Bodine Elec. of Champaign, a Div. of Rathje Enterprises, Inc. v. City of Champaign

• Decision Date: 27 May 1999
• Docket Number: No. 4-98-0887,4-98-0887
• Parties: , 238 Ill.Dec. 368 BODINE ELECTRIC OF CHAMPAIGN, A DIVISION OF RATHJE ENTERPRISES, INC., a Delaware Corporation, Plaintiff-Appellant, v. The CITY OF CHAMPAIGN, an Illinois Municipal Corporation, and Potter Electric Services, Inc., a Corporation, Defendants-Appellees.
• Court: United States Appellate Court of Illinois

Page 471

711 N.E.2d 471

305 Ill.App.3d 431, 238 Ill.Dec. 368

BODINE ELECTRIC OF CHAMPAIGN, A DIVISION OF RATHJE

ENTERPRISES, INC., a Delaware Corporation, Plaintiff-Appellant, v. The CITY OF CHAMPAIGN, an Illinois Municipal Corporation, and Potter Electric Services, Inc., a Corporation,

Defendants-Appellees.

No. 4-98-0887.

Appellate Court of Illinois,

Fourth District.

Argued March 24, 1999.

Decided May 27, 1999.

T.G. Bolen, Michael J. Kehart, James E. Peckert, A. James Shafter (argued), Kehart, Shafter & Webber, P.C., Decatur, for Bodine Electric of Champaign.

Frederick C. Stavins, City Attorney, Shaun K. Stuart, Assistant City Attorney (argued), City of Champaign, Champaign, for City of Champaign.

David C. Thies (argued), Lara L. Quivey, Webber & Thies, P.C., Urbana, for Potter Electric Services, Inc.

Justice MYERSCOUGH delivered the opinion of the court:

Plaintiff, Bodine Electric of Champaign (Bodine), brought an action for declaratory judgment against the City of Champaign (City) to determine whether the submission of a 5% bid bond, rather than the required 10%, was a material variance that the City could not waive or an immaterial variance that the City had the discretion to waive. The trial court found for defendant City and denied the declaratory judgment, holding that plaintiff's bid bond of 5% was a material variance that could not be waived by the City. The trial court also dismissed plaintiff's remaining count for injunctive relief against the City and the next lowest bidder, defendant, Potter Electric Services, Inc. (Potter Electric), as well as plaintiff's breach of contract complaint for money damages against the City, holding that the counts were rendered moot by its declaratory judgment ruling. Plaintiff appeals the trial court's denial of declaratory relief and the dismissal of its counts for injunctive relief and money damages. We affirm.

I. BACKGROUND

The City is a home rule municipality located in Illinois. In August 1998, the City issued a request for bids, with bidding instructions, for the Champaign police facility expansion project. Bid item No. 15 included the installation of electrical and security systems, with an estimated budget range of $1,250,000 to $1,500,000.

A 10% bid bond was a condition under both the project's bid packet instructions and city ordinance. The bid packet stated that the bid bond would serve as a security deposit that would be forfeited as liquidated damages if the bidder refused to enter into a contract after its bid is selected.

The request for bids also included the following language:

"The Owner [City] reserves the right to reject any and all Bids and waive any informalities in the Bidding. The Owner [City] is not obligated to accept the lowest or any other bid, and may waive an informality in any proposal and award work in any manner in which it determines the interest of the City will be served. The City will use the criteria listed in Section 12.5.37 of the Champaign Municipal Code, 1985, as amended, and any other criteria which may be included in the Contract Documents to select the lowest, responsible bidder." (Brackets in original)

Although the City reserved this right to reject any and all bids or waive informalities, the record does not reflect, nor do the parties assert, that the City has exercised that right.

When the City opened the bids, it discovered that the plaintiff, Bodine, had submitted the lowest bid on item 15 in the amount of $998,000. However, Bodine submitted only a 5% ($49,900) bid bond, rather than the required 10% ($98,800). Therefore, even though Bodine's bid on item 15 was $245,000 less than the lowest figure for the City's budgeted range, and $78,000 less than the next lowest bidder, it was not in compliance with the bid packet instructions and the city ordinance. The next lowest bidder was Potter Electric, which bid $1,083,000, and included the required 10% bid bond.

On September 23, 1998, five days after the bids were opened, Bodine tendered a 10% bid bond. On that same date, the City's police expansion team met to discuss whether to accept or reject bid bonds submitted with less than the required 10%. The meeting minutes specifically alleged potential adverse ramifications of accepting insufficient bid bonds, including:

"1. Future bidders would not have any reason to submit the required 10% bid bond if a lower amount or 5% was accepted.

2. Contractors could take more risks with their bids, meaning they could submit lower bids, with littler [sic ] or no bid bond. They [contractors [ (brackets in original) ]] could determine if they are the low bidder and then provide the bond. The contractor[,] if after submitting a bid that is too low, could then withdraw from the bid process with a smaller, little or not [sic ] penalty. The City would not want to set such precedence [sic ], where less than the required 10% bid bonds were to be submitted.

