Opinion
No. CV06 4014830
June 15, 2010
MEMORANDUM OF DECISION RE DEFENDANTS' MOTION TO DISMISS
The defendants City of Bridgeport, William O'Brien, Bernd Tardy, Robert Tetrault and John Fabrizi have filed a motion to dismiss the above-captioned matter claiming that the court lacks subject matter jurisdiction, as it relates these parties. First, the defendants argue that the plaintiff, CTTFB has no standing to challenge the award of a contract and make claims that the bidding process was undermined by fraud, corruption or favoritism because the complaint is deficient of specific facts. Second, the defendants claim that CTTFB is not an "unsuccessful bidder". Third, the plaintiff has failed to allege it has any standing based upon a status as a "taxpayer."
The plaintiffs, CTTFB, Inc. and Harry Mottram have filed their objection claiming that their action is not an "unsuccessful bidder" case. The plaintiffs state that there are no allegations of any competitive bid award in their complaint. Rather, the action alleges a violation of the Connecticut Unfair Practices Act (CUTPA) (General Statutes §§ 42-110 et seq.); antitrust statute (General Statutes §§ 35-24 et seq.) and the civil theft statutes (General Statutes §§ 52-564, 53a-119). The plaintiffs argue they have standing pursuant to the allegations regarding these statutes.
I Background
The plaintiff, Mottram, and the defendant, DeProfio, were partners in a corporate venture that held annual contracts from the City of Bridgeport to provide services to identify and locate owners of motor vehicles registered out of state and in other locations, who were claimed proper subjects of assessment and taxation by the City of Bridgeport. Neither Mottram or DeProfio were residents of the City of Bridgeport and their corporation, Connecticut Tax Fraud Bureau, LLC, (CTFB) of which Mottram and DeProfio were the principals, did not maintain an office in the City of Bridgeport.
In 2005, Mottram and DeProfio ended their business relationship and each formed their own new company. DeProfio formed Municipal Tax Services, LLC (MTS), and Mottram formed a new company, CT Tax Fraud Bureau (CTTFB). The present controversy has resulted from the award of a "bid" to identify motor vehicle tax delinquents, which was awarded to MTS, pursuant to a sole source provider provision in the purchasing ordinance of the City of Bridgeport. The plaintiffs allege that this contract should not have been awarded on the basis of a sole source provider provision, as the plaintiff was also in the business of identifying delinquent motor vehicle taxes. The plaintiffs allege they were prevented from bidding on the contract, as the contract was awarded under the sole source provider provision.
II Standards of Law A. Motion to Dismiss
"The standard of review for a court's decision on a motion to dismiss is well settled. A motion to dismiss tests, inter alia, whether, on the face of the record, the court is without jurisdiction . . . [O]ur review of the court's ultimate legal conclusion and resulting [determination] of the motion to dismiss will be de novo . . . When a . . . court decides a jurisdictional question raised by a pretrial motion to dismiss, it must consider the allegations of the complaint in their most favorable light . . . In this regard, a court must take the facts to be those alleged in the complaint, including those facts necessarily implied from the allegations, construing them in a manner most favorable to the pleader . . . The motion to dismiss . . . admits all facts which are well pleaded, invokes the existing record and must be decided upon that alone." (Internal quotation marks omitted.) State v. Marsh McLennan Companies, 286 Conn. 454, 463-64, 944 A.2d 315 (2008), quoting, Cogswell v. American Transit Ins. Co., 282 Conn. 505, 516, 923 A.2d 638 (2007).
B. Standing
"[A] court does not have subject matter jurisdiction over claims brought by persons who do not have standing . . ." (Citation omitted.) Orsi v. Senatore, 230 Conn. 459, 470, 645 A.2d 986 (1994); see also Middletown v. Hartford Electric Light Co., 192 Conn. 591, 595, 473 A.2d 787 (1984) ("[t]he issue of . . . standing must be addressed before we reach the substantive merits of the [parties'] claim, because standing has jurisdictional implications"), overruled in part on other grounds by Waterbury v. Washington, 260 Conn. 506, 545, 800 A.2d 1102 (2002).
"Standing is the legal right to set judicial machinery in motion. One cannot rightfully invoke the jurisdiction of the court unless [one] has, in an individual or representative capacity, some real interest in the cause of action, or a legal or equitable right, title or interest in the subject matter of the controversy." (Citations omitted.) (Internal quotation marks omitted.) Cottman Transmission v. Hocap Corp., 1 Conn.App. 632, 637-38, 803 A.2d 402 (2002). "[S]tanding does not hinge on whether the plaintiff will ultimately be entitled to obtain relief on the merits of an action, but on whether he is entitled to seek the relief." (Internal quotation marks omitted.) Id.
