Alva Elec., Inc. v. Evansville-Vanderburgh Sch. Corp., 82S01–1307–PL–473.

• Citation: 7 N.E.3d 263
• Decision Date: 01 May 2014
• Docket Number: No. 82S01–1307–PL–473.,82S01–1307–PL–473.
• Parties: ALVA ELECTRIC, INC., Arc Construction Co., Inc., Danco Construction, Inc., Deig Bros. Lumber & Construction Co., Inc., Empire Contractors, Inc., Peyronnin Construction Co., Inc., and Wink Construction, Inc., Appellants (Plaintiffs below), v. EVANSVILLE–VANDERBURGH SCHOOL CORPORATION and EVSC Foundation, Inc., Appellees (Defendants below).
• Court: Supreme Court of Indiana

7 N.E.3d 263

ALVA ELECTRIC, INC., Arc Construction Co., Inc., Danco Construction, Inc., Deig Bros. Lumber & Construction Co., Inc., Empire Contractors, Inc., Peyronnin Construction Co., Inc., and Wink Construction, Inc., Appellants (Plaintiffs below),

v.EVANSVILLE–VANDERBURGH SCHOOL CORPORATION and EVSC Foundation, Inc., Appellees (Defendants below).

No. 82S01–1307–PL–473.

Supreme Court of Indiana.

May 1, 2014.

Jon Laramore, April E. Sellers, Shiv Ghuman O'Neill, Faegre Baker Daniels LLP, Indianapolis, IN, A.J. Manion, Manion Stigger, Evansville, IN, Tony Wayne Fehrenbacher, Evansville, IN, Attorneys for Appellants Alva Electric, Inc., et al.

Richard T. Mullineaux, Crystal G. Rowe, William F. English, Kightlinger & Gray, LLP, New Albany, IN, Attorneys for Appellee EVSC Foundation, Inc.

Patrick A. Shoulders, Robert L. Burkhart, Dirck H. Stahl, Ziemer Stayman Weitzel & Shoulders, LLP, Evansville, IN, Attorneys for Appellee Evansville–Vanderburgh School Corporation.

On Petition To Transfer from the Indiana Court of Appeals, No. 82A01–1201–PL–2

RUCKER, Justice.

In this case we are asked to decide whether the specific procedure employed by a school corporation to renovate one of its buildings violated Indiana's Public Work Statute and if so, whether certain participants in the renovation violated Indiana's Antitrust Act. We determine that under the facts presented, the Public Work Statute was violated but the Antitrust Act was not.

Background

Indiana, like other states, has enacted statutes governing the way certain public entities must select contractors for publicly funded construction jobs. These statutes are designed “to safeguard the public against fraud, favoritism, graft, extravagance, improvidence and corruption, and to insure honest competition for the best work or supplies at the lowest reasonable cost.” Angel v. Behnke, 166 Ind.App. 541, 337 N.E.2d 503, 509 (1975) (quotation omitted). Such statutes generally provide that public construction contracts exceeding certain dollar amounts must be awarded through a public bidding process. One of Indiana's primary competitive bidding statutes, the Public Work Statute, is codified at Indiana Code sections 36–1–12–1 through 21 and provides (with certain exceptions not relevant here) that “all public work performed or contracted for by ... political subdivisions ... and ... their agencies” shall be subject to specific bidding procedures and must comply with numerous regulations and specifications. Ind.Code § 36–1–12–1(a). Contracts for the construction or renovation of school buildings typically must comply with the competitive bidding requirements applicable to public works construction contracts. See Brooks v. Gariup Const. Co., 722 N.E.2d 834, 839 (Ind.Ct.App.1999), trans. denied; Sch. City of Gary, Ind. v. Cont'l Elec. Co., 149 Ind.App. 416, 273 N.E.2d 293, 296 (1971). See also 2008 Ind. Op. Att'y Gen. No. 5 (2008) (citing I.C. §§ 36–1–2–10, –13) (footnote omitted) (“School corporations are political subdivisions for purposes of the public work statute.”)

One mechanism for enforcing the Public Work Statute is available through the Public Lawsuit Statute—Indiana Code chapter 34–13–5—which permits “citizens or taxpayers” of a municipality “to bring an action questioning the validity or construction of any public improvement by the municipality.” Shook Heavy & Envtl. Constr. Grp. v. City of Kokomo, 632 N.E.2d 355, 357, 358 (Ind.1994) (applying predecessor to chapter 34–13–5). In addition Indiana Code section 24–1–2–7—contained in the Indiana Antitrust Act—“confers on private individuals the right to challenge the award of a government contract where the governmental entity and successful bidder have engaged in collusion or fraud.” Id. at 358 (citation omitted).

Facts and Procedural History

Facing a $6.5 million cut in state funding defendant Evansville–Vanderburgh School Corporation (“School Corporation”) determined that it could, over time, reduce its operating expenses by consolidating its administrativeoffices from several buildings into one. To this end School Corporation announced on January 11, 2010 that it intended to convert its former warehouse building (the “Building”) into administrative offices. Shortly thereafter School Corporation hired an architectural firm to design plans for the necessary renovation of the Building, and the firm submitted plans to School Corporation around the beginning of June, 2010.

