Opinion
No. C3-97-972.
Filed November 25, 1997.
Appeal from the District Court, Ramsey County, File No. C4974640.
Thomas R. Olson, Jane Everson Volz, (for appellant)
Hubert H. Humphrey III, Attorney General, Katherine L. McGill, Asst. Attorney General, (for respondent State)
Timothy A. Sullivan, Caryn S. Glover, (for respondent Veit)
Considered and decided by Huspeni, Presiding Judge, Toussaint, Chief Judge, and Kalitowski, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (1996).
UNPUBLISHED OPINION
The contract for a state project was awarded to respondent, the second lowest bidder, rather than to appellant, the lowest bidder, because appellant's bid was defective in failing to reflect an addendum. Appellant's motion for a temporary restraining order (TRO) enjoining the state from awarding the contract to respondent was denied. Because we hold that the defect could not be waived as a minor deficiency or informality within the meaning of Minn. R. 1230.0700, subp. 4, and conclude that appellant would therefore have little chance of success on the merits, we affirm.
FACTS
Respondent State of Minnesota hired Barr Engineering to prepare a project proposal for constructing a landfill. Barr prepared the proposal and afterwards faxed two addenda to the bidders. The form for proposing a bid read in part:
3. In submitting this bid it is understood that the right is reserved by the State of Minnesota to reject any and all bids * * *.
* * * *
5. All addenda shall become part of the bid and the contract. The CONTRACTOR shall insert addenda numbers in the spaces provided where indicated on the first page of the proposal.
The lowest bid was $2,330,000 from appellant Duininck Brothers, Inc. (Duininck); the next lowest, for $2,364,000, or $34,000 more than Duininck's bid, was from respondent Veit Company (Veit).
The Duininck bid did not reflect addendum 2. Barr originally thought the financial impact of addendum 2 would be about $3,000 to $4,000. The state determined that the impact of addendum 2 was minimal, waived the defect in Duininck's bid as a technicality, and said it would award the contract to Duininck. Duininck claimed to have considered addendum 2 in preparing its bid and agreed to complete the contract at its bid price.
Veit sued the state and moved for a TRO; Duininck intervened. The court asked Barr to calculate the financial impact of addendum 2. After calculating, Barr reported that the impact of the addendum would be about $13,000 or $14,000 rather than the $3,000 or $4,000 they originally thought. The state then determined that the financial impact of addendum 2 could not be waived as a technicality and notified Duininck that it would not waive the omission in the bid and would award the contract to Veit. Veit dropped its motion for a TRO. Duininck brought an action against the state and moved for a TRO against Veit, and Veit intervened. Duininck's motion was denied.
DECISION
As a threshold matter, we address the state's motion to dismiss this appeal as moot. The state argued that because respondent Veit had done much of the work on the project before the appeal was heard, this court could grant no effective relief to appellant. We disagree. The state's argument would preclude appellate review of almost any denial of a motion for a TRO because such a denial generally means that the activity sought to be enjoined goes forward. While the practical realities of the situation are a factor in our review of the denial of a motion for a TRO, the fact that the activity has moved forward in the interval between the denial and the appeal does not make the appeal moot. We therefore shall review the merits of the denial of appellant's motion for a TRO.
A decision on whether to grant a temporary injunction is left to the discretion of the trial court and will not be overturned on review absent a clear abuse of that discretion.
Carl Bolander Sons Co. v. City of Minneapolis , 502 N.W.2d 203, 209 (Minn. 1993). Five factors govern the granting of temporary restraining orders: the nature of the parties' relationship; the balance between the harm to be suffered by the nonmoving party if the injunction is not granted and the harm to be suffered by the nonmoving party if it is granted; the likelihood of the moving party's success on the merits; the public interest involved; and any administrative burden imposed. Dahlberg Bros., Inc. v. Ford Motor Co. , 272 Minn. 264, 274-75, 137 N.W.2d 314, 321-22 (1965). Because likelihood of success on the merits is the dispositive factor here, it will be considered first.
Appellant concedes that the last factor has no application here. The district court addressed only the likelihood of success on the merits; however, in the interests of completeness, we will consider the other factors argued by appellant.
1. Duininck's likelihood of success on the merits
Minn. Stat. § 16B.09, subd. 1 (1996), provides that all state contracts "for which competitive bids are required must be awarded to the lowest responsible bidder, taking into consideration conformity with the specifications * * *." Minn. R. 1230.0700, subp. 4 (1995), provides that: "The state reserves the right to waive minor deficiencies or informalities in bids." Duininck argues that the omission of addendum 2 was a minor deficiency or informality that the state was obliged to waive and that the state therefore had no discretion to reject Duininck's bid. Duininck argues, alternatively, that if the state had discretion to reject the bid, the rejection violated substantive due process and was unlawful, arbitrary, and capricious.
The state determined that the omission of addendum 2 was a nonconformity in specifications, not a minor deficiency or informality. We note initially that, contrary to Duininck's argument, the state is not required to waive informalities; it has the option to waive them.
Minor informalities shall be waived if, in the judgment of the director , the best interest of the state would be served without prejudice to the rights of the other bidders.
Id. (emphasis added). Despite the mandatory "shall," waiving informalities is clearly discretionary with the director.
Even if the state were obliged to waive informalities, we are not persuaded that the omission of addendum 2 was an informality.
