Air Terminal Services, Inc., Application of
| Decision Date | 27 May 1964 |
| Docket Number | No. 4287,4287 |
| Citation | 393 P.2d 60,47 Haw. 499 |
| Parties | Application of AIR TERMINAL SERVICES, INC., a Virginia Corporation, Petitioner, for a writ of mandamus Directed to Fujio Matsuda, Director of Transportation of the State of Hawaii. Application of Ellen Lowe SHAM, on Behalf of Herself, All the Taxpayers of the State of Hawaii and All Members of the Public at Large Who Utilize Air Transportation Within the State of Hawaii, for a Writ of Mandamus Directed to Fujio Matsuda, Director of Transportation of the State of Hawaii. |
| Court | Hawaii Supreme Court |
SYLLABUS BY THE COURT
1. Insofar as the validity of the specifications for a public contract may be concerned, an unsuccessful bidder for the contract has no justiciable interest in that aspect of the case.
2. When the awardee of a public contract, named as a party defendant in a mandamus action which attacks the award made but seeks no injunctive relief, has been dismissed with prejudice, on the ground that relief is not being asked against the awardee, after opportunity to amend to state a claim for relief against the awardee has been given but not availed by of plaintiff--the action will be regarded as strictly a mandamus action.
3. In the exercise of sound judicial discretion a court should not grant a writ of mandamus where the public contract involved has not only been awarded but actually executed, and there has been part performance on the part of the successful bidder who is in possession and cannot be ousted, having been dismissed with prejudice at the commencement of the suit.
4. An unsuccessful bidder for a public contract cannot be granted a writ of mandamus compelling the acceptance of or further considertion of his bid when the contracting officer possesses discretion to reject all bids and the unsuccessful bidder cannot complain that such action would be arbitrary, the work having proceeded too far on the award already made to enable the contract to be let on the original terms.
5. Ordinarily, an injunction or decree preventing or rescinding an award of a public contract to another is granted an unsuccessful bidder only as an incident to mandatory relief to which the unsuccessful bidder is entitled.
6. Even if, upon suit of an unsuccessful bidder, the award of a public contract made by the contracting officer may be declared null and void notwithstanding inability of the court to mandate another award, such declaration will not be made when the contract has been executed and possession taken under it and the unsuccessful bidder fails to show that the acts of the contracting officer were in derogation of his clear legal right to be awarded the contract.
7. A contracting officer is not obliged to make an award of contract on the assumption that there will be forthcoming a signature not appended to the bid itself. A properly signed bid may be required as a guarantee that the formal agreement will be executed.
8. When the record shows that a doubt as to the adequacy of the financial resources of an unsuccessful bidder for a concession at a public airport was part of the history and circumstances of the case, a defense on that ground is not precluded by the fact that the minutes of the contracting authority do not set forth the reasons why the contract was awarded to another, or by the failure of the members of the board having the contracting power to state their reasons at a meeting.
9. Financial responsibility for the minimum guaranteed rent bid for a concession at a public airport under Act 245, S.L.1959, cannot be fully judged before the bid is made, and whiel the receipt and opening of the bid signifies under section 2 of the statute that the bidder is not out of the running, further consideration of the financial responsibility of the bidder for the bid as made is not precluded thereafter.
10. When the record shows that a doubt as to the adequacy of the financial resources of an unsuccessful bidder for a concession at a public airport was part of the history and circumstances of the case, the unsuccessful bidder cannot sustain the burden of showing that he had a clear legal right to the contract by merely showing that the contracting officer failed to accord him a hearing on his qualifications.
11. Injunctive relief, not mandamus, is the proper remedy when a taxpayer attacks the validity of specifications for a public contract.
12. A declaratory judgment is a matter of judicial discretion, and where governmental action is involved judgment should not be granted unless the need for relife is clear, not remote or speculative.
13. Pecuniary damage to the plaintiff as a taxpayer and taxpayers as a class is a requisite of a taxpayer's suit.
14. In a case of sale of public property where no expenditure of public money is involved, in the absence of fraud, actual or constructive, pecuniary damage to the taxpayers cannot be presumed. There must be a showing of loss of revenue which will result in an increase of tax burdens. Mere illegality is not enough.
