New Orleans Rosenbush Claims Service, Inc. v. City of New Orleans

653 So. 2d 538, 1995 La. LEXIS 976
CourtSupreme Court of Louisiana
DecidedApril 10, 1995
Docket94-C-2223
StatusPublished
Cited by56 cases

This text of 653 So. 2d 538 (New Orleans Rosenbush Claims Service, Inc. v. City of New Orleans) is published on Counsel Stack Legal Research, covering Supreme Court of Louisiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
New Orleans Rosenbush Claims Service, Inc. v. City of New Orleans, 653 So. 2d 538, 1995 La. LEXIS 976 (La. 1995).

Opinion

653 So.2d 538 (1995)

NEW ORLEANS ROSENBUSH CLAIMS SERVICE, INC.
v.
The CITY OF NEW ORLEANS.

No. 94-C-2223.

Supreme Court of Louisiana.

April 10, 1995.
Rehearing Denied May 11, 1995.

*540 Salvador Anzelmo, Thomas W. Milliner, A. Mark Flake, for applicant.

Avis M. Russell, City Atty., Stephen I. Dwyer, Susanne Cambre, Richard B. Eason, II, Adams & Reese, for respondent.

W.P. Wray, Jr., Christopher P. Pierce, for amicus curiae La. Associated Gen. Contractors Inc.

Charles L. Patin, Jr., for amicus curiae La. Municipal Ass'n.

CHARLES R. LINDSAY, Justice Pro Tem.[1]

The trial court granted an injunction in favor of the plaintiff, New Orleans Rosenbush Claims Service, Inc., preventing the defendant, City of New Orleans, from awarding a contract for administrative services under a new bid proposal. The trial court also issued a writ of mandamus compelling the City to award the contract to Rosenbush, the low bidder under the original bid proposal. The court of appeal reversed, holding that the City could not be required to accept the low bid on a project when it had reserved the right to reject "any and all bids." For the reasons assigned below, we reverse the judgment of the appellate court and reinstate the original trial court judgment.

FACTS

The combined provisions of the City Public Bid Law found in Section 6-307(5) of the Home Rule Charter for the City of New Orleans and the State Public Bid Law in LSA-R.S. 38:2211, et seq., require that contracts for any services, other than "professional" services, be let out by public bid.[2]

Section 6-307(5) of the Home Rule Charter of the City of New Orleans provides:

(5) Except in the purchase of unique or non-competitive articles, competitive bids shall be secured before any purchase, by contract or otherwise, is made or before any contract is awarded for construction, alteration, repair or maintenance or for the rendering of any services to the City, other than professional services, and the purchase shall be made from or the contract shall be awarded to the lowest responsible bidder after advertisement prescribed by ordinance or by applicable State law. [Emphasis added.]

Rosenbush was one of four companies that submitted bids to provide "administrative services" for the City's self-funded workers' compensation program for a one-year period beginning May 1, 1993, and ending April 30, 1994, pursuant to a request for bids, proposal FTC-#2618.[3] The bid proposal contained the following provision in its general conditions and instructions to bidders:

The Department of Finance, Bureau of Purchasing, reserves the right to reject any and all bids and to waive any informalities.

The bids were received and opened on March 31, 1993 and tabulated on April 1, 1993. Two of the other bids were disqualified, leaving Rosenbush as the lowest qualified bidder.

However, more than 30 days later, on May 17, 1993, the City sent a letter to Rosenbush and the other remaining bidder which stated:

We desire to reject all bids because we have determined that the contract should be awarded as a Professional Service Agreement, pursuant to the City's RFP Policy and because we desire to open the scope of service under the RFP Policy, both of which are in the best interest of the City.

