N.L. Constr. Corp. v. Freed Hous. Corp., Inc.

2012 Ohio 350

• Court: Ohio Court of Appeals
• Decided: January 23, 2012
• Docket: 2011CA00192
• Status: Published

Opinion

[Cite as N.L. Constr. Corp. v. Freed Hous. Corp., Inc., 2012-Ohio-350.]

COURT OF APPEALS STARK COUNTY, OHIO FIFTH APPELLATE DISTRICT

N.L. CONSTRUCTION CORPORATION

Plaintiff-Appellant

-vs-

FREED HOUSING CORPORATION, INC., et al.,

Defendants-Appellees

: JUDGES: : William B. Hoffman, P.J. : Julie A. Edwards, J. : Patricia A. Delaney, J. : : Case No. 2011CA00192 : : OPINION

CHARACTER OF PROCEEDING: Civil Appeal from Stark County Court of Common Pleas Case No. 2011CV02639

JUDGMENT: Reversed and Remanded

DATE OF JUDGMENT ENTRY: January 23, 2012

APPEARANCES:

For Plaintiff-Appellant For Defendants-Appellees

JOHN R. ROSS JOHN WIRTZ, ESQ. Morrow & Meyer, LLC 220 Market Ave., South, Suite 600 6269 Frank Ave., N.W. Canton, Ohio 44702 Canton, Ohio 44720

COREY MINOR-SMITH, ESQ. 400 East Tuscarawas Street Canton, Ohio 44702 Edwards, J.

{¶1} Plaintiff-appellant, N.L. Construction Corporation, appeals from the August

31, 2011, Judgment Entry of the Stark County Court of Common Pleas denying its

Motion for a Preliminary Injunction.

STATEMENT OF THE FACTS AND CASE

{¶2} The facts, as stipulated to by the parties,1 are as follows.

{¶3} Appellant N.L. Construction Corporation is an Ohio Corporation with

offices in Canton, Ohio. Appellee Freed Housing Corporation is a non-profit corporation

and wholly-owned subsidiary of appellee Stark Metropolitan Housing Authority

(“SMHA”), a state agency and public housing authority.

{¶4} Appellee Freed and appellee SMHA let for bid a construction contract

commonly known as the “Hunter House Project”, a public works project, and retained

the architectural firm of John Patrick Picard for architectural and design services. Bid

specifications for the project were publically advertised as required by Ohio law.

{¶5} Prior to the bid opening of June 16, 2011, on June 6, 2011 and June 10,

2011, the architect issued two (2) modifications to the bid specifications. Thereafter, on

June 16, 2011, the bids for the project were opened. While appellant was the apparent

low bidder for the general trades contract work with a bid of $3,284,601.00, Armatas

Construction, Inc. was the second lowest bidder with a bid of $3,542,400.00.

{¶6} On June 17, 2011, the project architect, John Patrick Picard Architect,

Inc., issued a “Request for Bid Clarification/Revision.” The Request for Bid

Clarification/Revision asked appellant, Armatas Construction and other businesses to

1 The parties’ Fact Stipulations were attached to the trial court’s August 31, 2011, Judgment Entry. submit the amount of a credit to appellee SMHA based on residential, as opposed to

commercial, prevailing wages rates. The advertised bid documents had specified that

the commercial prevailing wage rates were to be used. After submitting the amount of

the credit, appellant was still the apparent low bidder while Armatas was the second

lowest bidder.

{¶7} Appellee SMHA awarded the general trades contract to Armatas

Construction, Inc. at its Board of Commissioners meeting on July 28, 2011, as the

lowest responsive and responsible bidder. Appellee SMHA’s contracting officer verbally

stated that appellant’s bid was non-responsive because it had failed to list

subcontractors. Appellee SMHA awarded the contract to Armatas Construction, Inc.

utilizing the residential wages rates in the Bid Clarification/Revision for a price of

$3,114,780.00.

