Reiman Corp. v. City of Cheyenne

838 P.2d 1182, 1992 Wyo. LEXIS 148, 1992 WL 277256

• Court: Wyoming Supreme Court
• Decided: October 13, 1992
• Docket: 91-269
• Status: Published

Opinions

GOLDEN, Justice.

Reiman Corporation (Reiman) filed a declaratory judgment action against the City of Cheyenne (City) after the City had awarded Reiman a construction contract on an allegedly “mistaken bid.” Reiman requested the district court to declare that Reiman was entitled to withdraw/rescind its bid without forfeiture of the bid bond, or, in the alternative, to declare that Rei-man was entitled to reform its bid to correct the alleged error. Following a hearing on cross-motions for summary judgment, the district court issued an order which dismissed Reiman’s withdrawal/rescission claim for want of jurisdiction and granted summary judgment to the City on the reformation claim. Reiman appeals from only that portion of the district court’s order which dismissed its withdrawal/rescission claim. We will reverse and remand.

ISSUES

The only issue properly before this court is: Whether the district court erred in dismissing Reiman’s withdrawal/rescission claim on the basis that it lacked subject matter jurisdiction under the Uniform Declaratory Judgments Act.

FACTS

The City published an invitation for bids for the construction of a new fire station headquarters building on October 16 and 23, 1990. The invitation for bids informed all prospective bidders that bids would be accepted until bid opening at 2:00 p.m. on November 6, 1990. Reiman submitted its bid to the City at approximately 1:50 p.m. on November 6, 1990. Reiman’s bid of $1,910,000, secured by a five percent bid bond, was low bid for the project.

Approximately an hour after the bid opening, Tom Reiman (Mr. Reiman), Vice President of Reiman, allegedly discovered a clerical error of $71,000 in the computation of Reiman’s bid. Mr. Reiman promptly called Marian Black, the City’s Director of Purchasing, and Steve Elliott, the Project Architect, to inform them of the alleged error. Mr. Reiman also wrote a letter to the City Council, in which he explained:

I made an error in adding up my subcontractor bid column. I was adding up my subcontractor bids at approximately 1:35 p.m. when I received a return call from Bob Strasheim of Mechanical Systems concerning his bid and alternate #3. * * * The last item I added in my “Total Sub Bid” column was line item # 12 precast for $4,000.00. When I went back to adding the column after the interruption I started at line item # 21 skylight which was below item # 20 for $4,000.00. As a result I le[f]t out the following:

Line Item # 14 *** $34,300.00

Line Item #15*** 1,500.00

Line Item #16*** 25,200.00

Line Item #19 *** 6,000.00

Line Item # 20 *** 4,000.00

TOTAL $71,000.00

Concluding this letter, Mr. Reiman requested that Reiman be allowed to withdraw its bid without forfeiture of the bid bond and that the contract be awarded to the next lowest bidder.

Mr. Reiman appeared before the City Finance Committee on November 21, 1990 and before the City Council on November 26, 1990. At these meetings, Mr. Reiman reiterated the circumstances leading to the allegedly “mistaken bid” and renewed Rei-man’s request to withdraw its bid without forfeiture of the bid bond. Both the City Finance Committee and the City Council voted to accept Reiman’s bid as originally submitted. Accordingly, the City delivered to Reiman a Notice of Award and a Standard Form of Agreement Between Owner and Contractor on November 28, 1990. The Notice of Award required Reiman to, among other things, execute the contract with the City within ten days. Reiman was advised that failure to execute the contract within the ten-day period would result in a forfeiture of the bid bond. The City issued an amendment to the Notice of Award on December 4, 1990, thereby extending Rei-man’s time for compliance to December 26, 1990.

Reiman filed a petition for declaratory judgment and a motion for preliminary injunction against the City on December 14, 1990. Reiman requested the district court to declare that Reiman was entitled to withdraw/rescind its bid without forfeiture of the bid bond or, in the alternative, to declare that Reiman was entitled to reform its bid to correct the alleged error. Reiman also requested that the district court issue a preliminary injunction to enjoin the City from either requiring Reiman to execute the contract or from taking action to forfeit the bid bond during the pendency of the declaratory judgment action. A hearing on Reiman’s motion for preliminary injunction was set for December 20, 1990.

