City of Atlanta v. J. A. Jones Construction Co.

Supreme Court of Georgia

City of Atlanta v. J. A. Jones Construction Co.

398 S.E.2d 369, 260 Ga. 658, 1990 Ga. LEXIS 455

CourtSupreme Court of Georgia

DecidedDecember 5, 1990

DocketS90G0957

StatusPublished

Cited by28 cases

This text of 398 S.E.2d 369 (City of Atlanta v. J. A. Jones Construction Co.) is published on Counsel Stack Legal Research, covering Supreme Court of Georgia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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City of Atlanta v. J. A. Jones Construction Co., 398 S.E.2d 369, 260 Ga. 658, 1990 Ga. LEXIS 455 (Ga. 1990).

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Opinions

Benham, Justice.

We granted certiorari to consider the measure of damages to which a “frustrated bidder” is entitled when a governmental agency has wrongfully denied its bid. To consider that issue, only a brief recitation of the facts is necessary. For a more complete statement of the facts, see City of Atlanta v. J. A. Jones Constr. Co., 195 Ga. App. 72 (392 SE2d 564) (1990).

Appellant advertised for bids for construction of a parking deck at Hartsfield International Airport. The deadline for submitting bids was set at 2:00 p.m., April 10, 1985. Appellees’ bid was the lowest timely bid submitted, but the contract was awarded to Interstate Construction, whose bid was lower but was submitted three minutes after the 2:00 p.m. deadline. Appellees sued the City in two counts, seeking their lost profits in a claim for damages under state law, and seeking further damages under 42 USC § 1983 for an alleged denial of due process of law in the City’s failure to conduct a hearing to consider appellees’ complaints regarding the consideration of the late bid. The jury awarded appellees $522,125.05 on their state law claim and $375,000 on the § 1983 claim. The Court of Appeals affirmed the trial court’s judgment.

1. In order to determine whether the damages awarded were correct, we must first look at the purpose of the bid requirement. It appears that, all things being equal, the bid process for public projects was designed to protect the public coffers from waste and to assure that taxpayers receive quality work and goods for the lowest possible price. Approval of a process which favors the acceptance of the lowest bid is a constant theme expressed in cases decided by this court, cul[659]*659minating in Ga. Branch, etc. v. City of Atlanta, 253 Ga. 397 (321 SE2d 325) (1984). When, as here, a governmental entity has frustrated the bid process and awarded the contract to an unqualified bidder, the injured low bidder may bring an action for appropriate relief. Hilton Constr. Co. v. Rockdale County Bd. &c., 245 Ga. 533 (266 SE2d 157) (1980). However, a low bidder whose bid is unfairly rejected is only entitled to an award of reasonable costs of bid preparation. McQuillian, Municipal Corporations, p. 549, Sec. 29.86. We do not reach the issue of whether a public official could be held personally liable in the event of fraud, collusion, or corruption since that was not an issue in this case. In holding that appellees are entitled only to reasonable costs of bid preparation, which was established at trial to be $22,125.05, we adopt the reasoning of S & W Mechanical Co. v. City of Homerville, 682 FSupp. 546 (M.D. Ga. 1988), and specifically disallow the recovery of lost profits. To permit the recovery of lost profits would unduly punish the tax-paying public while compensating the plaintiffs for effort they did not make and risks they did not take. Limiting recovery to reasonable bid preparation costs is in keeping with the legitimate governmental objective of rewarding the lowest qualified bidder and guarding against public officials shirking their duties while, at the same time, preventing unwarranted waste of taxpayers’ money.

Since the award of damages on the state law claim in this case was greatly in excess of the allowable damages, the damages award in the judgment must be reversed.

2. Appellant complains that the award based on the § 1983 claim constituted an impermissible double recovery. We agree.

“[T]he abstract value of a constitutional right may not form the basis of § 1983 damages.. . . [S]uch damages must always be designed ‘to compensate injuries caused by the constitutional deprivation.’ [Cits.]” [Memphis Community School Dist. v. Stachura, 477 U. S. 299, 308-9 (106 SC 2537, 91 LE2d 249) (1986).]

The basis for appellees’ § 1983 claim was that appellant failed to afford them a hearing at which they could contest the award of the contract to another bidder. The damage from that failure was that appellees were not themselves awarded the contract. As we have held above, the permissible recovery for that wrong is the reasonable expense of bid preparation. Accordingly, we hold that the award for damages on the § 1983 claim must also be reversed. There being no contest regarding the amount of appellees’ bid preparation expenses, the trial court is directed upon remand to enter judgment for appellees in the amount of $22,125.05 with interest.

