State of Louisiana, Division of Administration, Office of Facility Planning & Control VS Infinity Surety Agency, L.L.C., Benetech, L.L.C. and JRDKS Construction, L.L.C., A Joint Venture, Benetech, L.L.C. and JRDKS Construction, L.L.C.
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STATE OF LOUISIANA COURT OF APPEAL FIRST CIRCUIT 2010 CA 0123 STATE OF LOUISIANA DIVISION OF ADMINISTRATION OFFICE OF FACILITY PLANNING CONTROL VERSUS INFINITY SURETY AGENCY L BENETECH L AND JRDKS C C CONSTRUCTION L A JOINT VENTURE AND BENETECH L C C AND JRDKS CONSTRUCTION L C Judgment rendered SEP 10 2010 On Appeal from the 19 Judicial District Court Parish of East Baton Rouge State of Louisiana Suit Number 577 Division 26 412 The Honorable Kay Bates Judge Presiding Pamela Miller Perkins Counsel for PlaintiffAppellant Jason Adam Bonaventure Division of Administration Office Evan Marshall Alvarez of Facility and Control State of Baton Rouge Louisiana Louisiana Taylor S Carroll Alexander J Mijalis Baton Rouge Louisiana Counsel for DefendantAppellee Jonathan P Lemann Counsel for DefendantsAppellees Claire E Easterling Robert E Couhig Jr Gary J Rouse New Orleans Louisiana Benetech L and JRDKS C Construction L A Joint Venture C and Benetech C L Infinity Surety Agency L C BEFORE KUHN PETTIGREW JJ AND KLINE J pro tempore wzt c1 2 0 Cegk ts Ji 6RE J CDNtu 1 Judge William F Kline Jr retired is serving as judge pro tempore by special appointment of the Louisiana Supreme Court KLINE J The matter involves whether damages can be assessed when a bid bond for a public works contract was issued by an unauthorized surety company The issue on appeal is whether the trial court erred in ruling that the contractor and its surety were not liable for damages when the submitted bid for a Louisiana Public Works Act LPWA contract included a bid bond issued by a company not authorized under La R 38 Here the trial court granted the exceptions of no cause of S 2219 action filed by defendants Infinity Surety Agency LLC Infinity and Benetech LLC Benetech LLC and JRDKS Construction LLC a Joint Venture Joint Venture Judgment was signed the State of Louisiana Division Administration Office of Planning and Control the State appealed of For the following reasons we affirm the trial court judgment PERTINENT FACTS On May 29 2008 the State opened bids for the Bayou Segnette Project the Project Bidding on the Project required that any surety retained to secure a bid must be authorized to write bonds in accordance with La R 38 On July 9 S 2219 2008 Joint Venture submitted a bid secured by Infinity the submitted bid form misrepresented that it met the La R 38 requirements The State failed to S 2219 reject the bid based on the surety noncompliance with the statute s The State instead awarded the contract to Joint Venture its lowest bidder Joint Venture and Infinity returned the signed contract but were unable to provide an acceptable performance bond even though the State gave additional time for them to do so On November 3 2008 the State notified Joint Venture and Infinity that it was seeking forfeiture of the bid bond as liquidated damages for the delay and for the additional work caused by their failure to produce an acceptable bond The additional work included costs to rebid the contract delay damages for the four 2 months delay in starting the work the difference between Joint Venture bid and s the bid ultimately accepted for the project attorney fees and court costs Joint Venture and Infinity both filed exceptions of no cause of action The matter was heard and the trial court granted both allowing the State fifteen days to amend when the State did not amend the trial court dismissed the suit with prejudice The State appealed alleging that the trial court erred 1 in holding that the State was not entitled to liquidated damages 2 in allowing fraudulent documentation to shield them from damages 3 and by ruling that the petition did not state a cause of action for tort misrepresentation DISCUSSION The State first argues that the failure to execute and deliver a signed contract along with a proper performance and payment bond gives it the right to reject the bid and retain the bid bond as liquidated damages The State contends that the clear language of the bid form states that after receiving the contract from the State the winning bidder has ten days to execute and deliver a signed contract along with the required bonds The State claims that it relied on the documents submitted by Joint Venture and when it could not comply with the terms the State was entitled to retain the bid bond The requirements for bid bonds for public works however are provided for under La R 38 S 2218C If bid bond is used it shall be written by a surety or insurance company currently on the U Department of the Treasury Financial S Management Service list of approved bonding companies which is published annually in the Federal Register or by a Louisiana domiciled insurance company with at least an A rating in the latest printing of the A Best Key Rating Guide to write individual M s bonds up to ten percent of policyholders surplus as shown in the Ms A Best Key Rating Guide or by an insurance company in good standing licensed to write bid bonds which is either domiciled in Louisiana or owned by Louisiana residents A second judgmentwas signed asserting that