Examples of minor deficiencies include, but are not limited to, omission of the title of the signatory; failure to furnish required catalog cuts; and minor detail omissions.
Id. An addendum costing $13,000 to $14,000 is not a "minor detail."
Case law supports this conclusion.
On all matters involving the substance of a competitive bid, such as those which may affect the price, quality or quantity, or the manner of performance, or other things that go into the actual determination of the amount of the bid, there may be no material variation or deviation from the specifications.
Foley Bros., Inc. v. Marshall , 266 Minn. 259, 263, 123 N.W.2d 387, 390 (1963). Addendum 2 affected not only price, but also manner of performance: it required more frequent soil testing. Omitting recognition of this addendum in the bid was a material deviation from a specification. See also Carl Bolander Sons Co. v. City of Minneapolis , 451 N.W.2d 204, 207-08 (Minn. 1990) (holding that failure to comply with specification by listing a women-owned subcontracting firm with which the bidder would use best efforts to enter into a subcontract was a substantial and material variance); J. L. Manta, Inc. v. Braun , 393 N.W.2d 490, 491-92 (Minn. 1986) (holding that rejecting bid of lowest bidder because of an improperly made $6 correction on the bid was not arbitrary and capricious and was mandated by statute); Coller v. City of St. Paul , 223 Minn. 376, 385, 26 N.W.2d 835, 840 (1947) (holding that a bidder on the installation of parking meters "derived a substantial advantage or benefit over other bidders by bidding on the basis of its own method of installation instead of the method called for by the city's plans and specifications" and nullifying the contract between the city and that bidder); Lovering-Johnson, Inc. v. City of Prior Lake , 558 N.W.2d 499, 503 (Minn.App. 1997) (holding that deleting a plus sign from a defective bid so it became the lowest bid was a "modification of a material term after bid opening in violation of Minnesota's competitive bidding laws").
Manta describes "informalities" as "defects which do not reflect bad faith, undermine the procedures, or prejudice the rights of those intended to be protected by the procedures * * *." Id. , 393 N.W.2d at 491. Duininck argues that its defect did not reflect bad faith, undermine procedure, or prejudice another's right. Even assuming the argument is correct, however, it is not dispositive: Manta does not hold that every defect that does not reflect bad faith is an informality.
Duininck cites Schwandt Sanitation v. City of Paynesville , 423 N.W.2d 59, 66 (Minn.App. 1988) (holding that "the lowest responsible bidder in compliance with the bidding specifications and procedures has a legitimate expectation in being awarded the contract"), to argue that it had a constitutionally protected property interest in the contract. Duininck's argument is contingent on the presumption that it complied with the bidding specifications and procedures; this argument is defeated by our conclusion that Duininck did not comply. Therefore Duininck could have had no reasonable expectation in being awarded the contract.
Duininck cites Madsen-Johnson Corp. v. City of Becker , No. C1-95-1713 (Minn.App. Mar. 12, 1996), review denied (Minn. May 9, 1996), to argue that the omission of addendum 2 was not a material deviation because the additional cost it imposed was de minimis in light of the total contract cost. We note first that, as an unpublished opinion of this court, Madsen-Johnson has no precedential value, and second, that it is distinguishable because it did not concern the application of Minn. Stat. § 16B.09.
The district court did not abuse its discretion in denying Duininck's motion for a TRO based on its determination that Duininck would not succeed on the merits.
Relationship between the parties
Duininck argues that its status as the lowest responsible bidder established a contractual relationship with the state, citing Schwandt and Johnson v. City of Jordan , 352 N.W.2d 500, 504 (Minn.App. 1984). However, the Schwandt holding applies to "the lowest responsible bidder in compliance with bidding specifications and procedures." 423 N.W.2d at 66. Similarly, Johnson holds that the acceptance of a bid by municipal authorities creates a contract in situations where "all legal requirements are observed." Id . at 503. There was no contractual relationship between Duininck and the state because Duininck did not observe all legal requirements.
The balance of harm
[An unsuccessful low bidder] is entitled to recover the costs incurred in preparing the unsuccessful bid * * * and its expenses, including reasonable attorney fees * * *. Loss of profit shall not be considered an expense item.
Telephone Associates, Inc. v. St. Louis County Bd. , 364 N.W.2d 378, 383 (Minn. 1985). Duininck cites Telephone Associates to argue that because it could not recover lost profits even if it should have been awarded the contract, it will suffer irreparable harm if the TRO is denied. We disagree. First, the inability to recover lost profits on a contract that was improvidently awarded to another does not equate to irreparable harm; second, if it did equate to irreparable harm, a TRO would not repair that harm by allowing the recovery of lost profits. A TRO is not a means whereby one can be awarded something to which he is not entitled.
4. Public policy
Duininck argues that because its bid was $34,000 lower than Veit's, public policy favors awarding the TRO and the bid to Duininck. The state argues that public policy favors, and the statute mandates, awarding the bid to Veit, the lowest bidder to comply with the bid specifications. Duininck cites no law indicating that public policy is served by disregarding a statutory provision in order to save money.
Duininck's lack of likelihood of success on the merits, the absence of a contractual relationship between Duininck and the state, Duininck's inability to recover lost profits with or without a TRO, and the absence of a public policy rationale demonstrate that there was no abuse of discretion in denying Duininck's motion for a TRO.