J. Russell Cades, Honolulu (Smith, Wild, Beebe & Cades, Edward Y. C. Chun, Fong, Miho, Choy & Robinson, Honolulu, on the brief), for plaintiffs-appellants.
Willson C. Moore, Jr., Sp. Deputy Atty. Gen., Honolulu (Bert T. Kobayashi, Atty. Gen., on the brief), for defendant-appellee.
Before TSUKIYAMA, C. J., and CASSIDY, WIRTZ, LEWIS, and MIZUHA, JJ.
In the court below two action were brought, one by an unsuccessful bidder for the contract here involved, and the other by a taxpayer. The unsuccessful bidder, Air Terminal Services, is a foreign corporation and not a taxpayer of this State.
The contract was for installing, equipping and operating the food and beverage facilities concession at the new Honolulu International Airport terminal facilities. The successful bidder was Interstate Hosts, Inc., a Delaware corporation authorized to do business in this State. The contract was let by Hawaii Aeronautics Commission, hereinafter referred to as the 'Commission.' The date of execution of the contract does not appear, but it was pursuant to a resolution awarding the contract adopted by the Commission on November 10, 1960. 1
Pursuant to section 26 of the Hawaii State Government Reorganization Act of 1959 (Act 1, 2d Sp.S.L.1959, section 26, R.L.H.1955, 1963 Supp. § 14A-25) the Commission was abolished July 1, 1961. The Director of Transportation, to whom the Commission's functions were transferred, was substituted before trial.
The actions were consolidated for trial and at the conclusion thereof judgment was entered in each suit in favor of the Director of Transportation. The unsuccessful bidder and the taxpayer have appealed.
Nothing is involved except the scope of discretion on the part of the Commission which awarded the contract. All allegations of fraud and collusion have been stricken from the pleadings by order of the court, and no error is assigned in that regard. The court found after trial that:
Each complaint, 2 as amended, contained three causes of action. The first cause of action alleged that it was the 'plain legal duty' of the Commission to award the contract to Air Terminal Services, Inc. Pursuant thereto, there was a prayer that a writ of mandamus issue directed to the defending officer, 'compelling and commanding' him to 'forthwith accept the bid proposal of Air Terminal Services, Inc. * * *.' The second cause of action alleged that Air Terminal Services' bid was the highest, and that any determination to the contrary would constitute an abuse of discretion. There was a prayer of the complaint that defendant be commanded 'to forthwith exercise in good faith any discretion that may be vested in [him] to determine which among the bidders is the highest responsible bidder * * *.' 3 The last cause of action, designated the fourth, 4 alleged that the specifications were fatally defective, and that any award based thereon was void. The relief prayed for, if the specifications should be found void, was the rejection of all bids. But read with the allegations of the complaint that the contract had been awarded to Interstate Hosts, what was sought in this connection was really the cancelation of the award. Such cancelation also was a necessary incident to the relief sought by the other two prayers.
Interstate Hosts was made a party defendant but filed a motion to dismiss under H.R.C.P., Rule 12, 'for the reason that the Petition does not request relief against this respondent and could not request such relief under the facts alleged in the Petition.' Neither the plaintiffs nor the Commission, then the defendant, made any objection to the dismissal of this party. According to the minutes of February 15, 1961, the attorney for the plaintiffs 'submitted to the ruling of the Court and asked leave to amend the petition.' At the same hearing there was argued a motion to dismiss which had been filed by defendant Commission prior to that of Interstate Hosts, contending that the complaint in each action failed to state a claim upon which relief could be granted, and specifically contending in the taxpayer's action, inter alia, that 'even assuming Petitioner [taxpayer] to be a proper party having a proper interest to bring a taxpayer's class action to challenge the bid award of a public contract, 5 mandamus is an extraordinary remedy, and the Petitioner's proper relief is injunctive.' By order of February 20, 1961, the defendant Commission's motion was denied but that of Interstate Hosts was granted with leave to amend 'to allege facts sufficient to justify a claim for relief as against Respondent Interstate Hosts,...
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