Butler v. Federal Way School Dist. No. 210

• Decision Date: 04 April 1977
• Docket Number: No. 3661--I,3661--I
• Citation: 562 P.2d 271,17 Wn.App. 288
• Parties: Robert BUTLER, Trustee for Sanitary Cloverleaf Farms, Inc., a Washington corporation, bankrupt, Respondent, v. FEDERAL WAY SCHOOL DISTRICT NO. 210, a Municipal Corporation, Appellant, Foremost Foods Company, a division of Foremost-McKesson, Inc., Defendant.
• Court: Washington Court of Appeals

Page 288

17 Wn.App. 288

562 P.2d 271

Robert BUTLER, Trustee for Sanitary Cloverleaf Farms, Inc. a Washington corporation, bankrupt, Respondent, v. FEDERAL WAY SCHOOL DISTRICT NO. 210, a Municipal Corporation, Appellant Foremost Foods Company, a division of Foremost-McKesson Inc., Defendant.

No. 3661--I.

Court of Appeals of Washington, Division 1.

April 4, 1977.

Merrick, Hofstedt & Lindsey, Gary R. Eliasen, Seattle, for appellant.

Douglas F. Albert, P.S., Inc., Federal Way, for respondent.

CALLOW, Judge.

This case involves the rejection of a low bid to supply dairy goods to a public school district that was submitted by a bidder in timely fashion, yet mislaid by the school district at the time of public opening.

On July 7, 1972, the defendant school district published a call for bids for the supply of dairy products. The call for bids stated that all bids would be opened in public and In the call for bids, the defendant school district reserved 'the right to reject any and/or all bids, to split awards, and to waive informalities or irregularities in the bids or in the bidding, if the best interests of the District will be served thereby.' The plaintiff submitted a bid in timely fashion. The bids were opened at the scheduled time, but the plaintiff's bid was not opened at the public opening in the presence of the other bidders. Approximately 15 minutes after the bid opening, the plaintiff called defendant school district to find out who had made the lowest bid. It was then discovered that the plaintiff's bid had been misplaced by an employee of the school district in the bid folder. Plaintiff's bid was subsequently opened and the determination was made that the Sanitary Cloverleaf Farms bid was in fact the lowest bid. All of the bids at this time became matters of public record.

tabulated. The bids were to be received up to 2:30 p.m., July 28, 1972.

The trial court's findings best set out the actions of the school board in handling the bid proceedings. Those findings state in part:

VII

That defendant's purchasing agent . . . executed a written memorandum . . . detailing the events which occurred in the bid procedure, in which in good faith he chose to waive the clerk's misplacing the Sanitary Cloverleaf Farms Inc. bid which was in the bid file, and accept the bids as submitted.

VIII

That defendant's purchasing agent, prior to making a recommendation to defendant's school board in regard to the milk bid, defendant Federal Way School District No. 210 contacted the school board attorney and received advice that the clerk's misplacing of the Sanitary Cloverleaf Farm Inc.'s bid which was inadvertently unopened at the public bid opening but was in possession of the school district could be waived. . . . Defendant's school board representative recommended to the defendant school board that the plaintiff's bid be accepted as plaintiff's bid was the low bid.

IX

That on August 7, 1972 the defendant school board met and the school administration presented the bids received on the school lunchroom dairy products . . . In making the presentation it was pointed out that an irregularity occurred which could be waived. Recommendations . . . were made and it was pointed out that the legal advise (sic) offered by the school district attorney indicated that the district could award a contract on the purchase of dairy products as recommended. It was moved (and) seconded . . . that the Board of Directors accept the bids on school lunch and dairy products and make awards as recommended by the school administration . . . Prior to the directors voting on the motion, an . . . attorney for Foremost Foods, challenged the recommendations on the basis of the irregularity and indicated that Foremost Foods might seek legal action. (The attorney) requested that the bid be awarded to Foremost Foods. Following discussion among the directors and the school administration, . . . (the) original motion (was withdrawn). It was then moved (and) seconded . . . that the Board . . . reject all bids for school lunchroom products . . . and authorize the rebidding of school lunch and dairy products for the 1972--1973 school year. Motion carried.

The plaintiff Sanitary Cloverleaf Farms protested the authorization of a second bidding, and the trial court further found:

XIII

That the board of directors of Federal Way School District No. 210 on August 7, 1972 arbitrarily and capriciously rejected plaintiff Sanitary Cloverleaf Farm's low bid because of a possible threatened lawsuit by Foremost Foods. That such rejection is arbitrary and capricious and that under RCW 28a.58.135 good cause was not shown for rejection of any and all bids as it was not supported by any substantial evidence to support rejection for good cause.

