Baukol Builders v. County of Grand Forks

• Decision Date: 09 June 2008
• Docket Number: No. 20060120.,20060120.
• Citation: 751 N.W.2d 191,2008 ND 116
• Parties: BAUKOL BUILDERS, INC., Plaintiff and Appellant v. COUNTY OF GRAND FORKS, Defendant and Appellee.
• Court: North Dakota Supreme Court

751 N.W.2d 191

2008 ND 116

BAUKOL BUILDERS, INC., Plaintiff and Appellant v. COUNTY OF GRAND FORKS, Defendant and Appellee.

No. 20060120.

Supreme Court of North Dakota.

June 9, 2008.

Aaron Anthony Dean (argued), Fabyanske, Westra, Hart & Thomson, Minneapolis, MN, and Thomas L. Zimney (on brief), Zimney Foster, P.C., Grand Forks, ND, for plaintiff and appellant.

Douglas A. Christensen (argued) and Sarah S. Barron (on brief), Pearson Christensen & Clapp, PLLP, Grand Forks, ND, for defendant and appellee.

John J. Petrik (on brief), Vogel Law Firm, Bismarck, ND, for amicus curiae Associated General Contractors of North Dakota.

SANDSTROM, Justice.

[¶ 1] Baukol Builders, Inc., the lowest dollar bidder for a public improvement construction contract with Grand Forks County, appeals from a district court judgment dismissing Baukol Builders' action for injunctive and declaratory relief against the County after the court decided the County's decision to award the contract to another bidder was not arbitrary, unreasonable, or capricious. Baukol Builders also appeals from orders denying its post-trial motions. Baukol Builders claims the County used unstated and unwritten criteria in awarding the contract to another bidder and the County's decision violated applicable competitive bidding statutes. We hold the County did not use unstated or unwritten criteria in awarding the contract to another bidder, the County's decision to award the contract to another bidder did not violate the applicable competitive bidding statutes and was not arbitrary, unreasonable, or capricious, and the court did not abuse its discretion in denying Baukol Builders' post-trial motions. We affirm.

I

[¶ 2] In 2005, Grand Forks County decided to construct a new regional correctional center to alleviate crowding at its jail facility. Grand Forks County sold about $16 million in bonds to pay for the new correctional center and planned to help finance the new correctional center with revenue from housing additional federal prisoners. According to the correctional facility administrator, the federal government had been paying the County $70 per day to house federal prisoners, but the rate was scheduled to increase to $110 per day per prisoner on October 1, 2005.

[¶ 3] Grand Forks County hired an architect to develop plans and specifications for the new correctional center, and it was decided to solicit bids for the correctional center in a series of three bid packages. On July 23 and 30, and August 6, 2005, the County published an "invitation to bid" in the Grand Forks Herald for Bid Package #2, which consisted of the exterior shell for the new correctional center. The invitation to bid said bids would be received until August 11, 2005. A "call for bids" said construction would "start immediately" and the County's "suggested completion date of work [was] July 31, 2006." The "instructions to bidders" said the County anticipated an immediate award of the contract, and "[a]ll work should be substantially complete as soon as possible and the bidder shall indicate on his bid form the date he proposes to have the Work completed. The Owner's anticipated substantial completion date is July 31, 2006." The "bid form" required the bidder to state the number of calendar days in which the bidder agreed to complete the work. A pre-bid conference to consider questions from prospective bidders was held on August 2, 2005. Representatives from two other prospective bidders attended the conference, but no representatives from Baukol Builders attended the conference.

[¶ 4] On August 11, 2005, Grand Forks County opened bids for Bid Package #2 from three bidders: Baukol Builders, Construction Engineers, and Peterson Construction. Baukol Builders' bid for the project was $3,666,337, with a completion date of July 31, 2006. Construction Engineers' bid was $3,700,000, with a completion date of 270 calendar days, which the County calculated to be May 7, 2006. Peterson Construction's bid was $3,853,900, with a completion date of 329 calendar days. The Grand Forks County State's Attorney advised the County that a bidder's proposed completion date was a factor the County could consider in awarding the contract, because the bidder's proposed completion date was stated in the bid specifications, was required on the bid form, and would become the completion date in the contract between the County and the successful bidder. The state's attorney also advised the County:

The present GFCCC is built to house 80 inmates. As of today, there are 110 inmates, not including work release. The GF County Commission has a right (if not a duty) to consider multiple factors in determining the lowest and best bidder. Given the plain wording of the bid specifications, and given the state of the law in ND as it exists today, the completion date of the project is a factor to be considered. Additional factors that have been considered by the Committee include: 1) cost of continuing to operate in the present GF County Correctional Center; 2) cost of debt/money (in the form of bonds); 3) the ability to generate revenue two months sooner under [Construction Engineers'] proposal as opposed to [Baukol Builders'] proposal; 4) other factors that the architect may deem relevant.

