Lawrence Brunoli, Inc. v. Town of Branford

722 A.2d 271, 247 Conn. 407, 1998 Conn. LEXIS 456

• Court: Supreme Court of Connecticut
• Decided: January 5, 1999
• Docket: SC 15872
• Status: Published

Opinions

Opinion

NORCOTT, J.

The issue in this appeal¹ is whether the court has subject matter jurisdiction over a claim for damages, rather than for injunctive relief, allegedly resulting from fraud, corruption or favoritism in the award of a contract that is subject to competitive municipal bidding requirements. The plaintiff, Lawrence Brunoli, Inc., brought this action against the defendant, the town of Branford, for money damages that the plaintiff claimed to have received as a result of improperly having been denied a certain municipal construction contract on which it had submitted a bid. The trial court dismissed the action on the ground that the plaintiff had no standing to assert a claim for damages in such a situation, and that a disappointed bidder is confined to an action for injunctive relief. The plaintiff claims that an unsuccessful bidder for a municipal construction contract is not limited to injunctive relief, but instead may seek money damages from the municipality. We conclude that a cause of action for money damages is not available to unsuccessful bidders on municipal contracts, regardless of whether there are allegations of fraud, favoritism or corruption in the bidding process. Accordingly, we affirm the judgment of the trial court.

According to the allegations of the plaintiffs revised complaint, which for purposes of this appeal we assume to be true, the defendant published an invitation to bid on a municipal construction project for renovations to and alterations of Branford High School, in response to which the plaintiff submitted a bid. The plaintiff further alleged that, on February 3, 1997, it was informed that it was the “lowest qualified bidder,” but that the defendant subsequently withdrew its award of the contract to the plaintiff because the plaintiff had failed to attend a prebid conference regarding details of the work to be performed under the contract.² In addition, the complaint alleged that the defendant had permitted the plaintiff to bid on the project although the defendant knew that the plaintiff had not attended the prebid conference, and that the defendant therefore had waived any attendance requirement by accepting the bid. According to the complaint, the defendant later awarded the contract to the second lowest bidder, in violation of § 75-2 of the code of the town of Branford.³ The plaintiff alleged further that the defendant’s conduct constituted favoritism toward the ultimate contract awardee. Finally, the plaintiff alleged that the defendant had breached its agreement to award the contract to the lowest qualified bidder, causing the plaintiff to suffer damages.

The defendant moved to dismiss the complaint for lack of subject matter jurisdiction on the ground, inter alia, that the plaintiff “is seeking money damages rather than injunctive relief, and Connecticut law only affords standing to disappointed bidders for public works contracts to bring actions for injunctive relief to vindicate the public interest in the competitive bidding process as private attorneys general.” The trial court granted the defendant’s motion and rendered judgment dismissing the plaintiffs action. This appeal followed. The plaintiff claims that the trial court improperly concluded that despite allegations of fraud, favoritism or corruption in the bidding process, an unsuccessful bidder for a municipal public works contract may not maintain an action for money damages. We disagree.

We first note that, because “[a] determination regarding a trial court’s subject matter jurisdiction is a question of law,” our review is plenary. Doe v. Roe, 246 Conn. 652, 660, 717 A.2d 706 (1998). It is well established that “[i]n ruling upon whether a complaint survives a motion to dismiss, a court must take the facts to be those alleged in the complaint, including those facts necessarily implied from the allegations, construing them in a manner most favorable to the pleader.” Pamela B. v. Ment, 244 Conn. 296, 308, 709 A.2d 1089 (1998). In the present case, however, we need not reach and, therefore, decline to address, the question of whether the facts alleged in the plaintiffs complaint constitute fraud, corruption or favoritism, because we conclude that, as a matter of law, an unsuccessful bidder to a municipal contract has no standing to assert a cause of action for money damages for failure of the municipality to follow its competitive bidding laws, regardless of whether the plaintiff alleges fraud, corruption or favoritism.

