Opinion
No. CV-06-4019213S
April 24, 2006
MEMORANDUM OF DECISION
I
In this case, the defendant has filed a motion to dismiss the complaint for lack of subject matter jurisdiction.
On December 6, 2005, the plaintiff, Ferguson Mechanical Co., Inc., filed a one-count appeal from a decision of the defendant, James T. Fleming, commissioner of public works. The plaintiff appeals, pursuant to the Uniform Administrative Procedures Act (UAPA), General Statutes § 4-166 et seq., from the defendant's decision permitting the substitution of another subcontractor in the place of the plaintiff on a certain government building project. The plaintiff simultaneously filed an application for a stay and for a temporary injunction to enjoin the defendant from allowing a substitution of the plaintiff as a listed subcontractor in an awarded bid. The application alleges that the substitution was made without good cause as required by General Statutes § 4b-95.
The complaint alleges the following pertinent facts. On May 4, 2005, bidding was opened on a project known as the science and classroom building at Eastern Connecticut State University. The plaintiff, a mechanical HVAC subcontractor, supplied a subcontract bid to OG Industries (OG), a general contractor, in the amount of $12,000,000. OG listed the plaintiff as the subcontractor for the mechanical and HVAC work and submitted its proposal to the department of public works (department). On or about July 12, 2005, the department presented OG a contract as the responsible low bidder and requested that OG submit executed subcontract agreements. OG then presented a subcontract agreement to the plaintiff, which included a rider that required in relevant part that the plaintiff obtain surety bonds for payment and performance of the work, and set forth the terms under which OG would pay the plaintiff for the bonds. Over the course of subsequent negotiations, the plaintiff proposed revisions to the subcontract, but the parties were not able to come to terms on the provision regarding surety bonds. Over the course of subsequent negotiations, the plaintiff proposed revisions to the subcontract, but the parties were not able to come to terms on the provision regarding surety bonds. On August 5, 2005, OG notified the plaintiff that the rider in dispute would take precedence over the language of the subcontract form required by General Statutes § 4b-96. On August 11, 2005, the plaintiff repeated its objections to OG, complaining that the contractor was demanding a document not in the plaintiff's control and that its insurance broker would not provide, and was demanding that the plaintiff accept an amount for the extra work that was less than the cost of the work.
That same day, OG sent a request to the department to substitute the subcontractor pursuant to General Statutes § 4b-95(c), citing the plaintiff's unwillingness to sign the subcontract as the "good cause" required by the statute. The department allowed the request and the plaintiff filed a protest to the allowance of the substitution pursuant to General Statutes § 4b-100. On October 25, 2005, the department's hearing officer denied the plaintiff's protest, and the plaintiff filed with the defendant an appeal of the decision pursuant to § 4b-100-10 of the Regulations of Connecticut State Agencies. On November 21, 2005 the defendant denied the plaintiff's appeal. The plaintiff then brought the present appeal.
On January 9, 2006, the defendant filed a motion to dismiss the temporary injunction and complaint for lack of subject matter jurisdiction, accompanied by a memorandum of law in support of the motion and exhibits. On January 13, 2006, the plaintiff filed a memorandum of law in opposition. The matter was heard on the short calendar on January 17, 2006.
II
"A motion to dismiss . . . properly attacks the jurisdiction of the court, essentially asserting that the plaintiff cannot as a matter of law and fact state a cause of action that should be heard by the court . . . A motion to dismiss tests, inter alia, whether, on the face of the record, the court is without jurisdiction." (Internal quotation marks omitted.) Filippi v. Sullivan, 273 Conn. 1, 8, 866 A.2d 599 (2005). "Pursuant to the rules of practice, a motion to dismiss is the appropriate motion for raising a lack of subject matter jurisdiction." St. George v. Gordon, 264 Conn. 538, 545, 825 A.2d 90 (2003). "The issue of standing implicates subject matter jurisdiction and is therefore a basis for granting a motion to dismiss." Id. "If a party is found to lack standing, the court is without subject matter jurisdiction to determine the cause." (Internal quotation marks omitted.) Fort Trumbull Conservancy, LLC v. Alves, 262 Conn. 480, 485, 815 A.2d 1188 (2003). "[S]tanding . . . implicates a court's subject matter jurisdiction, which may be raised at any point in judicial proceedings." Stamford Hospital v. Vega, 236 Conn. 646, 656, 674 A.2d 821 (1996).
