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Byrne and Jones Enterprises, Inc. v. Monroe City R-1 School District

Court of Appeals of Missouri, Eastern District, Second Division

November 12, 2014

BYRNE AND JONES ENTERPRISES, INC. D/B/A BYRNE AND JONES CONSTRUCTION, Appellant,
v.
MONROE CITY R-1 SCHOOL DISTRICT, Respondent.

Appeal from the Circuit Court of Monroe County Honorable Rachel Bringer Shepherd

LAWRENCE E. MOONEY, PRSIDING JUDGE

Byrne & Jones, [1] an unsuccessful bidder on a public-works project, appeals the circuit court's dismissal of its petition for lack of standing. Because Byrne & Jones cannot assert an interest under the relevant competitive-bidding statute, which is for the benefit of the public only, we hold that Byrne & Jones lacks standing to bring its cause of action. We therefore affirm the dismissal of its petition.

Factual & Procedural Background

The Monroe City R-l School District wished to build a new athletic stadium at the Monroe City High School. Two companies submitted bids for the project: Byrne & Jones and ATG Sports, Inc. The school district awarded the project to ATG Sports.

Two and one-half months later, Byrne & Jones filed its petition in the circuit court requesting the court to enjoin the district from entering into a contract with ATG Sports for the design and construction of the stadium project, and to award Byrne & Jones its bid-preparation costs in connection with the project.[2] Byrne & Jones alleged that the bidding procedures used by the school district did not permit all bidders to compete on equal terms and did not give other bidders a fair opportunity to bid against ATG Sports. Byrne & Jones asserted that in accepting the bid from ATG Sports, the school district acted arbitrarily, capriciously, unfairly, and in violation of the competitive-bidding process required by law. Further, Byrne & Jones alleged that in awarding the project to ATG Sports, the school district did not act in good faith, or in the best interest of the public, but acted in collusion with and for the benefit of ATG Sports.

The school district moved to dismiss Byrne & Jones's petition. Citing a long line of Missouri cases, the district asserted that Byrne & Jones lacked standing as an unsuccessful bidder to challenge the award of the contract to ATG Sports because it had no vested or protectable interest in the award of the public-works contract. State ex re!. Johnson v. Sevier, 98 S.W.2d 677 (Mo. 1936); Metcalf & Eddy Sews., Inc. v. City of St. Charles, 701 S.W.2d 497 (Mo. App. E.D. 1985); and State ex rel Page v. Reorganized Sch. Dist. R-VI of Christian Cnty., 765 S.W.2d 317 (Mo. App. S.D. 1989). Byrne & Jones, in opposing the motion, cited two cases that recognized standing for the unsuccessful bidder to challenge a contract that was not fairly bid. Metro. Express Servs., Inc. v. City of Kansas City, 23 F.3d 1367 (8th Cir. 1994); and Public Communications Servs., Inc. v. Simmons, 409 S.W.3d 538 (Mo. App. W.D. 2013). Byrne & Jones also cited out-of-state decisions that allowed an unsuccessful bidder to recover bid-preparation expenses. The circuit court concluded that Byrne & Jones lacked standing and therefore entered judgment sustaining the school district's motion and dismissing the petition. Byrne & Jones appeal the circuit court's ruling.