{¶8} Appellant then submitted a written protest to appellee SMHA on August 1,

2011. Appellee SMHA responded to the same in writing on August 4, 2011. In its letter,

appellee SMHA indicated that appellant’s bid was nonresponsive because appellant

had not listed subcontractors as required. The parties, in their stipulations, agreed that

neither appellee SMHA nor appellee Freed met with appellant to discuss the protest.

{¶9} On August 18, 2011, appellant filed a Verified Complaint for Declaratory

Judgment, Mandamus and Injunctive Relief against appellees in the Stark County Court

of Common Pleas, alleging that appellees had violated R.C. Sections 153.12 and 9.312

by awarding the general trades contract to Armatas Construction, Inc. Appellant, in its

complaint, also argued that it was the lowest responsive and responsible bidder and

that the decision not to award it the general trades contract was arbitrary, capricious and an abuse of discretion. Appellant, in its complaint, asked, in relevant part, for the

following:

{¶10} “1. That this Court issue a Declaratory Judgment, a temporary restraining

order, a preliminary injunction and a permanent injunction, declaring the award of the

contract to Armatas void and enjoining Defendants, SMHA and Freed, from proceeding

with the general trades contract awarded to Armatas.

{¶11} “2. That this Court issue an Order of Mandamus under O.R.C. 2731.01

directing SMHA and Freed to award the general trades contract to N.L. as the lowest

responsive and responsible bidding contractor under the publically advertised bid

specifications for the general trades contract for the Project.”

{¶12} Appellant, on the same date, filed a Motion for Temporary Restraining

Order and Preliminary and Permanent Injunction. Appellant sought to enjoin appellees

from proceeding with the general trades contract awarded to Armatas Construction, Inc.

Pursuant to a Judgment Entry filed on August 19, 2011, the trial court granted the

Motion for a Temporary Restraining Order.

{¶13} The matter came on for a hearing before the trial court on August 26, 2011

on appellant’s Motion for a Preliminary Injunction. As memorialized in a Judgment Entry

filed on August 31, 2011, the trial court denied such motion and held that its order was a

final appealable order and that there was no just cause for delay. The trial court, in its

Judgment Entry, held that appellant was notified of the Request for Bid

Clarification/Revision and provided with the same amount of time to respond to the

same as the other bidders and that appellant suffered no prejudice. The trial court, in its

Judgment Entry, also indicated that after appellant submitted a written protest to appellee SMHA, “[p]er this Court’s instruction, [appellant] was provided a meeting with

the Defendant to satisfy the statutory requirement set forth in R.C. 9.312(B). Said

meeting took place on August 30, 2011.”

{¶14} Appellant now raises the following assignments of error on appeal:

{¶15} “I. THE TRIAL COURT ERRED, AS A MATTER OF LAW, BY ALLOWING

DEFENDANTS-APPELLEES TO MODIFY PUBLICLY ADVERTISED BID

SPECIFICATIONS AFTER BID OPENING AND TO AWARD A PUBLIC WORKS

CONTRACT BASED ON UNADVERTISED BID SPECIFICATIONS IN VIOLATION OF

O.R.C. § 153.12.

{¶16} “II. THE TRIAL COURT ERRED, AS A MATTER OF LAW, BY ALLOWING

DEFENDANTS-APPELLEES TO MAKE A FINAL AWARD OF A PUBLIC WORKS

CONTRACT WITHOUT PROVIDING PLAINTIFF-APPELLANT WRITTEN NOTICE OF

REASONS FOR THE REJECTION OF ITS BID AND A PROTEST MEETING UNDER

O.R.C. § 9.312.”

STANDARD OF REVIEW

{¶17} Courts, in determining whether to grant injunctive relief, take into

consideration the following four factors: (1) the likelihood of a plaintiff's success on the

merits, (2) whether the issuance of the injunction will prevent irreparable harm to the

plaintiff, (3) what injury to others will be caused by the granting of the injunction, and (4)

whether the public interest will be served by the granting of the injunction. Corbett v.

