Cataldo Ambulance Service, Inc. v. City of Chelsea

• Decision Date: 07 January 1998
• Parties: CATALDO AMBULANCE SERVICE, INC. v. CITY OF CHELSEA & another. 1
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 959

688 N.E.2d 959

426 Mass. 383

CATALDO AMBULANCE SERVICE, INC. v. CITY OF CHELSEA & another. ¹

Supreme Judicial Court of Massachusetts Middlesex.

Argued Dec. 2, 1997.

Decided Jan. 7, 1998.

Philip M. Cronin, Boston, for plaintiff.

John Foskett, Boston, for City of Chelsea.

George A. Hall, Jr., Cambridge, for CareLine New England, Inc.

Before WILKINS, C.J., and ABRAMS, LYNCH, GREANEY, FRIED, MARSHALL and IRELAND, JJ.

GREANEY, Justice.

This dispute concerns the award of a contract by the city of Chelsea for the provision of ambulance services. A judge in the Superior Court granted summary judgment dismissing the complaint against both defendants, the city and the successful bidder, CareLine New England, Inc. (CareLine), in the suit brought by the plaintiff, Cataldo Ambulance Service, Inc. (Cataldo). Cataldo sought a declaratory judgment as to the validity of the contract award, claiming that a contract existed between it and the city that the latter had breached. ² The judge concluded that, as matter of law, Cataldo could not have reasonably relied on references to G.L. c. 30B, the Uniform Procurement Act, in the city's invitation for bids when submitting its bid on the contract. ³ The Appeals Court, however, reversed the judgment of the Superior Court as to the city, and ordered that summary judgment enter for Cataldo, on the basis that Cataldo's submission of its bid in response to the city's specifications created an implied contract obligating the city to those specifications. Cataldo Ambulance Serv., Inc. v. Chelsea, 43 Mass.App.Ct. 26, 30, 680 N.E.2d 937 (1997). The Appeals Court concluded that "[t]he city breached its contract by selecting a bid [from CareLine] that deviated substantially from the conditions of the invitation to bid," and awarded damages of bid costs against the city to Cataldo. Id. at 32, 680 N.E.2d 937. We granted the defendants' applications for further appellate review, and we now affirm the judgment of the Superior Court.

The following are the undisputed material facts. Cataldo supplied ambulance services to the city, under contract, from 1982, until its last contract expired on June 30, 1995. Prior to the expiration of this contract, the city, which had been placed under State receivership in September, 1991, learned that other area municipalities had obtained equivalent ambulance services for significantly less than the $90,000 per year that it was paying Cataldo. After attempts to negotiate a new contract with Cataldo at a lower cost proved unsuccessful, the city decided to put its ambulance services contract out to public bid. Although such contracts are exempt from the statutory requirements of G.L. c. 30B, see note 3, supra, the city invited public bidding by publishing legal notices in Boston, Chelsea, Everett, and Lynn newspapers. None of these notices made any reference to G.L. c. 30B. The city also made available to interested bidders an invitation for bids which specified the minimum criteria for evaluation of bids and the scope of services it required the contractor to provide. The invitation contained several references to G.L. c. 30B, including a statement in the introduction that "Massachusetts General Laws, Chapter 30B, which is incorporated here by reference, shall govern all procedures."

Cataldo and CareLine were the only two companies to submit bids in response to the city's invitation for bids. Cataldo's bid submission included a cover letter to the city's procurement officer that stated, "As you know, ambulance services are exempt from the Procurement Act, therefore, due to our standing and investment in the community, and in order to maintain continuity, we are requesting the opportunity of last refusal." Both companies submitted zero dollar bids, meaning that there would be no cost to the city for the ambulance services. Cataldo's bid adhered to the specifications contained in the bidding documents, while CareLine's bid provided for an advanced level of service beyond that specified by the city. ⁴ After reviewing the bids, conducting site visits and interviews at both companies, and considering recommendations from the members of a special committee formed to review the bids, the city's procurement officer awarded the ambulance services contract to CareLine. The day after CareLine was selected, Cataldo made contact with the procurement officer and asked if there was anything Cataldo could do to have the award reconsidered. The procurement officer rejected Cataldo's attempt to change the award.

