BAKER v STATE
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No. 85-11 I N THE SUPREME COURT OF THE STATE O F MONTANA 1985 JOHN R. BAKER, d/b/a BAKER CONSTRUCTION, J.R. P l a i n t i f f and A p p e l l a n t , STATE O F MONTANA, MONTANA STATE BOARD OF EXAMINERS, GOVERNOR TED SCHWINDEN, SECRETARY OF STATE J I M WALTERMIRE, and ATTORNEY GENERAL MICHAEL T . GREELY, a s m e m b e r s t h e r e o f , and MORRIS BRUSETT, D i r e c t o r of t h e D e p a r t m e n t of A d m i n i s - tration, D e f e n d a n t s and R e s p o n d e n t s . APPEAL FROM: D i s t r i c t C o u r t of t h e F i r s t J u d i c i a l D i s t r i c t , I n and f o r t h e C o u n t y of L e w i s & C l a r k , T h e H o n o r a b l e G o r d o n B e n n e t t , Judge p r e s i d i n g . COUNSEL OF RECORD: For Appellant: L a r r y W. Moran, Bozeman, Montana For R e s p o n d e n t s : Allen Chronister, Asst. Montana Attorney General, Helena, S u b m i t t e d on B r i e f s : Decided: Filed: - OCT 9 1985 Clerk - - April 4, 1985 O c t o b e r 9 , 1385 M r . J u s t i c e J o h n Conway H a r r i s o n d e l i v e r e d t h e O p i n i o n o f t h e Court. T h i s i s an a p p e a l f r o m a n o r d e r e n t e r e d i n t h e D i s t r i c t Court o f t h e F i r s t J u d i c i a l District, i n and f o r t h e County o f Lewis and C l a r k , d i s m i s s i n g t h e a p p e l l a n t ' s c o m p l a i n t f o r failure to state a claim. ground t h a t p l a i n t i f f raises important The statutes regulating standing t o sue. lacked questions s u i t was d i s m i s s e d concerning acceptance o f on the This appeal standing, and b i d s and award o f the public works c o n t r a c t s . The t r a n s a c t i o n i n v o l v e d r e s u l t e d the State of Montana, Division of from t h e i s s u a n c e by Architecture and E n g i n e e r i n g o f an i n v i t a t i o n f o r b i d s f o r t h e c o n s t r u c t i o n o f t h e N a t i o n a l Guard Armory i n H a r l o w t o n , Montana. received Baker on January h e r e i n a f t e r Baker, 18, 1984. submitted J. a bid R. $420,300, a d i f f e r e n c e o f $440. Construction, f o r $420,740 C o n s t r u c t i o n Company, h e r e i n a f t e r E d s a l l , B i d s were and E d s a l l submitted a b i d f o r Raker p r o t e s t e d E d s a l l ' s b i d o n t h e a l l e g a t i o n t h a t E d s a l l was w o r k i n g b e y o n d t h e c o n t r a c t time on another ineligible t o bid 18-2-311, public works project and was therefore on a p u b l i c p r o j e c t b y v i r t u e o f M A and s e c t i o n 37-71-203, C MCA. section A h e a r i n g was h e l d b e f o r e t h e B o a r d o f E x a m i n e r s on March 1 3 , 1 9 8 4 . The B o a r d o f Examiners d e n i e d t h e p r o t e s t and awarded t h e b i d t o E d s a l l a s t h e low b i d d e r . I n D i s t r i c t Court Baker s o u g h t t o h a v e t h e a c t i o n of t h e S t a t e i n granting t h e bid t o Edsall declared i l l e g a l a s a violation MCA . of Baker section further 18-2-311, requested d e t e r m i n e t h a t Baker was was entitled to the MA C the award of and that section the 37-71-203, District Court lowest responsible bidder the contract. Baker and sought recovery for lost profits, and a t t o r n e y ' s for failure granted. fees. to bidding costs, litigation costs D e f e n d a n t s f i l e d a motion state a claim upon which t o dismiss relief The D i s t r i c t C o u r t g r a n t e d t h e m o t i o n . can be I t i s from t h a t o r d e r t h a t Baker a p p e a l s . The decisive issue in this appeal i s whether Baker lacked standing t o b r i n g t h i s a c t i o n . The statute governing the award of construction contracts provides: " (1) F o r t h e c o n s t r u c t i o n o f a b u i l d i n g c o s t i n g more t h a n $25,000, t h e d e p a r t m e