An unsuccessful bidder to a municipal contract has available to him only very limited forms of standing. “Standing is the legal right to set judicial machinery in motion. One cannot rightfully invoke the jurisdiction of the court unless he has, in an individual or representative capacity, some real interest in the cause of action, or a legal or equitable right, title or interest in the subj ect matter of the controversy.” (Internal quotation marks omitted.) Ardmare Construction Co. v. Freedman, 191 Conn. 497, 501, 467 A.2d 674 (1983). It is axiomatic that a party cannot be liable for breaching a contract with another party unless a contract exists between the parties that could be breached. In the realm of competitive municipal bidding, it is well settled that a contract is created through the municipality’s action of awarding a contract, not through the submission of a bid by the contractor. “A bid is a binding offer to make a contract. ... A bid, even the lowest responsible one, submitted in response to an invitation for bids is only an offer which, until accepted by the municipality, does not give rise to a contract between the parties. . . . Furthermore, where the municipality reserves the right to reject any and all bids, no bidder can claim any contractual lights until he has been awarded the contract.” (Citations omitted; internal quotation marks omitted.) John J. Brennan Construction Corp., Inc. v. Shelton, 187 Conn. 695, 702, 448 A.2d 180 (1982). Except in certain specified circumstances, “an unsuccessful bidder has no standing to challenge the award of apublic contract.” Ardmare Construction Co. v. Freedman, supra, 501.

If an unsuccessful bidder has standing to bring a claim against a municipality, therefore, such standing must be derived from a source other than its bid submitted in response to the invitation to bid. That source is the municipal bidding statutes themselves. Spiniello Construction Co. v. Manchester, 189 Conn. 539, 543-44, 456 A.2d 1199 (1983). “[O]nly where fraud, corruption or favoritism has influenced the conduct of the bidding officials or when the very object and integrity of the competitive bidding process is defeated by the conduct of municipal officials, does an unsuccessful bidder have standing to challenge the award.” (Internal quotation marks omitted.) Ardmare Construction Co. v. Freedman, supra, 191 Conn. 501. A review of our prior cases illustrates, however, that the only remedy afforded to unsuccessful bidders under the municipal bidding statutes has been injunctive relief against the awarding of the contract to the illegally favored bidder. See, e.g., Blesso Fire Systems, Inc. v. Eastern Connecticut State University, 245 Conn. 252, 713 A.2d 1283 (1998); Unisys Corp. v. Dept. of Labor, 220 Conn. 689, 600 A.2d 1019 (1991); Ardmare Construction Co. v. Freedman, supra, 497; Spiniello Construction Co. v. Manchester, supra, 539; John J. Brennan Construction Corp., Inc. v. Shelton, supra, 187 Conn. 695; Austin v. Housing Authority, 143 Conn. 338, 122 A.2d 399 (1956).

Providing unsuccessful bidders with an equitable remedy alone is consistent with the policies that we previously have identified as underlying the municipal bidding statutes. This court has long maintained that “[mjunicipal competitive bidding laws are enacted to guard against such evils as favoritism, fraud or corruption in the award of contracts, to secure the best product at the lowest price, and to benefit the taxpayers, not the bidders; they should be construed to accomplish these purposes fairly and reasonably with sole reference to the public interest.” (Emphasis added.) John J. Brennan Construction Corp., Inc. v. Shelton, supra, 187 Conn. 702; Ardmare Construction Co. v. Freedman, supra, 191 Conn. 504. In Spiniello Construction Co. v. Manchester, supra, 189 Conn. 544-45, we substantially adopted the approach to unsuccessful bidder claims that was described by the Court of Appeals for the District of Columbia in Scanwell Laboratories, Inc. v. Shaffer, 424 F.2d 859, 864 (D.C. Cir. 1970). In Scanwell Laboratories, Inc., the court concluded that an unsuccessful bidder may bring an action against the municipality, but rather than being an action to vindicate the personal harm the bidder perceives it has suffered, “the [action] itself is brought in the public interest by one acting essentially as a ‘private attorney general.’ ” Id., 864. That public interest is triggered when a municipality is involved in some form of fraud, corruption or favoritism, or “when the very object and integrity of the competitive bidding process is defeated by the conduct of municipal officials.” Spiniello Construction Co. v. Manchester, supra, 544; see also Ardmare Construction Co. v. Freedman, supra, 504 — 505. It would be inconsistent with these policies to permit an unsuccessful bidder to assert a private claim for damages.