*541 On July 9, 1993, Rosenbush filed suit seeking a preliminary and permanent injunction to prohibit the City from taking any steps to award the contract pursuant to a new bid proposal. It also sought a writ of mandamus requiring the City to award the contract to Rosenbush pursuant to FTC-# 2618. Rosenbush contended that, as low bidder, it was entitled to be awarded the contract and its bid could not be rejected in the absence of "just cause" to do so. Further, it was claimed that the City's failure to fulfill its ministerial duty by awarding the contract to the lowest responsible bidder justified the issuance of a writ of mandamus ordering the City to award the contract to Rosenbush. Following a hearing, the trial court rendered judgment in favor of Rosenbush, granting the preliminary injunction and issuing the writ of mandamus.

The City appealed. The court of appeal reversed the trial court judgment. See New Orleans Rosenbush Claims Service, Inc. v. City of New Orleans, 94-0066 (La.App. 4 Cir. 5/17/94), 641 So.2d 545. On original hearing, the court relied upon its holding in HTW Transportation Company, Inc. v. New Orleans Aviation Board, 527 So.2d 339 (La. App. 4th Cir.1988), writs denied, 532 So.2d 121, 532 So.2d 122, and 532 So.2d 129 (La. 1988), to find that a bidding authority could not be required to accept the low bid on a project when the bidding authority had reserved the right to reject any and all bids, as the City had done in the present case. On rehearing, the Fourth Circuit reaffirmed its holding in the present case on original hearing. It also confirmed its prior holding in HTW Transportation Co., supra. It rejected Rosenbush's contention that, under the 1982, 1983 and 1991 amendments to the State Public Bid Law, specifically LSA-R.S. 38:2214(B), "just cause" is required for the rejection of bids, even if the bidding authority decides to reject all bids. Instead, the court concluded that "just cause" was only one reason to reject bids, and there was "no indication that the amendments were intended to restrict a public entity's right to reject all bids for other reasons." The court further found that this conclusion was supported by the provisions of LSA-R.S. 38:2215, which requires the public entity to act within 30 days of receipt of bids to either "award said contract to the lowest responsible bidder or reject all bids." The court interpreted this statute as requiring the public entity to reject all bids if it failed to award a contract within the 30-day period specified.

We granted Rosenbush's application for writs. New Orleans Rosenbush Claims Service, Inc. v. City of New Orleans, 94-2223 (La. 11/29/94), 646 So.2d 390.

The Louisiana Associated General Contractors, Inc. (hereinafter "the Contractors") filed an amicus curiae brief supporting the position of Rosenbush. The Louisiana Municipal Association filed an amicus curiae brief in support of the City.

JUST CAUSE

Rosenbush argues that the Fourth Circuit's decision, holding that a bidding authority may reserve the right to reject all bids "without just cause," is contrary to the provisions of LSA-R.S. 38:2214 and to several cases decided by the First and Second Circuit Courts of Appeal. The City argues that the appellate court correctly interpreted the statute and relied upon the jurisprudence of both the Fourth and Fifth Circuit Courts of Appeal.

Legislative History of LSA-R.S. 38:2214

LSA-R.S. 38:2214(B) of the Public Bid Law presently provides, in relevant part, that "[t]he public entity may reject any and all bids for just cause." [Emphasis added.]

After this statute was first amended and reenacted in 1977, it provided, in pertinent part, that "[t]he public entity may reject any and all bids."[4]See Acts 1977, No. 103, § 1. However, the statute was amended in 1982 and 1983. In Milton J. Womack, Inc. v. Legislative Budgetary Control Council, 470 So.2d 460 (La.App. 1st Cir.1985), the court reviewed this portion of the history of LSA-R.S. 38:2214:

The legislative history of La.R.S. 38:2214 firmly establishes that prior to 1982 a public entity could reject any and all bids. No mention is made of the necessity for cause.

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653 So. 2d 538, 1995 La. LEXIS 976, Counsel Stack Legal Research, https://law.counselstack.com/opinion/new-orleans-rosenbush-claims-service-inc-v-city-of-new-orleans-la-1995.