plaintiftdid not amend its petition within the allotted fifteen days and therefore the matter as dismissed with prejudice This court allowed the record to be supplemented with the judgment otdismissal 3 The awarding authority has a duty to carefully consider the written bid See Triad Resources and Systems Holdings Inc v Parish of Lafourche 577 So 2d 86 89 La App 1 Cir 1990 The statutory and bid form requirements including those included by reference to other documents must be completely and accurately observed Barriere Const Co LLC v Terrebonne Parish Consol Government 992271 p 7 La App 1 Cir 2 754 So 1123 1127 A 00 18 2d non conforming bid must be rejected as non responsive See Broadmoor LLC v Ernest N Morial New Orleans Exhibition Hall Authority 040211 040212 pp 1920 La 3 867 So 651 663 04 18 2d In this case the bid bond was not written by an authorized surety The bid therefore did not comply with the statutory requirements and should have been rejected as non responsive The State has failed to acknowledge this duty The non conforming bid was submitted but for whatever reason was not immediately rejected by the State The State therefore seems to be making an argument for exclusion of the duty to determine compliance But the clear reading of La R S b 1 2212A 38 provides that the provisions and requirements of this Section those stated in the advertisement for bids and those required on the bid form shall not be waived Further any bid not meeting the statutory requirements of the statute is null and void La R 38 S 2220 As stated in the trial court reasons for judgment if the successful bidder is s awarded the contract and fails to execute the contract within the specified time frame then the State has a right to liquidated damages In this case however the bid was non responsive because the bid did not comply with the statute We agree with the trial court rationale s Here Joint Venture bid was non responsive s 3 The State argues that it has no coca to determine if the surety is written by an authorized company La R S 22180 38 however mandates the sources to determine whether a surety company is authorized The State has made no showing that it was unable to check these sources before it awarded the contract 4 because it did not meet the statutory requirements of the statute and is therefore null and void See La R 38 S 2220 Although the State also argues that Joint Venture and Infinity should not be allowed to escape paying the penalty by its alleged fraud there is no ambiguity in the statute The bid did not meet the requirements of the statute and is null and void When a law is clear and unambiguous and its application does not lead to absurd consequences the law shall be applied as written La C art 9 New Orleans Rosenbush Claims Service Inc v The City of New Orleans 942223 p 11 La 4 653 So 538 544 95 10 2d Thus the trial court did not err in dismissing the State claims for liquidated damages because as articulated above s a non conforming bid must be rejected as non responsive There are contentions of a contract by acceptance of the bid offer however the bid offer was defective and not susceptible of acceptance Admittedly this conclusion seems harsh because in circumstances of this sort when there are two breaches of statutory responsibility one breach could be intentional and the other an oversight See e g Broadmoor 04 0211 040212 at pp 1920 867 So at 663 2d Had the State rejected the bid up front however there would have been no delay in awarding the contract to the lowest responsible bidder The first and second assignments of error are without merit The State argues in its final assignment of error that the trial court erred in dismissing its suit without addressing the tort actions The State contends citing Airline Const Co Inc v Ascension Parish School Bd 568 So 1029 1033 2d La 1990 that the Louisiana Supreme Court has implied that tort claims can be allowed in limited circumstances The State argues that the court purposefully declined to rule on that issue but it should be considered now We decline to rule however on whether under the facts before us that tort claims are actionable here The bid should have been rejected by the State without 5 consideration because it was non responsive Thus the alleged tort claims should never have arisen The LPWA is sui generis and provides the exclusive remedies available to parties in public construction work State of Louisiana through the Div of Admin v McInnis Bros Const 970742 p 9 La 10 701 So 97 21 2d 937 944 While circumstances may exist where tort claims might be actionable under the facts before us the intentional and negligent misrepresentation claims that the State makes against these defendants are adequately dealt with under the LPWA This assignment of error is without merit DECREE For the foregoing reasons we affirm the trial court judgment granting the exceptions of no cause of action filed by Infinity Surety Agency LLC and Benetech LLC Benetech LLC and JRDKS Construction LLC a Joint Venture and dismissing the claims of the State of Louisiana Division of Administration Office of Planning and Control The costs of this appeal in the amount of 17 545 1 are assessed against the State of Louisiana Division of Administration Office of Planning and Control AFFIRMED no
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