3. Future bids and bond requirements would be suspect in that any amount could be submitted. It would become difficult to require a 10% bid bond."

The meeting minutes also suggest that the City's attorney would notify Bodine's attorney that Bodine had until September 25, 1998, to find case law demonstrating that the 5% bid bond could be waived by the City as a minor irregularity.

On October 2, 1998, the City concluded that the submission of a bid bond in less than the amount required was a material variance that would make a bid unresponsive. Shortly thereafter, the City held a pre-award meeting with Potter Electric. On October 16, 1998, Bodine filed a three-count complaint against the City and Potter Electric. Bodine sought injunctive relief against the City and Potter Electric in count I, money damages against the City in count II for breach of contract, and declaratory relief against the City in count III.

A hearing on Bodine's request for a declaratory judgment was scheduled for October 27, 1998. Bodine and the City submitted a stipulation and affidavits as to certain facts to the trial court.

On October 23, 1998, Potter Electric filed a motion for leave to be heard at the hearing on Bodine's request for declaratory relief and a motion to dismiss Bodine's complaint pursuant to section 2-619 of the Illinois Code of Civil Procedure (Code) (735 ILCS 5/2-619 (West 1996)).

On October 27, 1998, the trial court began the hearing on the declaratory judgment by hearing arguments on Potter's motion for leave to be heard and for leave to file a section 2-619 motion to dismiss. Over Bodine's objection, the trial court allowed both of Potter Electric's motions.

After hearing arguments for declaratory relief, the court ruled against Bodine. The court specifically cited the adverse ramifications listed in the meeting minutes favorably, asserting that it demonstrates that "it is irrefuted [sic ] that the variance here[,] if granted[,] would give a bidder a substantial advantage over other bidders." Then, based on its ruling in favor of the City on the declaratory judgment, the trial court found counts I and II for injunctive relief and money damages moot and dismissed the counts with prejudice.

II. ANALYSIS

A. Standard of Review in Declaratory Judgment Actions

The grant or denial of declaratory relief is discretionary, as reflected in the language of section 2-701 of the Code, stating that the court "may, in cases of actual controversy, make binding declarations of rights" in certain matters, including "the construction of * * * a municipal ordinance." (Emphasis added.) 735 ILCS 5/2-701 (West 1996); see also Howlett v. Scott, 69 Ill.2d 135, 142-43, 13 Ill.Dec. 9, 370 N.E.2d 1036, 1039 (1977). The trial court's exercise of discretion in these cases is not given the same deference as in other contexts. R.L. Polk & Co. v. Ryan, 296 Ill.App.3d 132, 142, 230 Ill.Dec. 749, 694 N.E.2d 1027, 1034 (1998), quoting State Farm Mutual Automobile Insurance Co. v. Dreher, 190 Ill.App.3d 182, 185, 138 Ill.Dec. 131, 547 N.E.2d 1, 3 (1989).

As explained in Chicago & Eastern Illinois R.R. Co. v. Reserve Insurance Co., 99 Ill.App.3d 433, 436-37, 54 Ill.Dec. 564, 425 N.E.2d 429, 432 (1981):

"Independent review is justified because the exercise of the trial court's discretion in granting or denying declaratory relief is not dependent upon factors which are difficult for an appellate tribunal to review, such as, for example, factual determinations of credibility."

Abuse of discretion means clearly against logic--the question is not whether the appellate court agrees with the circuit court, but whether the circuit court acted arbitrarily, without employing conscientious judgment, or whether, in view of all of the circumstances, the court exceeded the bounds of reason and ignored recognized principles of law so that substantial prejudice resulted. Smith v. Intergovernmental Solid Waste Disposal Ass'n, 239 Ill.App.3d 123, 136, 178 Ill.Dec. 860, 605 N.E.2d 654, 662 (1992).

The standard of review for declaratory judgments, therefore, is less deferential than abuse of discretion, but more deferential than de novo review. As stated by the supreme court in First National Bank v. County of Lake, 7 Ill.2d 213, 224, 130 N.E.2d 267, 274 (1955), the issue is "whether the decision of the trial court [in denying or granting declaratory relief] was proper."

B. Bid Variance: Did it Provide Bidder a Substantial Competitive Advantage

The parties agree that the test for determining whether a variance is "material," thereby requiring rejection of the proposal, is whether it gives a bidder a substantial advantage or benefit not enjoyed by other bidders. Leo Michuda & Son Co. v. Metropolitan Sanitary District of Greater Chicago, 97 Ill.App.3d 340, 344, 52 Ill.Dec. 869, 422 N.E.2d 1078, 1082 (1981). In Michuda, the appellate court upheld an injunction initiated by the second-lowest bidder on a public works project because the lowest bidder failed to list minority subcontractors as required in the bidding documents....