On August 24, 1972, the second round of bids was opened, Foremost had reduced its bid to become the low bidder, and it was awarded the dairy products contract. Thereafter, Sanitary Cloverleaf Farms offered to furnish The issues raised are (1) did the trial court lack jurisdiction to review the actions of the defendant; (2) was the school district bound by the provisions of RCW 28A.58.135 ¹; (3) was the school district's right to reject any and all bids absolute; and (4) was the school district's action in rejecting the plaintiff's low bid arbitrary and capricious.

the dairy products to the school district and indemnify the school district against any claim Foremost might make against the district. This offer was refused. The plaintiff thereafter initiated an action for damages. During the proceedings, Foremost was joined as a party but was dismissed on a motion for summary judgment. The action proceeded between Sanitary Cloverleaf Farms and the school district, and the trial court awarded judgment for $24,899.99, plus costs, in favor of the plaintiff. The defendant school district appeals.

JURISDICTION

The plaintiff fulfilled the statutory requirements for the submission of a bid and is recognized by the parties as the initial low bidder. Under those facts, the plaintiff has standing to challenge the award of the contract to another,

allege violation of RCW 28A.58.135, and seek damages. The legality of the acts of public officials is subject to review, as well as alleged arbitrary and capricious conduct by such officials. Reagles v. Simpson, 72 Wash.2d 577, 434 P.2d 559 (1967); State ex rel. Cosmopolis Consol. School Dist. 99 v. Bruno, 59 Wash.2d 366, 367 P.2d 995 (1962). See also Paul Sardella Constr. Co. v. Braintree Housing Auth., 329 N.E.2d 762 (Mass.App.Ct.1975). The actions of state agencies and public bodies are subject to the constitutional power of the judiciary to review illegal or manifestly arbitrary and capricious actions violative of fundamental rights. State ex rel. Hood v. Washington State Personnel Board, 82 Wash.2d 396, 511 P.2d 52 (1973); State ex rel. DuPont-Fort Lewis School Dist. 7 v. Bruno, 62 Wash.2d 790, 384 P.2d 608 (1963). The violation of a fundamental right must be shown for jurisdiction to be present. Pettit v. Board of Tax Appeals, 85 Wash.2d 646, 538 P.2d 501 (1975). The contract right of the plaintiff was a fundamental right and the plaintiff was entitled to the parties being bound to the performance of their undertaking. See Ketcham v. King County Medical Serv. Corp., 81 Wash.2d 565, 502 P.2d 1197 (1972). The trial court had jurisdiction to review the actions of the school board.

RCW 28A.58.135

RCW 28A.58.135 requires the award of a contract sent out for competitive bids 'to the lowest responsible bidder.' The fact that plaintiff was both a 'responsible bidder' under the statute, and was the 'lowest' bidder on the initial offer, is uncontroverted. The statute then states, 'Any or all bids may be rejected for good cause.' It is asserted by the school district that the statute's use of 'may', rather than 'shall', permits a school district to reject bids for other than good cause--that defendant had the right to reject bids without good cause. The defendant then claims that this provision grants it the right to reject any or all bids with or without cause, as it announced in its initial call for bids. The defendant school district cites Mottner v We interpret the statute differently. Statutes are to be interpreted as a whole, and in the light of the intent gleaned from examining them in their entirety to discover their meaning and purpose. Platt Elec. Supply, Inc. v. Seattle, 16 Wash.App. 265, 555 P.2d 421 (1976). Statutes should be construed to give them purpose and effect. Steele v. State, 85 Wash.2d 585, 537 P.2d 782 (1975). The intent expressed by RCW 28A.58.135 is to foster bona fide bidders in the competitive bidding system, to protect their interests, and to enable school districts to acquire the best goods at the lowest price. The construction advocated by the school district would not advance the purpose of the statute and would ignore the requirement that bids be rejected 'for good cause.' We cannot disregard these words of restriction on school boards. The requirement that good cause be shown before a bid can be rejected restrains the public agency from awarding contracts upon improper or illegal bases and keeps the system open, unconcealed and public. When the plaintiff satisfied the requirement for lowest responsible bidder set out in RCW 43.19.1911, and submitted a timely, proper bid deemed to be the lowest bid submitted, plaintiff had a statutory right to award of the contract, absent good cause to the contrary.

Mercer Island, 75 Wash.2d 575, 452 P.2d 750 (1969), and Bellingham Am. Publishing Co. v. Bellingham Publishing Co., 145 Wash. 25, 258 P. 836 (1927), in support of this argument.

The Mottner case observed that the advertisement for bids therein made was not an offer to contract, but was instead the solicitation of an offer. RCW 28A.58.135 specifies that the contract Shall be awarded to the lowest responsible bidder. The Mottner and Bellingham cases rely upon...