City of Las Vegas v. Kitchell Contractors, CV-S-91-141-PMP (RJJ).

• Decision Date: 12 April 1991
• Docket Number: No. CV-S-91-141-PMP (RJJ).,CV-S-91-141-PMP (RJJ).
• Citation: 768 F. Supp. 742
• Parties: CITY OF LAS VEGAS, etc., Plaintiff, v. KITCHELL CONTRACTORS, INC. OF ARIZONA, Defendant.
• Court: U.S. District Court — District of Nevada

768 F. Supp. 742

CITY OF LAS VEGAS, etc., Plaintiff, v. KITCHELL CONTRACTORS, INC. OF ARIZONA, Defendant.

No. CV-S-91-141-PMP (RJJ).

United States District Court, D. Nevada.

April 12, 1991.

Roy A. Woofter, Robert S. Sylvain, City Atty., Las Vegas, Nev., for plaintiff.

Kirk Harrison, Kevin Stolworthy, Dereck C. Ence, Jones, Jones, Close & Brown, Las Vegas, Nev., for defendant.

ORDER

PRO, District Judge.

This case requires the Court to interpret a Nevada statute, Nev.Rev.Stat. § 338.147, entitled "Award of contract to contractor who submits best bid; determination of best bid." The statute reads in part:

1. A public body shall award a contract for a public work to the contractor who submits the best bid.

2. ... For the purposes of this section, a contractor who has:

(a) Been found to be a responsible contractor by the public body; and

(b) Paid the state and local taxes within this state for 5 successive years before submitting the bid,

shall be deemed to have submitted a better bid than a competing contractor who has not paid the taxes if the amount of his bid is not more than 5 percent higher than the amount bid by the competing contractor and the bid does not exceed the amount budgeted for the work or the engineer's estimate of the cost of the work, whichever is less.

(Emphasis added).

The Plaintiff City of Las Vegas (the "City") sought bids to expand its misdemeanor detention facility ("Detention Facility Expansion Project"). Bids were submitted and opened on January 8, 1991. Defendant Kitchell Contractors, Inc. of Arizona ("Kitchell") submitted the lowest bid, which was $6,835,800.00. Amicus Curiae Pace Contracting Co. ("Pace") was the next lowest bidder at $7,056,236.00. After reviewing the above bid preference statute, the City sent a letter to Pace which included the following language:

The City Attorney's Office has determined that your bid is the best bid in accordance with the referenced statute, therefore a recommendation to award the contract to your firm will be made at the City Council Meeting scheduled for February 6, 1991.

Pace's Amicus Brief (# 8), Ex. 1 (Letter of January 22, 1991). However, on February 5, 1991, after Kitchell had expressed its disagreement with the award of the contract to Pace, the City Attorney notified counsel for Pace that he would be seeking a declaratory judgment in court rather than recommending that Pace be awarded the contract at that time. Amicus Brief (# 8), Ex. 2 (Letter of February 5, 1991).

At its February 6 meeting, the City Council recommended that a declaratory judgment be sought to resolve questions regarding the interpretation of Nev.Rev. Stat. § 338.147. On March 14, 1991, the City filed its Amended Complaint (# 5) and Motion for Declaratory Judgment (# 6).¹ On March 22, 1991, Pace filed an Amicus Brief in Support of Finding that Kitchell Contractors of Arizona, Inc. Does Not Qualify for a Bid Preference Pursuant to NRS 338.147 ("Pace's Amicus Brief") (# 8). Also on March 22, 1991, Kitchell filed its Memorandum of Points and Authorities in Support of Plaintiff sic Kitchell Contractors, Inc. of Arizona's Response to the City of Las Vegas' Motion for Declaratory Relief ("Kitchell's Memorandum") (# 10) together with Exhibits (# 11). On March 27, 1991 Kitchell filed its Memorandum of Points and Authorities in Reply to Pace Contracting Co.'s Amicus Brief ("Kitchell's Reply") (# 15). That same day, Pace filed a Response of Pace Contracting Co. to the Brief of Kitchell Contractors, Inc. of Arizona re Motion for Declaratory Relief ("Pace's Reply") (# 16). Oral argument was heard from all parties on April 2, 1991.

While all parties agree that Pace satisfies the requirement of the statute to receive the bid preference, due to its payment of state and local taxes for five successive years, the dispute here concerns Kitchell's alleged eligibility for this preference. Kitchell alleges that various sales, room, and gasoline taxes it has paid between October 1987 and January 1991 qualify it for the preference. Kitchell further argues that its alleged predecessor paid state and local taxes in Nevada between 1979 and 1983, which qualify it for the preference.

