Cocca Dev. v. Mahoning County Bd. Of Comm'rs
| Decision Date | 25 June 2010 |
| Docket Number | CASE NO. 08 MA 163,Case No. 07 CV 3005 |
| Citation | 2010 Ohio 3166 |
| Parties | COCCA DEVELOPMENT, LTD. PLAINTIFF-APPELLANT v. MAHONING COUNTY BOARD OF COMMISSIONERS DEFENDANT-APPELLEE |
| Court | Ohio Court of Appeals |
{¶1} Appellant Cocca Development, Ltd., appeals the entry of summary judgment by the Mahoning County Court of Common Pleas against it and in favor of Appellee, Mahoning County Board of Commissioners in this breach of contract action.
{¶2} Appellant is the successor in interest to 7655, LLC ("7655"), which, in 2001, was the owner of the Southwoods Executive Center ("Southwoods") in Boardman, Ohio. In 2001, Appellee leased space at Southwoods for the Mahoning County Educational Service Center ("MCESC"). At that time, the county was required to provide equipment and office space to the MCESC pursuant to R.C. 3319.19.
{¶3} The county began accepting proposals from prospective lessors of office space for MCESC on November 1, 2000. Throughout the document, the packet uses language associated with a traditional RFP and also language associated with a traditional bid document. The proposal packet, specifically captioned "Request for Proposals," ("RFP"), included specifications for the office space, blank affidavits, and instructions to bidders. The instructions to bidders explicitly stated that proposals must be submitted on the prescribed form provided with the materials, and should not be detached from "the remainder of the contract documents." (Instructions to Bidders, ¶1.1.) Section 1.1 further instructed interested persons to furnish a summary of the proposal, which could be provided on separatepaper, "but should be attached to the contract document package." (Instructions to Bidders, ¶1.1.)
{¶4} The instructions also included the following provision:
{¶5}
{¶6} The specifications in the RFP read, in pertinent part: "To determine the award of the contract, the County will negotiate using criteria factors including but not limited to, ability to meet aforementioned requirements, date of availability for occupancy, quality of the proposed facility, interior and exterior aesthetics, and cost of the lease." (Bid Specifications, p. 7.) According to the affidavit of Lynn Davenport, 7655's Executive Vice President and Treasurer, the county and 7655 engaged in negotiations between the opening of proposals on November 1, 2000, until the execution of the lease on February 2, 2001 concerning the layout of space, the work to be performed by 7655, use of the building's auditorium, and a right to relocate MCESC to nearby office space. (Davenport Aff., ¶4.)
{¶7} The parties executed a ten year lease, with two five year renewal terms, on February 15, 2001. The signature page of the lease indicates that it was approved as to form on February 7, 2001 by an assistant prosecutor with the Mahoning County Prosecutor's Office.
{¶8} On January 1, 2007, R.C. 3319.19 was amended and the county's obligation to provide funding for the MCESC was eliminated. After determining that MCESC would not assume the rental obligations under the lease, Appellee elected to terminate the lease for non-appropriation of funds. However, the lease itself did not contain a provision that authorized Appellee to terminate for that reason.
{¶9} Appellant, as successor in interest to 7655, filed a complaint for declaratory relief, breach of contract, and equitable and promissory estoppel, as well as a motion for a temporary restraining order, asserting that Appellee's termination of the lease constituted a breach of the terms of the lease. Appellee argued in its answer that the lease was void because its terms violated Ohio competitive bidding laws, and that estoppel cannot be asserted against a government agency.
{¶10} More specifically, Appellee argued that the lease was the product of the competitive bidding process, and, therefore, the lease was void because it did not contain all of the material elements contained in the original bid. In this argument, Appellee relied on the termination provision in the instructions to bidders. Appellee claimed that the absence of a similar provision in the actual lease invalidated the lease according to Ohio competitive bidding law.