n t of administration shall: ... "(c) u n d e r t h e s u p e r v i s i o n and w i t h t h e approval o f t h e board o f examiners, s o l i c i t , a c c e p t , and r e j e c t b i d s and award all contracts to t h e lowest q u a l i f i e d b i d d e r considerTng conformity terms and with specifications and Section r e a s o n a b l e n e s s o f b i d amount. I' (Emphasis added. ) 18-2-103 ( c ) , MCA. The s t a t u t e s f u r t h e r s t a t e t h a t : ". . . A public contractor, a s defined i n 37-71-101, who has been awarded a c o n t r a c t by t h e s t a t e o f Montana o r any b o a r d , commission, o r d e p a r t m e n t t h e r e o f o r by a n y b o a r d o f c o u n t y c o m m i s s i o n e r s o r by a n y c i t y o r town c o u n c i l o r agency thereof for the construction or r e c o n s t r u c t i o n o f a p u b l i c work and i s working beyond the contract time (including any authorized time extensions) shall not submit any additional bids o r proposals o r e n t e r i n t o a n y a d d i t i o n a l c o n t r a c t w i t h any p u b l i c a g e n c y o f t h e s t a t e o f Montana, county, o r c i t y t h e r e o f u n t i l he h a s c o m p l e t e l y e x e c u t e d t h e c o n t r a c t upon which h e i s w o r k i n g beyond c o n t r a c t t i m e and a l l s u p p l e m e n t a l a g r e e m e n t s t h e r e t o . ". . . A p u b l i c c o n t r a c t o r s h a l l n o t be c o n s i d e r e d t o b e w o r k i n g beyond c o n t r a c t time if t h e d e l a y i s c a u s e d by a n a c c i d e n t o r c a s u a l t y produced by p h y s i c a l c a u s e which i s n o t p r e v e n t a b l e b y human f o r e s i g h t , i . e . , any o f t h e m i s a d v e n t u r e s termed an 'act of 18-2-311 and 18-2-312, S e c t i o n 37-71-203, God. '" Sections MCA. MCA p r o v i d e s : ". . . A l l b i d s and p r o p o s a l s f o r t h e construction of any public contract project subject t o the provisions of t h i s c h a p t e r s h a l l c o n t a i n a s t a t e m e n t showing t h a t t h e b i d d e r o r c o n t r a c t o r i s d u l y and r e g u l a r l y l i c e n s e d hereunder and i s n o t p r e s e n t l y w o r k i n g beyond t h e c o n t r a c t time, including authorized time e x t e n s i o n s , on any p r e v i o u s l y awarded public contract project. The number and c l a s s o f s u c h l i c e n s e t h e n h e l d by s u c h p u b l i c c o n t r a c t o r s h a l l a p p e a r upon s u c h b i d o r p r o p o s a l , and no c o n t r a c t s h a l l b e awarded t o any c o n t r a c t o r u n l e s s h e i s the holder of a license i n t h e c l a s s w i t h i n which t h e v a l u e o f t h e p r o j e c t s h a l l f a l l a s h e r e i n p r o v i d e d and u n l e s s the public contractor has completely e x e c u t e d any p r e v i o u s c o n t r a c t upon which h e h a s worked beyond c o n t r a c t t i m e . " Baker asserts bidding that statutes government and where agencies a must violation of abide a by statute the or r e g u l a t i o n g i v e s an advantage t o one b i d d e r t h e c o u r t s should allow the aggrieved bidder a right of recovery. f u r t h e r m a i n t a i n s t h a t by i n v i t i n g o f f e r s , that will they bidding be statutes, considered an implied Baker and r e p r e s e n t i n g pursuant to the contract exists competitive between the government and t h e b i d d e r s t h a t t h e government w i l l c o n s i d e r bids fairly and Baker cannot theory. honestly base within his plea the s t a t u t o r y procedures. for relief on contract I t i s a w e l l founded p r i n c i p l e o f c o n t r a c t law t h a t a c o n t r a c t d o e s n o t e x i s t p r i o r t o t h e a c c e p t a n c e o f a b i d by a n agency: " [A]n o r d i n a r y a d v e r t i s e m e n t for bids o r tenders i s not i t s e l f an o f f e r but t h e b i d o r t e n d e r i s a n o f f e r which c r e a t e s no r i g h t u n t i l a c c e p t e d . Even t h o u g h t h e of a municipality expressly charter r e q u i r e s t h a t a c o n t r a c t s h a l l b e awarded a t o the lowest responsible b i d d e r , c o n t r a c t i s n o t formed u n t i l t h e l o w e s t bid is in fact accepted." 