Com. v. Salemme

• Decision Date: 03 March 1975
• Citation: 3 Mass.App.Ct. 102,323 N.E.2d 922
• Parties: COMMONWEALTH v. Francis P. SALEMME.
• Court: Appeals Court of Massachusetts

Page 922

323 N.E.2d 922

3 Mass.App.Ct. 102

COMMONWEALTH v. Francis P. SALEMME.

Appeals Court of Massachusetts, Middlesex.

Argued April 16, 1974.

Decided March 3, 1975.

George Waldstein, Boston, for plaintiff.

Joseph P. Hurley, Braintree (Theodore A. Glynn, Jr., Wellesley, with him), for Braintree Housing Authority, Inc.

Before HALE, C.J., and KEVILLE and GRANT, JJ.

HALE, Chief Justice.

This bill for declaratory relief comes to us by way of a report by the Superior Court pursuant to Mass.R.Civ.P. 64, --- Mass. --- (1974). The case was submitted to the trial judge on a case stated. ² The judge made rulings of law and reported those rulings to us for a determination of their correctness. We summarize the facts.

Sometime prior to September 15, 1971, the Braintree Housing Authority (Authority) invited bids pursuant to the provisions of the competitive bidding statute (G.L. c. 149, §§ 44A--44L) for the construction of a State-aided project of housing for the elderly. Thereafter, the bids of the subcontractors were opened, with the defendant Daniel Mazza Co., Inc. (Mazza) found to be the lowest responsible and eligible bidder for the plumbing subcontract. Mazza's subbid was unrestricted with respect to its willingness to enter into a subcontract with any general contractor. On September 15, 1971, the bids of the general contractors were opened, with the plaintiff Paul Sardella Construction Co., Inc. (Sardella) found to be the lowest responsible and eligible general bidder. Sardella listed Mazza as its plumbing subcontractor, as did the second lowest bidder. The defendant Fred J. Findlen and Sons (Findlen), the third lowest bidder, listed Duggan Construction Co., Inc. as its plumbing subcontractor.

On September 29, 1971, Mazza wired the Authority, purporting to withdraw its subbid on the basis of an alleged clerical error, and confirmed that action by a letter sent the following day.

On October 20, 1971, the Authority voted to award the contract to Sardella as the lowest responsible and eligible general bidder. See G.L. c. 149, § 44A. The award was subject to the approval of the Department of Community Affairs. See G.L. c. 121B, § 31. On October 26, 1971, Sardella notified Mazza that it had been selected by the Authority as the subcontractor and on November 15 sent Mazza proper subcontracts for its signature.

Mazza failed to execute the subcontracts within five days (G.L. c. 149, § 44I(3)) and returned the unexecuted contracts to

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Sardella on November 22, 1971, notifying Sardella and the Authority of its refusal to execute 'due to a bona fide clerical error' in its bid.

Thereafter, the Authority reviewed all of the other eligible and responsible plumbing subbids and determined that if any one of those bids was to be substituted in place of Mazza's, Findlen's bid would be the lowest general bid. The Authority then voted on November 24, 1971, to rescind its award of the general contract to Sardella and to award that contract to Findlen. Sardella was not invited to nor was it represented at the meeting at which such votes were taken. A notice of the decision was mailed to Sardella, and it immediately lodged a protest with the Department of Labor and Industries, which conducted an investigation and held a conference on December 7, 1971. See G.L. c. 149, § 44K. On January 7, 1972, that Department rendered its decision upholding the action of the Authority in awarding the general contract to Findlen.

At a meeting held on December 15, 1971, the Authority found that 'a bona fide clerical error had been made by Mazza' and voted to return Mazza's deposit (which it subsequently did). See G.L. c. 149, § 44B(3). Sardella was not notified of that meeting.

On January 20, 1972, the Authority and Findlen executed a contract for the project. That contract was approved by the Department of Community Affairs. Findlen proceeded to build the project, substantially completing it by February, 1973. Findlen has been paid the contract price, with the exception of a small amount held back pending the completion of certain seeding operations.

Both Sardella and Findlen were eligible and responsible bidders at all material times.

The present bill for declaratory relief was filed on February 9, 1972. By this bill Sardella seeks a binding declaration of the rights, duties, status, and obligations of the parties, and that the damages caused Sardella by each of the defendants be determined and awarded to it. The prayers of the bill also include requests for temporary restraining orders and preliminary injunctions against the Authority and Findlen, enjoining them from doing any act in furtherance of the contract, and for an order directing the Authority to award the contract to Sardella and to rescind the award to Findlen. ³ Nothing in the record or in the docket entries indicates that any move was made in the Superior Court for the issuance of any restraining order or injunction.