"Standing is established by showing that the party claiming it is authorized by statute to bring suit or is classically aggrieved . . . The fundamental test for determining aggrievement encompasses a well-settled twofold determination: first, the party claiming aggrievement must successfully demonstrate a specific, personal and legal interest in [the subject matter of the challenged action] . . Second, the party claiming aggrievement must successfully establish that this specific personal and legal interest has been specially and injuriously affected by the [challenged action] . . . Aggrievement is established if there is a possibility, as distinguished from a certainty, that some legally protected interest . . . has been adversely affected." (Citation omitted; internal quotation marks omitted.) Id., quoting, Avalon Bay Communities, Inc. v. Orange, 256 Conn. 557, 568, 775 A.2d 284 (2001). The plaintiffs bear the burden of establishing that they have standing. Fink v. Golenbock, 238 Conn. 183, 199, 680 A.2d 1243 (1996).
III Discussion
The plaintiffs claim that the contract should not have been awarded on the basis of "sole source provider since the plaintiffs were also in the business of identifying delinquent motor vehicle taxes. The plaintiffs also claim they were prevented from bidding on the contract since the contract was awarded pursuant to the sole source provider provision. The plaintiffs further allege that the individual defendants Fabrizi, Tetreault, Tardy and O'Brien awarded the contract to the defendant MTS without adhering to the City's competitive bidding process, and that the City acted improperly by converting a contract with CTFB to one with MTS or assigned CTFB's contractual rights to MTS. In summary, the plaintiffs allege that the City of Bridgeport's agents/employees failed to honor, respect observe and abide by the City Charter and Code of Ordinances.
Specifically, the complaint alleges that the City and the individual defendants violated the Connecticut Unfair Trade Practices Act, General Statutes § 42-110a et seq., antitrust statute, General Statutes § 35-24 et seq., and civil theft statute, General Statutes § 52-564 and General Statutes § 53a-119. The plaintiffs claim the defendants wrongfully interfered with the plaintiffs' business expectancies by: (1) conspiring with DeProfio to deprive Mottram of his own personal property and the value of other assets that Mottram and DeProfio owned jointly though the CT Tax Fraud Bureau, LLC; (2) executed a no-bid contract with the defendant Municipal Tax Services, LLC (MTS) for the identical services being provided to the City by the CT Tax Fraud Bureau, LLC, without competitive bidding; (3) claimed or accepted Deprofio's false claim that MTS was a sole source provider; (4) based its actions on the claim that MTS was a sole source provider; (5) continued to retain MTS to provide services after the expiration of the 2005 no-bid contract; (6) conspired to illegally and/or improperly converted the City's contract with the CT Tax Fraud Bureau, LLC to the 2005 no-bid contract; (7) violated the City's purchasing ordinance by engaging MTS as a sole source provider without undertaking a public bidding process; (8) denied the plaintiff the opportunity to competitively bid on the contract for services; (9) defrauded the plaintiffs and conspired to defraud the plaintiffs by violating the established bidding process and demonstrating favoritism; (10) committed unfair and deceptive trade practices in the course of trade or commerce and violated antitrust statutes. Additionally, the plaintiffs allege that the defendants DeProfio and MTS intentionally made false representations to the City to deprive Mottram and CTTFB of the opportunity to make a competitive bid. Finally, the plaintiffs allege they have suffered an ascertainable loss of money or property and may suffer further damages due to the illegal actions of DeProflo, MTS and the City of Bridgeport defendants.
The defendants argue that the plaintiffs have no standing to challenge the award of a contract and to make a claim that the bidding process was undermined by fraud, corruption or favoritism because the complaint is deficient of specific facts and because the plaintiffs are not unsuccessful bidders. The defendants further state that the plaintiffs are also not taxpayers of the City of Bridgeport and, thus, have no standing.
"As a matter of common law, an unsuccessful bidder on a state or municipal contract has no contractual right that would afford standing to challenge the award of a contract." Connecticut Associated Bldr. Contr v. Hartford, 251 Conn. 169, 178, 740 A.2d 813 (1999). "[A] bid, even the lowest responsible one, submitted in response to an invitation for bids is only an offer which, until accepted by the municipality, does not give rise to a contract between the parties." John J. Brennan Construction Corporation, Inc. v. Shelton, 187 Conn. 695, 702, 448 A.2d 180 (1982) . . . see also Spiniello Construction Co. v. Manchester, 189 Conn. 539, 456 A.2d 1199 (1983); Joseph Rugo, Inc. v. Henson, 148 Conn. 430, 171 A.2d 409 (1961); Austin v. Housing Authority, 143 Conn. 338, 345, 122 A.2d 399 (1956); 10 McQuillin, Municipal Corporations (3d Ed. Rev.) § 29.80. An unsuccessful bidder, therefore, has no legal or equitable right in the contract and the disappointed has no right to judicial intervention. Connecticut Associated Bldr. Contr v. Hartford, supra, 251 Conn. 179; see also, Perkins v. Lukens Steel Co., 310 U.S. 113, 129, 60 S.Ct. 869, 84 L.Ed. 1108 (1940); Austin v. Housing Authority, supra, 349." (Citation omitted.) Ardmare Construction Co. v. Freedman, 191 Conn. 497, 501-02, 467 A.2d 674 (1983)."