In or around August, 2010 School Corporation determined it “did not have sufficient funds to complete, or publicly bid” the renovations. Br. of Appellee Foundation at 6. The School Corporation further concluded it could not sell bonds and levy a tax increase because it was already at its maximum tax rate. Id. In late October, 2010 School Corporation approached a contractor, Industrial Contractors, Inc. (“ICI”) about renovating the Building and accepting payment for the renovations over time. Specifically, School Corporation proposed a plan whereby it would convey the Building to a private non-profit entity and that entity would then contract with ICI for the renovations. See App. at 293. School Corporation identified the EVSC Foundation (“Foundation”), a local public school endowment corporation “formed to provide educational resources ... to the Evansville Vanderburgh School Corporation,” as the entity that would contract with ICI. App. at 293, 707. School Corporation officials selected this arrangement because Foundation was not subject to public bidding laws and therefore the renovation could occur more quickly. See App. at 275, 437–38. Apparently at this point Foundation had not been informed of the arrangement.

School Corporation contacted Foundation about the project in December 2010 proposing that Foundation “may be used to help facilitate the remodeling and purchase of the project” because Foundation was “not subject to public [bidding laws].” App. at 437. The essence of the plan was that: (1) School Corporation would convey ownership of the Building to Foundation; (2) Foundation would contract with ICI to execute the renovations as ICI had bid them to School Corporation; (3) Foundation would sell the Building back to School Corporation, accepting installment payments for the “sale” price in the precise amount and on the precise schedule that payments under ICI's construction contract were due; and (4) Foundation would make those payments to ICI. School Corporation, ICI, and Foundation implemented the plan through a series of six contracts among the parties.

In February of 2011, while the renovation was underway, the plaintiffs in this case—several area contracting businesses paying taxes in the school district (“Taxpayers”)—filed this action against School Corporation and Foundation (collectively, “Defendants”) seeking a declaratory judgment and injunctive relief for Defendants' alleged violation of public bidding statutes. Taxpayers later added a claim alleging Defendants' actions violated Indiana's Antitrust Act. Maintaining that “[b]oth sides agree on all the relevant facts,” Taxpayers moved for summary judgment requesting, among other things, the trial court declare “that the project violates public bidding laws,” and that “[t]he transaction also violates Indiana's anti-trust law.” App. at 122, 134, 147. Taxpayers further asked the trial court to void all the contracts constituting the transaction, to enjoin any further expenditure of public funds on the project, and to commence damages proceedings on the alleged antitrust violation. Defendants responded to Taxpayers' motion and filed their own motion for summary judgment. After a hearing the trial court granted Defendants' motion and denied that of Taxpayers. In so doing the trial court issued findings of fact, conclusions of law, and judgment determining among other things, “there is no doubt that the School [Corporation] engaged in the transactions in part to circumvent the public bidding statutes.” App. at 26. However, under its reading of the relevant statutes, the trial court determined the transactions did not constitute a violation. ¹ App. at 26. The trial court further concluded that in the absence of a violation of the Public Work Statute, Taxpayers' antitrust claims could not succeed. App. at 29.

Taxpayers appealed and in a divided opinion the Court of Appeals concluded the project violated the Public Bidding Laws and therefore reversed the trial court's judgment.²See Alva Elec., Inc. v. Evansville Vanderburgh Sch. Corp., 984 N.E.2d 668 (Ind.Ct.App.2013). Noting that the trial court concluded there was no violation of the Antitrust Act because it found no violation of the Public Bidding Laws, the Court of Appeals remanded this cause for further proceedings. In dissent Judge Friedlander largely agreed with the judgment of the trial court and also expressed concern about the adverse impact the majority opinion might have on the decisions of private foundations to support public schools. See id. at 684–86 (Friedlander, J., dissenting). Defendants sought transfer which we previously granted. See Alva Elec. Inc. v. Evansville Vanderburgh Sch. Corp., 990 N.E.2d 945 (Ind.2013) (Table).

Standard of Review

When reviewing the grant or denial of a motion for summary judgment “we stand in the shoes of the trial court.” City of Gary v. Ind. Bell Tel. Co., 732 N.E.2d 149, 153 (Ind.2000). Summary judgment is appropriate only when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Ind. Trial Rule 56(C). “In reviewing cross-motions for summary judgment, we consider each motion separately.” Girl Scouts of S. Ill. v. Vincennes Ind. Girls, Inc., 988 N.E.2d 250, 253 (Ind.2013). Where, as here, the dispute is one of law rather than fact, our standard of review is de novo. See Spangler v. Bechtel, 958 N.E.2d 458, 461 (Ind.2011). Further, the trial court in this case entered findings of fact and conclusions of law, “neither...