On December 20, 1990, Reiman and the City entered into an agreement which provided, among other things, that Reiman would withdraw its pending motion for a preliminary injunction, that the declaratory judgment action would remain pending, and that Reiman would sign the contract and proceed with construction. The agreement provided that the contract price would be determined as follows:

d. If the parties cannot agree in writing as to a contract price, the price shall be determined as set forth in this Agreement based upon the decision of the District Court in the action currently pending in Laramie County District Court.

# * * * * *

f. If Reiman prevails, and the District Court finds that Reiman is entitled to rescind its bid, Reiman shall be entitled to a contract price of $1,981,000.00.

g. If the City of Cheyenne prevails in such litigation, and the District Court finds that Reiman is not entitled to rescind its bid, the City shall be entitled to a contract price as stated in Reiman’s original bid, $1,910,000.00.

Following discovery proceedings, the City filed a motion for summary judgment in the underlying declaratory judgment action on October 7, 1991. Reiman responded with a cross-motion for summary judgment on October 17, 1991. A hearing was then held after which the district court issued an order on October 24, 1991. The district court dismissed Reiman’s withdrawal/rescission claim for want of jurisdiction and granted summary judgment to the City on Reiman’s reformation claim. The district court specifically determined that the withdrawal/rescission issue was rendered moot by the parties’ agreement of December 20, 1990 and that reformation was available only in instances of mutual mistake. This appeal ensued.

DISCUSSION

On appeal, Reiman challenges only that portion of the district court’s order which dismissed its withdrawal/rescission claim. Reiman contends that the district court erred in determining that the withdrawal/rescission claim failed to present a justi-ciable controversy within the meaning of the Uniform Declaratory Judgments Act. Reiman concedes that withdrawal/rescission of its bid is no longer an option, but contends that a justiciable controversy remains in that resolution of the withdrawal/rescission claim will have the collateral effect of establishing the contract price. Thus, the crux of the instant case concerns whether, as a jurisprudential matter, the district court erred in dismissing Reiman’s rescission/withdrawal claim on the ground that the parties’ December 20, 1990 agreement had rendered the issue moot. Resolution of this issue requires that we examine the policies underlying both the Uniform Declaratory Judgments Act and the doctrine of justiciability to determine if this is a proper case for judicial action.

The Uniform Declaratory Judgments Act dispelled the myth that the judicial arm of government could be extended only to redress prior wrongdoings (corrective justice). Edwin M. Borchard, The Declaratory Judgment — A Needed Procedural Reform (Part I), 28 Yale L.J. 1, 2 (1918). The Act is founded upon the premise that society is disturbed not only when legal rights are violated, but also when they are placed in serious doubt or uncertainty. Id. Consequently, the Act establishes a procedural vehicle whereby litigants may approach the court for a declaration of their “rights^ status and other legal relations whether or not further relief is or could be claimed” (preventive or corrective justice). Wyo. Stat. § 1-37-102 (1988). Edson R. Sunder-land captured the essence of the effect of the declaratory judgment on the administration of justice by explaining that, before the advent of the declaratory judgment, “courts were employed only as repair shops; since that time they have operated as service stations.” Edson R. Sunderland, A Modem Evolution in Remedial Rights, — The Declaratory Judgment, 16 Mich.L.Rev. 71, 77 (1917).

The stated purpose of the Uniform Declaratory Judgments Act is “to settle and to afford relief from uncertainty and insecurity with respect to legal relations * * Wyo.Stat. § 1-37-114 (1988). The Act is to be liberally construed to this end. Id.; Brimmer v. Thomson, 521 P.2d 574, 577 (Wyo.1974) (begrudging availability of declaratory judgment is inconsistent with its purpose). Expounding upon the purpose underlying the Act, Professor Borch-ard has succinctly stated:

As a measure of preventive justice, the declaratory judgment probably has its greatest efficacy. It is designed to enable parties to ascertain and establish their legal relations, so as to conduct themselves accordingly, and thus avoid the necessity of future litigation.

Edwin M. Borchard, The Declaratory Judgment — A Needed Procedural Reform (Part II), 28 Yale L.J. 105, 110 (1918).