[660]*660 Judgment reversed and remanded with direction.

All the Justices concur, except Smith, P. J., and Fletcher, J., who dissent.

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Benham, Justice.

We granted certiorari to consider the measure of damages to which a “frustrated bidder” is entitled when a governmental agency has wrongfully denied its bid. To consider that issue, only a brief recitation of the facts is necessary. For a more complete statement of the facts, see City of Atlanta v. J. A. Jones Constr. Co., 195 Ga. App. 72 (392 SE2d 564) (1990).

Appellant advertised for bids for construction of a parking deck at Hartsfield International Airport. The deadline for submitting bids was set at 2:00 p.m., April 10, 1985. Appellees’ bid was the lowest timely bid submitted, but the contract was awarded to Interstate Construction, whose bid was lower but was submitted three minutes after the 2:00 p.m. deadline. Appellees sued the City in two counts, seeking their lost profits in a claim for damages under state law, and seeking further damages under 42 USC § 1983 for an alleged denial of due process of law in the City’s failure to conduct a hearing to consider appellees’ complaints regarding the consideration of the late bid. The jury awarded appellees $522,125.05 on their state law claim and $375,000 on the § 1983 claim. The Court of Appeals affirmed the trial court’s judgment.

1. In order to determine whether the damages awarded were correct, we must first look at the purpose of the bid requirement. It appears that, all things being equal, the bid process for public projects was designed to protect the public coffers from waste and to assure that taxpayers receive quality work and goods for the lowest possible price. Approval of a process which favors the acceptance of the lowest bid is a constant theme expressed in cases decided by this court, cul[659]*659minating in Ga. Branch, etc. v. City of Atlanta, 253 Ga. 397 (321 SE2d 325) (1984). When, as here, a governmental entity has frustrated the bid process and awarded the contract to an unqualified bidder, the injured low bidder may bring an action for appropriate relief. Hilton Constr. Co. v. Rockdale County Bd. &c., 245 Ga. 533 (266 SE2d 157) (1980). However, a low bidder whose bid is unfairly rejected is only entitled to an award of reasonable costs of bid preparation. McQuillian, Municipal Corporations, p. 549, Sec. 29.86. We do not reach the issue of whether a public official could be held personally liable in the event of fraud, collusion, or corruption since that was not an issue in this case. In holding that appellees are entitled only to reasonable costs of bid preparation, which was established at trial to be $22,125.05, we adopt the reasoning of S & W Mechanical Co. v. City of Homerville, 682 FSupp. 546 (M.D. Ga. 1988), and specifically disallow the recovery of lost profits. To permit the recovery of lost profits would unduly punish the tax-paying public while compensating the plaintiffs for effort they did not make and risks they did not take. Limiting recovery to reasonable bid preparation costs is in keeping with the legitimate governmental objective of rewarding the lowest qualified bidder and guarding against public officials shirking their duties while, at the same time, preventing unwarranted waste of taxpayers’ money.

Since the award of damages on the state law claim in this case was greatly in excess of the allowable damages, the damages award in the judgment must be reversed.

2. Appellant complains that the award based on the § 1983 claim constituted an impermissible double recovery. We agree.

“[T]he abstract value of a constitutional right may not form the basis of § 1983 damages.. . . [S]uch damages must always be designed ‘to compensate injuries caused by the constitutional deprivation.’ [Cits.]” [Memphis Community School Dist. v. Stachura, 477 U. S. 299, 308-9 (106 SC 2537, 91 LE2d 249) (1986).]

The basis for appellees’ § 1983 claim was that appellant failed to afford them a hearing at which they could contest the award of the contract to another bidder. The damage from that failure was that appellees were not themselves awarded the contract. As we have held above, the permissible recovery for that wrong is the reasonable expense of bid preparation. Accordingly, we hold that the award for damages on the § 1983 claim must also be reversed. There being no contest regarding the amount of appellees’ bid preparation expenses, the trial court is directed upon remand to enter judgment for appellees in the amount of $22,125.05 with interest.

[660]*660 Judgment reversed and remanded with direction.

All the Justices concur, except Smith, P. J., and Fletcher, J., who dissent.

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398 S.E.2d 369, 260 Ga. 658, 1990 Ga. LEXIS 455, Counsel Stack Legal Research, https://law.counselstack.com/opinion/city-of-atlanta-v-j-a-jones-construction-co-ga-1990.

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