Furthermore, we have noted previously that we must “strike the proper balance between fulfilling the purposes of the competitive bidding statutes and preventing frequent litigation that might result in extensive delay in the commencement and completion of government projects to the detriment of the public.” Ardmare Construction Co. v. Freedman, supra, 191 Conn. 505. To grant standing to unsuccessful bidders who seek to bring actions for money damages would undermine the purpose underlying the municipal bidding statutes. If a municipality is found to have committed fraud, corruption or favoritism and is accordingly enjoined from awarding the bid to the designated awardee, the public is protected because the municipality is barred from paying more than the best price for the work to be performed. If, however, an unsuccessful bidder is permitted to assert a claim for money damages, rather than injunctive relief against awarding the contract to the successful bidder, the taxpayers of the municipality would be subject to paying once to have the work performed by the successful bidder and, if the unsuccessful bidder were successful, again for damages above and beyond the cost of the project. Such extra costs clearly are not in the public interest.⁴

Further, a municipality must know, in advance of awarding a contract, what the ultimate costs of the project will be. If an unsuccessful bidder were able to eschew a claim for injunctive relief and assert a claim for damages, the municipality would not know with certainty what those costs are until the limitations period for such a claim for damages had passed.

The plaintiff contends, nevertheless, that the threat of public discontent at paying damages would provide a more effective deterrent to keep bidding officials from committing fraud, corruption or favoritism than does the threat of an injunction. We do not find this argument to be persuasive. Our cases, in which unsuccessful bidders sought injunctive relief in circumstances of fraud, corruption or favoritism, constitute persuasive evidence that money damages are not required as an incentive for unsuccessful bidders to act as watchdogs on the municipal bidding process. There already exists in the realm of injunctive relief sufficient incentive for unsuccessful bidders to seek judicial intervention, which in turn acts as a deterrent upon bidding officials to violate the bidding statutes, without the detriment to the public interest that an action for money damages would cause.⁵

Finally, recognizing standing to an unsuccessful bidder to seek money damages effectively would eliminate the availability of injunctive relief in this context. It is well established that “ ‘ [a] party seeking injunctive relief has the burden of alleging and proving irreparable harm and lack of an adequate remedy at law.’ ” Walton v. New Hartford, 223 Conn. 155, 165, 612 A.2d 1153 (1992). If an unsuccessful bidder had an action in damages available to it as an alternative form of relief, we fail to see how it would ever be a qualified candidate for injunctive relief. This would eliminate the more efficacious remedy, to the detriment of the public.

We reaffirm the conclusion that this court consistently has maintained: where a municipality has engaged in fraud, corruption or favoritism, an unsuccessful bidder does have standing under the applicable, competitive municipal bidding provision to bring an action for injunctive relief. We hold, however, that an unsuccessful bidder does not have standing to seek money damages. To conclude otherwise would run counter to the sound and established purpose of protecting the public interest that underlies the municipal bidding statutes.

The judgment is affirmed.

In this opinion BORDEN, KATZ and MCDONALD, Js., concurred.

1 The plaintiff appealed from the judgment of the trial court to the Appellate Court, and we transferred the appeal to this court pursuant to Practice Book § 65-1 and General Statutes § 51-199 (c).

2 Each bid package purchased by the prospective bidders contained instructions to the bidders, which provided in relevant part:

“1.03 RECEIPT AND AWARD OF BIDS . . .

