was allowed to amend its bid price after the bids already had

been opened. Hemphill, 760 So. 2d at 722. West was the lowest bidder before and after the

bid amendment, so the City of Laurel chose to award the contract to West. Id. at 723. The

losing bidder (Hemphill) appealed, arguing that Laurel was not authorized by statute to allow

                                             11
a bid to be amended post-opening. Id. Laurel responded that, because the contract recipient

ultimately was the lowest bidder both before and after the bid correction, the overall purpose

(i.e., “spirit”) of the public-bidding laws was met in those circumstances. Id. at 724. This

Court rejected Laurel’s argument, holding that its “decision [was] not intended to impute any

culpable wrongdoing by the City of Laurel or West.” Id. “While the City may be

comfortable with its decision in this instance, however, the broader public will lose in the

long run if the public purchase laws are circumvented.” Id.

¶26.   The foundational principles underlying the statutory requirements of competitive

bidding negate any inference that the City could obtain additional public funds post-bid

opening. Such a concocted procedure does not “protect the public from collusive contracts,”

or “prevent favoritism, fraud, extravagance, and improvidence.” Id. Furthermore, it does

not “promote actual, honest, and effective competition” and it certainly does not allow

contracts to “be secured at the lowest cost to taxpayers.” Id. Indeed, the City increased the

expenditure of public funds by more than $200,000. The City’s argument that “the public’s

interests were protected because the contract was awarded to the lowest bidder,” is

unavailing. As this Court stated in Hemphill Construction Co., Inc., “the broader public

will lose in the long run if the public purchase laws are circumvented.” Id. at 724.

                                      CONCLUSION

¶27.   The City was without statutory authority to procure additional public funds post-bid-

opening to award the contract to Landmark, for its bid exceeded ten percent of the public

funds allocated for the project. We hold that the circuit court erred in affirming the City’s

                                             12
decision to award the contract to Landmark. Accordingly, the Court reverses the judgment

of the Coahoma County Circuit Court and remands the case for proceedings consistent with

this opinion.

¶28.   REVERSED AND REMANDED.

     WALLER, C.J., COLEMAN, MAXWELL, BEAM AND CHAMBERLIN, JJ.,
CONCUR. ISHEE, J., DISSENTS WITH SEPARATE WRITTEN OPINION JOINED
BY KITCHENS, P.J., AND KING, J.

       ISHEE, JUSTICE, DISSENTING:

¶29.   The majority holds that Mississippi Code Section 31-7-13(d)(iv) precludes a

governing authority from procuring additional funding for a public-construction project after

the opening of sealed bids. (Maj. Op. ¶ 27). I would find there to be no such preclusion.

Accordingly, I must respectfully dissent.

¶30.   Section 31-7-13, Hemphill argues (and the majority agrees) required the City to reject

both bids because they both were ten percent more than the original amount allocated for the

project. But Clarksdale argues that, while the text of Section 31-7-13(d)(iv) grants a

municipality the discretion to negotiate under certain circumstances, it does nothing to

prevent a governing authority from securing additional funding. After examining the text of

the statute, I agree.

¶31.   My agreement with Clarksdale’s position is based on the text of the provision, which

provides that if the bid is not more than ten percent higher than the amount (originally)

allocated, a governing authority “shall be permitted to negotiate with the lowest bidder in

order to enter into a contract for an amount not to exceed the funds allocated.” Miss. Code

                                             13
Ann. § 31-7-13(d)(iv) (Supp. 2017) (emphasis added). A plain reading of the text confirms

that this statute applies only when the governing authority negotiates with the lowest bidder.

To negotiate means “[t]o communicate with another party for the purpose of reaching an

understanding[,]” or “[t]o bring about by discussion or bargaining[.]” Negotiate, Black’s

Law Dictionary (10th ed. 2014). Here, nothing in the record indicates that the governing

authority (the City) undertook any action which resembled “negotiations” with Hemphill or

Landmark. Neither discussions nor bargaining took place with either party post-bid; the City

simply obtained funding to meet the lowest bid.

¶32.   Absent from the text of the statute, however, is any language which prohibits a

governing authority from obtaining additional funding to pay for a public project. To be

sure, when reading the text of Section 31-7-13(d)(iv), it is reasonable to infer that if all of the

submitted bids exceed the funding a governing authority possesses for a project, the

governing authority in that instance has no choice but to reject all bids, as it simply could not

pay the price of the bid. However, if all bids exceed the budgeted amount for a project, but

the governing authority can procure additional funding, there is simply nothing in the text of

the statute that prohibits it from doing so.

¶33.    In support of its finding that Section 31-7-13(d)(iv) precluded Clarksdale from

obtaining additional funding, the majority reasons that the allocated amount is to be

determined before bid solicitation. (Maj. Op. ¶ 20). In doing so, the majority cites an

opinion of the Attorney General that—ironically enough—states that, while the funding

determination should be made before bids are solicited, “there is no specific statutory

                                                14
provision directing a public entity as to whether the determination is to be made prior to the

solicitation of bids or may be made after bids are received.” Op. Miss. Att’y Gen. 2012-

00195 (April 20, 2012) (emphasis added). So, while that Attorney General’s opinion

suggests that it may be a wise and preferable policy to require such determination before

solicitation, it also simultaneously reinforces my position that no statute demands such.

¶34.   For the reasons stated above, in the end, I would affirm the City’s award of the

contract to Landmark. I respectfully dissent.

       KITCHENS, P.J., AND KING, J., JOIN THIS OPINION.

                                             15