Ohio Bldg. Auth., 86 Ohio App.3d 44, 49, 619 N.E.2d 1145, (10th Dist. 1993).

{¶18} The decision whether to grant or deny an injunction rests in the sound

discretion of the trial court and will not be disturbed by a reviewing court absent a clear abuse of discretion. Garono v. State, 37 Ohio St.3d 171, 173, 524 N.E.2d 496, (1998).

In order to find an abuse of discretion, we must determine that the trial court's decision

was unreasonable, arbitrary, or unconscionable and not merely an error of law or

judgment. Blakemore v. Blakemore, 5 Ohio St.3d 217, 450 N.E.2d 1140, (1983). We

must look at the totality of the circumstances in the case sub judice and determine

whether the trial court acted unreasonably, arbitrarily or unconscionably.

{¶19} Each element must be proven by clear and convincing evidence before

the trial court can order a preliminary injunction. Vanguard Transp. Sys., Inc. v.

Edwards Transfer & Storage Co., Gen. Commodities Div., 109 Ohio App.3d 786, 792-

793, 673 N.E.2d 182, (10th Dist. 1996).

I

{¶20} Appellant, in its first assignment of error, argues that the trial court erred

by allowing appellees to modify publicly advertised bid specifications after bid opening

and to award a public works contract based on unadvertised bid specifications in

violation of R.C. 153.12. We agree.

{¶21} R.C. 153.12 states, in relevant part, as follows: “(A) With respect to award

of any contract for the construction, reconstruction, improvement, enlargement,

alteration, repair, painting, or decoration of a public improvement made by the state, or

any county, township, municipal corporation, school district, or other political

subdivision, or any public board, commission, authority, instrumentality, or special

purpose district of or in the state or a political subdivision or that is authorized by state

law, the award, and execution of the contract, shall be made within sixty days after the

date on which the bids are opened. The failure to award and execute the contract within sixty days invalidates the entire bid proceedings and all bids submitted, unless the time

for awarding and executing the contract is extended by mutual consent of the owner or

its representatives and the bidder whose bid the owner accepts and with respect to

whom the owner subsequently awards and executes a contract. The public owners

referred to in this section shall include, in the plans and specifications for the project for

which bids are solicited, the estimate of cost. The bid for which the award is to be made

shall be opened at the time and place named in the advertisement for bids, unless

extended by the owner or its representative or unless, within seventy-two hours prior to

the published time for the opening of bids, excluding Saturdays, Sundays, and legal

holidays, any modification of the plans or specifications and estimates of cost for the

project for which bids are solicited is issued and mailed or otherwise furnished to

persons who have obtained plans or specifications for the project, for which the time for

opening of bids shall be extended one week, with no further advertising of bids

required.”

{¶22} R.C. 153.12 clearly provides a mechanism for modifying bid plans or

specifications prior to the time that the bids are opened. The statute does not provide

any mechanism for modifying the bid plan or specifications after opening. This Court is

not aware of any other statute or other authority governing post-opening modification of

bid plans or specifications nor have appellees cited this Court to such a statute or other

authority.

{¶23} In the case sub judice, on June 16, 2011, the bids for the project were

opened. While appellant was the apparent low bidder for the general trades contract

work with a bid of $3,284,601.00, Armatas Construction was the second lowest bidder with a bid of $3,542,400.00. Thereafter, on June 17, 2011, the project architect, John

Patrick Picard Architect, Inc., issued a “Request for Bid Clarification/Revision.” The

Request for Bid Clarification/Revision asked appellant, Armatas Construction and other

businesses to submit the amount of a credit to SMHA based on residential, as opposed

to commercial, prevailing wage rates. The revision was not publicly advertised.

{¶24} We find that appellees violated the plain language contained in R.C.