1. Cataldo argues that (1) by including references to G.L. c. 30B, in the invitation for bids, the city intended to make its procurement for ambulance services subject to that statute's requirements, even though G.L.c. 30B otherwise would not have applied; (2) that it responded to the references to G.L. c. 30B, by submitting a bid that was in compliance with the terms and conditions of the bidding documents ⁵; and (3) that CareLine's bid, offering to furnish a higher level of ambulance services, was nonresponsive, and should have been rejected, because G.L. c. 30B, § 5(g ), requires that "[t]he procurement officer shall award the contract to the lowest responsible and responsive bidder," a situation which, Cataldo says, applied only to its bid.

There is no dispute that the city's ambulance services contract is exempt from the requirements of G.L. c. 30B, and, ordinarily, could be awarded by the city's procurement officer in the exercise of discretion. In so acting, the procurement officer obviously would seek to advance the city's best interests by obtaining the highest level of ambulance services at the lowest cost. It is also undisputed that no contract was ever executed between the city and Cataldo. Cataldo's right to recover, therefore, has to be premised on one of two theories: (1) that a contract exists by reason of Cataldo's reliance on the city's references in its invitation for bids to G.L. c. 30B (this theory is based on the holdings in decisions such as Rhode Island Hosp. Trust Nat'l Bank v. Varadian, 419 Mass. 841, 849-850, 647 N.E.2d 1174 [1995], and Loranger Constr. Corp. v. E.F. Hauserman Co., 376 Mass. 757, 760-761, 384 N.E.2d 176 [1978] ), ⁶ or (2) that the city is bound through the existence of an implied contract.

The first theory (rejected by the judge in the Superior Court) requires that Cataldo have reasonably relied on the information contained in the city's invitation for bids. The judge decided that any reliance by Cataldo on the city's references to G.L. c. 30B in the invitation for bids was not reasonable. The judge pointed to Cataldo's own cover letter accompanying its bid submission acknowledging the irrelevance of G.L. c. 30B to an ambulance services contract and requesting an opportunity for last refusal. Such an exercise is clearly forbidden by G.L. c. 30B, § 5(f ), which does not allow any changes to a bid once the bids are open that would be prejudicial to the interests of fair competition. It was also undisputed that Cataldo approached the city procurement officer after the contract had been awarded and sought to change the outcome of the bidding process. Any attempt to renegotiate after the bids were submitted would be prohibited by G.L. c. 30B.

Cataldo argues that the judge failed to take into account its affidavit in which it had stated that "Cataldo understood [the references to G.L. c. 30B in the city's bid invitation] to be an express indication that Chapter 30B would apply even though the City otherwise would not have been bound by the statute...." Cataldo's affidavit further states: "In reliance on the reference to Massachusetts General Laws Chapter 30B, Cataldo submitted a timely bid strictly in compliance with all terms and conditions of the bidding documents and specifications. Cataldo did not believe our bid could differ from the requirements of the bid invitation according to Chapter 30B."

The assertions in Cataldo's affidavit are not sufficient to create a triable issue of fact. The question whether a party's reliance on a promise by another is reasonable is often a question of fact, but in an appropriate case can present an issue of law. This is especially so when the parties involved are of relatively equal knowledge and sophistication. The critical time for determining the existence of reliance was the time when the bids were received and examined and the contract awarded. Cataldo's post hoc claim of reliance is not determinative, if the summary judgment record demonstrates that, at the critical time, Cataldo could not have reasonably relied on the city's references to G.L. c. 30B. As has been mentioned, Cataldo's letter accompanying its bid stated that it knew that G.L. c. 30B did not apply to the contract, and, consistent with this awareness, Cataldo requested that it be allowed to proceed outside of G.L. c. 30B, to exercise an opportunity for last refusal. Cataldo's conduct after learning that it was not the successful...