The defendant argues that the court lacks subject matter jurisdiction because the plaintiff has no standing under the UAPA to challenge the state's approval of the general contractor's substitution request. Specifically, he argues that contractors did not have standing to challenge public bid awards in the absence of allegations of fraud, favoritism or corruption, none of which are in the complaint; that subcontractors do not have standing to challenge public bid awards at all; and that the plaintiff is not statutorily authorized to appeal the defendant's decision.
The plaintiff counters that the appeal is not a challenge to a public bid award, but rather that the plaintiff was a successful bidder that was removed from a project by the conduct of the defendant, in violation of a statutory prohibition against the substitution of listed subcontractors without good cause. Specifically, it argues that the case law that the defendant relies on is inapplicable because it pertains to plaintiffs who were disappointed bidders. The plaintiff further argues that, once a subcontractor's bid is listed, as it was here, the bidder's offer "ripens into an entitlement provided by statute to sign a statutorily-mandated contract with the general contractor."
General Statutes § 4-183(a) provides in relevant part that "[a] person who has exhausted all administrative remedies available within the agency and who is aggrieved by a final decision may appeal to the Superior Court as provided in this section." "It is . . . fundamental that, in order to have standing to bring an administrative appeal, a person must be aggrieved." (Internal quotation marks omitted.) Bongiorno Supermarket, Inc. v. Zoning Board of Appeals, 266 Conn. 531, 538, 833 A.2d 883 (2003). "Pleading and proof of facts that constitution aggrievement are essential prerequisites to the trial court's subject matter jurisdiction over an administrative appeal." (Internal quotation marks omitted.) ABC, LLC v. State Ethics Commission, 264 Conn. 812, 823, 826 A.2d 1077 (2003). "[T]he party claiming aggrievement must successfully demonstrate a specific personal and legal interest in the subject matter of the decision . . ." (Internal quotation marks omitted.) Id.
General Statutes § 4b-95(c), which addresses the listing and substitution of subcontractors in bidding and contracts for construction on state buildings, states in relevant part that "[t]he awarding authority shall not permit substitution of a subcontractor for any designed subtrade work bid to be performed by the general contractor's own forces, except for good cause." The statute goes on to define the circumstances that constitute "good cause," including the "failure [of a subcontractor] to perform his agreement to execute a subcontract under section 4b-96." General Statutes § 4b-95(c). General Statutes § 4b-96 sets out the subcontract form to be presented to subcontractors by the awarded general contractor, and states that "[i]f a listed subcontractor fails within five days . . . after presentation of a subcontract by the general bidder selected as a general contractor, to perform his agreement to execute a subcontract in the form hereinafter set forth with such general bidder . . . the general contractor shall select another subcontractor, with the approval of the awarding authority." The subcontract mandated by the statute contemplates the inclusion of supplemental information based on the specific requirements of the project under negotiation.
General Statutes § 4b-100 authorizes the commissioner of public works to adopt regulations to implement the provisions of all of the bidding statutes. It states in relevant part that "[t]he Commissioner of Public Works shall adopt regulations . . . establishing a procedure for promptly hearing and ruling on claims alleging a violation or violations of sections 4b-91 to 4b-100, inclusive." General Statutes § 4b-100(b). The corresponding regulations are in §§ 4b-100-1 to 4b-100-10 of the Regulations of Connecticut State Agencies.