"Despite these substantial constraints, we have recognized a limited exception to the rules of standing in order to provide a means of protecting the public's interest in properly implemented competitive bidding processes. Under this exception, unsuccessful bidders have standing to challenge the award of a public contract "where fraud, corruption or acts undermining the objective and integrity of the bidding process existed . . ." (Citations omitted) Id. "Like a comparable action based on federal law, such a suit is brought by one who suffers injury as a result of the illegal activity, but the suit itself is brought in the public interest by one acting essentially as a "private attorney general." (Internal quotation marks omitted) Id., 179-80, quoting Scanwell Laboratories, Inc. v. Shaffer, 424 F.2d 859, 864 (D.C. Cir. 1970). In Unisys Corp. v. Dept. of Labor, 220 Conn. 689, 600 A.2d 1019 (1991), our Supreme Court expanded this exception to confer standing on a non-bidder under narrowly defined circumstances. Our Supreme Court ruled that a plaintiff who had not submitted a proposal on a public project had standing to challenge a specification contained in the bid documents if that specification precluded the plaintiff's participation in a manner that impaired the fairness of the bidding process. Id., 694-95. The policy to limit standing so as to deny some claims brought by unsuccessful and precluded bidders is designed to protect twin goals that serve the public interest in various, sometimes conflicting, ways. "The standing rules aim to strike the proper balance between fulfilling the purposes of the competitive bidding statutes and preventing frequent litigation that might result in extensive delay in the commencement and completion of government projects to the detriment of the public." (Internal quotation marks omitted; citations omitted.) Connecticut Associated Bldr. Contr v. Hartford, supra, 251 Conn. 180-81.
The plaintiffs are not unsuccessful bidders, as no bids were ever solicited by the City of Bridgeport or its individual defendant-agents. The contract was awarded as a "sole source" contract. Despite the fact that the plaintiffs were not taxpayers of the City of Bridgeport, the plaintiffs have standing to pursue their claims under the Connecticut anti-trust statutes. The plaintiffs have not alleged a breach of contract action, or claimed injunctive relief, but, rather, violations of the Connecticut anti-trust statutes, CUTPA and civil theft.
The parties have not addressed whether a municipality can be sued for a violation of CUTPA. Accordingly, this court will not address that issue. See. Neighborhood Bldrs., Inc. v. Town of Madison, supra, 294 Conn. 660-61.
A municipality can be sued under the anti-trust statutes. Cheryl Terry Enterprises v. Hartford, 270 Conn. 619, 626-27, 854 A.2d 1066 (2004). Id., 628. "Although the legislature has excluded certain organizations and activities from liability under the act, it has not excluded municipalities, or the municipal bidding process, from its provisions. Id., 628. The plaintiffs' status as a non-taxpayer is irrelevant to their standing to bring a claim under the anti-trust statutes, as well as, the civil theft statute and CUTPA. The plaintiffs do not assert claims that are common to every City taxpayer or claims that allege a reduction in the public treasury. Pursuant to CUTPA, the plaintiffs allege unfair and deceptive acts, anti-competitive behavior, favoritism, conspiracy, collusion and civil larceny. They allege an ascertainable loss of money or property as a result of the defendants' behavior and that they were directly affected by the defendants' actions. (Citations omitted.) Neighborhood Bldrs., Inc. v. Town of Madison; see also General Statutes § 42-110b(a). The plaintiffs do not seek to modify or nullify a decision of a municipal administrative agency. They could not protest a bid decision by the Purchasing agent because no bids were solicited or made. This is not a "bid protest" case. The City Board of Public Purchases has no jurisdiction to hear the plaintiffs' statutory causes of action. The plaintiffs do not need to exhaust administrative remedies, as claimed by the defendants.
The court recognizes that proof of the allegations contained in the plaintiffs' complaint may be difficult, but the pleadings are sufficient to allow the plaintiffs standing and to allow the plaintiffs to proceed. Accordingly, the defendants' Motion to Dismiss is hereby denied.