The judge ruled that: (1) the Authority is liable in damages to Sardella for unlawfully rescinding its award to Sardella; (2) Findlen is not liable to Sardella for accepting and performing a contract which should have been awarded to Sardella; and (3) Mazza is not liable to Sardella for refusing to execute a subcontract. We are asked to determine the correctness of these rulings.

1. In making its determination that Findlen became the lowest responsible and eligible bidder and should thus receive the contract, the Authority relied on the provisions of G.L. c. 149, § 44I(2). ⁴ In so deciding,

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it in effect applied only the last two sentences of the subsection, as there was no joint consideration of subbidders with Sardella and no agreement by Sardella to substitute another subbidder for the one carried in its general bid. Instead, the Authority unilaterally substituted another subbid in place of Mazza's and determined that by reason of such substitution Findlen became the lowest general bidder. It then proceeded to revoke the award to Sardella and to award the contract to Findlen.

We agree with the trial judge that § 44I(3) ⁵ should have been applied in the circumstances of this case, as that section specifically provides the proper route to follow where, as here, there is a failure by the selected subbidder to execute a subcontract. That subsection mandates that the Authority and the selected general bidder together select another subbidder and adjust the total contract price by the difference between the amount of the latter's bid and that of the defaulting subbidder. Notable is the absence from that subsection of any provision for the selection of another general bidder should the result of the change be to make the previously selected general bidder no longer the lowest bidder. That is in stark contrast to the immediately preceding subparagraph (2), which specifically provides for such a change. The Authority is protected from the impact of the increased price, as the bid deposit of the subbidder is required by § 44B(1) to be payable to it. The bid deposit becomes the property of the Authority as liquidated damages to the extent of the difference between the depositor's subbid and that of the next lowest responsible and eligible subbidder. G.L. c. 149, § 44B(3). Subsection (3) provides, among other things, that in a case of a bona fide clerical error of a substantial nature affecting a low subbidder, its bid deposit should be returned. The occurrence of such an event would result in the loss to the Authority of the protection of the deposit but would not change the status of the lowest general bidder, whose original bid would have to be adjusted in the manner required by § 44I(3).

We conclude that the Authority's action in revoking its acceptance of Sardella's bid was erroneous and that the ruling of the judge that the Authority is liable in damages to Sardella was correct.

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We are thus confronted with the difficult and novel question of the proper measure of damages to be awarded a bidder whose award was rescinded in violation of statutory requirements. Sardella contends that the Authority is liable to it for the profit it would have made had the award not been wrongfully rescinded by the Authority. The Authority argues that, as it has the right to reject any and all general bids (G.L. c. 149, § 44D), and as no contract was ever made with Sardella, the latter has no valid theory of recovery against the Authority. ⁶

We conclude that Sardella is not entitled to recover anticipated profits as its measure of damages as it never actually entered into the contract under which it would have made such profits. See, e.g., Excavation Construction, Inc. v. United States, 494 F.2d 1289, 1290 (Ct.Cl.1974); Matter of Allen v. Eberling, 24 App.Div.2d 594, 262 N.Y.S.2d 121 (N.Y.1965); William A. Berbusse, Jr. Inc. v. North Broward Hospital Dist., 117 So.2d 550, 552 (Fla.App.1960).

This conclusion, however, does not mean that Sardella is left without any remedy for the violation of the competitive bidding statute by the Authority. It has consistently been held that 'in matters of substance there must be strict compliance with the requirements of G.L. c. 149 . . ..' Chick's Construction Co. Inc. v. Wachusett Regional High Sch. Dist. Sch. Comm., 343 Mass. 38, 41, 175 N.E.2d 502 (1961). Interstate Engr. Corp. v. Fitchburg, --- Mass. ---, ---, --- N.E.2d ---, --- (1975). ^a In construing an earlier version of the current statute, ⁷ the Supreme Judicial Court stated that the '(a)bsence of bad faith or of corruption does not excuse noncompliance with the procedure established by the Legislature for the award of the contract.' Gifford v. Commissioner of Pub. Health, 328 Mass. 608, 617, 105 N.E.2d 476, 482 (1952). 'Even the best of motives cannot excuse contravention of the statute.' Grande & Son, Inc. v. School Housing Comm. of North Reading, 334 Mass. 252, 258, 135 N.E.2d 6, 10 (1956). Neither the reservation of a right to reject any and all...