In short, the award of the bid may be based upon other factors besides purely pecuniary factors.

On August 16, 2005, after discussions about the bidders' proposed completion dates and the potential for increased revenue from housing federal prisoners, the County awarded the contract to Construction Engineers.

[¶ 5] Baukol Builders then sued Grand Forks County to enjoin it from rejecting Baukol Builders' bid and to preclude the County from awarding the contract to another bidder. Baukol Builders sought a declaration that the County's decision to award the bid to the second lowest dollar bidder was illegal and void and that Baukol Builders was the lowest responsible bidder. The district court denied Baukol Builders' August 2005 request for a temporary restraining order.

[¶ 6] After a trial to the district court in November 2005, the court dismissed Baukol Builders' action. The court decided Grand Forks County's publication of the invitation to bid less than 21 days before opening the bids did not adversely affect Baukol Builders because it made a timely bid. The court concluded the County complied with the "lowest responsible bidder" requirement and the "lowest and best bidder" requirement of the applicable competitive bidding statutes, because those statutes allowed the County to exercise discretion to consider the ability, experience, integrity, efficiency, reputation, and capacity of the bidders. The court concluded each bidder's estimated completion date was an item of competition and the County was entitled to consider that an earlier completion date would generate additional revenue from the housing of federal prisoners, which could be applied to reduce the County's obligation on the bonds. The court found the County's decision to award the contract to Construction Engineers was not the result of favoritism, fraud, collusion, or coercion. The court decided Baukol Builders failed to establish that the County's decision to award the contract to Construction Engineers was arbitrary, unreasonable, or capricious.

[¶ 7] Baukol Builders appealed. While the appeal was pending, this Court granted Baukol Builders' motion for a temporary remand to resolve post-trial motions. Baukol Builders then moved for a new trial under N.D.R.Civ.P. 59(b)(4), claiming newly discovered evidence that, contrary to the trial testimony of the correctional facility administrator, the County did not have a signed written contract to house additional federal prisoners at the increased rate of $110 per day beginning on October 1, 2005. The court denied Baukol Builders' motion for a new trial, concluding the claimed newly discovered evidence would not have changed the result of the trial. The court also granted Baukol Builders' request for additional discovery from the five county commissioners in office when the bid was awarded to Construction Engineers. After conducting additional discovery, Baukol Builders renewed its post-trial motion. The court denied Baukol Builders' renewed motion, again concluding the claimed newly discovered evidence would not have changed the outcome of the trial because the County had no reason to believe a rate increase for federal prisoners would not take effect on October 1, 2005. The court decided the County acted in good faith in August 2005 in deciding the anticipated increased jail revenue warranted an earlier completion date for the project. The court concluded the County's failure to subsequently receive a rate increase did not negate its August 2005 decision to award the contract to Construction Engineers rather than to Baukol Builders.

[¶ 8] The district court had jurisdiction under N.D. Const. art. VI, § 8, and N.D.C.C. §§ 27-05-06 and 32-23-01. Baukol Builders' appeal is timely under N.D.R.App.P. 4(a). This Court has jurisdiction under N.D. Const. art. VI, §§ 2 and 6, and N.D.C.C. §§ 28-27-01, 28-27-02, and 32-23-07.

II

[¶ 9] Baukol Builders contends Grand Forks County did not comply with the statutory requirement of N.D.C.C. § 48-01.1-03 (1999) for advertising for bids by publishing notice for three consecutive weeks before the date for opening bids. Baukol Builders contends the district court erred in failing to reject or annul the bidding process on that ground.

[¶ 10] At the time of these bids, N.D.C.C. § 48-01.1-03 (1999) provided that, if the estimated cost of a public improvement construction contract was greater than $100,000, "the governing body shall advertise for bids by publishing for three consecutive weeks, the first publication to be at least twenty-one days before the date of the opening of bids." See N.D.C.C. § 48-01.2-04(1) (Supp.2007) (implementing same 21-day requirement).¹ Grand Forks...