1 Williston on Contracts, S 3 1 (3rd. Ed. 1957). Courts from our sister jurisdictions have likewise held: . ". . in Alaska, as elsewhere, an agency's solicitation of bids is not an offer, but rather a request for offers; no contractual rights based on the content of a bid arise prior to its acceptance by the agency. Beirne v. Alaska State Housing Authority, 454 P.2d 262, 264 (Alaska 1969) .I1 King v. Alaska State Housing Authority (Alaska 1981) 633 P.2d 256 at 261. See also Gulf Oil Corp. v. Clark Cty. (Nev. 1978), 575 P.2d This authority conjunction statutes. accept with the is most language persuasive of when state's this read in bidding The department was under a statutory obligation to the lowest responsible bidder. The Department's solicitation of bids was not an offer. response to the solicitation an offer. Nor was Baker's Because the Department rejected Baker's bid, no contract ever came into existence. As a result, recovery based upon contract theory cannot be had. The policy behind the bidding statute also precludes any finding of standing for Baker to bring the action. The statute's primary function is to benefit the citizens. This premise is stated in 72 C.J.S., supplement, Public Contracts "Competitive bidding statutes are primarily intended for the benefit of the public rather than for the benefit or enrichment of bidders, and consideration of advantages or disadvantages to bidders must be secondary to the general welfare " of the public ... There are two views expressed as to whether such a person or entity has standing to request the judicial award of the c o n t r a c t o r s e e k damages from t h e d e p a r t m e n t . arena, the Circuit disappointed Procedures bidder Act, 5 Court of Appeals has standing U.S.C. S702, has under which the In t h e f e d e r a l held that a Administration provides, "A person s u f f e r i n g l e g a l wrong b e c a u s e o f a g e n c y a c t i o n , o r a d v e r s e l y a f f e c t e d o r a g g r i e v e d by a g e n c y a c t i o n w i t h i n t h e meaning o f a relevant statute, i s e n t i t l e d t o j u d i c i a l review t h e r e o f . " Scanwell L a b o r a t o r i e s , F.2d 859. Inc. (D.C.Cir. 1 9 7 0 ) , 424 it was s o e x p r e s s e d i n Stuewe v. s t a n d i n g and ( 1 9 1 2 ) , 4 4 Mont. mandamus Shaffer T h i s j u r i s d i c t i o n h a s adopted t h e view t h a t t h e r e i s no such Hindson v. is remedy 429, 120 P. available to 485, the i n r u l i n g t h a t no unsuccessfu1 bidder. " T h e r e was n o t a n y c o n t r a c t u a l r e l a t i o n e x i s t i n g b e t w e e n him and t h e b o a r d , and h i s s t a t u s a s an unsuccessful bidder does not make him a party beneficially The advertisement for interested b i d s i s n o t an o f f e r w h i c h by a c c e p t a n c e I t i s m e r e l y an constitutes a contract. i n v i t a t i o n t o e v e r y b i d d e r t o make an o f f e r , which t h e b o a r d may a c c e p t , and a c o n t r a c t r e s u l t ; b u t a p a r t y whose o f f e r i s n o t a c c e p t e d c a n n o t complain o r invoke t h e a i d o f t h e c o u r t s t o compel t h e b o a r d t h e provision t o accept h i s o f f e r o f law f o r l e t t i n g c o n t r a c t s - -i s of t h c h a r a c t e r t o t h e l o w e s t b i d d e r - -r t h e is fo b e n e f i t -f the p u b l i c , - - -t o and d o e s n o c o n f e r a n y r i g h t upon t h e l o w e s t b i d d e r a s su - -c h . " (Emphasis a d d e d . ) ... . .. The c o u r t noted t h e only s t a n d i n g which Stuewe had i n the c o u r t s was a s a t a x p a y e r , and n o t a s a n u n s u c c e s s f u l b i d d e r . In the present matter, Baker failed to allege i n D i s t r i c t C o u r t and on a p p e a l s t a n d i n g a s a t a x p a y e r . The t r i a l c o u r t found a p p e l l a n t d i d n o t h a v e s t a n d i n g under either (S 18-2-311, of the statutes MCA o r S 37-71-203, two s t a t u t e s w e r e n o t made losing contractors. cited MCA) . in his complaint H e noted t h a t t h e s e f o r t h e b e n e f i t o f competing o r They w e r e made f o r t h e p u b l i c and d o n o t provide the noted, a losing bidder with t a x p a y e r may have standing. As previously s t a n d i n g i f h e c a n show h e h a s b e e n h u r t , b u t i n t h i s c a s e a p p e l l a n t f a i l e d t o a l l e g e h e was a taxpayer. Stuewe v . Hindson ( 1 9 1 2 ) , 4 4 Mont. 429, 120 P. 485. Baker a r g u e s t h a t t h e l a n g u a g e o f t h e Montana Administ r a t i v e Procedure A c t i s s i m i l a r t o t h e f e d e r a l AdministraOur A c t i s n o t t h e e q u i v a l e n t o f t i v e Procedure A c t . S e c t i o n 2-4-702, federal A c t . MCA, the r e q u i r e s a person t o have exhausted a l l a d m i n i s t r a t i v e remedies b e f o r e being e n t i t l e d t o judicial the review. requirements Here, for Baker d i d n o t a t t e m p t t o a l l e g e judicial review. Most i m p o r t a n t , the c o m p l a i n t was n o t f i l e d w i t h i n 30 d a y s o f t h e d e c i s i o n o f t h e S 2-4-702 ( 2 ) , MCA. agency a s r e q u i r e d under h e r e was The c o m p l a i n t f i l e d t h r e e months a f t e r t h e f i n a l d e c i s i o n . Ac- c o r d i n g l y , Baker i s n o t e n t i t l e d t o j u d i c i a l r e v i e w u n d e r t h e Montana A d m i n i s t r a t i v e P r o c e d u r e A c t . I n a d d i t i o n , w e have h e l d t h a t t h e d i s c r e t i o n o f the agency t o award p u b l i c work c o n t r a c t s t o t h e l o w e s t b i d d e r i s not subject t o judicial S l e t t e n C o n s t r u c t i o n Co. Mont. 463, 307, 516 P.2d 110 P.2d parties. Nor 964. faith, of 1149; City of Great F a l l s Koich v . we w i l l Cvar n o t make ( 1 9 4 1 ) , 111 Mont. a contract In the absence of any for showing o f o r c o r r u p t i o n o f t h e Department, discretion ( 1 9 7 3 ) , 1.63 will not be disturbed. See, no contractua 1 relationship arose. bad the exercise Koich, supra. B a k e r ' s b i d was n o t a c c e p t e d by t h e Department. result, the awarded t h e c o n t r a c t i f E d s a l l was n o t t h e bidder. fraud, v. i s t h i s C o u r t p r e p a r e d t o v e n t u r e t h a t Baker would h a v e been successful review u n d e r normal c i r c u m s t a n c e s . Baker As a has p r e s e n t e d no argument upon which a bad f a i t h c l a i m c o u l d b e based. Nor a c t i n g i n bad was there faith. any proof that the Department was The Department o n l y s e c u r e d t h e b e s t product a t t h e lowest p r i c e f o r t h e b e n e f i t of the taxpayers, not the bidder. While a p p e l l a n t h a s standing, his laches p r e v e n t h i s b e i n g awarded t h e c o n t r a c t . Accordingly, affirmed. the judgment of the District Court is Mr. Justice Frank B. Morrison, Jr., s p e c i a l l y concurring: I agree with t h e r e s u l t i n t h i s case. stated a claim for relief Plaintiff has not entitling plaintiff to damages. P l a i n t i f f should have s o u g h t j u d i c i a l review p u r s u a n t t o t h e p r o v i s i o n s o f t h e Administrative Procedure A c t . f a i l e d t o d o s o , p l a i n t i f f i s w i t h o u t a remedy. Having
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