The Connecticut Supreme Court has declared that the competitive bidding statutes do not provide a disappointed bidder with 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. [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 . . . An unsuccessful bidder, therefore, has no legal or equitable right in the contract. Not unlike any other person whose offer has been rejected, the disappointed bidder has no right to judicial intervention." (Citations omitted; internal quotation marks omitted.) Connecticut Associated Builders Contractors v. Hartord, 251 Conn. 169, 178-79, 740 A.2d 813 (1999). The court has, however, created a narrow exception to this rule of standing, whereby "unsuccessful bidders have standing to challenge the award of a public contract where fraud, corruption or acts undermining the object and integrity of the bidding process existed." Id., 179.
The bidding statutes were amended in 1989, effectively adding further requirements concerning subcontractor substitution. While the legislative history of that amendment suggests that its provisions would benefit subcontractors, Connecticut case law since the amendment was adopted has continued to adhere to the principle that bidding statutes were enacted to protect the public, not bidders. "[S]tate and local competitive bidding laws have not been enacted in order to protect bidders. These laws serve to guard against abuses in the award of contracts such as favoritism, fraud or corruption and are enacted solely for the benefit of the public and in no sense create any rights in those who submit bids." (Citation omitted; emphasis added; internal quotation marks omitted.) Connecticut Associated Builders Contractors v. Hartford, supra, 251 Conn. 179.
General Statutes §§ 4b-95 and 4b-96 were amended by No. 89-367 of the 1989 Public Acts.
Speaking in favor of the bill that would amend the statutes, Representative Schmidle remarked that the bill "is good protection for the State of Connecticut, as well as for the small and medium contractors." 32 H.R. Proc., Pt. 19, 1989 Sess., p. 6460.
The issue of subcontractor standing has also been addressed by the courts. "[W]hile the courts have begun to broaden certain aspects of bidding standing, a subcontractor, not being a party to the bidding and award process for the general contract, has an interest too attenuated to permit standing." (Internal quotation marks omitted.) Kendland Co. v. Nicom Construction Group, Inc., Superior Court, judicial district of New London at Norwich, Docket No. 104321 (March 21, 1994, Hendel, J.) ( 11 Conn. L. Rptr. 198). "the inclusion of subcontractors in the litigation process would destroy the balance between fairness in the bidding process and the public's interest in the swift and efficient completion of its public works projects that the earlier cases have attempted to strike." Milward Corp. v. Hartford, Superior Court, judicial district of Hartford, Docket No. 702290 (December 6, 1991, Schaller J.) (5 Conn. L. 344).
While the plaintiff argues in its memorandum of law in opposition to the motion to dismiss that its status as a listed subcontractor provides it standing, it offers no authority to support such a proposition. Although the plaintiff's bid had been accepted and listed, the bidding process was not over, and the bidding statutes still applied. The plaintiff had not yet executed the subcontract. The plaintiff is correct in pointing out that the case law cited by the defendant pertains to plaintiffs who were disappointed bidders. The reasoning behind the holdings in those cases, however, is based on an analysis of the purpose of the bidding statutes generally Connecticut Associated Builders Contractors v. Hartford, supra 251 Conn. 179. The statutes at issue in this case are part of those same bidding statutes. The plaintiff has not made any allegations of fraud, favoritism or corruption that would bring it into the exception to the general rule that unsuccessful bidders have no standing. Therefore, it is found that the plaintiff is not an aggrieved person authorized to bring an appeal under the UAPA challenging a decision pursuant to the bidding process, and the court lacks subject matter jurisdiction.
In its memorandum of law, the plaintiff differentiates its status from that of other disappointed or unsuccessful bidders, stating that "when a subcontract bidder is listed, its offer ripens into an entitlement provided by statute to sign a statutorily-mandated contract with the general contractor."
Accordingly, the motion to dismiss is granted as the plaintiff is not an aggrieved person authorized to bring an appeal under the UAPA.