153.12 by modifying the publicly advertised bid specifications after the bids had been

already opened. As noted by appellant, the statute does not provide for post-bid

opening modification of specifications because once bids are opened, “the bidder’s

monetary sums are known” and are no long sealed. Because appellees did not comply

with R.C. 153.12, we find that the award of the general trades contract to Armatas

Construction was void. See Buchanan Bridge Co. v. Campbell, 60 Ohio St. 406, 54 N.E.

372, (1899) in which the court held that a contract made by county commissioners for

the purchase and erection of a bridge, in violation or disregard of the statutes on that

subject, was void. See also Cuyahoga Cty. Bd. of Commrs. v. Richard L. Bowen and

Assoc., Inc., 8th Dist. No. 81867, 2003-Ohio-3663, at ¶ 20-24, (holding that the county

commissioners, in their solicitation of a design services contract, failed to comply with

relevant statutory authority, thereby rendering the subsequent service contract void),

quoting Buchanan, supra.

{¶25} Appellant’s first assignment of error is, therefore, sustained.

II

{¶26} Appellant, in its second assignment of error, argues that the trial court

erred by allowing appellees to make a final award of the public works contract in this case without providing appellant written notice of the reasons for rejection of appellant’s

bid and a protest meeting pursuant to R.C. 9.312.

{¶27} Based on our disposition of appellant’s first assignment of error,

appellant’s second assignment of error is moot.

{¶28} Accordingly, the judgment of the Stark County Court of Common Pleas is

reversed and this matter is remanded for further proceedings.

By: Edwards, J.

Hoffman, P.J. concurs

Delaney, J. dissents

______________________________

JUDGES Delaney, J., dissenting

{¶29} I respectfully dissent from the majority’s analysis and disposition of

appellant’s first assignment error.

{¶30} “To prevail on a complaint seeking injunctive relief with respect to the

award of a public contract, the plaintiff must prove, by clear and convincing evidence,

that the award of the contract: 1) constituted an abuse of discretion; and 2) resulted in

some tangible harm to the public in general, or to the plaintiff individually.” W.C.I./Waltek

v. The Ohio Building Authority, 10th Dist. No. 93APE11-1583, 1994 WL 409780 (Aug. 4,

1994), citations omitted.

{¶31} The parties’ stipulations reflect that appellant was still the low bidder after

the bid clarification/revision credit was requested by the project architect. Armatas, the

next lowest bidder, was awarded the contract because appellant’s bid was considered

non-responsive due to its failure to list subcontractors.

{¶32} No evidence was presented that anyone received a competitive

advantage from its knowledge of the other bids. Appellee characterizes the minor

change in the bid specification as not substantial and immaterial. I would agree with

that characterization.

{¶33} I would affirm the trial court’s holding that appellant was not prejudiced or

at a disadvantage in responding to the clarification/revision or that the integrity of the

competitive bidding process was compromised. See also, Lewis & Michael, Inc. v. Ohio

Dept. of Administrative Services, 103 Ohio Misc.2d 29, 724 N.E.2d 885 (not every

variation from the instruction or specifications will destroy the competitive character of

the bid). {¶34} I would overrule appellant’s first assignment of error and then proceed to

address appellant’s second assignment of error.

______________________________ JUDGE PATRICIA A. DELANEY

IN THE COURT OF APPEALS FOR STARK COUNTY, OHIO

FIFTH APPELLATE DISTRICT

N.L. CONSTRUCTION : CORPORATION : : Plaintiff-Appellant : : : -vs- : JUDGMENT ENTRY : FREED HOUSING CORPORATION, : INC., et al., : : Defendants-Appellees : CASE NO. 2011CA00192

For the reasons stated in our accompanying Memorandum-Opinion on file, the

judgment of the Stark County Court of Common Pleas is reversed and remanded to the

trial court for further proceedings. Costs assessed to appellees.

_________________________________

_________________________________ JUDGES