In order to resolve this matter, this Court will examine two questions of interpretation relating to the Nevada preference statute. First, does the statutory language "5 successive years before submitting the bid" mean the five years immediately preceding submission of the bid or five years at any time before the bid is submitted? Second, does the statutory requirement that taxes be paid in Nevada "for 5 successive years" mean taxes must be paid during a block of sixty months or that taxes must be paid for five successive calendar years running from January 1 to December 31?

Turning to the first question, whether the five successive years in which taxes are paid must immediately precede submission of the bid, this Court must first look to the language of the statute. This Court finds that the language used is ambiguous as to what is meant. The Court must, therefore, interpret the statute in light of its legislative history. In a previous case before this Court concerning the same statute, the Honorable Lloyd D. George, United States District Judge, examined the legislative history and noted:

Both the Assembly and Senate Minutes indicate that the Legislature was concerned about the economic affects sic of out-of-state contractors performing instate projects. The Legislature was also concerned about a contractor taking money and then leaving the state. This would hamper the state's ability to obtain warranty work. Furthermore, the Assembly Minutes indicate that high industrial accident insurance rates hinder Nevada firms by giving out-of-state bidders a cost advantage.

Aviation Constructors, Inc. v. Clark County, Nevada, CV-S-90-443 LDG, Order of July 26, 1990, at 4 (Ex. F to Kitchell's Exhibits (# 11)). Judge George later noted:

The five year requirement tends to demonstrate a permanent and continuing presence in the state. This "presence" factor furthers the goal of benefitting residents and the state economy, and fostering warranty work.

Id.

It does not make sense that a legislature concerned about "a permanent and continuing presence in the state" would require a five year presence at any time in the past. If this were the case, the legislature's goals would be ill-served, and the statute's constitutionality would be questionable. See Big D. Constr. v. Court of Appeals, 163 Ariz. 560, 789 P.2d 1061 (1990) (Arizona preference statute declared unconstitutional as violative of the Equal Protection clause in Arizona's Constitution since it ceased to be rationally related to state's legitimate interest). A Court should construe any statute in order to preserve the statute's constitutionality. St. Martin Evangelical Lutheran Church v. South Dakota, 451 U.S. 772, 780, 101 S.Ct. 2142, 2147, 68 L.Ed.2d 612 (1981); Knapp v. Cardwell, 667 F.2d 1253, 1260 (9th Cir.1982). When read in the context of the goals of the Legislature in drafting the statute, the only reasonable interpretation is that a bidder must have paid state and local taxes for the five successive years immediately preceding the bid.

The Court recognizes that this is a conclusion contrary to that of the Nevada Attorney General in an opinion issued April 23, 1990. Ex. C, Kitchell's Exhibits (# 11). In that opinion, the Attorney General concluded that the statute meant "any 5 consecutive years preceding the date the bid is submitted," purporting to rely on the "plain meaning rule" of statutory interpretation. Id. at 12. While recognizing that the opinions of the Attorney General should not be lightly rejected, this Court would also note that such opinions are not controlling. See Wenke v. Hitchcock, 6 Cal.3d 746, 752, 493 P.2d 1154, 1158, 100 Cal.Rptr. 290, 294 (1972). In this instance, the Court cannot agree that the statute's meaning is clear on its face without the aid of legislative history, and therefore rejects the Attorney General's interpretation. As a result, this Court concludes that any taxes paid between 1979 and 1983 cannot qualify Kitchell for a bid preference in 1991 under Nev.Rev.Stat. § 338.147.

This Court must next decide whether the taxes paid between 1987 and 1991 qualify Kitchell for the preference. This can only happen if "5 years" means "5 calendar years running from January 1 to December 31," an interpretation that this Court must reject.

Both parties apparently agree, relying on dictionary definitions, that "year" normally means "calendar year" unless the context indicates otherwise. Pace's Amicus Brief (# 8), at 9-11; Kitchell's Memorandum (# 10), at 22. However, these sources do not explain how calendar year should be interpreted in a given context, but only distinguish a twelve month calendar year from other special years, such as fiscal or academic years. All authorities agree that a calendar year lasts twelve months, see generally Annotation, What 12-Month Period Constitutes "Year" or "Calendar Year" as Used in Public Enactment, Contract, or Other Written Instrument, 5 A.L.R.3d 584 (1966), but this does not completely resolve all problems of interpretation. While several sources indicate that a calendar year normally refers to the period January 1 to December 31, there are also numerous cases holding that the year may be measured from anniversary to anniversary date when the context indicates that this is the reasonable interpretation. See, e.g., Southerland v....