Kuhn Construction Company v. Department of Transportation

• Court: Court of Chancery of Delaware
• Decided: August 31, 2016
• Docket: CA 12629-VCS
• Status: Published

Opinion

EFiled: Aug 31 2016 02:29PM EDT Transaction ID 59496894 Case No. 12629-VCS COURT OF CHANCERY OF THE STATE OF DELAWARE

417 S. State Street JOSEPH R. SLIGHTS III Dover, Delaware 19901 VICE CHANCELLOR Telephone: (302) 739-4397 Facsimile: (302) 739-6179

Date Submitted: August 30, 2016 Date Decided: August 31, 2016

Edward Seglias, Esquire Ann C. Cordo, Esquire Robert K. Beste, Jr., Esquire Jennifer R. Noel, Esquire Cohen, Seglias, Pallas, Department of Justice Greenhall & Furman, P.C. 820 North French Street, 6th Floor 1007 Orange Street, Suite 1130 Wilmington, DE 19801 Wilmington, DE 19801

Re: Kuhn Construction Company v. Department of Transportation C.A. No. 12629-VCS

Dear Counsel:

On August 18, 2016, the Court issued a Letter Opinion in which it granted

Kuhn Construction Company’s application for a temporary restraining order.1 The

Court’s Order restrained the Delaware Department of Transportation (“DelDOT”)

from awarding a public bid contract for a construction project (“the project”) to

any entity other than Kuhn pending discovery and preliminary injunction

proceedings that will address: (1) whether Kuhn included a statutorily required

1 Kuhn v. Dep’t of Transp., 2016 WL 444075 (Del. Ch. Aug. 18, 2016). Kuhn Construction Company v. Department of Transportation C.A. No. 12629-VCS August 31, 2016 Page 2

“bid bond” with its bid for the project; and (2) if so, whether DelDOT improperly

rejected Kuhn’s conforming bid (the lowest of the bids submitted). The Court

declined to enter a mandatory injunction requiring DelDOT to rebid the project,

however, because it determined that DelDOT’s violation of 29 Del. C.

§ 6962(d)(8)(a) (“Section 6962”) by reading Kuhn’s bid before confirming

whether it contained the necessary bid bond did not justify mandatory injunctive

relief.

Even though it prevailed on its request for a temporary restraining order,

Kuhn has now petitioned this Court to certify an expedited interlocutory appeal of

that portion of the Court’s decision denying Kuhn’s request that DelDOT be

directed to rebid the project. DelDOT opposes the petition.

Delaware Supreme Court Rule 42(b)(i) provides that “[n]o interlocutory

appeal will be certified by the trial court or accepted by [the Delaware Supreme]

Court unless the order of the trial court decides a substantial issue of material

importance that merits appellate review before a final judgment.” Instances where

the trial court certifies an interlocutory appeal “should be exceptional, not routine,

because [interlocutory appeals] disrupt the normal procession of litigation, cause Kuhn Construction Company v. Department of Transportation C.A. No. 12629-VCS August 31, 2016 Page 3

delay, and can threaten to exhaust scarce party and judicial resources.”2 For this

reason, “parties should only ask for the right to seek interlocutory review if they

believe in good faith that there are substantial benefits that will outweigh the

certain costs that accompany an interlocutory appeal.”3 When certifying an

interlocutory appeal, “the trial court should identify whether and why the likely

benefits of interlocutory review outweigh the probable costs, such that

interlocutory review is in the interests of justice. If the balance is uncertain, the

trial court should refuse to certify the interlocutory appeal.”4

The Court has entered a temporary restraining order that preserves the status

quo for a period sufficient to allow Kuhn to establish a factual record in support of

its claim that it included a bid bond with its bid for the project. If Kuhn

demonstrates a reasonable probability it will prove that fact at trial, the Court has

already advised the parties that it will enter a preliminary injunction precluding

DelDOT from awarding the contract for the project to anyone else pending trial. If

2 Supr. Ct. R. 42(b)(ii). 3 Id. 4 Supr. Ct. R. 42(b)(iii). Kuhn Construction Company v. Department of Transportation C.A. No. 12629-VCS August 31, 2016 Page 4

Kuhn prevails at trial, then the Court will order that DelDOT award the contract for

the project to Kuhn. All of this will occur in short order as the Court has granted

Kuhn’s request for expedited proceedings.

What Kuhn proposes now is a piecemeal approach to the litigation that will

not advance the interests of justice but will increase costs and burdens.5 If the

Court enters a final judgment that Kuhn is not entitled to relief on its claim that

DelDOT wrongfully rejected Kuhn’s conforming low bid, then Kuhn will have an

opportunity to present to the Supreme Court on direct appeal any appellate issues

relating to that determination along with its argument that this Court erred by not

entering a mandatory injunction requiring DelDOT to rebid the project as a remedy

for DelDOT’s violation of Section 6962 by reading Kuhn’s bid before ascertaining

whether it contained a bid bond.6 Of course, if Kuhn prevails on its conforming

5 Krahmer v. Christie’s Inc., 2006 WL 4782303, at *1 (Del. Ch. June 15, 2006) (denying certification upon noting that “[c]ertification would likely result in the piecemeal appeal of factually and legally related issues and would be contrary to the interest of justice and the orderly procession of matters before this court.”). 6 To address its claim of urgency, Kuhn can seek an injunction pending appeal if it can demonstrate that the balance of equities and other criteria justify that relief, Ct. of Ch. R. 62(c), and request expedited scheduling of its direct appeal if it can demonstrate “good cause.” Supr. Ct. R. 25(e). Kuhn Construction Company v. Department of Transportation C.A. No. 12629-VCS August 31, 2016 Page 5

bid claim, then its statutory argument will be moot and the Supreme Court’s

consideration of that issue will have to await another day and another appeal

(unless, of course, DelDOT takes an appeal in which case Kuhn may raise the issue

on cross-appeal). What is not justified here, however, is for Kuhn to get an

indefinite extension of the temporary restraining order while it appeals only a

portion of the Court’s order, particularly when it succeeded in having the Court

preserve the status quo by preventing DelDOT from moving forward with the

project so that it could attempt to prove that its bid included the bond required by

Section 6962.7

Under these circumstances, I cannot certify that the likely benefits of

interlocutory review outweigh the probable costs. Accordingly, the petition for

certification of an interlocutory appeal is denied.

IT IS SO ORDERED.

Very truly yours,

/s/ Joseph R. Slights III

7 Kuhn certainly is free to withdraw its claim that it submitted a conforming bid, in which case the Court will enter a final order denying its statutory claim from which a direct appeal may be taken.