Although the Uniform Declaratory Judgments Act is to be liberally construed to the end that courts may declare “rights, status and other legal relations whether or not further relief is or could be claimed,” the Act does not expand the jurisdiction of the courts. The right to seek a declaratory judgment is open only to those persons “ * * * interested under a deed, will, written contract or other writings constituting a contract, or whose rights, status or other legal relations are affected by the Wyoming constitution or by a statute, municipal ordinance, contract or franchise * * Wyo.Stat. § 1-37-103 (1988). The “interest” requirement is but an expression of the basic doctrine that the judiciary will not invoke its remedial powers unless presented with a justiciable controversy. Mountain West Farm Bureau Mut. Ins. Co. v. Hallmark Ins. Co., 561 P.2d 706, 709 (Wyo.1977).

A justiciable controversy is defined generically as a controversy fit for judicial resolution. Numerous doctrines have evolved under the justiciability umbrella which are aimed at isolating those circumstances in which courts should withhold decision, either from deference to the particular authority and competence of another branch of government, or from recognition of the functional limitations of the adversary system. The doctrines include the political question doctrine, the administrative questions doctrine, the advisory opinions doctrine, the feigned and collusive cases doctrine, the doctrine of standing, the doctrine of ripeness, and the doctrine of mootness. 13A Charles A. Wright Et Al., Federal Practice and Procedure § 3529 (1984).

Of particular importance to the instant case are the doctrines of standing, ripeness, and mootness. These doctrines are premised upon jurisprudential principles which are designed to promote judicial economy and the wise exercise of judicial power. To these ends, the standing doctrine requires that the litigants have a tangible interest at stake in the subject matter before the court; the ripeness doctrine requires that the issue presented to the court be sufficiently mature for judicial resolution; and the mootness doctrine requires that a justiciable issue remain before the court throughout the duration of the suit. Memorial Hosp. of Laramie Co. v. Dept. of Rev. & Tax., 770 P.2d 223 (Wyo.1989) and Washakie Co. Sch. Dist. No. 1 v. Herschler, 606 P.2d 310 (Wyo.1980) (standing); Indus. Siting Council v. Chic. & N.W. Transp., 660 P.2d 776 (Wyo.1983) (ripeness); Rocky Mountain Helicopters, Inc. v. Air Freight, Inc., 773 P.2d 911 (Wyo.1989) (mootness).

The jurisprudential principles underlying the standing, ripeness, and mootness doctrines are embodied in the definition of a justiciable controversy adopted in Brim-mer. The Brimmer court identified the following four elements as being necessary to establish a justiciable controversy under the Uniform Declaratory Judgments Act:

1. The parties must have existing and genuine, as distinguished from theoretical, rights or interests.

2. The controversy must be one upon which the judgment of the court may effectively operate, as distinguished from a debate or argument evoking a purely political, administrative, philosophical or academic conclusion.

3. It must be a controversy the judicial determination of which will have the force and effect of a final judgment in law or decree in equity upon the rights, status or other legal relationships of one or more of the real parties in interest, or, wanting these qualities to be of such great and overriding public moment as to constitute the legal equivalent of all of them.

4. The proceedings must be genuinely adversary in character and not a mere disputation, but advanced with sufficient militancy to engender a thorough research and analysis of the major issues.

Brimmer, 521 P.2d at 578.

There is no question but that a justiciable controversy existed between Reiman and the City at the time the petition for a declaratory judgment was filed with the district court. The district court, however, determined that the parties’ December 20, 1990 agreement rendered the withdrawal/rescission issue moot. Specifically, the district court reasoned:

What was once a very real and actual controversy over whether or not Reiman could withdraw its bid without bond forfeiture, is now moot. Assuming the court were to grant Reiman rescission, the contract would no longer stand; the City would have to award the con[s]truction project to the next lowest bidder. This is no longer possible, and thus what the parties ask of this court simply does not make sense.

Hence, the rationale for the district court’s determination that it lacked subject matter jurisdiction under the Uniform Declaratory Judgments Act was because a ruling on the withdrawal/rescission issue could no longer “effectively operate,” i.e., that withdrawal/rescission of bid could not presently be ordered.