“B. Bid will be awarded based on the lowest qualified bid.

“C. The [defendant] reserves the right to accept or reject any bid to best serve its interests, or to hold the bids for forty-five (45) days before decision.

“1.04 QUALIFICATIONS OF BIDDER . . .

“B. The [defendant] may make such investigation as he deems necessary to determine the ability of the Bidder to perform the work, and the bidder shall furnish to the [defendant] all such information and data for this purpose as the [defendant] may request. The [defendant] reserves the right to reject any bid if the evidence submitted by or investigation of such bidder fails to satisfy the [defendant] that such bidder is properly qualified. . . .

“1.06 PRE-BID CONFERENCE

“A. A Pre-Bid Conference will be held at 10:00 AM, Thursday, January 16,1997 at the Branford High School. Attendance of contractors who intend to submit a bid is mandatory. . . (Emphasis added.)

3 Section 75-2 of the code of the town of Branford provides in relevant part: “Advertising and bids required. . . .

“A. Amounts; exceptions; definitions. . . .

“(1) Hereafter, all work or materials and supplies furnished to and purchased by the town . . . shall be awarded after advertising the same in some newspaper with a general circulation in the town to the lowest responsible bidder . . . (Emphasis added.)

4 We addressed a related example of the detriment to the public interest that arises when citizens of a municipality are forced to pay for more than the cost of the actual work to be performed in Blesso Fire Systems, Inc. v. Eastern Connecticut State University, supra, 245 Conn. 252. In Blesso Fire Systems, Inc., an unsuccessful bidder for a fire alarm system contract brought an action for injunctive relief, then later during the course of the plaintiffs appeal, the defendant put the entire project out to be rebid. Id., 256. The plaintiff was not awarded the contract during this rebidding process, and did not challenge the award to a different bidder. We dismissed the plaintiffs appeal as moot in light of the rescission of the first contract and the rebidding process that had occurred. Id. The plaintiffs second claim, beyond the injunction, was for a writ of mandamus to compel the state to award it the contract in question. We noted, however, that where the second contract award was proper according to the municipal bidding statute, if the second contract remained in effect and the mandamus action were granted, the result would be to “require the university to enter into two contracts for the same work.” (Emphasis in original.) Id., 257. To do as the plaintiff urges in the present case and provide money damages to unsuccessful bidders would provide a result that is different only in degree, not in kind, from the bizarre result of awarding two contracts for the same project that we sought to avoid in Blesso Fire Systems, Inc.

5 The majority ol' courts have concluded that damages may not be recovered under the municipal bidding statutes. Annot., 65 A.L.R.4th 99, § 2 [a] (1988). The plaintiff contends, however, that we should look for guidance to those jurisdictions that allow a cause of action for money damages by unsuccessful bidders to municipal contracts when fraud, corruption or favoritism are alleged. See, e.g., North Central Utilities, Inc. v. Walker Community Water System, Inc., 437 So. 2d 922, 924-25 (La. App. 1983) (impliedly permitting recovery for lost profits by remanding case in which plaintiff sought lost profits, without commenting on prayer for relief); Telephone Associates, Inc. v. St. Louis County Board, 364 N.W.2d 378, 382-83 (Minn. 1985) (permitting recovery of costs incurred in preparing bid including reasonable attorney fees under promissory estoppel theory, for purpose of encouraging “proper challenges to the bid-letting process” without making such plaintiff “bear the expense of its actions”); Marbucco Corp. v. Manchester, 137 N.H. 629, 634, 632 A.2d 522 (1993) (constructing hybrid scheme under which recovery of lost profits by unsuccessful bidder is permitted when municipality’s conduct is “tantamount to bad faith,” and recovery of expenses incurred in preparing bid is permitted for mere wrongful failure to award contract to lowest responsible bidder). Unlike the dissent, we are not persuaded by the reasoning of those decisions.