Discussion

A party must have standing to bring an action in a Missouri court. Schweich v. Nixon, 408 S.W.3d 769, 774 (Mo. banc 2013). At its most basic level, standing "simply means that the party or parties seeking relief must have some stake in the litigation." Lebeau v. Comm 'rs of Franklin Cnty., Missouri, 422 S.W.3d 284, 288 (Mo. banc 2014). A party seeking relief must show that he is sufficiently affected by the challenged action to justify consideration by the court and that the action violates his particular rights and not those of some third party. Moynihan v. Gunn, 204 S.W.3d 230, 234 (Mo. App. E.D. 2006). When a party seeks declaratory or injunctive relief, the criterion for standing is whether the plaintiff has a legally-protectable interest at stake. Battlefield Fire Prot. Dist. v. City of Springfield, 941 S.W.2d 491, 492 (Mo. banc 1997). A legally-protectable interest exists if the plaintiff is directly and adversely affected by the action in question or if the plaintiffs interest is conferred by statute. Ste. Genevieve Sch. Dist. R II v. Bd. of Aldermen of City of Ste. Genevieve, 66 S.W.3d 6, 10 (Mo. banc 2002). The interest sought to be protected must arguably be within the zone of interests to be protected or regulated by the statute in question. Harrison v. Monroe Cnty., 716 S.W.2d 263, 266 (Mo. banc 1986)(citing Ass'n of Data Processing Serv. Orgs., Inc. v. Camp, 397 U.S. 150, 153 (1970)). Whether a party has standing is a question of law that we review de novo. Lebeau, ATI S.W.3d at 288.

Section 177.086, the relevant bidding statute here that sets forth the requirements for a school district's advertising and awarding of contracts for the construction of facilities, states in pertinent part:

No bids shall be entertained by the school district which are not made in accordance with the specifications furnished by the district and all contracts shall be let to the lowest responsible bidder complying with the terms of the letting, provided that the district shall have the right to reject any and all bids.

Section 177.086.2 (emphasis added).[3] The last emphasized phrase is key. The statute vests the school board with an absolute right to reject any and all bids. Because of this, rejection of a bid by the school district creates no vested interest or property right in the rejected bidder. La Mar Const. Co. v. Holt Cnty., R-II Sch. Dist, 542 S.W.2d 568, 570 (Mo. App. 1976). Long-recognized is the principle of law that "where a public body reserves the right to reject any and all bids that are submitted to it they are empowered to do just that and by rejecting a bid they create no vested interest or property right in the rejected bidder." Id. And indeed, a long and well-established line of Missouri cases holds that an unsuccessful bidder competing for a government contract does not have a special pecuniaiy interest in the award of a contract to it, and therefore the disappointed bidder cannot state a cause of action challenging the award of the contract to another bidder. State ex rel Johnson v. Sevier, 98 S.W.2d 677 (Mo. 1936); La Mar Const., 542 S.W.2d at 569-70; Metcalf & Eddy Servs., Inc. v. City of St. Charles, 701 S.W.2d 497 (Mo. App. E.D. 1985); State ex rel. Mid-Missouri Limestone, Inc. v. Cnty. of Callaway, 962 S.W.2d 438 (Mo. App. W.D. 1998). Rejection of a bid does not give the bidder any private right that they can enforce for two reasons: (1) no contract was made; and (2) the legislature enacted the competitive-bidding statutes for the benefit and protection of the public, not the bidders. Sevier, 98 S.W.2d at 489; La Mar Const., 542 S.W.2d at 569-70.

Byrne & Jones does not assert a contractual right.[4] Instead, the company sued to enforce and protect an alleged private right, as a participant in the Missouri public-contract bidding process. This position is untenable, however, because Section 177.086 is designed for the benefit and protection of the public, not the bidders. La Mar Const., 542 S.W.2d at 570; see also Sevier, 98 S.W.2d at 679 (statute that required government contracts be let to the "lowest and best" bidder designed for benefit and protection of public, not bidders). The legislature did not design Section 177.086 to shelter the rights of individuals, such as the unsuccessful bidder. La Mar Const., 542 S.W.2d at 570. Long-recognized is this policy of serving and protecting the public. Our courts and scholars alike have explained that legislative provisions such as Section 177.086, which require public works to be awarded upon a public letting to the lowest responsible bidder:

are for the purpose of inviting competition, to guard against favoritism, improvidence, extravagance, fraud and corruption in the awarding of municipal contracts, and to secure the best work or supplies at the lowest price practicable, and are enacted for the benefit of property holders and taxpayers, and not for the benefit or enrichment of bidders, and should be so construed and ...

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