The district court erred in determining that it lacked subject matter jurisdiction under the Uniform Declaratory Judgments Act because the parties’ December 20, 1990 agreement had rendered the withdrawal/rescission issue moot. The doctrine of mootness encompasses those circumstances which destroy a previously jus-ticiable controversy. Wright, supra, § 3533.1. This doctrine represents the time element of standing by requiring that the interests of the parties which were originally sufficient to confer standing persist throughout the duration of the suit. Henry P. Monaghan, Constitutional Adjudication: The Who and When, 82 Yale L.J. 1363, 1384 (1973). Thus, the central question in a mootness case is “whether decision of a once living dispute continues to be justified by a sufficient prospect that the decision will have an impact on the parties.” Wright & Miller § 3533.

The district court did not focus upon whether resolution of the withdrawal/rescission issue continued to be justified, following the December 20, 1990 agreement, by the impact it would have upon the parties. Rather, the district court centered attention upon whether a ruling on the withdrawal/rescission could “effectively operate.” The district court’s hyper-technical application of the requirement that its judgment “effectively operate” is inconsistent with the liberal construction that is to be applied to the Uniform Declaratory Judgments Act. See Kurpjuweit v. Northwestern Dev. Co., 708 P.2d 39 (Wyo.1985). The requirement that the judgment of the court “effectively operate” means only that a court’s decision must have some practical effect upon the litigants, i.e., that a court may not issue a purely advisory opinion. Justice Blume has expressed this concept by stating that action under the Act is justified when “some useful purpose” will be accomplished thereby. Holly Sugar Corp. v. Fritzler, 42 Wyo. 446, 463, 296 P. 206, 210 (1931); accord Beatty v. C.B. & Q.R. Co., 49 Wyo. 22, 37, 52 P.2d 404, 408 (1935).

We believe that Reiman’s withdrawal/rescission claim yet presents a justiciable controversy and that consideration of the matter will serve the useful purpose of settling the parties’ on-going dispute over contract price. The December 20, 1990 agreement merely changed the impact that resolution of the withdrawal/rescission issue would have upon the parties’ rights; it did not render the issue legally insignificant. Jurisprudential concerns for judicial economy and concrete adverseness are not implicated. The parties have a “tangible interest at stake” in that $71,000 hinges upon resolution of the withdrawal/rescission issue. See Nixon v. Fitzgerald, 457 U.S. 731, 102 S.Ct. 2690, 73 L.Ed.2d 349 (1982) (financial interest in resolution of Presidential immunity issue sufficient to defeat mootness claim arising under similar circumstances). We harbor no misgiving but that the parties will thoroughly research the. relevant issues and militantly present them to the court for resolution. Moreover, this is not a hypothetical or abstract case. The facts relevant to the withdrawal/rescission issue developed in their natural course and exist to guide judicial decision. See Wright, supra, § 3533.1. Finally, judicial resolution of the withdrawal/rescission issue is not merely an academic exercise. As previously stated, a decision on this issue will have the practical impact of determining the construction price for the headquarters fire station building.

Contract principles also support judicial resolution of the withdrawal/rescission issue. Mootness questions, as with other questions arising from settlement agreements, should be answered according to the intent of the parties. Wright, supra, § 3533.2. In the instant case, the parties' intent to be bound by judicial resolution of the withdrawal/rescission issue is manifest in their agreement of December 20, 1990. Given that we find no jurisprudential impediment to entertaining this suit, we feel that it would be patently unjust not to hold the City to its end of the bargain, thereby leaving Reiman in a quandary as to how to resolve the continued dispute over contract price.

In summary, affirmation of the present case would place this court in the illogical position of invoking the jurisprudential doctrine of mootness, which is founded in large part upon the principle of judicial economy, to thwart the parties’ effort under the Uniform Declaratory Judgments Act to expeditiously settle their controversy over contract price in an attempt to avoid future litigation. Under the circumstances of the instant case, this is what does not make sense. Consequently, we hold that the district court erred as a jurisprudential matter in dismissing Reiman’s withdrawal/rescission claim for lack of subject matter jurisdiction under the Uniform Declaratory Judgments Act.

DISPOSITION

The order of the district court which dismissed Reiman’s withdrawal/rescission claim for want of jurisdiction is reversed. This case is remanded to the district court for a declaration as to whether a public bid may be withdrawn/rescinded, under the circumstances of this case, without forfeiture of the bid bond.

CARDINE, J., files a specially concurring opinion.

THOMAS, J., files a dissenting opinion.