{¶11} The trial court agreed, holding that the omission of the termination provision in the lease "added an additional provision beneficial to [Appellee]," and, as a consequence, the lease was void. (8/6/08 J.E., p. 3.) The trial court's judgment entry presupposed without analysis that the "agreement" referred to in the terminationprovision is the lease, and appears to presuppose that the process used to obtain the lease was a competitive bid process, not the RFP process.
{¶12} Although the trial court did not cite any case law in its decision, the decision appears to be predicated on the rule of law announced in Checie v. Cleveland (November 20, 1939), 8th Dist. No. 17429. According to the Eighth District Court of Appeals in Checie," '[a]ny contract entered into with the best bidder containing substantial provisions beneficial to him which were not included in the specifications is void for it is not the contract offered to the lowest bidder by the advertisement.' " Id. at *14, quoting Desmond [sic] v. City of Mankato (1903), 89 Minn. 48, 93 N.W. 911, syllabus at paragraph 3.
{¶13} The Checie Court decided," '[t]his rule should be strictly enforced by the courts, for if the lowest bidder may, by an arrangement with the municipal authorities, have incorporated into his form of contract new provisions beneficial to him or have onerous ones excluded therefrom which were in the specifications upon which the bids were invited, it would emasculate the whole system of competitive bidding.' " Id., quoting Desmond [sic] at 53.
{¶14} In the matter sub judice, Appellant argues that the "agreement" referred to in the termination provision is not the lease, but, rather, the agreement that existed pursuant to an RFP between the county and 7655 after 7655's proposal was submitted and prior to the execution of the lease. As earlier discussed, Appellee contends that the "agreement" referred to in the termination provision is the lease, itself.
{¶15} Appellant further argues that, even if the "agreement" referred to in the termination provision is the lease, the lease at issue in this case is not subject to Ohio competitive bidding law pursuant to R.C. 307.86(I), which specifically exempts leases for office space from conformance with R.C. 307.86. Subsection (I) exempts leases for office space where:
{¶16} "(a) The contracting authority is authorized by the Revised Code to lease the property.
{¶17} "(b) The contracting authority develops requests for proposals for leasing the property, specifying the criteria that will be considered prior to leasing the property, including the desired size and geographic location of the property.
{¶18} "(c) The contracting authority receives responses from prospective lessors with property meeting the criteria specified in the requests for proposals by giving notice in a manner substantially similar to the procedures established for giving notice under section 307.87 of the Revised Code.
{¶19} "(d) The contracting authority negotiates with the prospective lessors to obtain a lease at the best and lowest price reasonably possible considering the fair market value of the property and any relocation and operational costs that may be incurred during the period the lease is in effect."
{¶20} For its argument, Appellant relies on the title of the document issued by the county, that is, the "Request for Proposals," the discretionary language in the bid specifications, and the negotiations following the selection of 7655's proposal to argue that the RFP at issue is not governed by Ohio competitive bidding law. Inother words, even if the "agreement" in the termination provision referred to the lease, and the termination provision was a material provision in the RFP, the county had the discretion to negotiate the termination provision out of the lease and exercised that discretion.
{¶21} Appellee does not argue that the RFP in this case does not fall within the ambit of subsection (I), but, instead, that the county elected to competitively bid the lease rather than issue a request for proposals pursuant to subsection (I) of the statute. Appellee's purchasing director, James Fortunato, claimed that the county used a competitive bidding process in procuring office space of MCESC. (Fortunato Aff., ¶4.)
{¶22} Based on the record before us, we find that the "agreement" referred to in the termination provision was the agreement that existed between the parties after the submission of 7655's proposal but before the execution of the lease. The document at issue was clearly the product of an RFP and not of the traditional bid process. Although the language in the RFP appears ambiguous, extrinsic evidence supports the conclusion that Appellant's interpretation of the termination provision is reasonable, because Appellee did not object to the omission of the termination provision from the lease. Furthermore, any ambiguity should be...
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